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If you’ve been paying attention, you’ve surely noticed that the market is not exactly sympathetic to startups nowadays. You’ve been hearing a lot about layoffs in tech, down rounds, and startups closing up shop. There is no denying that the current global market, especially in tech, is a rough one.
Do the market conditions mean that if you have an idea for a startup, you shouldn’t pursue it or is there a way to navigate the storm and come out on top?
Here are five ways to increase your chances of success in a difficult market.
1. Focus on the problem, not the solution.
Many of these tips are true in a regular market but are exponentially more important in a down market. Before embarking on the startup journey, make sure there is a big problem that you are solving.
How you solve the problem is secondary to the existence of a huge global challenge that needs solving.
Before writing one line of code, make sure the world even needs what you want to build. Ask yourself if there is even a problem, how big that problem is, who else has tried to solve it, and why they have failed.
Once you answer all those questions, you can begin building the solution.
It might be a rough market but if an investor or a potential partner sees a huge pain point that you’re trying to solve, the chances of them moving forward are higher, no matter what the market looks like.
2. Conduct extremely extensive market research.
This is a continuation of the point above. In general, I wouldn’t recommend launching a company before doing market research. However, in a normal market, a saturated market doesn’t mean you can’t succeed but in a market like today’s, you better know who you’re up against, why you’re different, why other companies failed, or who has succeeded.
The need and importance of comprehensive market research increase significantly when the market is a bearish one.
3. Have a clear path to profitability.
It’s true that in the early days of a startup, profitability is not the main concern. First, you find a problem, build a solution, gain traction, raise capital, generate some revenue, and continue to build with the hopes of eventually turning a profit.
In today’s market, the road to profitability needs to be much clearer and hopefully quicker.
Gone are the days, at least for now, when companies can raise at astronomical valuations without any profit or a clear answer to when the company will be profitable.
4. Do not cold pitch investors. Instead, get an intro.
This is such an important point that so many entrepreneurs don’t get. It is always better to get to someone, whoever it is, via a warm intro.
If you’re looking for press, get an intro. If you’re looking for an investor, get an intro. If you’re looking for a design partner, get an intro.
No one is claiming that if you get an intro you are guaranteed success, but if you cold pitch someone, then your deck will just land on a huge pile of decks. That’s the last thing you want.
5. Before raising capital, make sure you have a strong product market fit.
This point is crucial and while you might be able to raise capital super early in a bullish market, in today’s environment, you’re going to need to prove that people really want your product and are willing to pay for it.
The bottom line is this. The market is definitely not easy today, but that doesn’t mean it’s impossible to build a successful company. What it does mean, however, is that making one wrong move can be the complete and total failure of your venture.
Tips from the inside.
We have had the pleasure of partnering with several new start-up companies in order to help them better understand a new market growth area or how well a new acquisition is functioning prior to purchase. Monitoring and measuring the customer’s experience, in order to grow the customer service culture within a business in our wheelhouse. We’re here to help, give us a call.
BY HILLEL FULD AND CARL PHILLIPS
