Success stories like Facebook have inspired thousands, if not millions to be entrepreneurs. Huge sums of money, fancy parties, and global recognition is certainly alluring, but many fail to understand the hard work needed to reach that stage.
As our CTO Hiraash mentioned in his blog post, although start-ups might look sexy, running an actual startup is really hard. This is probably why only around 10% of startups become successful. Around 60% of them go bankrupt or just about recover the invested capital.
So before you quit your day job and start a business, here are a few things to consider.
Do People Actually Need This?
The main reason why most startups fail is there is no market need for their product or service. What you think is a great idea for a product, might not have a market need at all. This is why it’s important to validate your idea as early as possible.
If you really want to, there are hundreds of amazing business ideas which you can utilize right away. Coming up with ideas is actually easy, it’s the execution that makes the difference.
You don’t need to actually come up with a brand new idea either. You can take an existing idea that already has a market need and work on a superior offering of that same idea.
Whatever the method you use, the most important thing you need to figure out is do people actually need it.
Have the Cash to Sustain You?
The second reason why startups fail is they run out of money. It could be your savings, it could be money you raised via the family or it could be money you got from investors. But as soon as the money runs out, you have little chance of making your idea a reality.
So, although it’s tempting to quit your 9-5 job and launch your entrepreneurial career, make sure you have enough money to sustain you for at least 3-6 months.
The best case scenario is you work on something as a side project, start making money out of it and then switch to it full time. But as I mentioned earlier, taking and idea to a product that makes money is extremely hard.
Another good way to raise some cash is to win a startup competition. Winners of startup contests get a lot more than money. They get cheap access to development tools, cloud storage, marketing tools and a host of other benefits on top of cash. All of this will smoothen your product launch process.
Haven’t won anything? Then have a look at our list that highlights tools to launch your startup.
Do You Have the Right Team?
If your current team consists of your friends, neighbors and family members, then you might have a problem. The third most significant reason for failed startups is not having the right team.
Of course, finding talented people to join your startup is not an easy task. This is especially true if you have nothing tangible to show your potential team members. However, startups are sexy and people actually want to build great things. So if you have a solid idea then you should be able to find quality talent.
Any Key Things I’ve Missed About Launching a Startup?
I believe I’ve covered the 3 most important things you need to create a business. Of course, there are hundreds of other reasons, but if you fail to cover these three you probably won’t get to the stage where you will have different challenges.
Nothing has been missed but honestly there is no bigger one to me than having the right people. I tried to start my business without having the right people in place and it cost me about 8 months just to get it off the ground. Luckily we are headed in the right direction but I blew through quite a bit of money when I had the wrong people!
I’d like to add one more:
Can you reach the people who need your product?
There are many stories of products launched that failed because nobody heard about the product. But, there are few stories of websites with huge traffic that weren’t worth quite a lot of money at some point.
So many entrepreneurs put their product idea ahead of getting their audience. But here’s the thing–what happens if you start out trying to find the right audience instead of trying to find the right product?
Answer: you are much more likely to succeed and even better, you can find your audience without quitting your Day Job which makes you much less likely to run out of money.
The thing is, finding an audience is a learning process. You catalog your ideas for audiences. Perhaps some are driven by your product ideas. Others are driven by your passions, interests, and skills.
Catalog all of that and start searching the web. Where do audiences with the same interests hang out? Get an idea of your potential market size by looking at audience sizes.
Suppose you find 15 Facebook Groups that talk about a topic. Add up how many members they have. Next, what about Quora questions? What about YouTube? Are the LinkedIn Groups? Online Forums?
Those are the water coolers where each audience goes to talk about the topic. Add up estimates of the traffic or members for all of that and catalog the links in a spreadsheet.
Now you have a way to compare relative audience sizes so you can decide which one makes the most sense to go after.
Next, create a website and start writing about the topic. Can you attract people to come over from the water coolers to join the particular Tribe that is your weekly email newsletter?
If you can, youv’e proven you speak their langauge and understand what they’re interested in.
Do this for 6 months to a year before you quit your Day Job. Wait until you can reliably predict your email list growth and can see when you will have enough to be worth selling to.
You’ve just eliminated huge risks from your business by doing it this way!
Two articles from my blog worth digging into if you like this approach are:
Blueprint for Growing Traffic Each Stage of a Website’s Life:
http://bobwarfield.com/blueprint-growing-traffic-stage-websites-life/
Start with an Audience Not a Product If You Want to Win:
http://bobwarfield.com/start-audience-not-product-want-win/