Saturday November 1, 2014
  • How Startups Can Avoid Failure
    Blog

    idea concept 2   Q.  I’m contemplating starting a business. I understand that most startups fail. Can you tell me why startups typically fail and how I can avoid the pitfalls?

       A.  The short answer is that most new businesses fail because they don’t generate sufficient revenue to sustain themselves. Admittedly, there are other reasons that startups don’t make it, but in our experience, this is the most frequent culprit. To ensure that your business generates enough revenue to succeed, we recommend following these four steps:

       1.      Differentiate your product or service – In his book Competitive Advantage, Michael Porter, a professor at Harvard Business School, said there are only two ways to successfully compete, either your offering must be differentiated from other options or it must be priced below the competition. As a practical matter, startups rarely have the volume necessary to support a low price strategy. Therefore, they must differentiate their offering. Startups must give prospective customers a reason to purchase their product or service rather than those offered by competitors. If you can’t articulate clearly and concisely why someone should buy your offering, our advice is not to launch a business. In our experience, failure to do this is most frequently the reason that startups struggle to generate sufficient revenue.

       2.      Identify your target market segment – Okay, so you know what makes your offering different from others in the market. Unfortunately, that by itself, is insufficient if too few people value the thing that differentiates your product or service. Our silly example is the skunk flavored Popsicle. If you marketed this product, it would be differentiated—nothing else like it on the market. Unfortunately, sales would likely be very low. Few people would be willing to purchase this differentiated product. You must identify a segment of the market that values the things that differentiates your offering and it must be large enough to support your business.

       3.      Decide how to reach your target market segment – Whoever said, “If you build a better mousetrap, the world will beat a path to your door,” was simply wrong. If the world doesn’t know you have a better mousetrap, no one will be knocking on your door. You have got to have a cost effective plan for reaching your target market segment with your marketing message. You need to communicate why your offering is the right choice for them.

       4.      Know how close the sale – Too many people launch a business because they are great widget builders. They forget that they will have to sell the widgets. Understanding what differentiates your offering is paramount. Identifying your target market segment is critical. Reaching your target market segment with your marketing message is a necessity. Yet, even after you have done these three things, in many cases, you’ve still got to close the sale. Be sure you know how you will sell your product or service before launching your business.

    Starting a business is risky and the odds are stacked against you. Most new ventures close the doors because they fail to generate sufficient revenue. Maximize your chance for success by following each of the tips above. As you think through each of them, be brutally honest with yourself. In this case, self-deceit can be deadly. Coming up short on any one of the above action steps can spell disaster for your fledgling enterprise.

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I HIGHLY recommend Polly and Doug. They have wonderful insight to help small business owners prioritize and identify strategies for growth and improvement. Wish I had met them 20 years ago!

Sharon Madere
President
Premiere Pet Products
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Doug and Polly, I want to thank both of you! The past few months have been enlightening and overwhelming all at the same time. Your guidance, direction, wealth of knowledge, and wisdom have exceeded all my expectations. No words could ever completely describe just how amazing of a “dynamic duo” you two really are!

Dawn Beninghove, RN, CCM, CRP, PN
Chief Executive Offer
Companion Extraordinaire Nursing Network, Inc.
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My company brought Polly in as a business consultant resource to provide Professional Skills curriculum to our early and mid-career leaders. It was company leadership that brought her in - it was her success with our associates that continued to bring her back! Using her HR and corporate leadership experience and her ability to connect with people at various levels of the organization, Polly was one of the most effective outside leadership development resources I've come across in my Talent Management years. She was extremely reliable and someone that I could trust to provide solid learning experiences that aligned with our corporate value system and talent development goals.

Scot McCarthy
Director of Workforce Development, CENTRA Health
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My team and I have had the privilege of working with Polly on our business. Polly's keen business insight and savvy is something special. She was honest, direct, and tactful about her observations and recommendations for our team and how to grow our business. It was a pleasure having her help us and I would tell anyone that’s serious about growing their business to call Polly. She’s great!

John OReilly
Managing Partner
Base Camp Realty of Richmond, Inc.
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Doug White took on an unfocused operation (in the financial services sector) and created an efficient, centralized system dedicated to excellence.  He did this not by driving change from the top down, but by helping the entire team see how their part of the process could be improved. Doug then mentored us toward effecting the changes ourselves. He taught us all how to bring our “A game,” and how to take ownership and pride in what we do.

Donna Levin
Vice President of Operations
care.com
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I have known Polly for over ten years. As an HR Manager, I have utilized Polly’s training expertise at my former company and with my current company. Polly exceled at assessing the needs of our management teams and tailoring training programs that resulted in visible positive change. I also know I can count on Polly as a resource on any HR topic or bounce ideas off of her when I need a second opinion. Polly has been a mentor to me and I have always appreciated her willingness to listen and offer valuable advice and expertise.

Leigh McCullar
HR Business Solutions Manager
Sheltering Arms Physical Rehabilitation Center
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I have had the privilege of working with Polly White for several years on a variety of projects. She consistently provides clear direction on how to resolve a wide range of employment-related issues. I look forward to my continued relationship with Polly.

Elizabeth Wilkins
Business Manager
Manorhouse Management, Inc.
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