Being an entrepreneur at heart and having a product or a service worth tuning into a business will by no means ensure business success. Too many entrepreneurs start a business because of an idea, without taking the first step in business, to identify a need in the market.
When that million dollar idea pops into the head of an entrepreneur, it is normally all systems go and involves a lot of passion and drive. But is there a need in the market for what this idea will offer? Only when there is a need is the idea an opportunity. So step one: find a need in the market. The possibility exists to create a need, for instance, twenty years ago nobody needed cell phones, but to create such a need takes a lot of capital.
Filter the idea
Step two is to filter the idea, or opportunity through three filters; operational, financial and marketing. Is it at all possible to execute the idea? Are the necessary skills and resources available? Is it possible to provide the product or service at a market related price?
Being a start-up company, competing against bigger competitors, can the product be provided at a price lower or at least equal to the competitors? Are there cheaper imports in the market? The last filter is the marketing filter. Does the market want the product?
Can it be supplied according to customer requirements, at the right price, place and time? Many a retrenchment or retirement package has been wasted due to entrepreneurs investing in an idea without doing the necessary research.
Once the research has shown that the idea is executable and definitely an opportunity, it is important to define the target market clearly. Even if it is possible to service the whole world, affect the entire global population with this solution to a global need, there is not an entrepreneur in the world that can immediately take on a global campaign, marketing wise or logistically.
A well-defined target market will describe the age group, income group, qualifications, geographical area and gender of the target market, at least. In the case of a business to business product, describe the geographical area, the size of the company and the industry in which the product will be distributed.
The importance of research
Once the target market has been defined, in-depth research and development can start. The entrepreneur now knows who will buy the product, but what are the specific requirements? Would they rather buy a pink than a green one, would they like it delivered or prefer to buy it from a supermarket, what size would be most convenient for the customer.
In the service industry, extracting client requirements is even more important. Lots of efficient work can be done, but if it is not exactly according to customer requirements it will not lead to a good customer experience.
Step five is to develop the product or service, document what it is and set specifications and standards. Even if it is a service rendered, “productise” it.
Then enters the elusive and mystical business strategy part, that part that business consultants tell entrepreneurs to pay big money for, to go away for a couple of days with them and then to hand over the cheque in return for a thick book, that entrepreneurs proudly put on a shelf in the newly furnished office.
When starting a new business, strategy can easily be done without paying any money for it. What is your vision? In other words, what do you want to achieve with the company. What contribution will your newly developed offering make to the target community? A vision is a one line statement:
“To offer a high quality product to a specific market in order to fulfil a specific need.”
What’s your mission?
The next component of the business strategy is the mission. How is the vision going to be achieved, according to which principles and at which standards? Be specific. “To be the best service provider globally” doesn’t cut it. Identify each component that will contribute towards achieving the vision.
Goals and objectives should be mid-term while vision and mission are long-term. In other words, once the vision and mission has been established, set specific steps necessary to achieve the vision and mission, allocate resources and set time lines to form the goals and objectives. The final part of the business strategy is the roll-out plan. Merely a step-by-step plan of how the business will be established, managed and marketed.
The next step is to structure the company. Decide where it will operate from, what resources such as furniture and equipment will be necessary, what roles need to be fulfilled, how many people will be required and, most importantly, how much capital is required to set all this up.
Entrepreneurs are known for under-budgeting. A good rule of thumb is to do the calculations and then double the amount. That is probably what is required to set up the business.
Once all that is done create operational excellence through setting and documenting quality parameters and service standards.
Develop and map processes of how every task in the business will be executed, create policies and service level agreements, develop role definitions for employees, with clear key performance indicators to inform them about the task as well as required standards, and put measurements in place to identify any variance from the standards and objectives immediately.
A common cause of business failure is the lack of proper planning and marketing a dream rather than a reality. When the business strategy is in place, there is clear direction. When the business has been established operationally with regards to human resources, supply chain and logistics, technology, financial processes, quality control and production, it is possible to walk the talk when the market is told about your business.
The good entrepreneurs fail due to too much business. Rapid growth at the start of the business phase will put pressure on finances, capacity and operational structures. The art of entrepreneurship is to balance capacity with marketing in order not to over or under sell.
The wise entrepreneur sells exactly what can be delivered at a standardised high quality. But a key word here is marketing. When there is no marketing, or sales, there is no business. In order to offer a product or service it is necessary to tell the market that the product or service is available.
When the need is real, the offering is in line with customer requirements, the operational capacity has been established and the sales drive is executed in an integrated manner, all that remains is to collect the money. But even in the collection of the money, failure can occur. When work in progress is not invoiced, debt collection days are longer than payment days, or incorrect invoices are issued, the brand and cash of the business will be seriously affected.
Excellence and efficiency
The ultimate ingredient to the business success recipe is excellence and efficiency. To do everything in a well-planned manner, to build quality into every step of the production and non-production processes and to create a cohesive team, all with one vision and mission in mind.
Even when this is achieved, however, entrepreneurship is still a gamble, requiring a lot of tenacity, risk taking propensity and an incredible ability to handle stress. At least when all the steps are properly followed, the stress will be manageable. In fact, that is what business is about, plan, lead, organise and control.
Selling The Dream
When you’re starting a business, the secret to success is getting everyone — from customers to suppliers — buying into your vision.
I started a company in 2016 offering road building in residential areas for local municipalities. I realised that there is too much risk involved and I do not have the capital to purchase machinery. The overheads are also too high. I feel more comfortable supplying municipalities with commodities. I have been in sales and have good people skills and sales experience. However, I’m struggling to get a foot in the door. Manufacturers are reluctant to give me a credit advance. As a result, I had to let go of many opportunities. How do I overcome this obstacle? — Martin
I can only speak from my own experience selling to municipalities. I did it once, successfully. This is how I did it:
- I convinced the municipality to roll out public WiFi in low-income communities.
- The municipality awarded me a contract.
- With that contract in hand I shopped around to find a company that I could sub-contract. That company had to take a risk that the municipality would pay me, and I would in turn pay him. I had to take the risk that the sub-contractor wouldn’t deliver the goods.
- I found a sub-contractor.
- We deployed the WiFi.
- The municipality paid its bills.
- There was never a hint of corruption.
In retrospect I realise I was the beneficiary of a succession of benevolent miracles.
Miracle No. 1: Meeting a political leader that shared my vision and was competent.
Miracle No. 2: Getting a legitimate contract out of a municipality.
Miracle No. 3: Finding a sub-contractor I could trust, and that trusted me.
Miracle No. 4: Successfully working with the municipality to fulfil the contract.
Miracle No. 5: Getting paid by the municipality.
Miracle No. 6: Avoiding corruption.
If you believe in miracles, keep going. If you’re slightly more risk-averse (or less desperate) than I was, then rather don’t target municipalities to build your business.
You’ll note that I solved the supplier credit problem by finding a sub-contractor that trusted me. That’s the only way to do it. Not only do you have to sell the dream to the customer, you must sell the dream to the supplier. I recommend reading Shoe Dog, the story of Phil Knight and Nike.
I want to start a business, but I don’t know how to approach my local bank or investors, probably because I don’t have any experience in the business field. I am currently in a full-time job and holding on to the security of the monthly salary (which I know is wrong) but I have responsibilities. How do I break out? — Lorenzo
First, the security of a monthly salary is under-rated. Don’t be so quick to wish it away! Of course, a salary is a long-term dead-end. When you’re forced to retire at 65, you’re likely to be staring at 35 years of supporting yourself and your family relying on pension and savings alone. Assuming they don’t retrench you before age 65.
Be grateful for a salary, but be on the look-out for a way to make a living on your own terms.
That way you will learn skills that can be used after forced-retirement age, and even more important, you will be able to keep yourself busy rather than spending your old age pottering around the house in boredom and driving your significant other mad.
Forget about banks and investors. If you want to start a business, you must do it without ‘other people’s money’. Find a problem in your industry, solve that problem, get paid for solving the problem. Repeat.
Ideally find a like-minded colleague that you trust, pool your efforts and partner to find a way to make a living in your own business. Partnership massively de-risks entrepreneurship.
Related: Pay Your Dues Before Raising Capital
Alan Knott-Craig’s latest book, 13 Rules for being an Entrepreneur is now available.
What it’s about
It’s easy to be an entrepreneur. It’s also easy to fail. What’s hard is being a successful entrepreneur. For an entrepreneur, there is only one important metric of success: Money. But life is not only about making money. It’s about being happy. This book is a collection of tips and wisdom that will help you make money without forgoing happiness.
Get it now
To download the free eBook or purchase a hard copy, go to www.13rules.co.za. To browse Alan’s other books, visit bigalmanack.com/books/
5 Lessons To Follow As You Take Your Product To Market
Don’t overly complicate things when launching your business. Instead, follow this advice from a successful entrepreneur so you’ll do things right.
When launching a new business, product, or service, the most common mistake entrepreneurs make is trying to do too many things at once in the belief that going to market with “more” is better.
It isn’t. During your initial launch period, or when relaunching new products or services, “more” means additional risk. More also means unnecessary complexity, as well as additional time to market, so more capital will be required.
Below are some important things to remember as you prepare to take your product to market:
1. Don’t try to build Rome in a day
I have a good friend who raised $2 million in a very tough market to start a consumer internet business. Finding that much money to start a new business was amazing, and I congratulated him on a big win. He was ecstatic and told me he couldn’t wait to get to work on the site.
One year later, I ran into him again and asked how it was going. He sang the blues. He said he was doing terribly. In fact, he was on his way to his attorney’s office to shut the company down. They had launched a few months before but had already run out of money. I asked how that was possible, and he talked about his big vision, how his company aimed to provide everything their target customer could possibly want to buy in the category. Their goal was to be a one-stop shop. He and his team invested all their time and money building something big and comprehensive, confident their target customer wouldn’t want to go anywhere else once their website was up and running.
When the company got started, they were solving one problem for one target customer. It was a simple concept. But when the money came in, everyone started working on other “great ideas” and “shiny objects.” They kept building and building and building. They went from solving one problem for one very specific target customer to building a one-stop shop that did a lot of things for a lot of different people. Then they started running low on cash, so they decided to push the product out.
After the launch, they learned, much to their surprise, that about 95 percent of their users used just 5 percent of the site! And that 5 percent was the original product to solve the original problem.
So that means 95 percent of the time and money invested was essentially wasted. What can you learn from this?
2. Focus on one thing, the simplest thing
When kicking off a new product or service, put all your energy and focus into that product or service. Focus on one thing at a time. It shouldn’t be the hardest thing; it should be the simplest, what we’ll call the minimum viable product (MVP). The MVP provides the opportunity to learn the most about your customers, with the least amount of time, money and effort.
The MVP puts you in a position to go to market quickly, collect valuable feedback and not waste time building things customers don’t want. This strategy significantly mitigates your risk and helps avoid the trap my friend fell into. Remember, Amazon started just as an online bookseller.
3. Follow the 85-percent rule: Good is good enough
Striving for perfection is the enemy of any product launch. As a rule of thumb, when the new business or product is 85 percent of the way there, you’re ready to go. In my experience, the level of effort required to reach 100 percent isn’t worth the additional time and expense at this stage. You’d be much better off getting something into the market and beginning to test.
4. Be great at collecting, and learning from, feedback
Once you’ve launched, listen to and learn from your users. Develop feedback loops to learn everything you possibly can.
- What do users like and dislike about the product or service?
- What features would they like to see added to enhance their experience?
- Which features don’t work or generate little interest?
Do whatever you have to do to engage with your users. That may include offering incentives to get feedback on surveys or in focus groups, reaching out on social media, or generating outbound calls to learn more.
The hardest part of this process for many entrepreneurs is to be completely receptive to what customers tell you. Given your passion and all the time you’ve spent on the project, you may not want to hear negative feedback. You may be inclined to think the customer just doesn’t get it. But feedback is the most valuable tool you have as an entrepreneur. So listen, consider, and use what you learn to iterate, improve, or even throw out some of what you have built or planned.
5. Avoid the shiny ball syndrome
As you start developing your MVP, you must fight “feature creep” at every step. You, your team, partners, and everyone else you share your vision with will have ideas about what should be added. While many of them will sound good at the time, they are instead shiny objects that distract you.
Your job is to stay focused on one thing, get it to market and then deliver the next thing. By focusing on one thing at a time, you can get to market quickly, learn a great deal about your product or service from actual customers and make changes based on their feedback And if your launch doesn’t fly, you have significantly mitigated your risk.
This article was originally posted here on Entrepreneur.com.
How To Launch An Online Coaching Business
Cut through the noise and create a viral product.
Work from home? Control your own schedule? Impact people across the world with your product or service?
Internet marketing is on the rise for a reason. It gives you the ability to scale your business to a global level without forfeiting your personal freedom. Still, there’s one question that still prevents entrepreneurs from entering the online space: “Is it really possible to make a living off the internet?”
Not only is it possible, it’s lucrative when done correctly. We live in the Golden Age of internet marketing. Thanks to social media, everyone can get in front of a camera and pitch their idea to the masses. Good enough, right?
Not quite. These days a big idea will only get you started; it’s what you do to bundle and package that idea that matters. Here are the three steps you need to take to launch a profitable online business.
Flesh out your idea
Of course, before you create your product, you need an idea. Your idea must solve a specific problem that a specific group of people face. Make sure you establish that before you move forward.
Now, before you begin creating your product, you need to write your sales copy. Your sales copy (or sales video, if that’s what you prefer) should be enticing enough to take prospects from “I’m interested in this” to “I need to buy this now.”
Related: Paddy Upton: People Centred Coaching
But, why write your sales copy before creating your product? Too many entrepreneurs write copy that promises a lot but delivers next to nothing. When you write your copy before creating your product, you build the blueprint to create a product that satisfies your customers’ needs –without overpromising.
Your sales copy should address the prospect’s problem, explain how your product is the solution to that problem, and include a list of bullet points that summarise the benefits of your product. Make sure you nail the first 500 words – easily the most read section of your sales copy. Finally, always create a sense of urgency or people at home won’t be motivated to buy your product.
People always ask me, “Well, what if I’m not a good writer?” That’s OK. Just say your pitch out loud, record it and send it to an online transcribing service. For a relatively inexpensive price, you’ll get your sales copy written out for you. Just review it, copy it and paste it to your website and boom – there’s your sales copy!
Build the “know, love and trust” factor
Most people believe you need to sell prospects first, then deliver results. But, what if you flip it? It’s much easier to sell someone once they know, love and trust you as an authority in your space, rather than selling them on your product before they even know if you can deliver the results you’re promising.
That’s why the most successful internet marketers – including myself – give away boatloads of free content via blogs and videos. Granted, the stuff we give away for free could easily be packaged together into a high-priced course, but that would be short-sighted. You don’t want prospects to buy from you once and move on – you want them to become long-term paying clients.
See, you deliver free quality content to your prospects, then they take it and implement it into their businesses. They start to see results in advance, which leads them to trust you more and more. Soon, they begin to crave more knowledge from you, and their willingness to pay for your products and services increases.
Eventually those prospects become your most loyal clients. They buy your front-end products, your upsells and your flagship products – all of which I’ll get to in just a second. But, before you get that far, make sure your prospects know, love and trust you before you worry about selling them anything.
Create your front-end product and upsells
Once your copy is written and you’re building the know, love and trust factor, your next move is to create a front-end product – a product that’s easy to sell. This could be an ebook, a membership site or a course that comes with follow-along videos.
Now, you might be tempted to charge a high price for that product. Here’s the thing: Most of the money is made on the back end. I’ll talk more about this in a second, but for now just remember that the front-end product is not the final product you’re really trying to sell them. I – along with many of my fellow internet marketers – don’t mind breaking even or losing money on front-end products because I know I’ll more than make my money back with my flagship product.
Instead, your aim should be to use that front-end product to upsell them instead. So, after they purchase your front-end product, offer them three different upsells. An upsell is a higher-priced product or service you offer a customer after they’ve bought something from you. These upsells should be done-for-you, and they should enhance the front-end product by making it easier to understand or more efficient at getting results.
Why are upsells so important? Besides adding value to your front-end product, you’ll be able to recruit more affiliates to promote your business. An affiliate promotes your product to their own audience for a commission fee. If you make money through upsells, affiliates will choose to work with your business over your competitors because you can pay them higher commissions. The payoff? You get more traffic going to your webpage and ultimately more bottom line revenue.
Move them to your flagship product
That’s how you set up the front end of your online business. But, what about the back end? Remember I said that most of your money will be made on the back end and not the front end?
That’s why you need a flagship product to pitch your clients once they’re done with your front-end product. But, what in the world does a flagship product look like?
It could be high-end coaching sessions. It could be a spot in your exclusive mastermind group. It could even be a suite of software that teaches them everything they need to know about their industry. The front-end product is a way to get your clients through the door; your back-end product is the money-maker product, the one they’re more likely to buy once they’ve already purchased something from you.
I’ll give you an example. People will often find my products online. Usually when they finish using those products, they’re still hungry for more knowledge and advice. At this point, they’re considered qualified leads for my mastermind program, so we make sure they know about that programme and how to become a member of it.
That leaves you with one problem: How do you send marketing emails to every single person that buys your front-end product/upsells? It’s basically impossible, unless you’re in front of your computer screen 24/7 (which I’m sure you’re not). Fear not, because it’s actually easy to do when you use an auto-responder system to send out all those emails on your behalf.
It’s simple: When your clients purchase your front-end product, the system automatically sends them emails from you. That way, you can build a sequence where you give away even more of your best free content before sending them an offer for your flagship product. By the time they get to your flagship product, they’ll be so confident in your expertise and results that they happily pay the higher price for your higher level of service.
That’s the simple science behind converting your prospects into clients, and your clients into fiercely loyal clients. It’s how you sell your highest-priced online programmes without running into any of the typical sales objections. Follow these three steps and start building your own online business empire today.
This article was originally posted here on Entrepreneur.com.
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