Why Most Startups Fail
Why do some startups succeed while similar startups with similar products languish and die? The difference is in the quality of their sales and marketing, according to Gerhard Gschwandtner, publisher of Selling Power magazine.
He observes that many entrepreneurs--especially those with an engineering background--lack much understanding of the basic skills required to bring a product to successfully to market.
For example, one of the biggest challenges that startups encounter is how to become visible to potential customers. What's needed are crisp, short sales messages that can break through the noise. All too often, though, startups have messages like this:
We are a cloud-based intelligent sales automation software company whose products are designed to automatically prioritize sales leads thereby empowering sales representatives to reach their true potential and avoid the many pitfalls associated with multitasking.
(Translation: "Our software reveals which sales leads are most likely to buy.")
Another challenge startups face is hiring salespeople who have the background and experience to sell their product. Instead, they tend to hire whoever comes along, put him or her on straight commission and see if he or she will sink or swim. "While entrepreneurs often expend vast efforts to recruit and retain the best engineers, they seldom put much thought or energy into hiring the best salespeople," says Gschwandtner.
As an example of the importance of sales and marketing, he cites Salesforce.com: "When they launched, there were already two 'cloud-based' CRM solutions available. Salesforce won because [CEO] Benioff marketed the benefits of moving your sales data online, while his competitors were marketing features and functions." Benioff also did an "excellent job" of building a sales team that could articulate that benefit to potential customers.
Why do so many entrepreneurs stumble when it comes to sales and marketing? In their heart of hearts, they simply don't feel that sales and marketing are all that important. Despite all evidence to the contrary, they believe the myth that, "If you build a better mousetrap, the world will beat a path to your door."
If entrepreneurs truly want to succeed, they should be spending more time on sales and marketing and correspondingly less on product development. After all, what's the use of having a terrific product if nobody knows about it or can figure out how to buy it?
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GEOFFREY JAMES | Columnist
Geoffrey James is an author, speaker, and award-winning blogger. Originally a system architect, brand manager, and industry analyst inside two Fortune 100 companies, he's interviewed over a thousand successful executives, managers, entrepreneurs, and gurus to discover how business really works. His most recent book is "Business Without the Bullsh*t: 49 Secrets and Shortcuts that You Need to Know."