Everyone’s so obsessed with startups nowadays – technically, MultiMerch is a startup too, even though we prefer not to call it like that. All the business success stories of the last decade are associated with online brands. Have you ever imagined yourself as the next Zuck or Dorsey? Many have, and most of them fail. But why?
They are not bootstrapping
Bootstrapping is an organic, self-sustaining, creative approach to entrepreneurship to cut personal risk. Seriously, before going out wild with your crazy business idea, go and validate it. Spend a bit of your personal time and $100 bucks of your personal money to make the first sale. Do it before you start building your awesome website and even before you think about the name and the domain name for your business. Seriously, this is the first thing you want to do – make sure someone actually wants your stuff or you might end up having wasted time and money for something no one needs. Noah Kagan and the Appsumo team offer a great course on starting your business through idea validation – go check it out!
Their ideas suck
Quite obvious, isn’t it? You’d be surprised how many of the ideas pitched on various startup gather events like Techhub are totally ridiculous. Again, validation is your friend. Go through a grandma test – talk to your grandma or a friend or two for 5 minutes. If you’re not able to explain them what’s your product and why they wanna buy it you might consider thinking of something else. Why would you want to waste your time building something people don’t need and want?
There’s a business idea, but no business model behind it
So you might have come up with a great idea – the product you’re offering is awesome, the customer experience second to none and you’re planning what to spend your first million on. Then you launch – and you’re broke in 3 months.
Whatever you are doing, make sure it gets you past the break-even point, the quicker – the better. Don’t be lazy, spend some time and put everything down on paper. The good old Business Model Canvas has never done any bad.
Get the customer to pay for less than what you get in return
The cost of acquisition of each customer must be less than his lifetime value. Sum up all your marketing costs and divide the amount by the number of your customers to get the cost of acquisition. The lifetime value is your gross margin x the number of products your client buys. You don’t really want to pay $50 bucks to acquire a customer that’ll spend $5 on your product, do you?
They don’t count their pennies
Accounting is important. Spend $30 per month and hire an accountant for your business. Let this person be annoying putting financial accountability pressure on you and preventing you from overspending. You might be a great entrepreneur and not know what your break-even level is. Concentrate on what you are best at!
There is no market or it is not reached
Is there anyone out there who wants what you’re offering and if yes – do they know you exist? If you used the Business Model Canvas than you’ve done some research upfront and know there is a market for you. Start selling! This might be a problem if you experience fear of rejection or laziness, but you’ll get over it once you begin.
You might also experience the funding gap, but this is not a big deal – explore the world of guerrilla marketing and free means of communication. There is also social media, free press releases, cold emails to potential customers and other things – seriously, with all the possibilities nowadays doing business online is an affordable process.
Features are not translated into customer benefits
Customers are lazy, just like you (or us). You might be offering a great product with a dozen awesome features that is superior to all of your competitors – but make sure your customer gets it! If your custom printed t-shirts are made of 100% cotton, say that they’re 100% natural. If you have a dozen of support guys employed, tell your clients all your support queries are processed within 5 minutes. Be creative in convincing your potential customers that you’re offering a product they want to pay for!
This sums up some of the popular reasons for e-commerce startups (or pretty much any small business online) to fail miserably shattering the dreams of their founders. Of course, there are many other things you need to pay attention when starting a business, but these are some of the main ones you totally need to take care of first. Do your homework, check your market, validate your idea and make sure it’s viable. Then you should be good to go!
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