One of my favorite companies is Bazaarvoice. The list of reasons is long. They are born in Austin (my favorite city), and offer awesome products that build communities around businesses. But my favorite is that they had customers paying for their products before they were released.
WHAT?!!
I know. Wouldn’t it be nice to have customers paying you to develop your product? I m not talking custom bikes here. I am talking about a product that you get paid to develop then it sells to a long list of customers benefiting various communities.
HOW???
1- If there is a need there is a product/service
Hopefully you didn’t develop your product because you were out stoned one night. I assume the idea came to you because you discovered a need for it, that’s worth paying for.
2- Exploring the need
Here is where many entrepreneur fall flat on their behind. They start to obsessing over the product forgetting about the need that started it all. When you make the exploration phase your obsession, you will find out:
Who would be interested in your product (age, marital status, ethnicity, gender, incomel)
What will they use it for (physical, emotional, mental purpose)
How will you present it or package it to show its value (internet, paper, cardboard, billboard)
How much are they willing to pay for it (pennies, dimes, dollars or thousands)
3- Find the customer before the product
Armed with the above information, you now have a good case to find a customer who is willing to pay you to develop it. Not an investors, but an actual customers who will pay to use it.
I know it might sounds backwards. Just bear with me:
Cousin George is loaded and has potential use for your product. After you explain your idea and how it will benefit him. He foots out the money for you to develop it. During the development phase, he is there with comments about the product veering off the original need or those bells and whistles being unnecessary, while you are debating punching him in the face.
The point is that an angel (in disguise) has given you the guidance to develop a marketable product. He is also showing it off to his rich friends, and if you have done an awesome job, other customers might appear your way. Or you might be ready to get other customers…After all, they can’t be worse than George.
Many entrepreneur lock themselves in the garage developing something that they can’t sell, to find out later that they misunderstood the need. Finding a customer to fund your idea is not the standard way of doing things, but it is the way to ensure that your idea is marketable in addition to keeping your delusions at bay.
Bazaarvoice believed in their ideas and pitched them to customers (who probably paid them pennies to develop them), but kept them on track with what is needed and what would sell.
So c’mon! Just like Michael Jackson took a chance on stage back in the 80s with some crazy moves that changed the world. You too can take a chance on doing things different or even backwards.
Walking into a small business owners meeting, I heard:
“…nothing is ever good enough…”
“…I’m spending too much money than I ever thought…”
“…I’m ignoring everyone else…”
For a second I thought I walked into Abused Anonymous.
“..I thought working with them would open more doors …”
“…I thought I would make a lot more money….”
Oh yes! I was in the right room…and it was bitching about your customer session.
Something about that conversation reminded me of being in high school, and dating the most popular guy. I remember my excitement when he asked me out. He was my validation for being cool and popular.
Few months later, I was praying for him to break up with me (of course I didn’t have the guts to do it myself). I was miserable and missed “my” cool friends, never mind spending too much money on hair spray.
The rules of business dictate that it is not personal; it is business. At the same time, the reality of small businesses is that it’s personal. So how can we make the wisest business decisions influenced by our personal needs?
Wisdom combined business would say:
1- Know thyself:
Many small business owners let their ego run the show. It is understandable, after all it is what got you here. But you might want to consider the reasons behind your decision to play with the popular kids. Is it to rub elbows on the dance floor or is it really in the best interest of the business?
2- Follow measurable goals:
Measurable goals with short time-line show the direction of the overall plan. Meaning, don’t shoot for “I m hoping it will open doors in the future” instead go for ” in 2 months, I should have A and B with profit margin of X, which will increase by Y in 6 months”.
3- Know your limits:
What are you willing to give up to get this? On the personal level, you might say “sweat, blood and tears”. On the business level, know the allocation of resources, cycle time and money. Then remember it is just a guesstimate and add 30% on top of that.
4- Accept the causalities:
Something always gives. What are you willing to sacrifice for this deal? Time? Money? relationships (family, friends, other customers)?
5- Exit strategy
In a way, it is a bad thought because it might show a lack of commitment. YET, knowing when to quit and what are the losses when you quit is crucial to making any decision. There will always be casualties. It helps to know and accept the consequences.
So before you start dancing around for winning the Walmart deal, decide if working 24/7 with your partner and mother in law to deliver 200 jars of BBQ by yesterday after paying $2000 for a bar code system, is worth the the profit margin of $0.5/Jar.
Meanwhile some of the local businesses would love to carry your product, greet you with a smile and offer you a profit margin of $5/Jar.
“Good is the enemy of Great” said Jim Collins in his book Good to Great.
And what a true statement that is. If all is hunky dory good, why push for great? The truth is there isn’t any more effort in Great than it is in Good. So why not go all out?
Jim Collins and his team concluded after 6 years of research that going from Good to GREAT, lies in buses, hedgehogs and flywheels…..
huh?
The Bus:
So here you are driving the bus of your life or business. Imagine riding with Larry, Sue and your partner. You guys can’t agree on the music, when to pee-stop or where to eat. Also your partner is constantly whining about the driving speed and Larry hates riding shotgun.
What a pain in the ass…literally and figuratively.
Now switch the passengers to Bob, David and a less whiny partner. David is a great navigator, Bob is an awesome DJ and your partner is a kick ass planner. Y’all are rocking and rolling. Your trip is one of a kind and you are having a great time.
The choice is yours. You will enjoy your time on this earth a lot more if you get the right people on your bus, the wrong people off your bus and the right people in the right seats.
Rock on baby!!!
The hedgehog:
“The fox knows many things, but the hedgehog knows one big thing” said the Greek philosopher Archilochus million years ago. So while the fox has many uncanny ideas to deal with life complexity, the hedgehog simplify that complexity to 1 big idea that helps him focus on wining every time.
Now imagine taking your complex and jacked up business/life (you have to be brutally honest here) and simplifying it to a simple yet profound and deeply satisfying life. SWEET.
The trick is in finding and understanding the intersection of these 3 facts about it
What can you be the best at in the world? (Equally what you suck at?)
What brings you the most moolah or personal satisfaction?
What are you most passionate about?
Let’s say basket weaving is your passion and you are great at it AND you found a slew of customers waiting to buy them from you at good profit margin. That could be your hedgehog. I say sell the hot dog stand, dumb the abusive boyfriend and start your new basket weaving business that will rock the world one basket at time.
The flywheel:
To make changes, you can’t just wish and wave a magic wand. That would be nice on a mushroom trip, but not realistic. Think of your life and business like a big flywheel that YOU are in control of moving. 1st rotation, 2nd rotation, 5th rotation, 100th rotation and it picks momentum spinning faster and faster.
It’s like eating 1 cup cake, after another and another and another. Next thing I know, I have expanded horizontally. Did the expansion happen from the 1st? Maybe not, but did it get things moving into that direction, probably. And thanks to the 2nd, 5th and 100th cupcake the expansion is exponential. Same for your business goals. Discipline on pushing your wheel toward your hedgehog concept is the key for great things to happen or wider hips…
Just remember that every time you change direction you are either starting a new flywheel or you are halting the momentum of the current one (Some changes might be necessary as in case of crappy bus passengers)
Bottom line, we all have the potential for greatness. It comes from consciously making decisions to be great and having the discipline to work at it…every day.
Life is too short to live in mediocracy. So go for GRRRREAT baby
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