According to the Startup Barometer study, in 2020, about 30% of startups were on the verge of collapse. But it’s not just about the pandemic and the crisis, but also about critical errors made during the launch. The main ones are analyzed by experts from the BMB Agency.
Startups, especially technological startups, often can function without an office and a linear organizational structure with a responsive management. Their employees solve all operating problems using task trackers and a remote desktop: have meetings in Zoom, communicate in Slack, set tasks in Jira and Trello.
The transition to flexible management methodologies (the same Agile and Scrum approaches) allows them to reduce recruitment costs and increase the efficiency of the work. But all this is not enough. If you want your startup to become a unique “unicorn”, it is important to avoid a number of mistakes during the launch process.
Let’s take a closer look at such possible mistakes.
1.Don’t focus too much on the idea
The startup founders are betting on an original idea, ignoring the service-centric business system. As a result, they forget about rational aspects that will lead to a profit: analysis of the market and the competitive environment, development of a portrait of the target audience and the selection of a suitable location for an offline point sales, risk analysis and scenario modeling – only after analyzing all these points, it will be possible to create a unique selling proposition that will bring real benefits.
For example, you are launching a food tech startup like dark kitchen (“dark kitchen” means that it works only for delivery). What is important? Firstly, take into account the preferences of the audience; secondly, monitor the quality of “raw” products and prepared products; then, control the sanitary conditions of warehouses and the speed of food delivery directly to the address.
The original idea in this case is just an application to the basic operational processes. This is well illustrated by grocery and ready-to-eat food delivery services such as: Grow Food, Level Kitchen, Fresh Lab, nowadays VkusVill joined this list with its VkusVill Cooking service. They offer personalized options (menu designer, vegetarian food, etc.) with good service (delivery timing, nutritionist’s advice, etc.) and fresh products (delivery is carried out daily or every two days).
What to do? Conduct a scenario analysis: choose the most suitable trading platform for your product, analyze the market and make your project keep up to current trends.
2.Bet on theory without practice
Focus on the user is a must have in the development of the project, but excessive obsession with theory cramps the practical implementation of your idea. This problem is common for edtech platforms. Their founders are often perfectionists: they refine their online projects day and night, keeping real users away. Of course, you need to know your audience, study the Customer Journey Map to create a quality service. However, launching advertising on a product prototype will only speed up its completion. If you see that you have an advantage over your competitors, then “freezing” it at the preparation stage is not a crime. Use all the opportunities to launch and scale the project: from self-promotion through Internet marketing to attracting investments and its following development under the patronage of a large corporation or investment holding.
In 2010, Hayk Hayrapetyan and Alexander Nikitin founded the School of Programming, which was later renamed GeekBrains.
Entrepreneurs caught the trend of online education development, but focused on training IT specialists and they were right. In 2016 Mail.ru Group has already bought a 51% stake of the platform, and in 2020 they bought the remaining part of 49%. As a result, the holding became the sole owner of one of the most successful projects on the online learning market — in terms of revenue as of July 2021, it occupies the 4th position among Russian learning platforms.
What does GeekBrains teach?
There is no single correct tactic for promoting your startup: you have an idea – realize it! If there is no idea yet, then use the good old-fashioned tips:
• choose a direction (you can use the Startup Barometer study for this);
• study competitors to find promising niches;
• decide what is your target audience and promotion channels;
• create a prototype and set up advertising for it;
• finalize the product based on feedback, make a presentation of your project and start looking for investments.
What if it’s scary?
Use existing examples and patterns for promoting a project on a new market.
For example, if you develop an IT startup, then it will not be excessive to turn to the advisors’ assistance. The experts can assess the relevance of your idea and offer development options: participation in acceleration programs (IIDF, Philtech, GenerationS, etc.), entering marketplaces (for example, VentureFusion), selling a business idea to a large company (Yandex, Mail.ru Group, etc.), partnerships with inter-industry market players (Skyeng has a good offer for partners), which have already “stuffed bumps” and have impressive customer base.
4.Information barrier as a trigger for market underestimation
Underestimating the market is a two-sided mistake. It affects both the founders of startups from large cities and from the regions, who incorrectly assess average check of off-site markets. If your product was created in Tokyo, this does not mean that it will be relevant in New York at the same price. If we talk about foreign markets, we should mention that 20 years ago they were inaccessible for an entrepreneur due to cultural and linguistic differences. However, the influence of globalization has changed the situation but there are still some blind spots. The Japanese market and the CIS market differ greatly from US and European markets on the matter of a price range. For example, there are fewer clients in Scandinavia, but they pay for services on average up to ten times more than Japan, and one such client for our northern neighbors makes a quarter or semi-annual volume of orders!
How to overcome the information barrier?
Create “information bridges”: analyze the situation on regional and foreign markets, where you see a potential platform for the development of your product.
In particular, make a detailed research of:
• market size;
possible legal barriers before launching the product on a new market;
• local business environment;
• infrastructure of the city/country;
• competitiveness;
• promotion channels;
• local traditions and preferences that can significantly affect sales and revenue.
Always Remember Your Goals!
5.Put excessive trust in acquaintances’ advice
One of the key mistakes that occurs in the process of creating “information bridges” is the tendency to trust people you know when assessing the market situation. If you make decisions based on the advice of your inner circle, it will be reflected in the successful adaptation of the project on a new market.
A good example is when an entrepreneur is integrated into the logistics system of large retail chains in China. For example, in China it is difficult to open a company without an affiliated representative – who is named as a country manager who will help you get comfortable and will make sure that you keep within the laws of the country (otherwise many restrictions could be imposed on the project)
What to do?
If you want to promote your product on a foreign market, hire a country manager who will be responsible for the adaptation of the product to local laws. If you plan to cover several foreign markets, then the best solution will be a centralized product promotion system – a global office with the head of the development department, who will supervise country managers from different countries.
6.Illusory expectations of instant success
If you want to introduce your startup abroad, it is important to bindingly assess your capabilities. On a third-party market, you will need a lot more resources to grow. For example, to estimate the promoting costs of a project in one of the European countries, you will have to multiply your company’s income during the crisis year at the federal level by ten – this way you will get your “European” budget for six months (maximum year).
How to avoid mistakes?
The international market requires costs, so indicate the circle of countries in which you want to develop: if you are going to cover the whole of Europe or Asia, get ready for big spending. Set a budget for each country you choose.
Remember, any third-party market is a platform with its own rules closed to foreigners, so it is important to work with local experts. For example, in the Arab countries there is an additional territorial division of the market: every curator is responsible for the entrusted territory and it is impossible to do business there without an intercultural advisor.
