By Ed McLaughlin and Wyn Lydecker
Can you turn the tables on startup success? Although a July 2015 report by Statistic Brain research says that 25% of businesses fail in the first year, 36% in the second year, and 44% in year three, we believe you can defy those odds.
You can turn the tables on your chances for startup success and advance your business idea into a positive, life-changing experience by taking three significant steps: 1. Solve a problem. 2. Create the product. 3. Secure market validation. To illustrate these steps, we’re using a case study of entrepreneur Marcus Weller and his product, Skully.
Step 1: Solve a Problem
In July 2010, Skully CEO Marcus Weller suffered a motorcycle accident in Barcelona, Spain, when he diverted his eyes from the road to read a street sign. Out of this one incident that lasted just seconds, came his vision for a motorcycle helmet that would solve the problem of obscured sensory perception on the road. As he shared on the Skully website, Marcus envisioned “a GPS map floating out in front of his helmet, helping him navigate and avoid collision.”
Applying his background and distinctive competence in intelligent transportation systems, human factors engineering, and industrial psychology, Marcus set out to solve a significant problem and bring his vision to life.
Marcus Weller, Skully CEO
To bring your vision to life, boil down your business idea and the problem it will solve to a few simple sentences. If you cannot reduce it to a simple description, then it may be too complex.
Step 2: Create the Product
It’s one thing to have an idea that solves a problem, but you also need to be able to create a product to test and sell in the real world. In February of 2013, Weller developed his first helmet prototype. Potential customers preordered the product, and in December of 2015, Marcus began delivery of the AR-1 motorcycle helmet to his worldwide backers.
Step 3: Market Validation
Continuing with the case study of Marcus Weller, in August of 2014, his small startup team launched a fundraising campaign on crowdfunding platform Indiegogo, offering preorders of the product. The campaign broke preorder records and simultaneously provided validation of his product’s marketability.
It’s easy to fall in love with your business idea and launch prematurely, but you will greatly increase your chances for startup success if you secure preorders before your launch. When you have preorders, you are assured that the market is willing to pay for your product or service. In addition, with preorders, you know you will have a revenue stream, and with that you can set the stage for future growth. You will also be able to demonstrate that you have proven your concept with consumers, enabling you to raise funding at better terms. Crowdfunding allowed Skully to prove that people wanted to pay for the new helmet. One of the advantages of crowdfunding is that you not only raise funding, but you also can get a sense of how much demand there is for your product.
When you create a product or service that fills a critical need, you will significantly improve your probability of startup success. Add to that an actual prototype that demonstrates how the idea works, and you increase your odds yet again. Finally, if you can secure preorders for your product via crowdfunding or direct selling, then you can be confident that your idea has been validated by the market. People will buy your product! You can move forward knowing that the life you change when you launch your startup, won’t just be your own – it will have the potential to change the lives of your customers.
Ed McLaughlin is currently co-writing the book, The Purpose Is Profit: The Truth about Starting and Building Your Own Business, with Wyn Lydecker.
Copyright © 2016 by Ed McLaughlin All rights reserved.