The Four Kinds Of Start-Ups

Summary

Start-ups may play by some of the same rules, no matter what kind of start-up they are, but start-ups all fall into one of four very different categories and they require very different treatment to make them successful.

The Four Kinds Of Start-Ups

When a start-up fails it can be hard to grapple with why this has happened. Sometimes there doesn’t seem to be any logical reason and often the passion and energy invested in the start-up hasn’t been enough. The main problem for start-ups and the main reason they fail is a lack of understanding from the ground up, about what type of start-up you are. Yes, there are some things that remain constant no matter what your start-up type, but there are some things that need to be done differently depending on whether you are entering an existing market, creating a new market, enter an existing market with a niche element, or enter an existing market as a low cost operator. If you understand what type you and why this makes you different you are more likely to succeed.

Entering an existing market

This is the easiest start-up to understand and work with. You should still be offering something different, maybe a higher performance than is currently offered, or a higher quality product, but either way you already know this market and you know the customers are there. Competition is healthy and by offering a higher performance product in this market you up then bar. And you have the advantage of the groundwork already being laid.

Creating a new market

If you are innovative enough to create anew market with a product or service that isn’t previously there, you have some major advantages. You have no competitors because no one has done this before, and you are offering something unique that solves problems for potential customers. But it’s the customers that give you the most problems here. Because you are creating a new market those customers don’t already exist for this product or service, and you don’t know if they will follow you into this new market. You have to convince them.

Entering an existing market with a lower cost product

We all know those companies that have successfully done this, supermarket alternatives, budget shoe stores, even low cost airlines. If the market is there and you know you can provide the same service at a lower cost, and people will be happy to buy something that’s less quality and cheaper, then this is a win win situation. You need to do your homework on this first and make sure those customers are there and want a cheaper alternative, but it’s pretty much a laid out path.

Entering an existing market with a niche product

Entering an existing market and offering customers something different, within that market, is a neat trick to pull off. Existing markets are often set in people’s minds, take fast food outlets, and to come in and change the rules is daring, but it can be hugely successful. Existing successful fast food outlets might seem as if they have cornered the market, but if you can see what could be improved upon and altered radically, while still staying within that market, you have something customers will really respond to.