Today, I am reminded yet again why start-ups fail.

I met with a lovely couple a few weeks ago who wanted to open a retail store. They have a dream to work for themselves and the wife wanted to be in fashion.

They are new to the market and have never owned a fashion outlet, but they both have passion and are determined to do it.

I asked all the normal questions;

• Have you done market research?
• Who are your competitors?
• How will you differentiate yourself?
• What location will you open in?
• Do you have a business plan?
• Have you looked at product and through research identified what will sell to the surrounding target audience?
• What will your price point be?

And the questions went on and on. Many could not be answered.

My immediate reaction was to encourage them to do their due diligence. To develop a business plan and do market research.
hope they prove me wrong.

Even though they are both really nice people, my gut tells me that they will open a store and fail. I really hope they prove me wrong.

Start-ups fail for many reasons. Some through no fault of their own, and others because the buddying entrepreneur has not done their due diligence and were acting on a whim.

Starting a business is not for the faint hearted particularly if you take the steps to sign leases for premises and hire staff. It can not only cost you a lot of money, it may even cripple you.

10 Reasons Why Startups Fail:

1. Market: No market research into viability of selling a product or service to a market segment.
2. Economy: Economic downturn directly affects your business (i.e. retail)
3. Business Model: No investment in developing a business model or ignoring the obvious when developing your business model that is too much about ‘you’ and not enough about your market.
4. Capital: Running out of money, cash flow problems and being undercapitalized to start off with. Short cuts along the way may mean that your brand is impaired.
5. Too much focus on you and not who you are trying to sell to: Entrepreneurs who name a company after something that means something to them, but nothing to their customers. They pick colours and store fitouts based on what they like, not what the market is looking for.
6. No point of differentiation to competitors: Going into an over-saturated market with the same copied product and trying to make it work will be a disaster.
7. Location: Location is king – if you cheap-skate on location, you may find that you set up shop where no-one will find you. The result will speak for itself.
8. Pricing: No real pricing strategy and not enough investigation into the figures. Make sure that you know when your business will break even, what your costs are to run your business and what your plan is upfront if you don’t get enough sales in the door at the start. If you price your product competitively and find that no matter how much you sell, you can’t make a dollar – yet your competitors with greater buying power are making a killing – then you need to reconsider your pricing and product strategy.
9. Ignorance: Contrary to the saying, ignorance is not bliss. If you are ignorant about running a business and making it profitable, chances are you are going to fail. This is not a game of monopoly. This is real life, with real money and real responsibility.
10. Listen to those who have been there and done that. You will get pearles of wisdom from people you least expect. The greatest business success stories come from people who have learnt to listen.

And… two extras for good measure which are the most important of all…

PRODUCT: Do your research. Make sure you are not starting up with a product that has no chance of succeeding in the market. Make sure that there are people in the market that would want your product. Don’t compete head to head with industry leaders with no point of differentiation. Ensure that your product is quality, professional and represents your brand.

MARKETING: Develop a brand that resonates with your target market and then develop a marketing strategy to make sure they all know you exist, what you do, where to find you, why they should choose you over others etc.

Did you start a business that failed? Share your story with me on msmith@marketingeye.com

A goal for Marketing Eye is to improve customer satisfaction in the next 12 months.

It takes so much effort and money to acquire a customer, that by investing back in their satisfaction, we will automatically improve our bottom line and create greater brand loyalty.

To do this though, you need to create a “shift” in the way people think in your organisation. That is easier said than done.

Randall Stephenson became CEO of AT&T in 2007 and his first port of call was to create a shift in thinking across the entire organisation.In the past the company had been focused on their wireline business, but he wanted everyone to shift their thinking to the future, which was wireless. “That’s where the growth is,” he said. The new strategy was to “Mobilize everything” and so he went about communicating this shift to all the employees, stakeholders and customers.

Marketing Eye’s shift is to create content to drive connections. Our aim is to connect our customers to their customers through content. Now this may seem simple, but it isn’t as easy as it sounds. Marketers in consultancy firms believe that they write a strategy and they implement it. That’s how to get a pat on the back after the year-long contract with one of our clients. To do what you say you are going to do and to deliver every element of the marketing strategy ontime and within budget.

Well, that’s no longer enough. Ultimately clients are looking to connect to their clients in a meaningful way. By understanding that connection underpins marketing results, marketing consultants can refresh the way they work with clients and create more meaningful and sustainable client acquisitions.

Creating a shift with clients and communicating the value in the shift is also a challenge. Clients have the same mindset as marketing consultants. They want a marketing strategy, and then once that has been agreed upon, they want it implemented.

If we go to the client and take them back a few steps and talk about “content driving connections”, we are immediately creating a situation where the client says, “I thought that is what we are doing” or “that sounds like marketing  bulls***”. Both are true in some ways. Marketers, like their PR and advertising counterparts are renowned for putting a “spin” on everything that they touch, but the truism of “content driving connections” is positioning companies to think about how their content interacts with their target audience.

For instance, Marketing Eye has a twitter account. Actually, we have two. We communicate on that Twitter account any new blogs we have written, positions open at our firm, client achievements, and we retweet interesting stories. We put content out there for the world to see. Our blog, is content. It shares the story of an entrepreneur with a big dream who has ups and downs and sometimes has to move cross-ways. The marketing blog also shares information on marketing and sales, in which the company specializes in. A loyal following ensures that the blog drives Marketing Eye to number one on Google for keywords that are essential to our business without costing money for adwords or sponsored links. Ultimately, by writing a blog daily, we save money that our competitors pay out for advertising on Google and re-invest that money back in technology to ensure that we work harder, faster and smarter for our competitors.

Content is driving the future of Marketing Eye. Full stop.

The issue is convincing the “financial planning firm” or the “logistics company” that they need to re-think their strategy to create more meaningful content, that resonates with their target audience and creates a connection. Not just for today, but also for tomorrow.

While marketing strategies work if they have the right strategy and are executed according to the plan, marketing consultants need to take one step back when developing their marketing strategies in 2012 and say, “how does content drive the connection” between the client and their clients? What content is needed and how often does content need to be populating the minds of the target audience?

Have you changed your marketing strategy for this financial year?