You're a startup. You have an idea. You want to build something and make it available to the world.
But how do you get started? How do you launch? And what exactly does it mean to "launch" your product?
The answer is: it depends. On a lot of things, actually! But there is one thing that's true for every new startup: deciding how to sell your product is one of the most important decisions you'll make.
So let's talk about it! Here are 10 go-to-market mistakes that most software startups make:
Not having a go-to-market strategy
A go-to-market strategy is an essential business plan. It guides you through customer discovery, market research, and marketing efforts.
Few entrepreneurs enjoy creating a go-to-market strategy, but as a B2B marketer, I am always relieved to see one in place. Yours should ask and answer questions about your market, customers, and products before you start burning through cash. Plus, it will save you time, money, and headaches down the road.
What often surprises entrepreneurs is that the go-to-market strategy is different from your business plan or pitch deck. The business plan is a blueprint for prospective investors detailing how you expect to use their money to create and sell your product (and hopefully make profits). A pitch deck summarizes that information in a presentation format for meetings with investors. A go-to-market strategy provides directions on how best to find early customers and maximize your chances of success against competitors who have been at work longer than you have—and what to do if things don’t turn out as planned.
Not knowing their target market
When you build your product, it's tempting to focus on the technology, but many B2B software startups fail to truly understand their target market.
This is a mistake. There’s no way your company can grow without properly understanding your customers' needs. Use market research, and learn as much as possible about how your target market thinks and behaves.
Consider their purchasing habits, challenges, budgets, and decision-making process. When you know these things, you can make sure that what you're selling aligns with the wants and needs of your customers.
Not planning your founders' equity and vesting schedule
You've probably heard stories about the founders of well-known startups who have become millionaires with their company's success. As a result, you may be dreaming about enjoying a similar fate when you get your own startup off the ground. Unfortunately, if you don't plan ahead and establish an equitable vesting schedule for your founders' equity, you could wind up where co-founders leave your startup with more money than they worked to earn.
Startups often move quickly during their early days, and it's easy to neglect important tasks while dealing with the overwhelming demands of day-to-day work. However, when it comes to creating a fair and legally binding vesting schedule for your company's equity, you must invest time early on in its development so that everyone can be on the same page later down the line—especially if someone decides to leave or is asked to leave the company at some point in its growth process.
Even though planning isn't fun (usually), do not skip this step! It is better to confront this issue head-on now than wait until it's too late!
Launching without a minimum viable product or getting feedback from potential users
This is not an all-or-nothing list, so you can launch without an MVP, but you have to get feedback from the market in the first few months after launching. If you don’t, your approach will be based on assumptions that may not be true, and it could take much longer to achieve product/market fit.
- An MVP is the first version of your product with only the bare minimum functionality to be useful to your customers. It’s important because it allows you to test your product in the real world and get feedback from your customers so you can validate or pivot if necessary.
- Your MVP needs to focus on the core value of your product and support customer acquisition at a low cost, so avoid any features that are not absolutely essential for achieving that value proposition
Not planning ahead for when you'll need money
As the CEO, you must plan ahead for when you will need additional funding. If you don't think about how much money you'll need and how long it will take to achieve your goals, your venture will likely fall short.
To raise more capital at a later date, you should start looking for money well before you actually need it. Although this might seem counter-intuitive (“Why would I go search for investors when I have no use for them?”), putting in time early on to establish a relationship with investors can make the difference between life and death if something goes wrong and you do end up needing help.
In the heat of an emergency, it's hard to focus on what's important (which is why some people hire financial advisors). So don't wait until you are out of money to start looking for more—you may find yourself losing critical time as investors play hardball or simply say no.
Not knowing your competition
Know your competition. If you don't know who your competitors are and what they're offering, how are you going to differentiate yourself? Even more importantly, how can you improve on their product or service? Knowing who you're up against is essential for creating a better offering.
Learn from them. In-depth research on competitors and the market can help you understand what's working for them and what isn't. This will help inform your decisions so that you don't make the same mistakes or waste time reinventing the wheel when it comes to features or processes. It will also show you what your own value proposition is—you'll learn where competitors are succeeding so that you can improve upon those areas as well as what their weaknesses are so that you can ensure yours' aren't similar.
Identify unmet needs. If there's no existing product in the market, it may be a good sign that there is a need yet to be filled. Take some time to research customer discovery and see if this is true!
Leaving out marketing in the budget or not negotiating with vendors at all
If you're like most software startups I've worked with, you haven't included marketing in your budget. And if you have, it's limited to a few ads and some PR.
Make sure that you allocate significant resources for marketing. Marketing is not just advertising and PR but encompasses all the activities of generating awareness and demand and converting that demand into sales. Best practices call for spending between 18% to 24% of revenue on marketing to grow profitability by 25%. The startup environment is extremely competitive so expect to spend a little more.
Marketing is not just a function of the marketing department; it's everyone's responsibility in the company. As consultants, we are forced to wear many hats—from CEO to janitor—so make sure that everyone helps out with the marketing efforts at hand.
Not knowing the best channels to reach customers and how to use them effectively
While the product might be great and solving a real problem, it won't matter if you're not reaching your target market. Knowing your target market and where they are active is crucial for success. If you're not going to the places that your potential customers hang out online, then they'll never hear about you. Social media channels can be one of the best ways to reach potential users. But don't assume people know about your product—you need to tell them about it!
Thinking that an idea will sell itself and ignoring marketing for too long
While this is the most common mistake for startups, it's also the one that can be most easily avoided. The reality is: no matter how good your product or service is, if customers don't know about it, they won't buy it. And even if you have lots of users and/or paying customers, there's always a bigger market that you should be reaching.
The biggest lesson here is to focus on your customer--and what matters to them--instead of getting wrapped up in internal meetings and workflows. What are the key benefits of your product? How do they position you against competitors? Is messaging consistent across departments? By keeping sales and marketing in sync, you'll build more trust with prospects and customers alike.
You'll also find success by thinking of marketing as a revenue center rather than a cost center. Marketing isn't just about branding; it's about generating leads that turn into contracts and driving revenue growth for the whole company. It may seem counterintuitive at first, but once you see how integrated marketing efforts can impact results on both sides of the balance sheet, you'll never look back!
Ignoring numbers, data, and what the data says are your most common buyers, activities, and conversions leading up to those sales.
It's important to find out what you can from analytics and what they are telling you about your buyers, activities, and conversions. A lot of people ignore the data. They hear numbers, and stats can be boring. But the truth is that if you're not looking at these numbers and making decisions based on them in marketing software, then it's a mistake. Your job as a marketer is to get the customer to buy, so why wouldn't you pay attention to data that could tell you where those customers are coming from?
Go into Google Analytics (or whatever analytics program) and look at reports by source/medium to understand where traffic comes from, which social media networks do best (which might surprise you), how much of your traffic converts into leads and opportunities—this information shows how well content marketing does for your business compared with other channels like print advertising or paid search PPC (pay per click). You can also use analytics tools such as Mixpanel or KISSmetrics that help track customer activity on your site. When someone visits one of those pages, they see related messaging tailored specifically towards them to drive conversion rates up even higher while simultaneously decreasing bounce rates.
Now that you've been armed with the 10 ways software startups most often miss their mark, you're in a better position to steer clear of them. This is where the rubber meets the road. You've done your research and asked yourself the tough questions, but now it's time to put all of those new insights to work and make your plan a reality. We hope this guide has been helpful!