Avoiding the Classic Business Pitfall of Launching “A Product in Search of a Marketplace”
The small business failure rates uncovered by a recent Bureau of Labor Statistics study are enough to make even seasoned entrepreneurs worried. Of all the new small businesses that open their doors today, 20% of them will fail within their first year. Of those that remain, a further 33% will not be around to celebrate their second anniversary. Out of all that are left, only about half will survive to their fifth year and beyond.
Studies suggest that if you can make it to year five you can probably make it to year ten or longer, but actually getting to that point is something of an uphill battle.
There are an unfortunately large number of reasons why your entrepreneurship instincts might steer you towards a business failure, regardless of how strong they may be. Most businesses fail because they don’t have the ability to adequately anticipate cash flow, meaning that they have no visibility into “money in vs. money out.” Others still don’t properly anticipate or react to factors like competition, technological shifts or sudden changes in the marketplace.
But one of the major factors that causes a huge number of small business failures is also, thankfully, one of the easiest to avoid. You could spend years coming up with the perfect idea for a product or service, refining it, perfecting it and then releasing it – and it will still land in the world with a hollow thud if you don’t make sure people actually want it in the first place.
Instead of taking advantage of a marketplace in search of a product, you’ve got a product in search of a marketplace on your hands. Unfortunately, this almost never ends well.
Veering away from this most devastating of icebergs is something that requires you to keep a few key things in mind.
It’s All in the Message
For the sake of argument, let’s say that you do actually have an objectively great product or service that was developed with your audience in mind. You don’t have “something that nobody wants,” but rather “something that people don’t know they want yet.” This is a situation that a large number of businesses find themselves in and it is one where that spirit of entrepreneurship will suit you well.
In this case, so much of your success (along with circumnavigating the “product in search of a marketplace” problem) will come down to your marketing message. This is an issue that a lot of highly innovative products and services have to deal with. People may think something looks or sounds cool, but if they have a hard time visualizing how it fits into their lives they’re not going to part with their hard-earned money.
At this point, the job of your marketing collateral is no longer about selling to your audience. Instead, it’s about educating them.
This is going to require a bit of a perspective change from the way “things are normally done.” Gone are the days where you can get away with just listing a product’s technical specifications and essentially going “how cool is this?” Instead, you need to start with the factor that matters most: your customers.
Begin from a place of “you have a problem in your life. I know, because I have that problem too. I understand how difficult this problem is. I understand how much time and/or money it is costing you. It is really unfortunate, but that is why I came up with the solution: meet this product or service, and it’s going to change your life.”
Your message needs to start with your audience and work its way to the product, rather than starting with the product and hoping to attract the attention of the right audience. There is an essential distinction between the two.
Visual marketing collateral is going to be hugely beneficial to you during this time, particularly content like video. By as soon as 2021, video is expected to make up an incredible 70% of all mobile device traffic worldwide. But video won’t just be helpful in terms of audience education because it’s popular – it also plays to the strengths of how the human brain works in the first place.
When people hear or read a piece of information, they’re only likely to remember about 10% of it three days later. If you pair that same information with a relevant image (or present it in the form of a video), that number jumps to an incredible 65%.
Things like video product demonstrations, overviews and even live question and answer sessions are going to become key in terms of educating your audience and getting them ready for what you have in store for them. Yes, sometimes “product in search of a marketplace” is something you cannot overcome – that is a problem that was baked into your business from its inception.
But in most other cases, your audience is ready for a product or service like yours – they just don’t know it yet. At that point, your job becomes creating the type of visual marketing collateral like videos that will introduce these new concepts to them in effective, engaging ways… and to keep doing so until you’re ready to launch, building anticipation and excitement along the way.
Obtaining the Right Perspective Moving Forward
In the end, it’s important to remember that the number one rule of making money is also a simple one: if you want to sell something, make sure you know who you’re selling to. Don’t start with your product or service and then go out in search of a market – look at the real problems that your potential customers are having and figure out which one you can solve.
If you start with your audience and work backwards from there, and also pay attention to how you’re communicating with your audience to convey the right information at the right time, making money will no longer be a question of “if” but “when.”
AUTHOR BIO: PJ Taei is based in the Washington, D.C. metro area and is proud to serve as the founder and current president of Uscreen, an easy-to-use video platform enabling anyone to sell videos online.