In the run up to the local version of Shark Tank on Maltese TV it comes to no surprise that ‘Start Ups’ are the predominant topic in the local business fora discussions. The most prevalent aspect of the discussion is access to finance and the challenges related to it. I prefer focusing on the idea validation, the go-to market, the mentoring of the founders (to have the right mindset) and anything in between.
Having years of experience with start-ups, in my opinion following are the more salient aspects.
Let me start with tackling the access to finance issue to get it over and done with – if your idea is good you will surely find financial help. Contrary to public impression and possibly contrary to statistics too, In Malta liquidity and capital is abundant, and people willing to invest are plenty too. But people with business acumen are savvy and won’t risk their money easily. If you have been pitching your idea with competent people and you haven’t found the support yet, well, it may be time to re-think your idea.
When you are coming up with your idea – don’t think inwards but (always!) think outwards. Ask yourself the question – ‘How will this idea make the life of the user better?’ That is the one and only reason why end users will purchase or use your product/s. You need to address a real-life need.
So, let’s start by dissecting the process.
OK, the first distinction that must be made is whether the product, service or whatever you are planning to do is targeted at the end consumer or the corporate/business user. The first lesson to learn is not about ourselves but understanding the fundamental difference in the psychology and purchase process of the end user.
Let’s get over with the easier one – the corporate user or as commonly known B2B products. Whatever that product is, may be tangible, may be a software or an app, keep in mind that in the corporate world people only switch suppliers for one of TWO reasons:
- If your products will make them make money, either by direct contribution or by some form saving, or
- If your products, albeit a bit more expensive, will help them save a lot of time.
Now, let’s shift our attention to the end user (that is B2C), and we can use a few familiar real-life stories in order to help our thinking process.
First of all and most importantly, the same two reasons mentioned above, regarding the B2B sectors, apply also to the end consumer. That is why we all have a personal computer, use email and Google today and practically nobody has a pager any more. The invention of email made life so simple. Subsequently if a product or service can address both (money and time) better still. Isn’t that the secret behind Amazon? It serves both – spares you time of running around to look for your shopping items and at the same time you may find good deals. But you may lightly remark … “but there will always be people who prefer the physical and personal retail experience”. Correct, and this leads us to the other element that plays a vital role in consumer business – experience.
In consumer business, each demographic segment may be targeted by offering an experience that the user may feel relevant or important to him. So, if your start-up is a consumer product, service, software or app you need to think deeply about the experience it will offer to the user. Think of Facebook, Instagram or Tinder – they are definitely not a ‘product’ as such. Whether it is to gossip around, play the philosopher or finding your perfect match, they are tools that provide an experience. They are experiential in nature. They touch upon human emotions and satisfy needs.
Effectively, as a Start-up entrepreneur your main question must be “what’s in it for the user I am targeting?”. It is surprising how often start-ups focus on WHAT they want to create but do not give the deserved attention to WHO they are targeting and what is the benefit or experience that user will be getting. Do proper test runs and be prepared to depart from your original idea. Never forget that at the startup stage you cannot satisfy everyone, so it is better to focus and come up with a good product than try to please everyone and come up with something mediocre.
I can tell you from direct experience that it is very rare that a product reaches the market exactly as the inventor thought it would. When a product or service is well tested, keeping in mind the questions discussed above, you will have the time to make the necessary changes and address the shortcomings. A concept which is widely used is that of creating an Minimum Viable Product which is either thrown-away (on the lines of if you have to fail, fail fast) or refined to an iterative process which takes into account market feedback and consumer behaviours and reactions (towards the product or service!).
In conclusion, never go to market, prior to thoroughly testing your product with targeted focus groups. In our next article about StartUps we will speak about elements such as product repurposing, second life of a company, mentorship and the underlying purpose of founders behind the most successful startups.
Get in touch with us, to discuss how we can be of help to your startup or startup conceptual idea.
