When you find yourself out of work for the second time in less than a year, for reasons that were easy to fix but at the time out of your control, you can do one of two things. You can keep treading the mill, keep taking the same risks and watching the same mistakes being made, or you can jump, and go on a mission to prevent other small companies going the same way. We spoke to digital marketing specialist and owner of Blu Mint Digital, David Bailey, on the topic of start-up failure and how one might prevent it.
It’s common knowledge that start-ups have a high failure rate, and you might be forgiven for being a little cautious when applying to work with a new company, albeit one running on pure enthusiasm with a nice and interesting product or service.
A report in 2014 commissioned by British insurer RSA suggests that over half of new business start-ups don’t make it past the five-year mark, and that figure has become a lot more depressing since last year’s Brexit referendum result. The long-term prognosis according to the Bank of Ireland is even more shocking, with an official figure of 66% failing within the first five years, but a gloomy overall failure rate of 80% suspected.
There are of course many factors contributing to these failures, both internal and external and across the spectrum, but there is an interesting trend within the tech scene that’s painting a very different picture. Classic issues such as bad planning, cash-flow problems, burn-out and being too proud to seek external help – that are prevalent with many offline businesses – are present yet dwarfed by a handful of core oversights in tech start-ups; the main oversight is that of a solid and structured marketing plan.
At around the time of the RSA report Companies House announced a record year for the registration of new companies, at 500,000 by the end of October. Research by leading mobile operator O2 showed a leap in the survival rates for tech start-ups, although there was a significant correlation between those that had been lucky enough to go through accelerator programmes and this success rate. Accelerators, often run or funded by larger corporations these days, focus greatly on marketing as well as planning and fostering the perfect environment for scaling.
Meanwhile in Tallinn, Estonia, ex-salesman and British national David Bailey was job-hunting. Having taken a chance on a promising start-up developing a two-way sync between SaaS apps, he ended up being the victim of internal differences:
“For fun, we built a spin-off Chrome extension that moves data from LinkedIn to CRMs, based on our core technology, sales people loved it and feedback from the marketing team was suggesting we had a hit on our hands. Sales, marketing and the CEO wanted to go down this route, as we’d found a product market fit. The engineers wanted to develop the original idea that was often fed back as being confusing for the end-user, and ahead of its time too maybe. The founders ensuing disagreements tore the company apart from within, it ceased operations not long after” David told us.
Inconvenienced but relatively unfazed, David agreed to work for another start-up, this time a ratings and review site aimed at expats in the Baltic States. Sure enough, less than six months down the line he was back to square one, the locals took more of a shine to the product than its intended audience, forcing the company to localise marketing and content. They ran out of time and money as a result.
Jobless for the second time, with what appeared as marketing failures of both previous employers having major influence on his personal situation, David started Blu Mint Digital, a digital marketing agency with the mission of shaking up marketing in the start-up world; he tells us:
“Blu Mint was born out of the need for companies to understand their client, know their markets and get traction – fast. Also, SMEs cannot afford a full-time marketer, or the time taken to train them up, I’ve seen this and its consequences first hand… twice!”
In line with trends mentioned earlier, Bailey’s belief is that flawed marketing methods within the start-up and SME spheres is a major contributor to many of these companies’ subsequent demise, and shared a large proportion of the responsibility for the figures we’ve seen rise to even a 90% (Forbes) failure rate in recent years.
“I do believe though that start-ups fail for a number of reasons, not only related to not marketing their company successfully. What marketers can realistically do is find markets and users for their company’s product, and more importantly, ensure that the product is presented (and found) by those users so that start-ups can maximise their success.“ Bailey goes on the add, “There is no point having a perfect product that solves a user’s problem unless the user can find your company. Marketers can aid in brand awareness, lead generation or even company sales.”
A frustration of his, and many in similar lines of work is the inability of some to accept the advice and guidance of marketing professionals. “It’s all very well contracting an agency like mine, or having an active in-house marketing team, but you have to learn to listen to their findings and guidance, internal differences are all too often a result of the pig-headedness of the tech talent, the key is to work together, to accommodate each other; that’s something we feel really strongly about within our company, and we remind our clients as often as is needed.”
David Bailey truly believes his experiences with failing start-ups has shaped the way he does business now, and has fostered a no-nonsense way of handling things that he is adamant helps get his clients results.
“Sometimes you have to challenge them, to take charge of the situation, we owe it to our clients and it’s what they’re paying for. At least now I’m in a position to do something before it’s too late, but we work hard to make sure it doesn’t come to that!”