How do you know if a startup will be successful? To determine if a business will be successful, you should first ask yourself the key factors that will determine its success. According to a study by Inc. and the NBBA, about 8 in 10 businesses fail. Various vital factors determine a startup’s success and they are based on these criteria.
- Customers
Before you start a business, you must identify a potential customer and an unmet need in the market. This will help you identify the type of product or service that will satisfy their needs and provide them with meaningful value.
A large-scale problem is the best bet if you’re a well-funded entrepreneur. On the other hand, if you are a solo entrepreneur, a lesser-scale opportunity might be more beneficial as it allows you to focus on your core business and not worry about getting overshadowed by more established competitors.
- The Product
The product you’re developing should solve the specific needs of your customers. It would be best to avoid adding unnecessary features or messaging that will dilute or confuse the value you’re providing and focus on solving the problem at hand.
As you develop the product, ensure that you avoid factors preventing your customers from adopting it, such as a steep learning curve, a lack of integration, and expensive switch costs.
Before you start a company, you must identify the ideal market for your product or service. In addition to the cost of developing the product, you also need to consider the cost of implementing it.
- Timing
Every opportunity has a limited lifespan, and every market has a lifecycle. During the beginning stages of innovation, it’s easy to enter a market, and technical solutions are typically the main challenge. Anyone with a good idea can find a way to solve the problem and find a market ripe for innovation.
However, being too early in the game can lead to failure. The typical startup can take much longer than most companies can finance. The best strategy for most startups is to follow a fast-follower approach, where they identify a new target audience. You should also be able to identify existing customers who are interested in your solution.
- Competition
The imbalance between the number of competitors and new customers in a market can make it difficult for new entrants to enter. This dynamic is usually seen during the late stages of an innovation’s lifecycle. We’re looking for signs that the market still needs to meet the needs or desires of potential customers. A flourishing market is characterized by old, stagnant, or new markets ripe for innovation. A well-designed positioning strategy can be created in such an environment.