Why should you take the time to figure out what the heck it is that you are selling?
According to Bloomberg, an incredible 80% of businesses fail within the first 18 months. The main question is why? Most seem to believe it is because they simply run out of cash. But the truth is much deeper than that. In fact, running out of cash is just the end result of a series of missteps that got them there in the first place.
According to the Small Business Administration, about two-thirds of businesses with employees survive at least 2 years and about half survive at least 5 years. As one would expect, after the first few relatively volatile years, survival rates flatten out.
What makes this data even more interesting is that according to the SBA, “A negative economy has little effect on a given business’s survival. Businesses started in expand¬ing economies in 1995 and 2005, those started just before the downturn in 2000, and those started just after the downturn had almost identical survival paths (Chart 1). Although the economy is not seen as an obvious factor in business survival, it may be that businesses able to weather a downturn nev¬ertheless feel the crippling effects down the road.”
So What is Product Positioning & Why a Post About It?
Well, if 80% of businesses fail within the first 18 months because they run out of cash, and the economy does not seem to be the main culprit…what could the root cause be for such massive failure rate?
That’s why you follow me…to learn how to build a successful business and reduce your risks of potential failure.
So, here is the potential answer
It’s most often….
PITCHING YOUR PRODUCT TO THE WRONG MARKET!
Therefore, it is important that you understand how to get product / market fit. This is the degree to which a product satisfies a strong market demand. It has been identified as a first step to building a successful business.
A good starting point is developing a Product Positioning Map. They work exactly like roadmaps, meaning they get you from point A to point B so you can reach your destination as efficiently as possible. In business terms, a product positioning map helps to define your company’ss niche relative to your competitors.
Product Positioning Strategy:
Below are 3 reasons to position your product or services correctly and most importantly, what you can do to avoid it happening to you:
- Product Positioning Reason #1: Not Understanding a customer’s pain. This is probably by far, the number one reason why businesses fail. Most entrepreneurs come up with an idea, and instead of talking to potential customers, and understand their pain, they go ahead open up a business and expect customers to come and buy whatever it is that they have to sell.Rather than launching a business and then trying to figure out how to attract customers, you should instead talk to your potential target market first. Listen to their pains, complaints, frustrations, etc. Only then, try to create a product or service that will solve his pain. This will not only reduce the sales cycle, which in return will increase your cash flow, but it will also create loyal customers in the process.
- Product Positioning Reason #2 Creating another me too product or service. These commodity products or services, especially in a highly competitive market, make it very difficult to differentiate your business. Trying to get the crumbs is not a way to grow a healthy and profitable business. You may be able to get away for a few months or even years, but eventually. you will join the “living dead.”You have to be careful when using this approach, because if you develop or create something customers do not just yet know, as a small business you may not have sufficient funds to go through the process of teaching the crowd about your product. It is best not to differentiate too far from what is already known. This way, customers are already familiar with your product or service, yours is just better, faster, etc.
- Product Positioning Reason #3: Failing to have a clear message. In today’s economy, it is hard to be everything to everyone. Even if your product can deliver to multiple markets, it is best if you define what it is that you are selling and who you are selling it to. Here is where data becomes extremely important. Only then will you understand who is really interested in what you have to sell and which message is getting the most traction. Try to avoid guessing, or assuming what customers want. Always test, validate, look at your data and iterate or pivot as necessary.
Before we wrap up, you may want to look at a couple of product positioning examples:
Product Positioning: Wrapping It Up
Think about how non-risky it can truly be to run your own online business just by making sure you start on the right footing. Exercise great care when planning your product positioning. Make sure you don’t make potential mistakes that may lead you to cash-flow problems, or business failure. Use the above suggestions and you will massively increase your chances of success.