Reading this article will help you save hundreds of thousands of dollars and years of blind development. Sounds like clickbait? Perhaps. But why not wrap genuinely helpful content in a catchy package?
Often, IT and web3 startups are launched by developers who are great at coding but, unfortunately, lack experience and knowledge in business processes, strategic planning, and marketing. In my opinion, this is one of the key reasons for the infamous statistic that over 50% of startups don’t make it past five years.
Ideally, when you, as the founder of a future project, are looking for like-minded individuals for a joint product launch, your first step should be to find a partner with deep knowledge in business development, marketing, and sales. This person will significantly strengthen your management team and take on business processes. Meanwhile, you can continue focusing on development. Such synergy allows you to build a product without being torn between what you love and what you are not quite versed in.
In this article, I’ll share with you a basic checklist for launching a new product. You’ll learn what things to consider at the start and how not to spend several years walking in the opposite direction of success.
Before we move on, I suggest we connect on LinkedIn. I’m confident it will be incredibly beneficial for both of us. Click here and then come back to the article.
So, with the formalities out of the way – let’s get to the exciting part.
Before starting a project, conduct research
The better you prepare your “homework” – the more time you devote to analyzing the target niche and how your product will fit into it – the higher your chances of discarding irrelevant ideas and entering the market with something that your consumer truly needs.
Trust my experience, it’s better to make 10 pivots (changing the course of startup development) during the analysis and hypothesis evaluation stage than after a good portion of investor funds have been spent.
The Secret of Success
At the idea evaluation stage, your best ally is critical thinking. Just because you’ve come up with something new and view it as a product that will change the world tomorrow, it might merely be a manifestation of emotions and self-pride, not an objective evaluation.
I know this clearly from my own experience: if a circle of intelligent people questions the idea and offers constructive criticism, it’s better to listen than to defend yourself like the last of the three hundred Spartans.
What We Analyze
1. Presence of similar products in the market (in other words, competition)
Remember: The absence of competition is more likely a red flag than a unique opportunity. Why? Because there are eight billion people in the world, all looking for ways to change it. And if such an idea doesn’t exist yet, there are two reasons: either you’ve found the Holy Grail, which happens in 0.0001% of cases, or your idea is not yet needed in the market. The choice is yours, but I tend to lean towards the latter option. The ideal scenario is a niche where there are two to four strong players who have learned how to make money. They continue to grow and improve the product. Apart from them, there are dozens of other companies aspiring to catch up with the leaders. The larger the market, the more competitors you can afford. If there’s an infinite number of them – keep looking. A “red ocean” (a highly competitive market) is not the best option to start your entrepreneurial journey. Important! Beware of monopoly.
2. Evaluate the market volume – the number of potential customers
It might happen that even after securing a large slice, you still don’t earn enough for the business to make sense. If the market is large, choose a segment to start with. Maybe not all of us should immediately target the U.S. There are plenty of other interesting markets.
3. Look for niches where you can scale
Find areas where you can transform the product, enter new markets, and launch new ancillary products. Look for niches where competitors’ products are in the active stage of development, not living out their last days.
4. Assess your financial capabilities
There are products that require a few thousand to start, and there are those where even a million won’t be enough. Try to plan the necessary budget for a year ahead, then double it. Next, take the amount of money you’ve allocated for marketing and multiply it by four. Look at the result and soberly assess whether you are ready for such expenses, whether you will attract enough capital, or whether you will achieve sufficient traction for the next round of investment before the previous funds run out.
5. Think about how you will earn revenue right from the start.
Build the first economic model of your business: identify what your users will pay for, how much, and how often. Then, think through three or four different monetization strategies. Of course, your model will be adjusted once you enter the market. But without understanding how to generate profit, there’s no sense in proceeding further.
6. Create a list of all who would be potentially interested in your product
Remember, there are always more than one target audience, and many are not apparent. Some may bring in more money, while others could prove unprofitable. Try to estimate their size.
7. After making a list of target audiences, draw another column
Title it “Pains” and list beside each audience what exactly would motivate a potential customer to use your product, what problems they have, and how your product helps solve them. There are a few crucial rules here: if your product is “nice to have,” but not really a necessity, it won’t sell; if there are already analogs that solve the consumer’s problems in a way they are accustomed to, and you’re offering something revolutionary, remember: people are very lazy. They need to put in titanic efforts to discard something familiar. A simple promise that your product is better won’t be enough of a stimulus.
8. Evaluate how you’ll compete with other market players
To do this, first analyze their activities, and identify their strengths, and weaknesses. Assess your potential, and understand where you’ll be inferior and where, on the contrary, you could be better. Maybe you have a lower margin, better marketing, technical advantages of the product, etc.
9. Who said that customer development should only be done when the product is ready when there’s at least an MVP and the first users?
Wouldn’t it be better to do it when the project only exists on paper, when there’s a hypothesis that should change the world and all that remains is to understand if the world is ready for such changes? How to do customer development without having a product – you might ask me.
Here’s a life hack. Imagine that the product already exists. Then:
- Prepare a compelling description that includes positioning, advantages, and areas of application.
- Think about the price. It’s better to have options, so prepare several packages that include different features.
- Create a presentation where you mention everything crucial related to your product.
- Identify who your potential customer is.
- Then go and try to sell it to them.
You might ask: “Sell what? Air?” NO! Sell them the idea, sell as if the product already exists. Only this approach will allow you to hear real feedback from your target audience and will enable you to start making adjustments to the product at the planning stage.
Why not gather the old good focus group and give them a list of 20 questions related to your product instead? Are you sure that people respond honestly? Or, how effectively did you formulate the questions to ensure that the answers would be adequate to evaluate the business prospects? It’s a rhetorical question, and I leave it to you.
So, what do we get? You went to a meeting. You’ve already started validating the hypothesis; you learned the actual feedback of the target customer, noted the points where the product does not meet expectations, and maybe you even made a preliminary sale. Sounds cool, right? And all of this without a single hour spent on development.
Your next step is to scale market testing. Don’t just talk to one or two people – engage with dozens of potential customers.
Here’s the formula for the correct project launch:
“Create a paper prototype – test the niche – create a dozen more prototypes – test again – then build an MVP – test again – and only then proceed to extensive development – continually testing, of course 🙂”
Remember, such strategic preparation will help you save hundreds of thousands of dollars, preserve your mental health, and assist your product in becoming commercially successful.