How resourceful startups can avoid the “number one cause of death”

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Startups fail for many reasons. One of the chief causes of premature startup death, according to research by CB Insights, can be stated as “no market need.”

You built it… and they didn’t come. Why?

Several risk factors can lead to the terminal diagnosis “no market need.”

Unbridled optimism

Most entrepreneurs are optimists, which makes sense. Most also have good business instincts. However, these characteristics can lead to trouble if you’re either overconfident – or under confident – either because of your natural optimism or by the way you respond to your business hunches. You don’t want to fly by the seat of your pants – or to be too afraid to soar at all.

For a reality check on the state of your raw business ingenuity, check out Harvard Business Review’s Instinct Can Beat Analytical Thinking.

Optimism (or even sometimes a touch of laziness) can cause you fail to assess your market before diving in “dollars first.” Check out Entrepreneur’s Nine Questions to Ask When Assessing a Market to get yourself on track.

Market disconnectedness

While many startups adhere to the maxim “see a need, meet a need,” a surprising number – including some that eventually achieve success – are addressing markets they do not truly understand or with which they don’t really identify. Examples could include – please forgive me for generalizing – men designing women’s clothing or shoes, baby boomers creating social media apps for teenagers (while millennials build “easy” mobile devices for grandparents) or Big Food developing packaged ready-to-serve organic vegan entrees for purists.

As a business owner, the onus is on you to find a market you understand deeply, or to come to understand deeply the once-unfamiliar market you must reach. Here are ten questions to get you started.

First-mover syndrome

You have created a new product or service concept or category… and now you must create the need. You are a “first mover,” and that is an expensive and risky place to be. This article, First-Mover Disadvantage, is useful in determining how best to deal with this situation.

Saturation syndrome

On the other end of the spectrum, you may be entering a market too late. This can happen when a market is saturated… sopping wet with no capacity to absorb another newcomer. If you want to try this anyway, read How to Succeed in an Over-Saturated Market.

Paralysis

It is possible that you are not impossibly far off from meeting a market need, but that you need to pivot. This means you need advice, time, and the courage to change something fundamental about your business focus. It isn’t easy. Here’s How to Pivot: A Twelve-Step Guide to Pivoting Your Startup.

Too many symptoms, no cure in sight?

As a final option, consider cutting your losses. A startup’s life is important, but, unlike your own, it can be replaced. Don’t let a doomed startup take you down with it. Look forward to another endeavor, another day. You’ve heard of the serial entrepreneur, have you not?

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Michelle van Schouwen is president of van Schouwen Associates, LLC (vSA), a B2B marketing company based in Longmeadow, MA. The company is known for vSALaunch, its proprietary, modular and scalable system for B2B marketing launches, vSAConsult, its executive-level strategic planning capability, and for its expertise in integrated marketing for B2B. Michelle is also an early-stage investor and mentor to startups.

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