Why Do Most Small Businesses Fail?
And how to avoid it?
There are many reasons why most businesses fail, reasons such as poor management, lack of enough resources, inadequate marketing plan. But after working with and studying dozens of startups and companies, I think that a lack of understanding about market and customer needs is the main reason they fail.
When I worked as one of those startups members, we didn’t know about the market and struggled to understand the users; we didn’t know how to make our business model, improved our product, and even persuaded our users came back to our application again.
In the previous lesson, we talked about the idea evaluation process; we also learned, we have two different categories of ideas:
1) Solve a new problem without a proper solution.
2) Making changes and modifications in existing structures.
Moreover, we talked about how to choose the best idea from a vast number of new ideas.
Idea Evaluation Series:
1) 3 Quick and Easy Steps to Validate Your Startup Idea | Idea Evaluation
If you prefer to watch instead of reading, click the link below.
Now we are talking about, if your idea is related to the second category, how to improve the success rate ( the second category: Making changes and modifications in existing structures.)
for this reason, first try to answer these four questions:
1)What is the main problem that the current solutions are not able to solve?
(for example, Are they expensive? Are they difficult to use and need some extra training? Not yet up to date with the latest technology?)
2) Who are my main competitors?
List 4 of your main competitors that you think they have the most overlap with your services and write down the strengths of each.
3) Why should people abandon their past solutions and choose mine? (what is the primary advantage of my offering: for example, cost reduction, ease of use)
I listed essential criteria for creating competitive advantages, so try to give the below items a score from 1 to 5 according to your confidence.
Nevertheless, in the market research section, we’ll talk about it in more detail.
Lower price: I can offer a product or service at a lower price than my competitors
Higher access: My product or service can use anywhere and anytime
Ease of use: My product interface, designed to use even by my grandparents, quickly.
Better design: The design and packaging of my new product is better than competitors and suitable for consumer needs.
Less time to learn: The user will spend less time to learn than existing products.
The sum of the above should be at least 15, to your idea, find a better market than the competitors.
4) What is the main competitive advantage of my product?
By following those steps, you will most likely choose your idea from a vast number of ideas.
for choosing the best idea, I list other essential factors in the below list:
Do’s:
.Learn more about your industry.
.Know your costumers.
.Plan accurately.
Don’ts:
.Avoid choosing an idea that does not have a large market.(in the next lesson, we will dive into it)
.Avoid choosing an idea that you can’t describe easily.
.Avoid choosing an idea that does not suit your taste and skills.
.Avoid choosing an idea because everyone is looking for it.
In this lesson, we talk about the main reasons for business failure. It’s the end of the idea evaluation series.
In the next lesson, we’ll discuss market research in more detail and start from the marketing foundation; I recommend you don’t miss it!
