Did you know that most entrepreneurs fail because they create a product that no one wants?
That’s right. They create something that they thought was a great idea but unfortunately people didn’t want to buy it…
This problem is bigger than people think
As quoted by this Forbes article by Neil Patel, 9 out of 10 start-ups fail.
According to the source of the data, 42% make a product that there is no market need for.
In reality, this figure is massively underreported. In the article that quotes the 42% figure, many of the ‘other reasons’ for failure are really just that same problem over and over again. Look at these ‘other reasons’ quoted in the article:
- Ran Out of Cash – 29%
- Poor Product – 17%
- Need/Lack Business Model – 17%
- Poor Marketing – 14%
- Ignore Customers – 14%
- Product Mis-Timed – 13%
- Pivot gone bad – 10%
- No Financing/Investor Interest – 8%
- Burn Out – 8%
- Failure to Pivot – 7%
These all are likely to relate to the same problem!
For example, if the start-up ‘ran out of cash’, it means it wasn’t able to turn demand in the product into cash. Why? Most often because there isn’t enough market need.
If the start-up says it failed due to ‘poor Marketing’ or ‘Product mis-timed’, what they really mean is that they were unable to get customers to buy the product… meaning there was probably an issue with the perceived value potential customers saw in the product, because the product didn’t fit a real market need.
In fact, in most of the cases above, it’s likely that the entrepreneurs were creating a product that there wasn’t a big enough unmet need for… so people weren’t willing to pay for it. (Hence they burned out, or couldn’t get financing, or failed to pivot or whatever).
I’d argue that more than 80% of entrepreneurs create a product that doesn’t have sufficient market appeal
Based on my experience of working with many parentpreneurs in a variety of industries, I see the same thing over and over: entrepreneurs working for months and months without any evidence from potential customers that there is real demand for their product.
So why do so many people make this mistake? And why do people keep making the same mistake over and over again? Why on earth do they create a product that no one wants!? (I’ve done this too!)
Here are the 3 reasons that I see most often…
1. They think they have a ‘killer idea’!
Once an entrepreneur has that ‘killer idea’, they become so emotionally attached to it that they will be very reluctant to adapt it or let it go. Rather than checking that there is a real market demand first, they go storming ahead, spending months developing their website, branding, and product.
What they should be doing first is making sure there are some people who are willing to pay for the product, based on how it is described.
How to avoid this trap: Think of yourself as a scientist who needs to test whether your startup is really a good idea and how it could change, (rather than an artist who doesn’t care what others think).
2. They spend lots of time getting carried away ‘building the business’
Are you spending your time on your business or ‘busy-ness’?
As an entrepreneur you have to perform a lot of roles, from CEO to admin assistant, from Salesperson to Legal team. Working in a start-up can feel exhilarating as you switch between various tasks and situations, using your genius to build something out of nothing.
Unfortunately you can end up very, very busy. So busy that you lose sight of what your real goal should be right now, and the specific steps you need to take to get there.
I see this every week. Even the parentpreneurs that go through my accelerator programs occasionally make this mistake. They’ll join a Q&A call with me and proudly tell me they’ve had a productive week, spending lots of time on the business, and they’ll list all the things they’ve done. I’ll ask: “Great… but why did you do those things?”. They are momentarily stunned. They then gingerly reply: “Because I need to build my business?”.
I help them realise they’ve taken their eye of the specific goal they are working to right now (for example, getting pre-orders for their product). I usually help them see that the 2-3 tasks they actually need to do to progress against their real goal would take less than 30 minutes.
That isn’t a typo! If they had done just 30 minutes of work on these tasks, they would be further forward than they are now, despite spending 40+ hours on their business that week.
As entrepreneurs, we all do this occasionally.
We waste time building the product and the business based on their own view of what we think it should be and what others are telling us we should be doing, like Facebook Ads, Branding, Logos, Opt-In Pages, Stationery, Office, Staff…..the list goes on and the expenditure climbs.
How to avoid this trap: Identify the small steps needed to test demand for the product (and getting your first sales), which actually takes very little time and would save hours and thousands of pounds. Then block out time to do these as a priority.
3. They focus their effort on attracting funding and getting feedback from people who aren’t their customers
Many entrepreneurs are led to believe that they have to give up their job altogether and find funding which they then ultimately need to live off to pay their bills. Generally, this money does not get spent on developing the business but on all the unnecessary overheads that they have racked up in point #2 above, plus living costs.
Sadly there is a perception that people who get funding are automatically successful entrepreneurs… but this is not true. The reality is that they can become too busy focusing on the investors and getting them their sought after returns rather than the actual customer. Even if they do get funding, they then have to spend it on all the things they said they would whilst also living off it – it runs out quickly… many entrepreneurs then don’t get the next round of funding and the dream collapses very suddenly.
Doesn’t this sound a bit like being made redundant by a boss?
Many entrepreneurs don’t even consider that by obtaining funding they effectively become a employee to their investor with even more added stresses and pressures of a normal job! They never question whether it is really worth it.
Beyond funding, many entrepreneurs seek feedback from the wrong people… such as friends, family, experts and investors who are interested in the business but wouldn’t be the ideal customer for it.
For example, I was asked for advice from a entrepreneur about how to demonstrate the theoretical financial benefit to their customers of their product, as they were finding it really hard to calculate. I asked “Did your customers request that?” And they replied, “No, some advisors that are helping us prepare for an investor presentation said we need to include it in our pitch.”
This entrepreneur, like so many others, was spending significant amounts of time and money on something that wasn’t important to their customers – and actually investors would far prefer to see long lists of paying, happy customers than ‘theoretical benefits’.
How to avoid this trap: Get clear on who your ideal customer is and get their feedback to identify what really matters.
So, now you understand that the trap that most entrepreneurs fall into when starting their business is to ‘create a product that no one wants’.
I’ve provided some suggestions but as you might expect, avoiding these traps is more difficult than you’d think – but fortunately that’s what I’m here to help you with…
Watch this free video and use this checklist to identify the exact steps you need to take to get pre-orders for your product – proving there is a real market need!