005: How to avoid the most common cause of failure for a startup

“The trap that most entrepreneurs fall into when starting their business is to create a product that no one wants” - Alexis Kingsbury

If you are a Parentpreneur with an early stage startup (that hasn’t got sales yet), or are planning to start a new business, then you’ve just struck gold. 🙂

In this episode of the Parentpreneur Accelerator Podcast, I talk about the most common cause of startup failure, and explain why focusing on getting your first sale is the antidote.

I then walk you through the six steps to get your first sales in a way that build a business you love whilst having time with the family you care about.


Resources related to this episode:

  1. Why most entrepreneurs fail (includes the failure data I talk about)
  2. Why getting your first sale is key
  3. Why most entrepreneurs end up going back to the drawing board
  4. Book: Anyone can do it (Duncan Bannatyne)
  5. Book: The Lean Startup (Eric Ries)
  6. Book: 4 Hour Work Week (Timothy Ferriss)
  7. 3 mistakes entrepreneurs make when setting prices
  8. The 6 Steps to Your First Sale (Video & Checklist)
  9. Parentpreneur Accelerator Community
  10. Information about the Parentpreneur Startup Accelerator Program


P.S. In the episode I incorrectly said that our Parentpreneurs have reported saving ~£2,500 and 6 months as a result of the program. This was in the early days. Our most recent data (as of 15th June 2017) suggests this is actually £9,250 saved, and 14.25 months (per Parentpreneur, not in total). 



What is the most important first milestone for a startup business?

It’s referred to by lots of different names…

Traction. Validation. Proving demand.

Put simply, they basically mean that a new startup needs to show that there are real people willing to pay real money for what they offer.

However, many businesses go for months or even years without demonstrating they can add sufficient value to people to be able to support some form of income generation.

This is actually the most common cause of failure for startups!

They create something that they thought was a great idea but unfortunately later find out that people don’t value it enough to pay money for it…

This problem is bigger than people think

Marketing guru and serial entrepreneur Neil Patel once wrote that, 9 out of 10 start-ups fail.

According to the source of the data, 42% of failures make a product that there is no market need for.

In reality, this figure is massively underreported. In the article that quotes the 42% figure, many of the ‘other reasons’ for failure are really just that same problem over and over again. If we look at some of the ‘other top reasons’ quoted in the article… such as:

  • Ran Out of Cash – 29%
  • Poor Product – 17%
  • Need/Lack Business Model – 17%
  • Poor Marketing – 14%
  • Ignore Customers – 14%

We can see that these are all likely to relate to the same problem!

For example, if the start-up ‘ran out of cash’, it means it wasn’t able to turn demand in the product into cash. Why? Most often because there isn’t enough market need.

If the start-up says it failed due to ‘poor Marketing’ or ‘poor product’, what they really mean is that they were unable to get customers to buy the product… meaning there was probably an issue with the perceived value potential customers saw in the product, because the product didn’t fit a real market need.

In fact, in most of the cases quoted in the article, it’s likely that the entrepreneurs were creating a product that there wasn’t a big enough unmet need for… so people weren’t willing to pay for it. (Hence they burned out, or couldn’t get financing, or failed to pivot or whatever).

I’ve found that more than 80% of entrepreneurs create a product that doesn’t have sufficient market appeal

Based on my experience of working with many parentpreneurs in a variety of industries, I see the same thing over and over: entrepreneurs working for months and months without any evidence from potential customers that there is real demand for their product.

Occasionally I’ll see one that closes its doors due to team issues or market changes or a cashflow issue, but these are much rarer.

So why do so many people make this mistake? And why do people keep making the same mistake over and over again? Why on earth do they create a product that no one wants!? (I’ve done this too by the way… more than once!!)

Here are the 3 reasons that I see most often…

  1. They think they have a ‘killer idea’!
  2. They spend lots of time getting carried away ‘building the business’
  3. They focus their effort on attracting funding and getting feedback from people who aren’t their customers

So, now you understand that the trap that most entrepreneurs fall into when starting their business is to ‘create a product that no one wants’.

So, how do you avoid them?

Start by getting a customer to buy from you early on.

Getting your first sales forces you to make sure your offering solves a real problem because real customers are prepared to hand over hard cash for the solution!

You need pre-orders: Customers who hand over money in exchange for the promise of a product/service in future.

So, now you know what the goal is…

How do you get pre-orders?

Most entrepreneurs stab in the dark. They come up with an idea, pitch it to some people and see who bites. If it fails to get interest they either go back to the drawing board, or they look for different people who might be interested.

There are loads of other problems with this approach, even beyond the obviously painful de-motivating experience of going back to the drawing board many times. However, it can lead to success, and is common practice amongst many accelerators and incubators.

I hate this approach though. As a Parentpreneur, my time is too valuable to go back to the drawing board all the time, and my family don’t need the rollercoaster of emotions and stress that the exciting idea-phase and the depressing ‘drawing-board’ phase bring.

Instead, the Parentpreneurs I work with follow a 6-step process that is specifically designed to avoid having to go back to the drawing board.

Each step builds on the previous one, so that even if you find that there isn’t demand for a specific product idea, you just go back one step to make a small change rather than have to decide to ‘persevere’ or ‘give up’.

What steps should a new business start with?

Here are the 6 steps you need to take (in this order) to get your first sale:

  1. Design your life – Why do you want a business? How do you want to spend your time? When will you spend time with your family? When will you exercise? How will you protect 6+ hours of focused time per week to work on your startup?
  2. Find your “why” – What broad groups of people do you want to help and what are you truly passionate about doing for them? Why do you want to help them? Why will you be excited to work on this business?
  3. Identify your ideal customer – Who exactly do you most care about helping? Who do you know that would be an ideal customer? What about them really matters? Who else can you find that fits the profile? (Find at least 10 people)
  4. Find a real problem to solve – What are your ideal customer’s goals and frustrations? What problem causes a real pain for your ideal customer? Why don’t existing solutions solve this problem already?
  5. Match a solution to the problem – What does the solution need to do to solve the problem? How will your solution overcome the limitations of existing solutions? What will make your solution 100x better than alternatives?
  6. Get pre-orders – What price are your ideal customers willing to pay? How can you afford to deliver the solution at that price? How many people will pre-order from you based on what you plan to give them?

A couple of words of warning…

Do not skip a step!

I know you want to move fast. But, if you skip a step you’ll find that:

  1. You aren’t able to complete the next step properly
  2. When you find that customers aren’t willing to buy the thing you want to sell, you have to go all the way ‘back to the drawing board’, rather than just go back one step.

Also, don’t use this process to just validate an idea you already have is great.

One of the most common causes of failure is that people believe super-strongly they have a great idea so are only looking for validation of this rather than being willing to change their plan.

Occasionally someone will go through my accelerator program with a business idea that they hold on too tightly to. They treat the program as a tick-box exercise, and find that they soon trip up and see that they have missed a fundamental building block, like being clear on who your ideal customer is, or what pain you solve.

If you’d like to see the 6 steps laid out in a checklist with more detail to help make them easy to follow, I’ve provided a downloadable checklist in the show notes.

About The Author

Alexis Kingsbury

Alexis is founder of the Parentpreneur Accelerator and Making Greatness Ltd. He is a serial entrepreneur, with experience creating start-ups in a variety of areas, particularly in SaaS and EdTech. He is also a lucky husband and proud dad, and now helps other 'parentpreneurs' like him to achieve their dreams of having successful businesses, making a difference in the world, and spending time with the people they love.

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