5 reasons to persevere through start-up obstacles

They said it was going to be hard. But you had no idea it would be this hard. Exhaustion, a poor diet, a parade of ‘no’s and disappointments. Plus mentors and advisers, including me, listing reasons to pack it in. It isn't easy to maintain your enthusiasm and energy in the face of all that.

So when should you not shutter your start-up?

The only thing I hate to see more than good people burning cycles on lost causes is to see good people giving up too early on good ideas when in reality the opportunity was far more promising than they could see from their trendy co-located office loft.

Persevere

So when are the discouraging obstacles not an apocalyptic sign, but simply short-term hurdles, perhaps requiring just a bit more effort and diligence? Here are just a few clues that it’s time to stick it out and renew the energy and resources to continue:

1.      Required capital was initially under-estimated (this is common) but doors are still open to you for additional resources, even if from friends and family.  You may be reticent to ask again, and that's a fair concern... and indicative that you are being wise with investors' trust and money. Still, it is your responsibility to manage your enterprise wisely and to sell your vision. But never confuse your very real fiscal responsibility with imagined guilt of the risk both you and investors are taking together.

2.      You’ve not yet introduced your MVP (minimally viable product)... but it is because you’ve made a valid pivot from the original plan. If the delay from these pivots are based on honest and useful customer feedback, the delays are valid and a good reason for asking for more runway. 

3.      Your reasons for delays and obstacles are not excuses. There’s a difference between a problem you cannot control and therefore must accept and overcome, versus a crisis you created or could have changed but chose to ignore.

4.      The market gap that your product/service is intended to fill is still not being adequately filled by established competitors. As long as it will fill a genuine need in the market (presuming you’ve done that diligence) then there is still an opportunity to be exploited.

5.      You can identify all the voices telling you that you cannot do it - because they all sound remarkably like you. They are all inside your own head. Take a step back and look at yourself in the third person. Is the negativity you are hearing from yourself the same you’d tell someone in your identical position? Or would you be kinder, more encouraging while still realistic? 

Like my earlier post giving you good reasons to shut the doors, there are no hard and fast rules, and of course, any one of these are not a guarantee of a successful start-up deserving your continued effort. But just as it is unwise to continue to pursue a start-up out of obligation, it is unwise to make a permanent decision about shuttering it without taking a moment to review the real reasons for your current discouragement.

Few if any start-up situations ever meet ideal expectations. But with a deep breath and a little introspection, you might find that the reality of the situation is far from desperate. 

5 reasons to shutter your start-up.

There's no lack of enthusiastic blogs, posters, and gurus out there encouraging you to follow your dreams and strike out on your own. So I am aware that my contrarian posts can be a real downer, as I’ve written several posts that discourage potential start-ups from, well, starting up, including the fallacy of expecting a ‘better’ product to succeed, or the idea that you should chase your dreams.

But there are great ideas that deserve your attention and enthusiasm. Yet once you’ve already sunk your heart and soul and 401K into your business, when is negative thinking just ‘nattering nabobs of negativity’, and when does it become a warning that something is wrong and you need to get out? After all, the sage tells us that ‘everything is temporary given enough time’, and we all know that even expected obstacles cost more and take longer to overcome than ever often predicted.

So when is enough enough? There are a few clues that it’s time to recognize that it’s time to close the doors:

1. You, yourself, are exhausted and cannot continue to infuse your discouraged team with requisite energy to soldier on through the current circumstances.
2. Resources are spent. This seems obvious, but resources are never really ‘gone’, just harder to raise - but if you are spending more time raising funds instead of selling an MVP (minimally viable product), you are on a slippery slope.
3. You’ve made little progress in overcoming objections from potential users either in fact or positioning.
4. You’ve missed initial, and extended, deadlines and milestones.
5. The market gap that the product/service needed to have filled is beginning to be adequately filled by established competitors.

There are no hard and fast rules, and any one of these are not indicative of a start-up needing to be shuttered. But any two or more create an uphill battle that takes the joy, enthusiasm, and health and finances of founders down with it.

Unless your start-up is a cruise line, there’s no glory in going down with the ship. 

The price is falling! The price is falling!

Just a note for the editors of marketing pubs out there: "how to market in a sagging economy" articles have been done. To death. Okay, we get it. Preaching to the choir here. Move on.

Its a valid subject, but most of these articles are promotion-oriented. What hasn't been discussed as much is the role of price strategy in a sagging economy, and generally. This especially occurs to me today because of a current client project, where pricing strategy is the current key gating concern prior to product launch.

Obvious Secret #1: Pricing strategy, especially in a weak economic environment, has little to do with, well, price.

Even in the best of times, great products, great promotions, clever ads and a loyal base can be undone by a misguided or misapplied pricing strategy. This is because left to their own devices, finance and sales executives will see sagging demand as a numbers issue and not a brand issue. Plus, it is expedient to react instinctively with a red pen (cutting prices) when profits shrink and sales falter.

Bad plan.

Unstudied discounts are not as easily undone tomorrow as they are done today. Price cuts are a short term solution to a larger, longer term issue; that is, the product hasn't established the brand position to maintain margin in a discount environment. Understand that price cuts are welcomed by consumers but always create subtle dissonance - an inability on the part of the consumer to properly relate price to value, so when the market returns upward, as it always does, this results in a nearly Sisyphean effort to re-establish a brand position held prior to the discount. Pricing is not a cost issue - it is a value issue.

Understand the way customers make buying decisions and become far more visible, and more efficient, in delivering on these criteria; this will always be more effective in building recession-proof brands. This is because pricing is a long-term strategy, not a short term tool. When the economy sours, there are other levers to pull - operating costs, added value, extended hours, free upgrades. Think about supplier pricing and work new billing models to manage cash flow. Invest in money-saving IT investments such as Unified Communications and collaboration products. Reevaluate your market position and consider new marketing initiatives to go after markets competitors might have recently abandoned. Fire some costly customers. Adjust invoicing offers and procedures to improve cash flow and reduce defaults. These tools and others are manipulated in good times and bad with far greater flexibility than price, which can only move in two directions: up, or down.

Its easy to be Chicken Little and think in blocks of fiscal-quarter-bound panic over a current fiscal situation, but creating and applying the right principles for pricing allows for decisions that over time not only weather current storms, but position a company for consistent growth over the long haul.

Shackin' up

Quick Quiz: When asked why RadioShack decided to rebrand itself "The Shack", CMO Lee Applbaum stated it was because (choose just one!):

1. We think "shack" conjures up many positive store images.

2. Some customers and the investor community refers to us as "The Shack" already.

3. We can't afford the real Shaq as a spokesperson, and he's in Cleveland now anyhow.

4. Basic research could have told us that "The Shack" is actually a popular Christian novel regarding the anguish of a parent over the rape and murder of his daughter. Oh, well.

5. Because... "The (Love) Shack is a little ol' place where we can get together! (Don't forget your jukebox money!)"


The answer is #2, although any of the answers is equally bad, and equally plausible.

That's right. RadioShack's most avid customers and "the investor community" (really? that's their target with this campaign?) already refer to the company (despairingly, perhaps?) as The Shack, so they figured they'd just co-op the term as their own in a desperate grab to leverage, and therefore destroy, any credible independent brand affinity.

Besides, marketing theory aside, every middle school kid in America already knows that giving yourself a nickname is just lame.

If you were a tree, what kind of tree would you be?

If your company or product were a fictional character, who would it be? It's one of the questions I ask when trying to determine the intended brand perception for a client. And I get more than my share of rolled eyes from the engineers in the room.

But consider your own response to this question: If you were thirsty, where would you likely find an ice-cold Obama? Next to the Dr. Pepper or nearer the energy drinks?

If you called your friend, would you expect to pick up and dial the McCain or are you more likely to just go online and 'poke' them on Obamabook? Maybe you'd discuss the McCain supertanker that is caught in a storm off the gulf coast, or the latest music player from iObama.

You can think about this when you pick up a snack of some organic dried fruit at Obama Foods for your flight to Chicago on McCain Airways.

Okay, the whole thing is silly. But now reverse that:

If you were thirsty, where would you likely find an ice-cold McCain? Next to the Dr. Pepper or nearer the energy drinks?

If you called your friend, would you expect to pick up and dial the Obama or are you more likely to just go online and 'poke' them on McCainbook? Maybe you'd discuss the Obama supertanker that is caught in a storm off the gulf coast, or the latest music player from iMcCain.

You can think about this when you pick up a snack of some organic dried fruit at McCain Foods for your flight to Chicago on Obama Airways.

Relatively speaking, the former made more sense, didn't it? And it proves out the power of branding on not only our perceptions of products, but perceptions of our leaders, our friends, and ourselves.

This important article was sent to me by a designer with whom I do much of Strategy180's branding work. It underscores the power of branding and how it may not only impact the can of soup we put in our grocery basket, but the future leadership of the world's last great superpower.

Perhaps now you might want to budget for that branding study, yes?

...dogs and cats living together - mass hysteria!

Along with this post's title, one of my favorite movie quips, offered in deadpan delivery by Howard Ramis in Ghostbusters, is "Sorry, Venkman, I'm terrified beyond the capacity for rational thought."

Yet this is a lot of what we've been hearing lately from colleagues and pundits. But this isn't the End Of Days brought about by the Sta-Puft marshmallow man, but rather it is a long overdue reminder to focus, work hard, live within our means, and reprioritize.

While things will change over the next days and weeks, and some of it may perhaps eventually change my tone in this post, right now I'm not seeing a lot of bad news so much as a lot of fear and uncertainty, and opportunity always arrives with uncertainty. Buy into the fear and sell into the optimism. It's Warren Buffett's approach for the markets and should be all marketers' as well. Our response to a difficult situation changes our ability to handle it.

No doubt, things are going to stink in the near term, because marketers have by and large never properly positioned themselves or the function for the key role it should assume during a market slowdown, opting instead to stammer defensively and nervously paint lambs blood above our office doors. Still, a ten trillion dollar debt should worry us. The potential for a nuclear Iran is disurbing. Climate change has me checking under the bed for the bogeyman and Al Gore.

But this? Nothing that a little ingenuity and informed strategic thinking can't overcome. Now is not the time for marketers to be running for the exits. Companies that spend this time looking for greater efficiencies and new approaches will maintain in a slowdown and position themselves for exceptional share growth when the money starts flowing again.

There are a number of studies to support this. Download a few. Discover specific ideas. Seek knowledgeable advice. Recalibrate.

Smile.

An Old School Measurement Discounts the Internet

In my salad days selling radio, one of the compelling reasons for radio was its influence on individuals at the point closest to the point of sale – that is, in the car on their way to go shopping. It intimated radio’s conversion - the power of radio to convert listeners to buyers. A recent survey took a similar notion – influence on the consumer’s buying decision – and it doesn’t look good for new media.

Regarding electronics, "The Internet and Consumer Choice” study from the Pew Internet & American Life Project found that just 27% of mobile phone sales were significantly impacted by the web. The figure was only 23% for real estate, and surprisingly (to me, anyway) only 17% for music choices. (I’m a big fan of Pandora.com and its ability to introduce new artists, so perhaps I’m a bit of an early adopter there.)

Still, the role of the internet in researching purchases has not changed – 90% of respondents indicated that they still use the web for product research. For marketers, that means that on the web, content is still king – and that market awareness, visibility, credibility and brand building are critical on product websites. Conversion, however, appears to remain elusive.

Think radio. My former employers would love me for that plug.

The ying and the yang

I hear all the time that if the customer were simply a, well-informed, and b, rational, a sale would be easy. Well, I'm here to tell you that these represent the two ways to make the sale, and both can be leveraged through effective marketing communication.

If your offering is indeed the smart choice for your customer, then by all means, help your customer get smarter. Educative sales, or consultative sales are effective in this vein, where your marketing communications are targeted toward speaking opportunities, bylines, blogs, and high-profile media relations efforts. This appeals to the educated, rational value buyer. Yer all rational buuyers have a streak of irrationality, so...

If your offer requires a change in impression, assumption, habit; or if you need to compete not on utility and value but on fashion and emotion (irrational) then by all means appeal to the emotions of the buyer - even in a business to business space - to drive out considerations on a strictly formal qualitative form. "Nobody ever got fired by buying IBM" isn't a commonly understood mantra because itt is rational, it is the result of the emotion of fear on the part of the buyer. Tap into fear, lust, comfort, or any of the other 14 or so emotional triggers and fill a need - albeit an emotional one.

Embrace the rational and irrational buying signals as opportunities, not barriers.