Tech or not, a lot of new firms fail. In our sector, we commend entrepreneurs for their attempts and recognize that a day’s setback can provide valuable insights for future triumphs.
We also know that, despite the fact that many us with experience in startup successes and failures dismiss ideas, saying things like “This will never work” (as many people did with Uber) or “You can’t earn any money in this business” (as many said with WhatsApp or Dropbox), some entrepreneurs do amazing things that we never would have imagined.
The tech startup sector is driven by trying outlandish new ideas, or even ordinary things done in novel ways with exceptional quality and inventiveness.
1. Size Of The Market
It’s acceptable to focus on a tiny market, and you can possibly develop a specialized company that will be very beneficial to you personally. But it’s unlikely that this will be a business that can be funded by venture capital, which is completely fine.
Therefore, if you decide to pursue a niche market, you will need to earn modest sums of money, maintain extremely low costs, and reach positive a cash flow as soon as feasible.
You will meet your demise if you attempt to grow rapidly or accrue large losses with long-term payback paid marketing campaigns. It is precisely this kind of long-term payback marketing that calls for venture financing.
You should concentrate on where big money is being spent and/or will be spent if your objective is to create a scalable startup.
There are countless methods to investigate the size of the market in your industry, and to determine how much of it is within your control, you’ll probably need to make some crude approximations.
2. Structure Of The Market
Not only does market size matter, but “market structure” does as well. Are you entering a market that is “fragmented,” meaning that no one controls the industry, or are you entering a field (like the music industry) where a few extremely large incumbents manage much of the distribution?
Although I can inform you that separate markets are simpler to disrupt, you can get in either way, your approach needs to be extremely different.
3. Strengths And Weaknesses
You should also be aware of the incumbents’ advantages and disadvantages as well as how they will probably react to your accomplishments.
For example, if you work in the airline ticket reselling business, you should consider the influence that company might or might not have on you.
When a business is first starting out, its competitors usually don’t react because you’re too little and unimportant.
They become interested in you as you develop and will probably examine your business plan and prospects. They’ll react if you begin to walk in your success stride.
4. Microeconomics
Astute investors give careful consideration to what is known as “unit economics,” or the economics of one service provider. To let that customer know about our goods or service, we must market them to them.
PR, SEO, influencer distribution, and other types of “unpaid” marketing are examples of this type of marketing. However, these all possess a hidden cost in the end.
PR is a true expense since it takes up team time and energy that could be used elsewhere. SEO needs a content strategy, relevancy, inbound links, keyword tactics, and other factors. It doesn’t just happen. Influencers might pitch in once or again, but nothing comes for free in the end.
5. Competition
You must research your rivals if you hope to succeed. It is unlikely that you will enter a market by yourself. It’s important to be really honest with yourself and consider how your offering will surpass the competitors in the market in some way.
A wedge is required. You might target a particular underserved niche (consider Bevel by Walker & Co.), be more feature-rich, cheaper, easier to use, or just more adept at sales and marketing than the competitors with a comparable, or even worse, product. It is incorrect, however, to ignore other market developments.
Think, Plan, study, Test. Verify the information. Verify firmly held beliefs. As you learn more, make adjustments based on your intended sources of differentiation.
See what you may find by reading a number of founders’ “what went wrong” eulogies. However, be aware that the perspective they use to provide you with the solution is biased and possesses flaws.
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