Creating a product development strategy is a sure-fire method for mitigating the risks that come with releasing a product that needs to align with user expectations perfectly.
At Nopio, as a web development company, we meet a lot of people thinking about starting their own online business. It’s very hard to know who has a chance to succeed, but there are some qualities that are common among the ones who have. According to Bloomberg, up to 80% of companies will fail, and this ratio is even worse for startups: according to Business Insider, up to 93% will fail.
First of all, let’s decide what it means for an online business to be successful. We’re not talking about explosive growth, millions of users and tons of money pouring in with every VC that drops by to see how the CEO is doing. As nice as it would be, for most people success is steady growth. It is income that covers expenses and salaries, a plan for future expansion and a favourable prognosis of the next 12, 24, or 36 months. You could say it’s not much, but it’s still pretty hard to achieve.
When you work with multiple people on a daily basis (especially in tech consultancy), some similarities start to emerge fairly quickly. Does that mean that we have a universal formula for success? I wish, but what we can offer are pointers to keep you focused and heading in right direction. Is everything on the list an absolute must? No, but having these increases the chances by no small margin, at least judging by our experience.
So, what are these secret treats that we’d love to see more often? Here they are:
Expertise in the domain
This is a big one. Most people instinctively lean towards domains they feel strongly about, but not always. On the other side of the spectrum are people who may have heard positive gossip about this cool new thing, have done some research (hopefully), and are starting their new venture from scratch.
In some cases, this is enough to get an initial grip on the subject and proceed from there, but more often, a lack of real world experience shows in the product or service offered. This issue, despite being a big one, is fairly easy to overcome by partnering with someone experienced or investing tons of time in further development of skills and experience.
What are the dangers connected with this advice?
Firstly, it’s extremely hard to design business process and logic without deep understanding of the subject. Since every internet business should deliver a value, practical experience helps to understand the needs of customers and offer them solutions they really need.
Secondly, everything has a set of common errors; all new comers do. Some of them are possible to avoid by research, but some are clear only for experienced professionals.
Thirdly, if the person responsible for driving the internet business forward is super busy learning and researching the field of expertise, he or she will need to divide their focus. That’s not good for anybody.
A final thought on this point is that we, your technology team, can help to some extent, but ultimately, we are experts in our own domain. We can bring in our experience from similar projects and propose how some of the features may work, but at the end of the day, we need high level direction and business process that we can work on implementing.
Monetization strategy and business plan
It’s a common thing these days, especially among startups, to begin operation without a good plan about how the idea in question will be monetized. It’s quite common to see a project based on an idea, but without real thought about how it will be earning money.
…why would someone want to fund a project that has no plans for how to make money?
Theoretically, you can count on receiving funding from interested VCs. Theoretically. There are some issues with this approach. Specifically, why would someone want to fund a project that has no plans for how to make money? Also, even if some funding is raised, there is no guarantee that it’s possible to find a way of becoming profitable before the funds run out.
From our experience, the best approach is to plan for “profitability on day #1”. If profitability is not possible (often with SaaS products), there should be a clear strategy as to what needs to happen in order for the project to start earning money and eventually become profitable. What’s more, this plan should be followed and checked in on regularly. The more you check in on your progress, the better. For each step, you should ask yourself: is our plan realistic? Are we doing well enough to hit our targets?
Willingness to proof the idea
Most ideas seem appealing if you think about them long enough. That doesn’t mean that the market will see it as valuable enough to buy or invest in. It’s best to start small (or super-small) and see if it’s worth investing the time and money.
There are ways you can cheaply check if the project has a chance to gain some traction. Do not convince yourself that the idea is too good to expose to the general public for fear of competition.
There are 3 probable situations:
- The competition already exists and you are just a part of it;
- The competition is non-existent because the idea is debatable (or just bad);
- You have found a niche. In this case, although you may never be sure if this is where you are, your fear of competition is strong. In most cases there is no reason for this; an idea is nothing without execution.
Building something requires the owner to put in a lot of effort, focus on the project, be willing to take risks, and be brave when making decisions.
Deep focus and goal driven personality
Think about that last point: “an idea is nothing without execution”. Some of the best ideas never happened purely because of the creator. Building something requires the owner to put in a lot of effort, focus on the project, be willing to take risks, and be brave when making decisions.
It takes some time to understand that a business does not build itself, but requires time, dedication, and love day, after day, after day. Just because people catch on to your idea doesn’t mean you will lose it. It’s more about how you execute the project than what the idea is.
It’s also quite likely that your original idea will shift in different directions when you see how customers react or when new possibilities present themselves. Be ready, be observant, be focused, and be willing to adjust your goals.
Personal brand and business network
It’s often the case that people who have already worked on their own business, successfully or not, and have built a project are the most likely to succeed. Why? Because they have gained experience, contacts, and have learned what may go wrong when running their own show. These people often require less feedback and support from technology partners as some of the stuff they are facing is familiar – they can prevent issues instead of reacting to them.
Another thing that you can gain from previous experiences is a network of business contacts. These help to spread the word, discuss possible opportunities, or are good selling points. Also, friendly contacts are exceptionally good as evangelists for the new project they find appealing.
Love for numbers and reports
Measure everything, everywhere, at any time. We have noticed that people tend to ignore the reporting when it’s most needed – at the very beginning of the project. It may seem like a waste of money – building a report while we could be building features – but without reporting figures, how will you know if the feature pays off?
Our most successful customers are into reports… very into reports. You need reports to see how your online business is doing, if it’s profitable, if it’s growing or shrinking, what the prognosis is for the future. Look at the reports not as a cost, but as an investment.
Working on your own “stuff” is not easy. It’s a challenge, it’s tiring, and it’s often stressful (especially in the beginning). But it’s also rewarding. Don’t deny yourself the rewards – be clever. Invest your time into proven ideas, commit yourself to the project, drive it with a plan and dedication. Also, get yourself the best tech team – we’re here for you! 🙂