What’s the main reason for entrepreneurial success?

Wonder how many articles have been written, including by me, explaining what makes a successful entrepreneur? And rarely is the most important aspect of succeeding in business mentioned.  Watch Andy Rachleff, lecturer in strategic management at Stanford and experienced venture capitalist, in less than a minute stating what is the most important ingredient for entrepreneurial success.

To have the right product or service for the market is something so fundamental it’s easy to forget to even mention it. Wrote Entrepreneurship – do genes play a part? that has attracted a lot of readers’ comments. But neither I nor any reader thought of mentioning the crucial aspect of product- market fit. We all just overlook it even though it is a do or die issue for success.

Doesn’t matter if you are The Entrepreneur of the Decade, if you are offering the wrong product/service you will fail.

Why do so many companies fail?

Did you know that in Sweden as many companies go bankrupt every year as there are start-ups? Sure the tax system is one reason but that’s, unfortunately, not the only explanation. Quite a few of them are offering a service or product that the market, for whatever reason, has no interest in. Sometimes they are actually offering something before the market is ready for it.

How do you know if the market wants what you are offering?

It’s easier said than done unless you are offering something that there is always a demand for. Look at how Nokia laughed when Apple came up with the Iphone and regular airlines didn’t take low price airlines, like Ryanair, seriously. They failed to understand what the market wants and are hence having huge problems.

Nokia is actually a great example of a company with a lot of qualified and talented employees that have the characteristics of successful entrepreneurs. But they didn’t understand what the market wants and hence lost out.

Keep your ear to the ground

Determining what the market wants is however not as easy as it sounds. Keep your ear to the ground and do research to test if your idea is a viable one.

Long before disposable barbecues became a hit someone I know had the idea but failed. Why? It simply was too early. But that could have been overcome if the right marketing, communication, branding and promotion had been done. What would have happened to the Iphone if Apple had not been able to promote it to the market in ways that worked? Most likely Blackberry would still be considered the ultimate choice.

Do you agree with Andy Rachleff that product-market fit is the most important ingredient for entrepreneurial success? If not, why? How do you determine what the market wants? Do you keep your ear to the ground? What’s your experience when it comes to determining what product/service the market wants? How do you decide on the right timing for launching it? Are you able to promote it in ways that make consumers desire something they may not yet know that they need or want? What promotional strategies have you found work best?

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46 Responses to “What’s the main reason for entrepreneurial success?”

  1. Geek Girl Says:

    You nailed it with this one! That is the most important thing before all else. You will not be successful if the market doesn't want / need / or isn't ready for it. Seems to me that doing your research ahead of time is essential. You do not want to invest huge dollars until you know your product has a chance at success. How you test the market for receptiveness to your product is another thing entirely. I think it depends on the product itself – service or goods – as to how you proceed.
    My recent post My Blogging Platform

  2. catarinaalexon Says:

    Many thanks. Glad we agree, Cheryl!

  3. Jeannette Paladino Says:

    Catarina — such simple advice, yet so essential. I always marvel that until about 20 years ago no one thought to take that ancient invention — the wheel — and attach two of them to the bottom of suitcases. Millions of people struggled to life, much less carry, their suitcases. Then an airline pilot "invented" the suitcase with wheels. To me, that one of the most impressive case studies of product/market fit.
    My recent post Giving Thanks With Jobs for Our Veterans

  4. catarinaalexon Says:

    Glad you agree, Jeannette. It's not for nothing it was an airline pilot who came up with the product-market fit you describe. He really had his ear on the ground.

  5. Susan Oakes Says:

    Hi Catarina,

    It is the simple most basic thing that so many overlook and one of the most important. I don't however think it is the most important as there are a number of other factors. I have done a lot of new product development and like your BBQ example had the right products, however the market wasn't ready. One thing that helped overcome this is a model I developed over many years that shows whether the idea has legs and should be pursued and takes into account all the factors including product-market fit.

    One example I had was a product I had to launch and the market wasn't ready or thought it needed. The message the head office overseas wanted us to promote it was wrong for our market. It would have meant a change in behaviour and was against their attitude of the day. From research we found a message that changed behaviour by building on their current attitudes instead of trying to change them.

    It also comes down to your observation skills and experience, knowing your customers and being able to interpret the information. Too many take what customers say literally and that is often misleading.

    My recent post The Simple Advantages Of Having A Marketing Strategy

  6. Mark Brody Says:

    Catarina – This is spot on. I am an Ops guy and understand the importance of the service aspect of products sold. Got to make sure the market is satisfied with the customer service aspect of the product and how the organization handles "problems" that may arise.

    Thank you for sharing!
    My recent post Thing 1 and Thing 2

  7. findingourwaynow Says:

    This is such a simple message and it's so true. The fact is, many companies/individuals launch a product because they like it. That very product may not be what the general public sees as something they desire. Keeping our ear to the ground and paying close attention to the ebbs and flows of the public can yields a great deal of intel regarding the current trends, avoiding the "I like it" symdrome. That may be what sparks an idea that could grow into a successful venture or product. It's not an easy thing, matching a product to what the public wants, but when you do it's amazing to see what happens. :)
    My recent post Co di Sasso Cabernet Sauvignon & Sangiovese 2011 Wine

  8. becc03 Says:

    It is simple advice and very relevant…how to do the research and identifying what is needed is a huge task. I'm not sure I'd even know where to begin.

    By the way, I have nominated you for a Sunshine Award. The link is below :)
    My recent post Sunshine Award for Bloggers

  9. catarinaalexon Says:

    We actually do agree Susan. Good example that shows how something that is too early can succeed if it is promoted and marketed the right way.

  10. catarinaalexon Says:

    Glad you agree Mark.

  11. catarinaalexon Says:

    Great points Susan. Glad we agree.

  12. catarinaalexon Says:

    Glad you agree with this simple, and frequently overlooked, fact, Becc.

  13. GuyW Says:

    Absolutely – there's no point in having a solution for a problem that doesn't exist… Entrepreneurs have to be sure that the market wants what they're offering. Once they have that assurance, then passion is the next most important thing for the entrepreneur.

  14. catarinaalexon Says:

    Good point Guy.

  15. Leora Says:

    Catarina, what Andy says seems so obvious, but too often creators of a product get so caught up in the desire to produce and create they have a hard time seeing that the market isn't there. Years ago I worked on a project in which the main creator loved it, but I had my doubts. Sure enough, it fell through the cracks and never went to market. Hard to take those blinders off.

  16. catarinaalexon Says:

    Yes, we often forget the obvious, Leora.

  17. patweber Says:

    This is so true. His metaphor of if the dogs don't like the dog food is terrific. And as you say in your post, if you product isn't wanted, it will fail.

    Spot on Catarina! Thanks.
    My recent post How government resources assist women owned small businesses

  18. catarinaalexon Says:

    Glad we agree Pat.

  19. Lubna Says:

    When it comes to market fit, do you think focus groups still play an important role? Or have the entrepreneurs moved on from focus group to some other mechanism or several other mechanisms to gauge the market fit?
    My recent post Return to India – A Memoir

  20. catarinaalexon Says:

    There are many ways to find out if the market wants a product/service. Focus groups is one option. Don't think there is one answer to how to best find out if the market wants what you have to offer. Most likely the answer is whatever works is fine:-)

  21. Bindhurani Says:

    Catarina, finding out the need for a product is very important. Many people start on Etsy to sell handmade stuff and complains about not getting any sales. It is not the marketing, it is the product, that they try to sell is the problem.
    What a person looking to buy handmade is looking for?
    How to find it is the next question.
    Thanks for the thought provoking article.

  22. Edward Reid Says:

    Nice blog. There is a similar approach to publishing periodicals. The most important thing is if there is an audience for content. Great reminder!
    My recent post 100 Great Memories and More!

  23. catarinaalexon Says:

    Good example, Bindhurani.

  24. Tommy Tan Says:

    I believe the reason for entrepreneurial success is not giving up. A lot of people gives up when things get tough or made a few mistakes. To become successful, i believe one must endure all the hardship and learn from it. My 2 cents =]

  25. catarinaalexon Says:

    True Edward.

  26. catarinaalexon Says:

    In other words Tommy, you don't agree that the most important thing is product-market fit. Not giving up is crucial if you have product-market fit. If you keep on working for succeeding with something the market doesn't want however, you will just lose money.

  27. Scott Hammond Says:

    Matching product to market is one piece of the puzzle, but I wouldn't focus on it as the whole thing. One thing entrepreneurs who succeed learn early on is you have to do a lot of different things right to succeed.
    My recent post Top 5 Black Monday Gifts for Guys

  28. catarinaalexon Says:

    Scott, if you don't have the right product/service-market fit it is the basic thing. Then comes being an entrepreneur which partly comes from genes:-)

  29. Doreen Pendgracs Says:

    I think that genes play a role in entrepreneurial success, but not always. It really makes me sad when I see a business that was built from the hard work of the parents or grandparents fall to pieces when taken over by the next generation. Sometimes, when things are handed to us on a silver platter, we don't appreciate the sweat and toil that went into building that business and think it will just run itself. When the drive has been removed, the enterprise will often fail.
    My recent post tips to make you a better blogger

  30. catarinaalexon Says:

    True Doreen, when we are lucky to have entrepreneurial genes it makes a difference. But even then it can be difficult if you decide to build up a company based on a product or service the market doesn't want.

  31. JeriWB Says:

    This makes me think about my struggle with genre as I am making my way back to the world of creative writing. In this case, the dogs don't want to read literary fiction as much as they want to read adventure and romance. Finding the balance between the integrity of executing a written work I can be proud of crafting and yet it remaining a story with broad appeal is indeed a challenge.
    My recent post Book Review: Ava by Ashley Barron

  32. catarinaalexon Says:

    Good example Jeri.

  33. Bryan P. Hollis Says:

    Hi Catarina,

    I understand your post. I have to say something about my distant observation of people of your home land, Sweden. You say that as many as 1/2 fail as those that are successful. I know the Nordic people to be very intelligent. I dated a beautiful Norwegian for a number of years. Wonderful girl…much smarter than me! Wouldn't you rather these ladies and gents try (even if they have work to do) than to be someone that didn't even give it a go? Agreed about the details, but it also takes a bit of real world failure to teach you to become a success,

    Bryan

  34. catarinaalexon Says:

    True Brian. However, do you know that if you fail in Sweden and owe money to your creditors you are finished since you cannot even get a mobile phone account? You are blocked from doing anything and will have to live on a bit more than $1,000 until your debts have been paid off. If you owe a lot your life will be ruined. It's easy to do what you suggest in the United States but not in Sweden. In your country it doesn't matter if you have gone bancrupt here it is shameful.

  35. Bryan P. Hollis Says:

    Wow Catarina, I did not know that. That is a scary concept, and yes, one I am not familiar with. The problem it creates for the US is that we let it go (debt), and we are in debt to the entire world, especially China while we place band-aids on our economy along the way. Thanks for the information,
    Bryan

  36. catarinaalexon Says:

    Yes Brian, but you are talking about sovereign debt:-)

    If an American goes bankrupt he is regarded as someone who tried and it's almost positive. In Sweden he becomes persona non grata.

  37. Bryan P. Hollis Says:

    Somewhat agree with the generalization. However, also in America, if you have concrete evidence of bad business dealings, especially in our local markets and counties, of a company, it's owners or group of owners and they have pulled some really bad moves, those people may declare bankruptcy, but they would certainly have to relocate to start-up again. I live in one of the most conservative States in the USA, and if that happens around here, you are finished. Best move to California!

    Bryan

  38. catarinaalexon Says:

    Brian, what I described happens to all owners of businesses that fail. Not just the bad apples. It's enough that you have a client that doesn't pay:-) There is no comparison between the US and Sweden when it comes to this. Keep in mind that as many businesses go bancrupt as there are start-ups and you will understand how many people's lives are ruined. However, I don't think it's possible for an American to understand how bad it is here. It's simply incomprehensible, even to me because I have lived most of my life abroad.

  39. @Mompreneurmogul Says:

    True you have to have a product people will want to buy. You also sometimes have to ignore nay sayers not everyone will understand what you are trying to do if you are an entrepreneur.
    My recent post How To Be Successful And ONE Thing That Kills Success

  40. catarinaalexon Says:

    Yes Mompreneurmogul. True that you will have to ignore the people who tell you it will not work. But that will not be enough if the market does not want you product or service:-)

  41. akandrewwriter Says:

    It it totally key. As the guy said, if the dogs don't like the dog food… Developing a niche is the real kicker, witness the ipod etc. Trying to think up something that people don't even know they want is the ultimate in getting a foothold on commercial success. That said I do think that execution is incredibly important as well. Cash flow is a sure fire way to send a business down the tubes, so there's a lot of aspects that make up the whole picture. As always a good blog Catarina. Thank you.
    My recent post MuseMedium: Books and David Mitchell

  42. catarinaalexon Says:

    Glad we agree AK.

  43. waseem ali khan Says:

    planning, organising, directing, co-ordenating with the worker etc are most reasons to be success for the enterprenuer.

  44. catarinaalexon Says:

    In other words Waseem, you disagree with Andy Rachleff.

  45. Kerry X. Ray Says:

    A market orientated company puts the customer at the “heart” of the business; all activities in the organisation are based around the customer. The customer is truly king!. A market orientated organisation endeavours to understand customer needs and wants, then implements marketing strategy based on their market research; from product development through to product sales. Once sales have begun further research will be conducted to find out what consumers think about the product and whether product improvements are required. As markets continuously change, market research and product development is an ongoing process for a market orientation company.

  46. catarinaalexon Says:

    Good and true points Kerry. But first you have to have a product or service that the market wants:-)

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