How to get started with market research
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What does a startup need? 6 steps on the way to success
Oct 3, 2023
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Every day hundreds of brilliant startups are being created across the globe. They might have different motivations but most of them eases people’s lives in one sense or another.
On average from a hundred startups only ten makes it to the first rounds. And further only three businesses from ten live more than 3 years.
Today I wanted to share my observations after 3 years working closely with startups scaling from Seed level to C-round and form a couple of factors you have to ensure that will increase chances to make your idea a new banger.
What an early stage tech startup usually need to get successful:
1
Good & well-tested idea
2
Market research
3
Business plan
4
Qualitative product
5
Good marketing
6
Funds & Resources
Good & well-tested idea
If you have a good idea for a startup you are either a good entrepreneur who deeply feels what market needs, industry specialist, or a person who feels pain in some specific aspect of your life.
In all these cases a good startup idea is a solution that relieves pain or eases people’s lives through some product, service or knowledge.
If you already have 100s of ideas in mind - I’d love to say stop.
Before considering your idea as a good one you need to do a couple check-ins:
Is this really a huge pain that requires a solution or is it just something that annoys you but you would not want to pay 5 dollars to get rid of it?
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Does your idea fully solve a problem and not cause new ones?
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Has anyone on the market already executed the solution? (If yes — don’t worry, we’ll talk about it further)
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So to consider your idea as good it should at least follow these three statements:
1
It fully solves a specific problem
2
The problem it solves is a huge one & really requires a relief
3
You solve it in a unique way (or at least in a way that works & cannot be properly solved without it)
Market research
After you think over your idea you need to check if it fits the current market. I’d suggest getting a specialist to conduct a proper market & competitor analysis.
But it will be of your benefit if you do the following preliminary:
1
Figure out your intended audience
You also can react out to us for more detailed explanation or support on that topic here.
2
Form a testing group (at least from your relatives, friends, or colleagues)
A good number to start is 10 people — but the more you have the better
3
Make a series of “interviews” with this group regarding the issues the problem is causing in their day-to-day life (how long you’ve been suffering from this problem / why you can’t handle it by yourself / will your life become better after solving this problem & e.t.c.)
Try avoid the following while you asking:
1
Give too many variations in your questions (try to give 2 options at a time);
2
Avoid using technical jargon or explanations that complicate things. Make sure to use language that everyone can understand.
3
Asking the wrong questions. You need to deeply think over your questions as based on them you’ll form your future product roadmap. When you create questions for a concept test that support your goals, you’ll get clear takeaways to act on.
You can even make a prototype using free services (like Bubble.io, Webflow or Adalo) & make several iterations of interviews to sharpen your idea
To sum-up: The best case scenario in my opinion is to reach out to the specialists to have a clear answer & analyze your idea. Doing market research by yourself is also a good option if you don’t want to spend a sum on such an early stage — just make sure you do it with full dedication otherwise you put a bunch of risks for the further stages.
Business plan
After you make sure your idea is valuable & fits your target market you should outline a business plan, a roadmap in other words. It’s needed not only to visualize your next steps for yourself but also for your potential investors if you need them.
A good business plan should represent the following:
The idea of your product
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The problem it solves
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How it solves the problem (the mechanism)
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Your competitive advantages
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Marketing plan
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Sales plan & margin calculation
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Scaling plan for 6, 12, 24 & more months
✓
And keep in mind the more aspects you think over initially — the less expenses you’ll incur.
Here are also a couple of tips that should help you while outlining your plan:
1
Be brief.
- Your business plan should be short and concise. This requirement is due to two reasons:
- Your business plan should be such that the reader has a desire to read it in its entirety. Who wants to waste time on a document that is 40 (and sometimes all 100) pages?
- As a tool for business growth and development, the business plan should change with your company. A long document is more difficult to work with, which means that a business plan that is too long is more likely to get covered in dust on the shelf.
2
Look at an example business plan.
Before writing a business plan, it is better to look at a sample business plan for a company in your industry (cafe, beauty salon, car wash, online store). You will be able to understand how it should look like, how to make the right calculations, what to include in a business plan, industry features, etc. You can search for examples on the Internet.
3
Don’t be afraid.
Most entrepreneurs are not business experts. They have no special education, and they are forced to learn as they go. Writing a business plan may seem like a daunting task, but it’s not. If you know and love what you want to do, it will not be difficult for you to write a good business plan and adjust it as your project develops.
Moreover, it is not at all necessary to immediately create a full-fledged, detailed business plan, the structure of which described in this article. It’s better to start with a simple one-page business plan and build on it in a more detailed document.
Qualitative product
I think I can speak on this topic for hours. Currently let me stick only to the main aspects you should prioritize on that step.
After you clearly see that your idea can be in demand & fits the current market you can proceed to the actual development.
I’d point this out as a must - you have to find a specialized provider nowadays.
One man pure self made startups always will be there, and there will be success cases, but don’t fall victim to the survivor’s mistake, in the current market the chances to successfully compete are pretty low unless you’re a truly experienced specialist in both business and software development.
So how to define a good provider in the ocean of yes-mans & №1 development companies?
Take a look at the:
1
Previous cases.
I’ll apologize before all development companies for revealing this, but if a company never made a project in your industry - most likely they have the following plan underneath - let’s try it & figure it out on the go. They don’t know the underwater rocks you & them will face during the development which simply leads to development time & budget increases.
2
Talk with the actual people who will be working on your project.
It’s very important to mentally match with the team, as each single task could be interpreted differently.
And think about that, a small 3-months project can have a minimum ~300 tasks so just multiply 300 tasks to 10–15 minutes of explanation (p.s. it’s 50–75 hours) and see why it’s important.
3
Ensure that the project is interesting to the provider.
Basically you can feel it through the first 1–2 calls with the company representative. Take a look at how many specific questions they ask. How many corners they pre-handle with their solution. Ask about details on how they will figure out tricky moments, challenge the process, ask for suggestions.
P.S. If you have any FoodTech or E-commerce project - we’d love to take a look at it personally! We love startups & are ready to guide you from point A (even very early stages) to point B (fundraise/continuous support).
Here you can take a look at examples of what you can achieve with us.
Here you can take a look at examples of what you can achieve with us.
Good marketing
I’ll say an obvious thing but just having a good product is not enough.
Nowadays you have plenty of tools to promote your product, but in my practice I often see an issue of the same type where my clients visualize the following plan for themselves: first we build an app, fundraise next, and start thinking about marketing after that.
Nowadays you have plenty of tools to promote your product, but in my practice I often see an issue of the same type where my clients visualize the following plan for themselves: first we build an app, fundraise next, and start thinking about marketing after that.
A good strategy is to prepare a marketing plan beforehand (on the business plan stage is the best case) it should include at least:
1
What platforms will be used - it depends on where your intended audience spends most of the time (ex. we looking for ours in Tik-Tok)
2
Content strategy - think of: who will make a content for you, where you’ll post it, will there be a marketing budget, what your story tell is about, and what you want to tell about - team/product/goals/mission/e.t.c.,
3
PR strategy (you can find more about it here)
The earlier marketing preparations will start - the better. The minimum viable time to start it usually is 1 month before release.
As a result you’ll know for sure what, when, and to whom you should promote your product.
Funds & Resources
The most interesting & important part in my opinion.
I already highlighted the common vision we faced, build a product first — then fundraise — then do the marketing. That’s incorrect, or at least partly correct.
I already highlighted the common vision we faced, build a product first — then fundraise — then do the marketing. That’s incorrect, or at least partly correct.
Fundraising is an interesting topic as it is individual for each person. Someone makes an MVP with his own capital, and someone needs additional funding even for a prototype. Both options are okay, I just want to give a couple of suggestions that can save your time & money for almost any case.
Good preparation is a must
The more & better you know about the market you plan to operate in, your intended audience, your competitors, your short/long term sales & marketing strategy, your income-expenses ratio (margin) the more chances you have in front of your investors to interest them.
Take a look at startups like: Stytch (raised $90m in 2021), Nylas (raised $120m in 2021), or Front (raised $59m in 2021)
Take a look at startups like: Stytch (raised $90m in 2021), Nylas (raised $120m in 2021), or Front (raised $59m in 2021)
Show benefits
And I mean how investors will benefit from your project. It might seem rude but they see you as a potential asset - and that’s completely fine. You must be realistic & sometimes even start with less beneficial terms for you (but please don’t overdo it, always keep your value in mind).
Just be rational & try to plan a win-win terms for both parties based on your stage.
In other words:
1
If you don’t have a product yet & pitch just an idea — show testing results, your business plan, designs, user flows, partners who want to work with you, your industry knowledge, partners you’ve already found, explanations why it should work & e.t.c.
You can structure an offer with a series of steps like an MVP first, release, v.2, collaborations & e.t.c.
To sum it up - the best you can show your investors is a Software Specification - this document is a must-have first stage you have to do before the development starts & I’d highly recommend getting a specialized development team for it.
2
2.You already have a product you’d like to pitch - the best you can do to prepare is to get some traction first. People love numbers & proven results, highlight what you’ve already achieved & not what you want to achieve. Realistically calculate your valuation based on your experience & plan for the near & not so near future.
Good examples: Softr (raised $13,5 m in 2022), and Ledgy (raised $10m in 2021)
Good presentation
Actually a very underrated aspect. Nobody wants to look at boring slides with tons of text & hear boring info about “another revolutionary product”. Be creative, make a sketch about your product (but please don’t make it look cringe), be real & transparent.
And I want to point this out - let them test your product. To feel the value of your idea, show - not tell.
Example: The Plate (raised $1,3m in 2021) and Perfeggt (raised $1,1m in 2022)
Example: The Plate (raised $1,3m in 2021) and Perfeggt (raised $1,1m in 2022)
Hope this helps you to structure your steps in making a new impactful business & we’d love to support you in it & participate in market improvement.
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