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Reduce the risk of your startup failure

5 things you need to know before you build a startup
Startup risk

Sometimes startups fail, actually majority of them do. I would be lying if I said that it didn’t happen to our clients as well. The reasons may lay in customers, product, business model, team and financials – quite a lot of factors to foresee, but here’s what we’ve learnt during last 5 years and over 60 projects done.

5 things you need to consider to reduce the risk of your future startup

1. Build a niche

Being first in a specific area creates a competitive advantage from the very start. Attracting customers looking for a new product, service or solution is way easier than trying to convince people already using similar products but of recognizable brands.

Being first is also a desirable for PR/marketing reasons, because media will write about your company more eagerly. We’ve experienced amazing media coverage when working with our client Zupa, because it was “the first restaurant in Wroclaw that serves soups only”. It has grown up to 3 restaurants right now.

2. Start simple then add features

If you’re a startup founder no doubt you dream big, plan to start a new Facebook or Google with plenty of awesome features that will improve the lives of millions. Unfortunately, unless you’re a millionaire, that’s not the way to kick off. What you need is to build a working MVP that encompasses the most important, distinctive feature(s) and when you gather users then you will scale, add features etc.

Firstly, this approach allows you to focus on a big picture instead of plenty of small features. In consequence, you will focus on a unique value proposition and communicate it clearly. There is nothing worse than a product that nobody understands what is it for.

Secondly, minimal prototype allows you to learn quickly and draw conclusions for future. What do early adopters think about your product? Are there any problems when using your product/service? That is a great opportunity to apply the changes before you invest lot of time and effort into it.

Finally, development is the most expensive part of the game. Numerous startup clients come to us with long list of features that they “need” to build before launch and we immediately know if they won’t make it, because it is time- and money-consuming. We advise them to build one extraordinary feature that solves some users’ pain and then move forward. Our client ArtConnected, a platform for artistic interaction, had a plan for an advanced application – that couldn’t have been done in their budget. We’ve narrowed the features to the core one – posting artistic calls, built a perfectly working MVP and now after extra funding we’re developing their MVP2.

3. Become an expert in your field

Becoming an expert means two things: first, do lots of research, competitor and clients’ needs analysis – so you make sure you offer sth unique, but foremost something that people want (and finally will pay for). Be where your future clients are, observe their behavior, listen to them, ask as many questions as possible. This will also help you build a network of contacts that you can cater to with your offer. Second, become a leading authority in your niche. To sell your product or service you need to know everything about it to be authentic.

Our client eSky has become an expert in the area of flights and finally has become Polish main player in the flight searches area, serving over 70-80% flight queries.

4. Outsource specialists

Establishing a startup is a hard, full-time job. In the long run doing everything yourself from marketing to development will lead to problems. Not to mention that you need to be quick so nobody steals your thunder.

On this stage I wouldn’t advise to hire your own team, because salaries, benefits, training and so on will generate significant monthly costs. Before the launch it is also hard to find talented specialists, because the unknown (and thus uncertain) startup isn’t the most attractive workplace.

External team of designers and developers with appropriate startup know-how will help you avoid common mistakes, reduce the features (and costs) to the core ones and grow your product quickly. The biggest advantage of outsourcing is that you pay them only when you need something done. Among others that is the reason why our startup clients hire us ;).

5. Experiment offline before going online

Before you automate the processes (which means the use of rather costly software) try to do it several times by hand. Going through the process on your own will give you a lesson and idea how the target application should look like.

We’ve got this piece of advice from Richard Lucas and we do that experiments also in our internal startups – Vehunt and Haeroo. The first one is a marketplace startup that helps in car buying process. We’ve tried to sell 5 cars offline before developing the online platform. Haeroo is a photo, video and 3D scanning device for real estate market. We’ve visited a few real estate agents and filmed one residence before even building the product. ​