There are many ways to transform your product, idea or project into a startup and launching online has become the most attractive path to do just that. However, they all entail careful planning and a number of actions during different stages of your launch.
Regardless of the product, you still have to develop a prototype or MVP (minimum viable product) and raise capital to become a viable startup that can mature into a profitable business. Based on our experience in launch strategies and marketing techniques at DRVE, we decided to outline key considerations to help you to develop your pre-launch formula and keep you on track for success.
Do Your Research
An idea is like sand on the beach, plentiful. What really adds weight to an idea is knowing its position in context of the existing market and/or customer needs. Even the most innovative products are solving for something whether it be completing a link in the value chain, satisfying a niche market segment, bundling multiple products into a single solution, unbundling a specific feature or aiding a problem faced by a customer.
At an early stage, it is important to research the target market size, existing competitors, competing business models, product delivery process, what customers most value in the product and the customer journey. Discovering how your product fits into the greater market and customer needs through research will help you confirm that your product really can compete against existing products and adds value to the customer.
Once you’ve pinpointed the essential ingredients, it is time to take your idea and design your product’s prototype. At this stage you can truly start to assess the economics and scalability of your product. This may appear to be against the campaign-based crowdfunding model however, products that go the distance which develop into sustainable cash-positive businesses have these questions on viability answered upfront. With a prototype at hand combined with your research, your project is now looking more credible to potential investors who can envision your business beyond a single campaign or equity investment.
To ensure you can follow through on your product, it is crucial to test whether the numbers and economics behind your product actually stack up in the marketplace. To do this, you must quantify every cost that you envisage to come up in the launch, development, production, modification, promotion or support of your product. Because your product is new to the market, these numbers are assumptions that can be used to test how your costs will act at different volumes. If accurate, they can also help identify the minimum amount of revenue required to have positive cash flow and indicate an approximate level of financing required.
How to start and fuel your pre-launch?
You now understand your market, customer, product and the financing required to deliver your product at scale to customers. But how to build a storefront, launch a brand, begin taking sales, produce products and deliver while raising finance to do so?
The likes of Kickstarter or IndieGoGo are fantastic platforms that have found one solution to this problem however, crowdfunding platforms have become quite crowded. For a campaign to be successful nowadays, they require pre-launch investment into e-mail, online, social media and/or influencer marketing just to direct attention towards your campaign page.
Alternatively, you can raise finance from investors to launch using your own activities and marketing strategy in exchange for equity however this would mean adding a new stakeholder, who come with their own distinct intention, to invest in your yet-to-be-proven business. There is a wide spectrum of equity investors whose goals and priorities vary, which makes equity raising a time consuming and challenging task. Although equity investment provides the resources required to launch, how those finances are deployed and allocated at the early stages of a product launch is not an easy challenge to overcome. Lastly, there is equity crowdfunding whereby you campaign your business concept rather than your product to individual investors or groups of investors (called syndicates) through platforms such as Seedrs. Equity crowdfunding poses a blend of the resources and challenges outlined above. These solutions to fuel your early growth can be easily exhausted or difficult to scale, which may not give a new product the true foundation upon which a self-sustaining business can be built.
Alternatively, founders and entrepreneurs may choose a path where they can seek funding for specific purposes from different sources (e.g. credit lines from a bank), outsource specific functions (e.g. hire a marketing agency) or a combination such as those offered by certain accelerators or incubators. At DRVE for example, we have invested in several early stage startups by fuelling sales growth without taking equity, that effectively improved cash flow, market reach and brand awareness. This in turn generated a more organic revenue base that could be continuously replenished and repeated.
Explore all paths
Every founder and entrepreneur needs to assess all options, opportunities and/or potential partners before a path is chosen. Beyond pre-launch, the journey to making a business profitable and sustainable is riddled with challenges and many paths are difficult to track back from. Entertaining all paths before you launch will help you decide what will work best for your product and business in the long run.