As startup tools and resources become more accessible, the playing field continues to level. Around 305 million startups are founded annually, yet only 40 percent become profitable. So, how do you ensure you belong to that 40 percent? It’s easy to get caught up in the excitement of entrepreneurship— choosing your logo, building your website, and showcasing your brand. However, none of these things necessarily translate to revenue.
To reach the tipping point and actually meet a market need, you should be able to answer these seven questions confidently and with conviction.
1. What problem does your product or service solve?
In a few sentences, you should be able to clearly articulate the gap in the market— saving time or money, improving productivity, enhancing the customer experience, or solving a customer’s pain point or frustration—that you fill with your product or service. If you can’t immediately call out how you solve a problem, it’s unlikely customers will gravitate to your product or service long-term, no matter how attractive your brand is.
Related: The 5 Soft Skills You Need to Succeed in a Startup Environment
2. Who is your target audience?
Your customer personas should be well-documented and strategic, outlining things like:
- Demographic details (age, gender, income, education level, occupation, geographic location)
Strategic customer personas go beyond simply describing the target audience. They delve into the customer’s motivations, goals, pain points, and challenges. They should be created based on in-depth research—including surveys, focus groups, and customer feedback to ensure accuracy and relevance.
In doing this, you will immediately clarify your target market audience and, ideally, know precisely how to reach them. As SurveyMonkey puts it, “Buyer personas let you get to know your target customers like you know your friends, so you can talk to them about your products in a personal way that highlights the benefits that are important to them.”
If you cannot describe your target audience intimately, it’s unlikely you’ll know how to work with them long-term.
3. What is your unique selling proposition?
Your unique selling proposition (USP) is more than just a marketing buzzword that will define your messaging long-term. It’s your “elevator pitch,” and it should answer the following questions:
- Who you are
- What you do
- Why should anyone care
Customers are overwhelmed with options and should be able to understand what makes your product or service different immediately. Your USP will be the key to positioning yourself and your startup to stand out instead of blending in. Here are 15 strong USPs and an explanation of why they are effective.
It should be easy for you to call this to mind, considering it will act as your core messaging.
4. What is your pricing and go-to market strategy?
You should be able to explain your strategy and justify your pricing based on your product or service’s value. Your pricing strategy should consider your costs, your competition, and your target audience’s willingness to pay.
Startups can generate revenue in many different ways—subscriptions, advertising, direct sales, etc.—so you need to know, in advance, how your revenue will generate and sustain over time.
Your go-to-market strategy will go hand-in-hand with your pricing strategy. It is propped up by five pillars—product analysis, product messaging, the sales proposition, marketing strategy, and sales strategy.
You should be able to speak to all these things and have intimate knowledge of your sales and marketing process and strategy.
5. Who are your competitors, and how will you differentiate?
Answering this question requires a thorough knowledge of the marketplace and your competitors because, when starting a business, competition is the greatest challenge. Ideally, you will have done adequate market research before launching your startup so that you are acutely aware of your strengths and weaknesses in relation to your industry competition.
An easy way to keep this information top of mind is to conduct regular SWOT (Strengths, Weaknesses, Opportunities, Threats) analyses to identify how your competitors are operating and what you can do to stay ahead.
Related: How Businesses Can Improve Their Brand Awareness
6. Why do your customers choose to work with you?
It’s critical to understand why your customers are choosing you, and you should be able to call this information to mind easily. This will only come from talking with your customers, and the most successful startups make a habit of this.
Ask questions like:
- How did you first hear about our service?
- What challenges or problems prompted you to sign up/purchase?
- How has your life/business improved since implementation?
- Why would you recommend us to a friend or partner?
Keep answers to these questions well-documented so you can continue reaching and converting your key customer personas.
7. How will you measure success?
Perhaps most importantly, you should be able to answer the question of how you will measure the success of your startup. This may include metrics such as revenue, customer acquisition, customer satisfaction, or brand awareness. You should be able to explain how you will measure success and your goals for each metric.
Without the answer to this question, you cannot run campaigns effectively, acquire funding, or even hire effectively. When your goals are clear, it will be easy for you to adapt and pivot in the early stages of your startup’s operations.
By having a clear and concise answer to these questions, you can ensure that your startup meets your customers’ needs and is successful in an increasingly volatile market.
This blog was written by Chad Witherell.