Why businesses fail (part 3): they don’t attack an important customer problem

We’ve all seen it. An entrepreneur opens a new business, but before long we notice it’s closed.  They ran out of money before the business broke even. The time and money they spent is gone, and their lender may have a claim on their home and other assets.

How does this happen? 

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Third, they didn’t attack an important customer problem, or satisfy an important customer need. The customer or prospect isn’t very anxious to solve their problem. They may have found a work-around that is acceptable for now. They will procrastinate if you ask them to buy, and when they finally do, they will look for the cheapest solution. Not a good market for your business: long buying cycles, low conversion rates, and constant pressure on margins.

What should you do instead?

  • Look for a segment of your current target market, or an entirely different target market, that has an important problem you can solve, or an important need you can satisfy. If you were originally planning to offer a car washing service, focus on people who get a real benefit from a clean car, like real estate agents, executive limousine services, and people who want to sell their cars. If you were planning to open a small book store, offer a subset of books that aren’t available on Amazon, like antique and rare books.
  • After you choose your new target market, you need to reach out to target market customers. Meet with as many of them as you can. If these customers have an important problem or need, they have probably found a solution already. Executive limousine drivers are not driving around in dirty cars. People who want rare books are probably not waiting around for someone to open a new small book store. But they may think their current solution is too inconvenient, or could be improved to better meet their needs, or is too expensive. For example, they may go to an antique book store, but they have to drive a long way to get there. Find out what it would take in terms of delivery or features to make them switch to a new company.

SCORE counselors are available locally or on-line to help you create and manage a successful business. Call us in Pinellas County at (727 532-6800 or go to  www.pinellascounty.score.org.

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Why businesses fail (part 2): they wait until the business opens to build an audience

We’ve all seen it. An entrepreneur opens a new business, but before long we notice it’s closed. The classic example is a new restaurant, often in a location that has been the scene of more than one failed restaurant before. They ran out of money before the business broke even. The time and money they spent is gone, and their lender probably has a claim on their home and other assets.

African-field-cricket-arpingstone-wikipedia-commonsHow does this happen? Second, they waited until the business opened to start building their audience. When they opened the doors or published the book, what did they hear? You know.

What should you do instead

Guy Kawasaki, one of the original Apple evangelists and an accomplished author, had this message for new authors: “The process of building a platform [audience] takes six to twelve months … If you don’t have a platform yet, you need to build one as you are writing your book.”

This applies to everyone. Find ways to build relationships with potential customers as soon as you have figured out who they are. Go where they hang out in the real world and meet them face to face. Meetup groups. Chambers of Commerce. Community events. Conventions. Trade shows (yes, there are still trade shows. Don’t believe me? Check out the convention center in Orlando). Look for opportunities to speak.

Go on-line and look for people who are posting on Twitter about the problems or opportunities you are attacking. Join relevant LinkedIn groups. Do your potential customers upload to Pinterest? Do bloggers write about your industry or your customers? Respond to their posts. Ask them questions. Try to move the on-line relationships off-line.

When you meet people, invite them to subscribe to your email newsletter or your blog. Keep them up to date on your progress. Ask them for opinions. If you have a product or a physical location, share pictures as things get built. Writing a book? Ask people to comment. Listen to them and make changes. Have a contest … give away a few autographed copies of your book, or meals at your restaurant, or tickets to your concert.

On launch day, you should hear more than crickets.

SCORE counselors are available locally or on-line to help you create and manage a successful business. Call us in Pinellas County at (727) 532-6800 or go online  to www.pinellascounty.score.org.

image courtesy of arpingstone via wikipedia commons license