This is the second post in a series on launching a successful startup.
In his book, Disciplined Entrepreneurship: 24 Steps to a Successful Startup, Bill Aulet, Managing Director of the Martin Trust Center for MIT Entrepreneurship, goes beyond theory to outline the steps anyone can take to be a successful entrepreneur.
In the first post in this series on successful start-ups, we stressed the importance of the discovery stage—time spent brainstorming about product and service ideas, defining potential customers, and identifying industry matches. Each is a necessary step that will help budding entrepreneurs prepare for a successful launch.
Once the brainstorming component is complete, the goal is to narrow the focus and find the sweet spot where your product or service meets not only a potential customer, but a targeted end user—the customer who will buy your product or service and become a loyal brand ambassador, persuading others to buy it as well.
To accumulate as much information as possible about your market opportunities, begin by asking these questions:
- Is the target customer well funded? If the customer does not have the cash flow, new ventures won’t survive.
- Is the target customer readily accessible to your sales force? Don’t rely on third parties when starting out. It’s best to deal directly with your target customer in order to get the feedback necessary to make improvements to your product or service.
- Does the target customer have a compelling reason to buy? Why would the customer buy your product or service instead of using a similar one? What do you offer to differentiate your service or product to show the customer they can do better?
- Are you ready to deliver a complete product today? No one wants to buy a new engine for their car and install it on their own. Most people want to purchase the complete car ready to drive. To deliver a complete product, you may need to work with other vendors and manufacturers. This means you will likely need to insert your product or service into an already existing workflow.
- Is there entrenched competition that could block you? From the customer’s viewpoint (not your own), how strong is the competition? How can the competition block you from reaching your customer? How can you stand out from the competition to offer the customer something more desirable?
- If you win one market segment, can you leverage it to enter additional segments? Can you enter adjacent segments without making numerous changes to your product or sales strategy? It’s best not to launch your product from a market that is so difficult that it inhibits other opportunities in other market segments.
- Is the market consistent with the values, goals, and passions of the founding team? Timing is everything. The ideal situation aligns the goals, values, and passions of the founding team with the market so that they are attainable. Otherwise, you may be working against your own efforts.
Time can be the biggest obstacle for any entrepreneur. But it is important to find the time to search for as many market opportunities as possible, to focus on researching market opportunities in depth, and to segment from the industry to the end user level. Making all the above possible will result in the best chance for success.
Bill Aulet is a Senior Lecturer at MIT Sloan School of Management and the Managing Director of The Martin Trust Center for MIT Entrepreneurship. He teaches in the Entrepreneurship Development Program and the Regional Entrepreneurship Acceleration Program (REAP) at MIT Sloan Executive Education.