LIVING in a tech-driven world, it’s only natural that most start-ups of today are tech companies. However, the failure rate of tech start-ups are by far the worst of any business, factored by numerous causes.
Apart from collaboration and funding issues, tech start-ups are more likely to fail due to not having the right product/service for the market.
While many of the reasons for failure are out of the control of a start-up such as lack of investors or tough competition, the ability to successfully develop a stable product for consumers can be harnessed.
The planning process is the most crucial of all, where the founder needs to find the right tools and services that will be able to accommodate the company’s needs in the long-term, even before the business has started.
According to Harvard Business School professor Clayton Christensen, 95% of new products developed have the tendency to fail as its uses are deemed unneeded. They either did not pass the test of consumer acceptance or could not be scaled up.
So how does one get the product, target market and timing right?
On this, Romanian business coach and consultant for global start-up accelerator Startupbootcamp, Adrian Pica says: “Most (products introduced by start-ups) fail because they are not clear on what issue or problem they are trying to resolve. Some will wrongly address the problem, and others the solution whereas one should know if there is enough desire for a product.”
“Try not to jump into building products but build prototypes to assumptions. If you can’t explain it simply, you probably don’t understand it well enough,” he added.
Prior to the product development stage, Pica suggests that one should develop a simple framework that caters to a focus group.
For instance, if you have something with a million of functions, Pica says, ask yourself what the product can do for the first 10 people.
“I suggest entrepreneurs to not use friends and family as their ‘lab rats’ when trying to validate or determine a product’s feasibility. They will always say the nicest and positive things so as not to offend you and to encourage you,” he explained.
“But strangers will give you a more honest and no-holds-barred feedback.”
Apart from that, some companies might feel the need to spend a lot on marketing when introducing new products. But The Lorry Online Sdn Bhd co-founder and executive director Nadhir Ashafiq feels that staying within budget is always the key to having sustainable products.
“Mismanaging your budget would lead to disaster, especially when you’re running a business-to-business company which offers credit terms,” he said.
“Managing it by creating processes and documentation would solve a lot of eventual headaches. Poor management of cash burn will also lead to disaster,” he added. – Nov 9, 2020
