Why Startups fail?
There are hundreds of reasons why companies, especially startups, fail. It could be the economy in the country, exchange rate when buying products, new competition, bigger competition, new fads and products. We have seen them all and they do happen. Majority of the time those are just excuses or misdirection behind one ugly truth. If you are doing the basic’s work with your company, there’s still one HUGE risk, the customer risk. That’s right, market risk, tech risk, and competition risk are only a risk if you are missing a key ingredient in your company, the customer.
According to a report by CBinsights where they did a postmortem analysis on 101 startups enlisting the 20 top reasons why startups fail, most companies really fail from a lack of customers,to put it in better words, nobody wants to buy what they are selling, or at least not enough people. This is where Design Thinking comes into play. The old tired model of build first, sell later will only cost your company money, time and effort, to discover at the end of your story, you did that for nothing. You should come to the new way of thinking, the bright side of innovation, the Design Thinking way: Sell First, Build later.
To avoid failing and significantly increase your chances at survival you need to adapt and consider three things before you even begin spending time and money:
- Human Desirability: What do people want or need? How bad do they want it, is your idea aligned with these wants and needst?
- Business Viability: Is there a market big enough? Is there too much competition? Are the costs related to your service or product comparable to the market opportunity for price and volume?
- Technological Feasibility: You have realized that people want it, and that there is a market and is profitable. Now the most important question: Can it be built? Will it work in today’s environment?
These are just some of the questions that you need to map out when you begin building a product or company and there are many new ways to do it without going bankrupt on day one. Kickstarter is a crowdsourcing platform that can work wonders to begin playing with Design Thinking, by uploading your idea and product into the platform you can see how many people are interested, how much they are willing to pledge for what you are offering, and eventually will fund your project if It complies with the very basics of Human Desirability and Business Viability. You need to be sure about the Technological Feasibility to be able to deliver the final product.
If you want to learn more about Design Thinking and the processes and tools that will help you master and apply it to your Startup you can subscribe to our 4 week online bootcamp starting June 10th here.
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