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Beat The Odds Of Failure

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Publish date: Sat, 13 Jul 2019, 05:18 PM
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Beat The Odds Of Failure

3 Statistically, 90% of new businesses and products fail soon after they’re launched. Take action now and your business won’t be a statistic.

There’s a lot you can control to avoid being one of the casualties.

That’s all from Alberto Savoia, author of “The Right It: Why So Many Ideas Fail and How to Make Sure Yours Succeed.” Savoia was Google’sGOOGL first director of engineering and is a serial entrepreneur.

Tips on what you can do to take action and beat the failure odds:

› Validate the need. Most new ideas that fail do so despite competent — and often exceptional — execution, Savoia says.

The actual reason they fail is because “the market is simply not that interested in them; regardless of how well they are designed, engineered or marketed,” he said.

Make sure you are “building the right ‘it’ before you build ‘it’ right,” Savoia said. When researching viability, he says the data is collected firsthand from representative samples of your expected target market.

› Test the waters. When applicable, the best way to validate that your target market is really interested in your product, Savoia says, is to state “if you buy it, we will build it.” Do this as opposed to asking “if we build it, will you buy it?”

“The most reliable form of market data is market dollars,” Savoia said. “There is no better way to validate that a new idea is worth pursuing than a bunch of checks from customers who are so eager to get their hands on your product that they are willing to put down some money ahead of time.”

You can take a page from Elon Musk’s playbook. He requires aspiring TeslaTSLA owners to put down substantial deposits to preorder one of the company’s new models — and then wait a couple of years to take delivery.

“Or follow the lead of the thousands of entrepreneurs and innovators that use Kickstarter to fund their projects,” Savoia said. Kickstarter is an online forum that allows people to “back” ideas by pledging funds.

› Profit right away. If you’re producing a product including packaging and delivery for a fifth of the ultimate retail price, you’re in good shape, Jules Pieri says. She’s the author of “How We Make Stuff Now: Turn Ideas into Products That Build Successful Businesses.”

Pieri is co-founder of The Grommet, a website which has launched more than 3,000 consumer products since 2008.

“This won’t be true when you are at an early, low scale of production, but make sure you can see a path to that cost structure at volume,” she said. “Too many founders do not anticipate things like retailer margins and distribution costs.”

› Network. Steve Jobs made it a lifelong personal practice to reach out to people with expertise beyond his own whenever he started something new, Pieri says.

Since only 10% of Grommet users have any consumer product production experience, they have to fill in a lot of gaps, she says. “They do that most effectively through building a brand-new and continually growing network.”

› Form strategic partnerships. A huge amount of trust is established when a lesser-known startup works closely with recognizable brand names, says Kevin Yu, CEO and founder of SideChef, a home cooking platform and recipe app.

He advises creating a chart of potential partners and matching your offerings to a wish list of those partners’ competencies.

SideChef has created alliances with Amazon’sAMZN Alexa devices and General ElectricGE appliances.

“We convinced our partners how customers would win from such an experience, and then worked together to bring these experiences to life,” Yu said.

› Use your speed advantage. A startup can often build an entire prototype or proof of concept in the same amount of time a large company would take just to scope out the project and allocate resources to it, Yu points out.

“Being a startup means running at the front of the pack for innovation and risk, in order to realize and build value before anyone else,” he said. “You’ll be able to take advantage of every startup’s greatest inherent advantage as a first-mover.”

 

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