I have learned a great deal over the past few years about business, the do’s the don’ts and everything in between. My lessons come from various sources like mentors, books, entrepreneurs around me, my partners in various business ventures, by following entrepreneur superstars like Elon, Pieter Thiel, Branson and also from the real world of business where the grind lies. I have decided to share my 3 most valuable lessons in this article to entrepreneurs who are serious about making a success of their great ideas. There are many other lessons to be learnt, but without nailing these 3, you don’t even have to bother with the rest.
Why am I sharing these 3 best kept secrets?
Because so many entrepreneurs are fooled into starting businesses before being properly prepared for what lies ahead and this is why so many fail. My opinion of course, use it or don’t.
Sell your product before you build it.
Building a product before you sell it, is like going to war with fragile weapons and no knowledge of the landscape. You are totally unprepared, ill-equipped and imminent failure will be your fate.
Sell your product before you build it.
Make sure you understand this statement, read it again. Sell your product first, before you build it. Most entrepreneurs [ including me in the past ] jump right into building their ideas into products before really selling the idea first.
Sure all your buddies and family members tell you that your idea is a winner and you will make lots of money, but they are not the ones that have to pay you without even knowing you. Take your idea, get a professional brand designed for it, and a really good product pitch, and go line up your first 30 clients through marketing. Not your immediate network, market to the open world and find 30 clients that are willing to spend x amount on your product. This way you will learn about what the market really needs, you will answer most of their questions in your final marketing material and you will be 100% prepared when you launch the real thing.
Once you do that, thank them for it and give them life time guaranteed free use of your product, this way you won’t piss them off, instead you will win their respect and trust. Once you have 30 clients willing to pay for your product, then you build it. If you need to raise funds to build your product, it will be much easier now that you have your first 30 clients and proved there is a market and a need for your product as well as a willingness to pay for it.
So many entrepreneurs with real products cannot even claim that.
Price your product around what people are willing to pay for it
Don’t think about how much money you want to make or how much you need to pay off your investment when designing the pricing models of your product. Do this and you have a guaranteed fail.
There is a very small margin that people are willing to pay for something. The hit or miss is extremely close to each other. Too expensive, people think to hard about it. To cheap, they doubt the quality.
In my experience, talk to as many of your future clients as possible, and base your pricing on real data and market research. Find out what are people’s pains and what they will be willing to pay for your product to cure those pains.
Your offering needs to be a 10 times multiplier
This is one of the most valuable lessons I wish I learnt much earlier in my career. I would have saved millions.
Hardly any idea is something totally new. Most ideas are a better or cheaper way of solving a problem that someone else is already solving. So if your idea is just a bit better, or slightly different or better priced, you won’t make it. All the critical problems for both business and consumers are already solved, which means that people would need to cancel their existing solution and jump ship to yours – for some companies this could be a massive event.
For people to jump ship to your solution, it has to have a 10 time multiplier on your competitors. Either 10 times cheaper or 10 times more features, or simply just a 10 times better solution. The fact is, your target audience need to look at your product, compare it with other solutions and you have to be the obvious choice. By a mile. This is the only way to get people to convert to your solution.
Just because you have a better idea does not mean people are going to use your product.
Design your entire offering with this in mind and you will end up with a product that everyone wants, or if not, you will save a lot of money and not pursue your idea at all because it won’t be worth it.