You have a great tech idea and are ready to launch a revolutionary IT product or service. After following all the steps of the SDLC, you are confident that your idea will be a hit and generate exquisite revenue, right? Let us inform you that launching a tech idea is more complex than it looks.
Many startups attempt to succeed each year in the market, but only a small percentage can endure the intense competition and constantly evolving technology landscape. Speaking factually, the failure rate among startup businesses is as high as 90%.
As a result, launching a tech startup is an extremely risky idea in the current business situation. It leaves many entrepreneurs and businesses wondering, ‘How to launch a successful tech startup and not fail in the market?’
If you, too, have this question, let us tell you are at the right place. This blog will provide complete information on factors contributing to a high failure rate among tech startups. Please stick with us until the end, as we have provided a fail-proof process for launching a successful tech product for startup businesses.
Let’s start the blog by understanding more about tech startups and how they’re a prominent trend among entrepreneurs.
Back to Basics: Tech Startup 101
In lay terms, a tech startup is any business that uses digital technology to deliver a unique product or a service. The idea of a tech product can be as complex as Google or as common as Uber and everything in between.
Today, as the scope of technologization is rapidly increasing, many people, especially young entrepreneurs, are coming up with new and innovative ideas and are launching their tech startups. These tech startups are now evident in almost every industry and sector, bringing revolutionary change to how these industries function.
There needs to be more than just an idea for a startup to guarantee success. The fate of the business is determined by various factors crucial for its growth or failure.
It is essential to comprehend the causes and elements that may lead to the failure of your technology startup. Therefore, we will examine each factor in depth and determine what actions to avoid to launch your startup effectively.
Top 7 Reasons Why Tech Startups Fail
To avoid the failure of a tech startup, it is essential to know the internal and external factors that can cause it. Knowing these factors will help create a successful business and launch it safely in the market. Therefore, let’s explore these factors in detail.
Business Model
A business model is a framework through which startups plan to operate. This architecture creates a foundation for further business planning and is a critical point for each startup.
While it may not be mandatory to create a business plan right when you begin your startup business, doing so beforehand can clarify your business’s specific aspects.
An optimal business model means a plan or strategy that generates the best results for your business and lays a strong foundation for sustained and long-term growth. Many tech startups need to pay more attention to this aspect of their business and follow a nonoptimal business model.
When choosing a suitable business model, it is essential to understand that no ‘one solution fits all’ strategy. You must follow a trial-and-error approach to find the business model that works best for your organization.
User Value
Tech startups often develop services or products to meet the user’s needs. However, only some of these startups can deliver a solution that adds value to the users. In cases like these, users often end up abandoning the products/services of such businesses.
Therefore, it is essential that while you come up with an idea, you also outline ways in which your solution holds value for your target users. This factor will enable you to bridge the market gap and deliver unique value propositions, ensuring your brand’s success.
Team
The crucial element in starting a prosperous tech enterprise is assembling the correct team. In the case of tech startups, you must have a flexible, scalable, and experienced team working on your project to ensure your product is developed with the proper practices.
When tech startups begin their business, they often need to hire a complete team to work on the project. It places their business under tremendous financial burden, eliminates flexibility, and increases rigidity.
Therefore, if you are a tech startup planning to develop a digital product, we highly recommend collaborating with a development outsourcing agency and hiring dedicated developers for your project instead of hiring an in-house development team. It will be helpful to get skilled people in a cost-friendly manner.
Moreover, this approach enables tech startups to quickly scale their team, meaning you can add or remove members from the appointed development team at your discretion, further aiding flexibility.
Idea
Whether or not your tech startup will succeed in the market depends on the product or service you deliver to your target users. It is crucial that your tech startup idea is up-to-date and meets the current needs of users.
A great idea is innovative, unique, and based on the latest user demand. If you need an idea for your offerings, you can dive into the market and research users’ challenges. With this analysis, you can develop a creative solution that appeals to users and helps them overcome their difficulties.
It is important to note that even tech startups with some of the most innovative ideas are prone to failure. While these entrepreneurs possess great ideas, they need help executing or implementing them efficiently.
Therefore, we recommend you do a depth research on the market to dig out the best-in-class ideas for your tech product.
Marketing Plan
Suppose you have created an excellent digital product with a lucrative monetization plan and are ready to set foot in the market. After following all the necessary procedures, you need a strong marketing strategy to avoid experiencing losses quickly.
Marketing is the channel that connects your brand with the users and helps generate sales. By effectively marketing your product or services, you can boost sales, create a distinguished brand image, and generate tremendous revenue.
Therefore, we cannot emphasize enough the importance of a robust marketing plan for your offerings. You can market your solution traditionally or digitally or even go with the hybrid marketing approach.
Funding
Having sufficient funds is an essential part of starting a business. While most companies rely on external investors, some go for self-funded launches. Whichever approach you follow for your startup needs to be exquisitely well-planned and stable. It is because most tech startups fail due to a lack of funds amid their launch.
One of the most common practices here is to develop a prototype of your product and use it to get investments. These prototypes act as a working model of your solution and are excellent for convincing investors to invest in your project.
In addition, optimally managing the funds is equally important to ensure capital management and revenue optimization. This factor will ensure that you generate high ROI and remain in business, eliminating the risk of bankruptcy.
Entry Time
The blog emphasizes the significance of businesses finding the appropriate tech product/service and promptly introducing it to the market.
Despite excelling in all other factors, many tech startups fail due to the wrong time they choose for market entry. It would help if you considered factors like existing competition, user demands, market readiness, and awareness about your tech product.
By optimally timing your product’s launch, you can easily create a solid market entry. Some tech startups have gained tremendous early bird benefits by entering the market at the right time and have experienced world-class success.
These were just a few reasons why so many tech startups fail. By thoroughly considering these factors, you can boost the success potential of your tech startup and launch a lucrative tech solution in your target market.
These are only a couple of actions that you should steer clear of when starting your business. So, what must one do to launch a successful tech product? Moving further, we will dive into the complete process of developing and launching a tech product and try to get an answer to this question.
How to Launch a Product as a Tech Startup?
Any tech startup looking to enter the digital market needs to undertake an extensive and well-planned development process to build a tech product or solution. In this section, we have provided a time-tested and fail-proof method through which you can make a tech solution for your startup.
Create an Idea
Creating an idea is the first and foremost step of launching a tech startup. It is also the step that motivates most entrepreneurs to start a tech business in the first place. It is essential that your idea is competitive and has revenue potential, apart from being unique. You can move to the following steps if your idea meets these requirements.
Research the Market
After coming up with a strong concept for your technology startup, you can conduct market research and broaden the scope of your idea. The most common practice among tech businesses is to conduct 360-degree market research, which includes the target market (end users), competitors (companies with similar ideas), and niche (industry you wish to target).
You must have gained important information about the technology idea at the end of the stage, which will serve as the foundation for your product. It includes the type of product you wish to develop (a website, mobile app, software, game, etc.), technologies you will need for your project, features, etc.
Create Business Model
Thorough market research will help you create a business model canvas, an architecture that will further turn your black-and-white idea into a revenue-generating reality. A business model comprises various elements and components like revenue streams, value propositions, selling channels, user segments, and more.
As mentioned, many startups must start their business with a business model. However, doing so is an excellent idea to further fail-proof your plan. Moreover, if you plan to get external investments, having a BMC can be extremely useful in convincing investors.
Design the Product
It is where your idea starts taking a visually understandable shape and form. Here, UI/UX designers run your idea through various stages of the design process, namely sketching, wireframing, mockup creation, prototyping, and design testing.
The size and complexity of the product will mainly estimate the product design time and cost. Depending on your capital availability, you can either develop an MVP product or go for full-scale development. Most businesses use MVP development, which is feasible for most tech startups.
Code Your Product
In this step, a team of programmers codes your solution based on the design created in the previous stage. One effective method is to use agile programming and test your solution continually during development to save time compared to testing the program after it is fully coded. After completing the coding process, you are ready to enter the market with your product and offer it to your intended audience.
Scale
Once launched, you can scale your product per your requirements and add new features. Most businesses undertake periodic scaling and change their solutions’ design, features, elements, etc., to ensure they are relevant to the latest market demands.
To optimally scale your product, you will require user feedback and continuous market research. This step is especially crucial for businesses that start with an MVP product and plan to scale it to an advanced version as their business grows.
Market Your Product
In the previous section, we discussed the critical participation of the marketing process in the success of a tech startup. An efficient market strategy can maximize profit and create a unique brand value among your target users.
Some tech startups start marketing their products right from the design stage. This process helps them generate curiosity among the target customers and set a firm foot in the market right from the launch. By adhering to this process and following the steps mentioned here, you can create a thriving tech product for your startup.
Summing It Up
With more and more tech startups in the market, it is becoming challenging for entrepreneurs to sustain their businesses and remain profitable. Through this blog, we aimed to shed light on common mistakes that entrepreneurs should avoid when launching a tech startup.
You will be able to reduce the risks of failure and increase your tech startup’s success potential by focusing on the points. Moreover, following our systematic and time-tested tech product development strategy, you can deliver a world-class solution to your target customers.
