Anything can be the reason for the failure of a startup: a mismatch with market expectations, promotional errors, or an incorrectly defined target audience. There is a practice of testing any business ideas using a minimum viable product (MVP) to see possible miscalculations at an early stage and correct them without incurring significant losses.
High competition is not a threat, but a challenge
The past 2022 and the beginning of 2023 were not the most favorable for launching startups. IT giants carry out massive layoffs in their structures around the world. Following Google, which announced the dismissal of twelve thousand employees (about six percent of the total), Hewlett Packard and Cisco resorted to equally unpopular measures. Global high-tech funding has more than halved compared to the same period in 2021.
Under these conditions, only the most carefully calculated and verified projects have a chance of survival. In this regard, the importance of MVP development services for startups is growing more than ever.
Well-designed terms of reference for MVP creators and your own vision of the prospects for your business idea allow you to launch a product that will hit several goals. It will give you an idea of the correctness of the chosen path and help you make the necessary adjustments at a very early stage. Thus, MVP performs such functions:
- testing the hypothesis based on actual data and proving the viability of the idea;
- reducing the possibility of financial losses when launching an unsuccessful product;
- reduction of development costs due to the rejection of unnecessary functions;
- identifying unnoticed needs of future customers;
- optimization of product testing and acceleration of the search for errors;
- formation of an initial customer base even before a full-scale launch;
- proper representation in the market and attracting investors.
Why startups fail and how to emerge victorious
As a rule, the cause of the collapse of even up-and-coming startups is not one reason but a combination of them. If you try to analyze the available statistics, then the list of “killers of promising business ideas” will look like this:
- Lack of finance. Own funds ran out precisely at the moment when the rookie businessman was literally a couple of steps from a glorious victory, but venture investors preferred someone else to him. This reason was named by 38 percent of the respondents.
- Lack of demand in the market. A harsh reality has shattered optimistic ideas about the prospects of a product or service: consumers have not adequately evaluated the offer. Thirty-five percent of innovators fell victim to this cause.
- For the proposal’s attractiveness and successful implementation, there were not enough goods or accessories. Twenty percent of the losers cited this reason.
- Wrong business model. Another birth trauma of many newcomers: theoretical ideas crashed against the cruel practice of the market. This reason will be carved on the gravestones of 19 percent of stillborn startups.
- Legislative and administrative restrictions and prohibitions. When the idea that everything not forbidden is allowed makes you soar on the wings of a dream, once again consult with a lawyer. Perhaps you merely have not read some law to the right page. This reason killed 18 percent of startups.
- Mistakes in pricing. If the project above lacked a picky lawyer in the preparation stage, the authors of the following idea decided to do without an economist. For which decision they paid. Fifteen percent of future millionaires could not stand the inexorable laws of the market.
- The organizers were not lucky with the team. When you start a business in a garage, you need to think very seriously about choosing partners and associates and how to motivate them. It’s scary even to imagine what the world today would have become if Sergey Brin, Bill Gates, or Steve Jobs had stumbled at this stage. 14 percent of those who were not destined to create their own Google or Microsoft cited this as the reason for their failure.
- The product was either ahead of its time or too late. Unrecognized geniuses can always console themselves with the thought that they came into this world too soon. Ten percent of failed Edisons probably think so.
- The quality of the product failed. It’s incredible why these spoiled consumers don’t want to step into the position of a poor debutant and buy a worthless product from him or pay for a useless favor. “Oh, this cruel world!” Eight percent of arrogant scumbags sing this refrain in chorus.
- Mutual misunderstanding between the startup team and investors. The 7 percent of startups that have quietly gone into oblivion blame this very reason for their premature death.
- The promotion went badly against expectations, and the turnover of the product or service did not allow the business to continue — 6 percent of victims.
- Premature burnout or lack of determination to continue due to prolonged setbacks. Well, not everyone can be heroes in shining armor. Five percent of the authors of excellent but too slow in their development of business ideas left the race precisely for this reason.
It is easy to see that in addition to the fact that a significant part of the above reasons is somehow related to each other, their common denominator is the lack of preliminary research. MVP development services for startups exist precisely to help the authors of business ideas create a product that will allow them to test the ground and carefully prepare for the first launch of their product or service.
Summing up
No matter how attractive and innovative the idea may seem, it requires careful and comprehensive testing. MVP is not a single item but a concept. This concept involves many prerequisites for obtaining objective information about the market’s demand for a new product, consumers’ expectations and needs, and their willingness to pay for a new offer.
Of course, making an MVP is not an immutable law, and no one will hold you accountable for skipping this step when entering the world of big business. And maybe even you will be lucky. Well, or you will join the forgotten majority. You decide.
