Startups, from Ohio to Silicon Valley, have to be dialed in to get funding. Their execution strategy, understanding of the marketplace, and, of course, their pitch, needs to be polished if they hope to receive backing.
Yet, interestingly, the majority of startups seeking funding and aiming for ambitious growth goals miss one of the most important components of a successful business plan. It’s not something that they will gain with even the best Big Data mining, and it’s absolutely essential to successful adoption by their customers.
Data doesn’t reveal everything
A startup’s business plan will typically include a market study, demographic data, and loads and loads of statistics, charts, and often even predictive modeling.
Which is all well, and absolutely necessary.
But the majority of startups still miss an essential step.
Opinions. Perceptions. Motivations. Experiences.
Even the best data in the world doesn’t uncover the subjective, feeling-part of the equation – that part that will actually help a company understand how people will use their new app, sharing-economy service, or cloud-based program.
And another interesting tidbit? Ninety-four percent of startups fail within the three years. Yes, you read that correctly: 94%. But perhaps this isn’t so stunning when you consider that the majority of startups don’t build the opinion, motivation, and perception part into the vetting of their business idea.
Fortunately, there is a solution that will set startups up for success
Gathering statistics, numbers, and and comprehensive market studies is only one-half of the due diligence that startup founders need to work on. The other half is to hire a neutral, third-party market research firm to do qualitative, person-to-person interviews with the actual target market that the product is being developed for. We’re not talking about taking a poll at a bar, brainstorming with best buddies from one’s college years, or crashing a bachelorette party and asking for opinions.
Sorry – that’s not rigorous enough research.
Qualitative research is a methodologically rich process that takes the user-audience through a comprehensive open-ended discussion guide, and it incorporates projective exercises that get beneath the surface and tap into deeper motivations and reasoning. From this process, startups that begin with this step will come away with a far deeper understanding of their audience, giving them direction on how to tweak their product, refine their messaging, and position the product relative to the competition. In some cases, they may even learn that their product isn’t viable, in which case it’s time for them to go back to the drawing board and work on a revised or totally new concept.
Regardless of the findings, startups that invest first in market research will come away with tangible, proven ideas that they can build into their business plans. And, most importantly, startups that take this step will have a compelling case for their investors and a better chance of success. The 6% that actually make it, in other words.
About the author:
Tamara Irminger Underwood writes content for InterQ Research, a full-service market research company. Learn more at www.interq-research.com.