Main parameters affecting startup execution and questions to group potential customers
Now, you are aware of the five stages of technology adoption and customer awareness. If don’t, check my previous article!
What did we learn before the previous article?
-Start up is a scalable business,
-You solve a problem within any eureka moment,
-There is a fork in the road before start executing,
-Product Market Fit / Market Entry Barrier curve is very important,
-PoC, Prototype and MVP are levels of an idea to sales step and for startups whose competitors don’t reach the actual product market fit 1M USD MRR.
All articles are connected. So, if you don’t have any idea, check all first one by one.
What is the next step?
We will start contacting people or companies by categorizing them in the way of customer awareness levels and technology adoption steps.
With PoC, you have been searching for whether your idea can be done or not.
With a Prototype, you have been discovering what the product will look like. It also allows you to create first screens, user flows, product specifications, and planned features.
With MVP, you start to find an answer to the question “Do leads also have this problem and would they like to buy?”
MVP means you are in the market with your product. 0 USD means no product market fit but 1–10K USD MRR means you got something. It is the illusion of product market fit.
Especially prototype level is for founders. Because all plans are being shaped at this level. You meet five parameters at this level:
- Timing: It is the most important parameter of your start-up. If your potential customers are fully unaware, maybe it is not great timing to execute.
- Team/execution: You will understand the importance of this matter after sales start. After ten sales you usually understand how to reach more and what the product should look like.
- Idea: It is nothing itself. Everybody has ideas about problems but a few people start executing an idea. Be sure that potential customers think differently from you about your product. You will understand the importance of execution rather than idea after starting to talk with your leads.
- Business model: It is directly connected with the revenue/pricing model. Your sales are being directly affected by this parameter. Mostly in the prototype process, you explore it. Is it going to work with the marketplace model or the subscription model? What about freemium, pay-as-you-go, etc?
- Investment: It is not a short-distance run. It is a marathon and ecosystems are not friendly about investments. Today growing MRR is the most important parameter for investors. Maybe you are going to bootstrap 3–5 years in your journey.
These are from Ted Talk by Bill Gross: “The single biggest reason why start-ups succeed” He has a great point of view that comes from experiences.
The point is startup journey is like walking in the desert until starting to sell. You are mostly hallucinating against circumstances.
For example, a team is important but how? Most startup founders start walking with their friends around them. They trust each other in the first step but they don’t talk about reality because of their inexperience. They mostly think this journey is short-term. Priorities are important.
Priorities can be like buying a car or house, marriage, children, or hard work conditions whatsoever. It all depends on people and it changes from person to person. Not every people can be resistant to hard times or conditions.
You should definitely/talk with your co-founders about the marathon.
Another example from the business model? You can’t manage what you can’t measure. The commission revenue model can be uncertain against subscriptions. It may take a year to understand this and time is so important for co-founders.
What about investment? How many years or months can you bootstrap? What is Plan B? What are Plan C and Plan D. You should align this matter very carefully.
You are maybe an ideator. Do you think that you are the most important person in the room? What about idea stealing? Come on! Yes copying a product is what people or companies do but your idea? Why is execution everything? Because ideas don’t meet with potential customers.
The big bomb is timing. Think about the group of “unaware” in customer awareness levels that I mentioned in my previous article. Unaware is a group of people who don’t know what the problem is. What does it mean?
It means extra cost because you need to educate them first. There are so many examples of wrong timing in both hardware and software startups.
Believe it or not! You should have a double or triple check on these matters my friend!
When you fully think about those topics, you also start talking with around and potential customers.
What is the first mistake taken by the founder?
They talk everything around themselves about their startups like they will become a future co-founder and world conquerors together!
They ask the question: “Does it work or not?”
Don’t. It is wrong!
Now, you already learned that there were parameters affecting execution like timing, team, idea, business plan, funding.
Most people around you have no start-up experience. They just have emotional guesses upon your idea with the question of work or not.
You should first search for who will become your future customers. Who are the leads?
If you are going to work with companies you can prepare a list from the chamber of commerce or organized industrial zones etc.
If you are going to work with people you can check communities, discord channels, social media groups, etc. with related topics.
The question is “Do they buy or not?”
Free users can be misleading about experimenting and pivoting your product but potential customers’ feedback will direct you to the sales.
You should prepare questions for your potential customers
If they are “unaware”, you should mostly talk about the problem that they can’t face and question them about the existence of the problem.
If they are “problem aware”, you should make them dream about a solution. Questions direct them to dreams. What if there is a product like this solving problems or something like that?
If they are “solution aware”, you can question missing points and wrong things about solutions and how should it be.
If they are “product aware”, you are already on the way and they know about you but why they don’t buy from you?
If they are “most aware”, congratulations! You have a customer. You are now at the level of the illusion of product market fit so what is your plan to make them pay again and again?
Questions can be increased! Besides grouping people or companies, try to group them about which kind of technology adopters are they! Innovators? For example, they mostly download every application or talk about websites. If they are also your potential customers, you are close to sales.
Or they can be laggards. They don’t like technology. They are addicted to traditions and skeptical. You should also try to learn their personality with side questions.
The truth is you are just going to become successful with 2,5% of the total who you contact! It means you will have so many rejections.
Let’s have a brainstorming session! You will contact 100 people or companies.
What is your worst-case scenario?
- 3 of them will buy,
- 13 of them will be about to buy but they will have some expectations and sales will take months. If you are lucky, it will take weeks,
- 34 of them will mention their problems and opinions about solutions. They will talk about their good intentions but they would also like to see your references, success stories,
- Another 34 of them will directly reject you or you will be ghosted by a part of them,
- Finally, you will be ghosted 100% by the rest 16.
What is your best-case scenario?
- Any but any scene is better than the worst-case scenario. (hoho)
There are five stages of the technology adoption life cycle: 2,5% innovators, 13,5% early adopters, 34% early majority, 34% late majority, 16% laggards.
That is why your start-up is just for 3 people in the first steps.
Of course, it depends on your ideal customer profile, revenue model, product type and level, etc. As a result of all:
-Think about parameters of timing, team, idea, business plan, funding,
-Prepare a list including leads,
-Start to contact them,
-Question and learn about problems, solutions, and products.
-Try to sell according to your product-ready level.
-Prepare yourself for so many rejections,
-Experiment and pivot!
