No matter what niche you are entering, success is possible with the right strategy.
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Statistics suggest that most startups will fail, with some estimates reaching as high as 90% in the United Staes. As an entrepreneur, that stat can be frightening, particularly when entering a highly competitive market.
Today, the market is highly tech-driven, with the world’s most valuable brands such as Apple, Amazon, Microsoft and Google topping the list. Yet while saturated, opportunities are still growing as more industries embrace digitization and automation. The current crisis has in many respects reduced barriers to digitization, and more companies actively turn to new IT solutions in response to changing patterns of employment and consumer behaviors. A competitive market, however, shouldn’t put you off from entry.
With that in mind, here are the top five things to consider when launching a startup in a highly saturated and competitive environment.
1. Be disruptive
The most successful tech startups on the market are disruptors. Netflix is an early example of a disruptor, one that accompanied the death of the video store and replaced the traditional TV programming model. Amazon is also an example as a model that essentially replaced department and storefront stores.
What you will find at the heart of all successful disruptive startups is that they focus on customer needs. Disruption, as such, comes at all scales, and your business doesn’t need to be the next Amazon to be disruptive. Take Happy Socks as an example. The brand became a disruptor by simply designing a new type of colorful patterned socks promoted through creative sales displays, celebrity collaborations and a solid social media presence.
2. Develop customer-driven research
This leads us to our next point: the importance of researching your market, competitors and their customers. But what about gathering insights from the non-customers that your competitors have been unable to convert? Suppose you are looking to establish a new market, rather than simply stealing existing customers from your competitors. In that case, insights on the pain points and barriers to entry among non-customers can be an invaluable resource to help you differentiate yourself from others in the same space and carve out a niche in the market. These might range from financial pain points to processes or support. Do not make the mistake of only researching the existing customer base of your competitors. From qualitative to quantitative insights, these will be key to helping you deliver on a disruptive product and business model.
3. Validate your product in the early development cycle
While understanding customer pain points is key to your product development, one of the most effective ways to gather feedback on your product for your target market is to launch a minimal viable product (MVP). An MVP is a tool that can be used as part of a process to test your assumptions, preventing you from going back to the drawing board over and over. With many startups failing based on a lack of market need, an MVP allows you to assess the appetite for your product and then fine-tune your offering.
For example, you may focus on integrating real-time chat for customer integration when there is no appetite for this feature among your target audience. Or you may develop an app when your customer prefers a desktop solution. What is clear is that none of this will be evident to you until you get your product in the hands of your end user. Airbnb, Amazon, Buffer and DropBox are examples of successful companies that started by bringing an MVP to the market.
4. Find your purpose
With consumers more purpose-driven than ever before, you must determine your values and purpose and communicate this through your marketing activities. While you may differentiate your product from competitors based on your price point or product quality, consumers — particularly millennials — will often make purchasing decisions based on the brand they feel more affinity to.
More and more startups are being born out of purpose. One of the most successful value-driven companies includes Tesla, which aims to replace traditional diesel cars with electric cars. Other examples include Trine, a company enabling people to invest in solar energy projects, and Handiscover, a travel booking site accommodating individuals with special needs and disabilities.
5. Be sure to measure your success
Having clear objectives and knowing how to measure your success against your competitors will be essential in understanding whether you are on the path to success. Moreover, measuring your success will be critical in convincing your investors and prospective investors that your business is credible. From your customer acquisition cost (how much you pay to acquire a new customer) to your burn rate (how much capital you are spending), always have one eye on your metrics. This is essential to managing the financial health of your company and, thereby, operating a successful company.