Startup founders are without a doubt, some of the most relentless people around. After all, an outstanding product takes more than just a great idea. Founders have to persistently execute and ‘course correct', in order to turn that idea into a thriving business.
But what if, despite all the persistence, your business continues to struggle? How do you know if you should keep pushing ahead, or whether it’s time to pivot? Here are 4 signs your startup is in trouble, and what you can do to turn things around.
1) You Haven’t Found Product Market Fit
Some startup products don’t address meaningful problems. Or, customers don’t care about the issues the products are trying to solve. Unfortunately, many companies don’t really have a market for their product.
And according to serial entrepreneur Marc Andreessen, lack of market is the number one company-killer. “You'll break your pick for years trying to find customers who don't exist for your marvelous product, and your wonderful team will eventually get demoralized and quit, and your startup will die,” he wrote in his blog.[Tweet “Lack of market is the number one startup-killer”]
But while market is arguably the most important factor in a startup’s success, many entrepreneurs tend to not consider it a priority. They spend lots of time focusing inward on their products, but not enough time trying to uncover their customers’ pains – exactly what you need to do to match a product to their needs. Or, discover a better market altogether.
You need to speak with potential customers about the problem you’re trying to solve. Would they use your solution? How are they solving the problems on their own? How much is it costing them?
Once you understand your market and adjust your product to suit it, customers will be lining up at your doorstep. Because according to Andreessen, a great market, “pulls a product out of the startup.”
Just take a look at Placefull.com, an online marketplace that allows merchants to rent out their office spaces. The business initially charged customers a transaction fee to book, but Placefull failed to get any traction. But after the founders spoke to loads of customers, they redesigned and started charging a flat monthly fee instead. Just one year after the change, Placefull began to generate over a million dollars in annual recurring revenue.
2) Customers Like Your Product, But They Don’t Love It
“It’s much better to first make a product a small number of users love, than a product that a large number of people like,” writes Y Combinator president Sam Altman in his Startup Playbook.[Tweet “Start by making a product a small number of people love vs. a large number of people like.”]
If your product just does its job, your customers won’t recommend it to others. But if you build a product that solves a pain really well, your customers will rave about it to their friends – an important factor considering that at the early stages of a startup, you want each new customer to acquire another.
So, how do you make sure your product is something exciting? You need to simplify it. Don’t build a product with 10 mediocre features. Build one that does a great job at fulfilling one task. Look at Trello, for example. The SaaS tool makes working on group projects as easy as using sticky notes on a whiteboard – and now with more than 10 million users, they have tons of raving fans.
3) You Rely On New Features to Help Acquire Customers
When you’re struggling to acquire customers, it can be easy to assume it’s because your product lacks features. Having a great product is important, but a product alone won’t get you customers. In this case, the saying ‘build it and they will come’ only applies to baseball fields – because when it comes to business, it rarely turns out to be true.
You need to stop assuming that just adding new product features will help you grow. Instead, speak to existing customers and get their feedback, to make your existing features even better.[Tweet “You need to stop assuming that just adding new product features will help you grow.”]
And in parallel to this, you need to focus on sales and marketing efforts. Discover who your potential customers are by talking to existing ones, doing online research via forums and social media, and looking for what your competitor’s customers complain about online.
Next, focus on where these people are spending their time. If they’re searching for a problem in search engines, try investing in SEO or SEM strategies. Or, if they’re using a complementary product, think about partnering with that brand. For example Stripe partnered with Shopify, because they saw potential customers were already on board with the eCommerce software. And through the partnership, Stripe gained access to over 200,000 Shopify customers.
4) You’re Getting Customers, But Not Keeping Enough
Getting new customers is one thing. But keeping them is far more important. And all too often, startups lose customers too quickly because they don’t put enough effort into helping their customers succeed.
You need to create an outstanding customer service experience to keep clients happy from the start. A product like Intercom will help you engage with customers, by providing live chat for your website, and the ability to email, send push notifications, and send in-app messages. Chameleon will help you to create a better onboarding experience for customers, by enabling you to build product tours for your website or app. You should also think of hosting regular training webinars, which is easy to do through Google’s Hangouts on Air, or even a simple Facebook Live video.
And finally, make it easy for customers to ask for help. Just check out Slack’s Twitter account and you’ll see how the company’s customer support team is not only human and funny, but also quick to respond to any troubleshooting questions.
Building a startup is hard. And there are a number of reasons why businesses fail. But if you’re proactive by spending enough time with customers, tracking the right metrics, and triggering where red flags might arise, it’s definitely possible to address the issues before your business goes down hill. You just have to be open to looking for ways your company can improve, and be flexible in your approach.