2024 Economic Landscape For Tech Startups


According to a recent study, 70% of startups fail due to a lack of marketing efforts and an inability to find customers who are willing to pay for and use their products. Additionally, many startups suffer from a lack of skills and knowledge, which can lead to poor decision-making. Another common issue is having the wrong team in place, which can lead to a lack of cohesion and direction. According to Carata, 761 startups went bankrupt in 2023, with the most dangerous part being that 121 of them managed to raise above 10 million dollars. CNN dubbed 2023 as the “extinction level year” for tech startups, as 9 out of 10 startups fail in their first 5 years of existence. CBS Insights reports that 50% of startups fail in the first 18 months.

Why Do Startups Fail
– Ineffective sales and marketing.
– Ignoring customer needs.
– Miss time product launch
– CBS insights say that 42% fail because they have a misaligned product market fit.

Difference between B2B and B2C Businesses
A B2B is any business that sells to another business while B2C sells T-shirts, soaps, and end customer is an individual. For example, If you are selling MRI machines, your buyers will be hospitals or clinics. B2B is designed to serve businesses.

Why is B2B difficult to crack?
When you are trying to navigate as a startup company, these are threats that make it difficult:

  • Risk Aversion: When you try to sell a product to a business, businesses are generally laid back. If it is a successful business and things are happening smoothly,they do not want to change their internal culture.
  • Decision Making Process: In business especially enterprise level businesses where you have departments, there is not one decision maker. The CEO can be the one who will sign check, but he is going to ask the finance department for input if it is worth it.
  • Customization Needs: Not every business is different. They may be in the same space but their internal culture is all different from each other. As a result of this, it is proven difficult. It is not possible for a product to suit every business needs.
  • Educational Hurdles: If you sell to a company, the staff needs to be trained and learn your objectives. This is time consuming and businesses do not want to break from their normal habits.
  • Established Competition: This is the most dangerous thing because businesses already have a solution and it is extremely difficult to break in as a startup.

How Do You Break In?
You do not until you find a Problem-Solution Alignment. But how do you do this?
Find people in the industry to test your idea. In startup culture it is always better to try and die fast, it saves you a lot of money and time. If you have a product you think is going to change or effect the way thing are presently working, it should not only be good to your eyes but also to the early adopters. This is not about the product itself but the process.

Establish Strategic Feedback Loop For Product Validation From Early Adopters
No matter how remarkable your product is,businesses are not going to adopt it until they are enticed to think their competitors will use it to get ahead and revolutionize the industry. Your product also has to be easy to test, which means you find 20 – 30 early adopters who you think perfectly match the criteria in the industry. This process deduces that you are not selling yet but you are trying to see if your product sells or not.
At least 20 – 25% of early adopters should agree to your assumption about the market. They need to agree that the problem you are solving is worth the solving price. This is a critical thing people ignore. If the early adopters do not agree then do not move forward. Go back to the drawing board. Step out and talk to people individually, take your time. It may take 6 months to a year. Assuming that you have a decent product that passed the validation test, then you can move to the next stage.

Your First Step Towards The Go-To Market
Buy Persona: You make a fictitious profile.
Demographics:

  • Age
  • Gender
  • Location
  • Job title
  • Company size
  • Industry

Roles and Responsibilities:

  • Decision-making authority
  • Influence within the organization
  • Identify the key challenges/ issues they face in their roles

Determine:

  • Where they go for information
  • Buying motivations
  • Preferred communication channels
  • Map out their buying process.

Time To Find The Product Market-Fit
– Give yourself a realistic sales target suitable to your industry and space.
– It should be time bound. For example, 3 months (first quarter)
– A clear number of sales. 5 or 100 depending on the ticket size.

Metrics To Measure The Performance Of Your Product In The Market

  • Customer feedback
  • Usage metrics
  • Customer retention
  • Referrals and advocacy
  • ROI for customer
  • Competitive positioning
  • Scalability e.t.c

If you followed all these steps, you have a product market fit. Congratulations, you have a startup that can stand on it’s feet.

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POSTED BY EKO INNOVATION CENTRE

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