Get Ready To Learn A Ton… Starting With How NOT To Launch a Company says Peter Decaprio.
It doesn’t matter if you want to start your own company or join someone else’s startup team – before you ever take action it is crucial to have a plan to follow.
Unfortunately, most entrepreneurs don’t take the time to develop that plan before jumping into action and this leads to poor performance which often results in failure for many startups! In fact, 1/3 of all startups fail within the first 18 months due to poor planning. I’ve heard it said that if you want to increase your odds of success then do the opposite of what most people are doing when launching their startup or joining someone else’s team!
Before I get too deep into this post let me tell you about my friend Dave Balter who is an expert at teaching entrepreneurs how NOT to launch companies. You can also check out his blog with tons of great posts on entrepreneurship here.
Dave taught me this lesson in April 2012 when he brought in his friend Frank Demmler to teach a class about Entrepreneurship at Syracuse University’s Whitman School of Management.
During that class, Frank shared some powerful insights with us about how NOT to approach your startup journey. Here are just a few of the gems I took away from the class:
4 Tips for Launching a Successful Startup (The Opposite of What You Might Do)
1. Low Start up Cost –
One way not to launch a startup is by spending too much money before you really understand what your customers want says Peter Decaprio. Our goal at DealerInspire was to charge dealers no more than necessary for our services to be cost-effective and then increase prices over time as we learned more about the market. Unfortunately, we rose too much funding without selling enough volume which ultimately hurt our bottom line and ability to scale! I still think it is important to raise money but be cautious how much you rise before you can prove that you can sell your product or service.
2. Get Your Product to the Market ASAP –
Another way not to launch a startup is by spending too little time developing a prototype for your idea. We spent a lot of time perfecting our software even though we knew it wouldn’t be right from day one. We wanted to make sure every feature worked flawlessly before releasing anything because there was no margin for error due to all the different integrations with dealerships’ websites and backend systems. I still think it’s important to keep your product in the lab until you are ready for market but don’t wait too long!
3. Focus on the Customer –
Another way not to launch a startup is by focusing too much on what you want your company to be versus how you can develop products and/or services that meet customer needs. We spent a lot of time building things in our software that dealers didn’t ask for simply because we thought they would make us more appealing or even give us an edge over our competitors in the marketplace. As entrepreneurs, we tend to have great ideas but if they don’t solve a problem for someone then you’re just another innovator with an idea nobody wants! Today when selling anything online (software, hardware, services) it is critical to constantly speak with your customers and ask them, “What problems do your customers have?” This way you know what features to build next so you can solve their problems.
4. Secure Customers before You Scale –
Another way not to launch a startup is by focusing too much on scaling before you actually begin to sell your product or service says Peter Decaprio. We spent too much time building our software not realizing that we needed actual clients (dealerships) using the system in order for Dealer Inspire to be worth anything! The only reason we were able to secure funding was because one of our co-founders had already launched another successful company (Peterbuilt Motorsports).
I hope these lessons from Frank Demmler about how NOT to launch a startup help you in your journey. Please comment below with any tips or questions that you have and I’d love to hear some of the ways that YOU think we could have done our initial launch better!