So you have decided to become an entrepreneur, you have an idea for a product and feel that you are on the right path. Stop. 96% of projects fail to reach the market, and 90% of startups collapse in their first year. You need to understand where you are heading and what difficulties you are about to face before you run off to start your venture.
I am Omri Levavi, CEO of ZERO21, and I see entrepreneurs rise and fall every day. From my experience, in setting up companies and startups and managing accelerators, I help entrepreneurs in the early stages. I try to understand what makes them fall and what makes them successful. Before you go through another sleepless night, take another loan, or tell another friend about your idea, you should continue reading about the difficulties I encountered. Read it thoroughly, and I promise to show you how you can do it right and even sleep well at night.
The beginning is always the hardest
Several elements can prevent you from succeeding:
– The money is gone
– Your strength is over
– The passion is over
– There are not enough investors
– You don’t have an MVP
– The MVP isn’t working
But the most critical mistake that I discovered is to develop products that only solve the entrepreneur’s problem. Or rather, the pain hugely bothers the entrepreneur but not the rest of the market.
Sometimes, entrepreneurs are sure they have found the next startup, that they forget to do thorough market research. Without examining the target market’s needs and problems, there is no reason to continue spending time on the venture.
I have summarized for you 5 main reasons that lead to project failures; at the end of each reason is a proven (pro) solution.
1. Don’t quit your day job
Yes, it sounds weird, but to be successful, statistically, it’s better not to quit your day job. A study of 5,000 entrepreneurs of various ages found that entrepreneurs who did not quit were 33% less likely to fail in their new venture than those who did say goodbye to their boss.
When we are in a steady job, we do not need to worry about making money each month, and it also has a positive effect on our sleeping hours. We force ourselves to sleep appropriately; otherwise, we will not function properly at work and risk losing it.
If we don’t have to get up in the morning for work, we can work on our project for 20 hours a day and sleep 4 hours a night. It sounds like a lot of work hours, doesn’t it? Studies show that most entrepreneurs will stay focused up to 9 hours max, after which their work will be less productive.
Pro tip: Keep your day job and work on the venture whenever you have free time. Sleep 8 hours every night, and you will see that you are more efficient in working on the project/product because you have more hours of sleep. You will worry less about finance, which will leave you time for originality and creativity. In general, sleep, sports, and proper healthy nutrition lead to a healthy lifestyle that promotes entrepreneurs in all aspects.
2. Lack of marketing knowledge
Many entrepreneurs bring an immense passion for the product, company, or venture. Sometimes they develop a fantastic MVP that the world has never seen before. But they lack in marketing knowledge.
Yeah, your product is amazing and will change the world, but if no one hears about it, how can you progress forward?
Marketing is complex. It is imperative to study it, even superficially, to understand basic concepts like ROI or Go To Market, even before setting up a meeting with potential investors. Knowing the various platforms: website, social media, advanced marketing systems, mailing systems, and more, will help progress you towards mass marketing. Even the most basic knowledge can lead to efficient quality results that can be developed afterward with the help of professionals.
A good example of that is seen on “Shark Tank”. The show features entrepreneurs with fantastic ideas. They have all the data: competitors, market capitalization, profits, and usually lack of marketing knowledge. The sharks on the show smell “blood,” meaning an entrepreneur who does not understand marketing, and attacks with tempting marketing partnerships that the entrepreneur cannot refuse.
Marketing in the early stages is critical – if you succeed and learn to include first users in your app, you will gain real feedback and receive a better valuation.
Pro Tip: Conduct a market survey to understand the need of the market, what issue your product solves, what problem he is attacking. You need to know how to build the message and how to spread it further. The internet is full of information and courses on the subject, and we will expand on this later.
3. They spend too much time in the garage
We sometimes fall in love with our product, that we forget about everything else. I’m not talking about work or family, I’m talking about essential product progression. Attracting investors, quality control, developing features, and more. We stay in the concept stage for too long.
It is a waste of resources, and a waste of valuable time, time that consumes the entrepreneur’s life and takes over. Entrepreneurs I meet are so in love with their product that they forget crucial things, like the market research they did five years ago, is no longer relevant. The market is overflowing with similar products, and yet they continue to take out loans and try to get the venture to be the next “unicorn.”
The LinkedIn founder said, “if you’re not embarrassed by the first version of your product, you’ve launched too late,” and I agree with that.
Pro tip: Go out and talk to your potential clients. Get to know them personally and intimately. Understand how they feel about the venture; what need did it answer them? What condition did it not? Ensure that the product meets the criteria you set in advance. You may even discover some new things. You can also talk to an outsider who is not in love with the idea and has a more broad vision and experience to understand your company’s needs and set goals. I recommend that you create a lean product as much as possible so that you can test it as soon as possible on your future users. Only then can you move forward.
4. Money money money
Airbnb’s story begins with two entrepreneurs who wanted to pay rent in one of the most expensive US cities, San Francisco. They decided to buy two air mattresses instead of a double bed, put them in their living room, and offer to rent them for bed + breakfast on their website. The idea suited demand because all the hotels were fully occupied in the city due to a technology conference. Three customers responded to the ad and became the company’s first customers, making 80$. Today, each of the original investors of the startup holds $ 3 billion in capital value.
This story shows that for a good idea, you do not need a lot of money. To develop it, you will require investment, but it is essential to understand that money isn’t the most critical element. Invest in getting to an MVP and then recruit the rest. I advise you to get an MVP as soon as you can because, without it, you are wasting money, and investors will not want to meet.
Pro Tip: Follow these rules of thumb, and you won’t waste money:
- Build an MVP at minimum cost and enter the market as early as possible.
- Create a business model that makes money from day one.
- Market Research – research and talk to your potential customers as quickly as possible; you may even make a few sales, which will return some of the investment.
5. Is there a market for your product? (Critical Reason)
Already mentioned and still, the number one reason for entrepreneurs’ failure is that your solution isn’t needed, and there is no market for your product.
An essential point, but if you have developed a product that helps you, it will not necessarily help the world or humanity. The market reacts differently, so it’s vital to test MVPs on real customers before going full force on a venture.
Henry Ford said that if he had listened to his clientele, they would have asked for a faster horse; that’s true, but even if you do develop a groundbreaking product, you still need to understand if there is a market for it.
I re-emphasize you need to go to market with an MVP as soon as possible to receive feedback from existing clients and start paying back your investment.
Pro tip: contact us and start the Zero21 MVP process to achieve an MVP within six months.
There are no magic solutions, but it is possible to shorten the route to obtain an MVP
Sorry to shatter startup clichés for you:
- You will not have to resign from your regular job.
- You will not have to fight to make ends meet.
- You will not have to break all your savings accounts.
You will also not leave the family, and yes, you will sleep at least 8 hours a night and still reach an MVP within six months.
We at ZERO21 allow you to reach a market-ready MVP within half a year. If you have an idea, if you have a target audience, or even if you do not. In 6 months, you will have an MVP ready to go.
At ZERO21 (or 021), we have developed a unique work methodology, the Zero21 MVP process for entrepreneurs and startups in the early stages. We work closely with you for six months. Working on the most important details for the venture’s success – product / financial/legal / marketing – within 6 months, you will have a product to sell to your target audience. Think of it as an accelerator for MVP, only unlike traditional accelerators, you will not have to relocate to it.
The process includes:
- Research and specification for the product or service you offer. Financial and legal aid until getting an MVP within half a year.
- Design, branding, and development using agile – develop the latest technologies as fast as possible and as best as possible.
- Feedback loop – the most crucial step that is unique to us. You will receive real feedback from your potential customers, and you will be able to improve and optimize the product accordingly. Also, you will be able to sell the product.
Want to hear more? You can contact me or one of our talented staff personal Click here.