Where’s Your Market?
I talk with a lot of investors and one area they all feel startups tend to falter is in their go-to-market plan. Why is this? I think there are many reasons, foremost among them is that often founders have never brought a product from concept through market launch. If they previously worked inside a large company, then the target market was already identified and defined.
Most founders I’ve met, have an idea of the problem they are trying to solve and who they are solving it for, but few have done a comprehensive analysis of what market best fits their offering and brand. For all successful startups, understanding this is paramount for initial and long-term viability.
In a recent research report analyzing why startups fail, CB Insights found that the number one reason is “no market need”. When you read into the research, “no market need” often translates into “poor product/market fit.”
In many cases, it seems, failure could have been avoided simply by conducting a comprehensive market analysis.
What do we mean by this?
It starts with identifying which sectors and segments are most in need of your product or service. Even if you have a solution that “applies to every business on earth” – and yes, I’ve heard that line multiple times – there are going to be some segments that are better points of entry than others or – “the low hanging fruit”.
Another consideration is market cadence. This is the difference between when you receive a sales commitment and when the customer actually purchases your product. If your business model doesn’t align with the cadence of the market, you can find yourself in trouble quickly, despite feeling very successful.
I know from personal experience how not understanding market cadence can kill your startup. You can read more about it here.
You also need to understand the maturity of your chosen market segment. Mature segments tend to be more risk averse and can be slow to adopt new technologies. This doesn’t mean that you should necessarily avoid the segment, but make sure you fully understand your market entry points.
Sometimes your best entry point is through third parties, such as consultancies and application developers. Other times the market might be tiered, with second-level companies looking for new technology to vault them into the forefront of the industry. Again, understanding the shape and structure of your target markets can keep you from constantly running into seemingly immovable barriers.
In addition, a solid market analysis can help you find segments and target customers who best align to your business model and culture. Companies like working with others that look, feel and act in a similar manner to themselves. If you want to build a strong, open and agile culture, look for companies within segments that have a similar feel.
Who are the companies they are working with and what do they look like? Is there a culture fit between your startup and their existing business eco-system? If you are targeting larger, more mature companies, check and see if they have smaller divisions that might be a better fit and provide a route to entry. Many times, these smaller, more agile business units help large enterprises evolve their business practices and cultures.
This brings me to the final point in your market analysis: How is the market evolving? This often aligns with how mature the segment is but can vary widely by industry and market type. Some very mature markets continue to evolve rapidly while others have hardly changed in decades. Understanding how and how fast a market is evolving can help you identify opportunities early and avoid pitfalls of ossified markets.
I help startups understand how to build a brand-based business and go to market plan. I have over 25 years in giant companies and startups, launching products, building brands and understanding how markets work. I can help you know your markets better, so you can improve your odds of success.
To find out more about how I help startups build their brands from day one please visit my website, andrewhayden.com and schedule a free discovery session.