In 1989, there was a film called Field of Dreams. It starred Kevin Costner, who acted as a farmer who hears a voice that tells him ‘If you build it, they will come’. He gathers this voice hinting for him to build a baseball pitch, so does exactly that, despite every thinking that he’s nuts. And as with all nice, happy Hollywood endings, they did come, with old legendary baseball players reuniting for a game of modern baseball.
Startups and entrepreneurs often think of themselves as building their own Field of Dreams when launching their business. However, as opposed to what Hollywood would have you believe, even if you build it, they might not come. Without any marketing plans or strategies, or the foresight to have a marketing budget set up, this could lead to catastrophe.
A lot of startups raise only enough seed capital to build their product, and leave nothing in the bank left for actually driving customers to the product. By the time they they realise, they’re out of cash, and have to start approaching venture capital community (read: Dragon Dens) for the money to help get their product launched into the public eye. The problem with this though, is venture capitalists don’t tend to fund something unless it has sufficient ‘proof of concept’ already built around it. This means a website that is generating a lot of traffic, a bursting customer pipeline, revenue, or some other metric that indicates that people want the product. Keep in mind that venture capitalists want to get their money back, plus profit. They will often go for concepts that have been proven to work before, or a concept that is already showing huge demand. They will not hand out money for people to ‘try something out with’.
Many businesses and entrepreneurs learn this the hard way. They burn through all their cash before they have had a real shot at success. This is often a mistake that they cannot bounce back from. Keep in mind that most entrepreneurs have to work without a wage for many months, and it could be many more months before their product starts to get noticed, and even more before it starts generating revenue. If these businesses had thought ahead and integrated their marketing into the initial budget, chances of being able to secure an investor would be much higher, as would the chance of getting the product to take root. Another factor to consider as well is that to build a successful product is to get proper feedback from users. If no-one is using the product, it’s hard to gauge what would actually make your product successful. So if you have no money to market, and investors won’t invest because people aren’t using your product, and people aren’t using your product because they either haven’t seen it, or they’ve seen it and they don’t like it…well, it’s a vicious cycle.
So don’t try to build your own field of dreams. Don’t get enraptured by the by the siren calls of success stories. Very few startups go the way of Groupon or Pinterest. The reality is launching the product and initial customer acquisition is very difficult, and without proper planning, can get very expensive. While it is important to build a great product, find some time to really work out a proper marketing budget and strategy to make your concept successful. [Forbes]