- Sustainable Growth
Okay. So you’re a newly proclaimed entrepreneur, e.g. - someone who will do everything in their power to be sure their company succeeds. You have a breakthrough product idea but you are not completely sure how to go about running the business side of launching said product. You know you want to be as efficient and as quick as possible in building a following and getting your product out there, yet you only have so much time and money. So how do you do it?
Work tirelessly to create your product and launch it as soon as possible? Not exactly. In fact, you want to do the opposite: Work in reverse. It might seem counterintuitive, but trust me, you will thank me in the end. By using the tools and methods below, the process will become clear.
First things first, make sure to start off with simplicity in mind. You want to keep this process lean. Try to eliminate the need for your team to multitask too often. You don’t want anyone spreading themselves too thin and not doing their absolute best on a project. Keep it simple. Get things done one at a time and don’t move on to a new project until your current one is done. You can use a whiteboard or spreadsheets or a project management tool like Asana or Harvest to keep track of projects in the brainstorm, in progress, or completed phases. Keep it organized. A benefit to this way of working is that every team member takes part in every aspect of working through a project and everyone gets to learn to think critically about a feature in the brainstorm column.
Will it be validated? If the answer is NO, don’t bother building it! Save the time, money, and stress. Channel those resources into projects that will be validated.
Now, you need to make sure your idea is valid, that what you have to offer is something people need and something that people want. But how do you know if that’s what you have? Test it. In business, especially in the world of startups, everything is an experiment and everything is a test. You’ve just become an entrepreneur, and congratulations, you’re also now a scientist.
You first want to determine what risks are involved with launching your product, service or idea - monetary risk, time risk, etc. - and then determine the profit you’ll acquire from each sale. When your benefits (profit) outweigh costs (risk), the company should grow. After determining your risks and profits and looking at how they balance out, decide if this idea will be “the one”.
Fortunately, when testing your profit (benefit-cost), you don’t need a huge number of customers to do so. Ten customers will provide the information you need so you don’t have to worry about thousands of customers in order to determine your potential test rate. That said, data changes, as well as your product and customers. What works now may not work in six weeks. Continue to source data for analysis to see if you are growing. Amazon’s Mechanical Turk is perfect for such testing at a low cost.
How do you operate with limited financial, time, or labor resources? It just means you have to work smart. For example, rather than talking in circles with your team about the minute details of your product, look more at the testing. See if the product is even going to sell before you use those minimal resources to build it. Learn before you build and grow and do it quickly, especially if you have a small amount of time to get things done. Launch a landing page, watch the analytics, make changes, and launch again. Talk to your customers as much as you can, run cohort analyses if you have enough data, and hold focus groups. Take advantage of every opportunity you have to test your product.
Learn as much as you can directly from the source, your customers.
Now all that information might seem abstract and you want the step-by-step process of growing your business, so here we go:
First, determine and create the hype about your product. The product doesn’t have to be ready to launch by any means, though. That might seem counter-intuitive because wouldn’t you want to sell something that’s been created rather than selling just an idea? No. You want to create a product you know is going to be successful - one that brings in sales - rather than wasting time making a product that fails.
In order to measure the demand for your idea, create a simple online landing page with LaunchRock. Include your product idea, why it would be ideal to purchase this product. Which problems are you trying to solve? And how awesome this product is. Don’t hold back, you’re trying to sell something. After creating the landing page use web analytics (great tools are available for this) to see how many visits to the site you are getting and then take it one step further and look at how many people are interested in purchasing your product, those who try to move onto the second page of your site after they register for the mailing list). If there’s high interest, great! If it’s not what you expected, you can modify the product or throw in the towel completely.
Now that you’ve tested and retested the validity of your product, it’s time to start building it (since, after all, you told your customer base that it existed). Again, you want to be focus on developing rapidly: Don’t build anything unnecessary. Focus on your key differentiators and/or disruptors. Build what’s useful, iteratively. And don’t leave anything to chance!
If you make a change, test it. A great way to test a change is to run a double blind study (commonly known as an A/B test). Gather people to test, giving half the original product (A), and the other have the updated product (B) - and observe! See which product gets a better response and go with it. Pay attention to what people do (body language, facial expressions and the like) rather than what they say as people may not be as honest as you’d like them to be.
It’s built! It’s launched! Is it successful?
Your reports need to be able to show you if something went wrong, either what went wrong or who you can talk to in order to figure that out, learn from it, and improve the issue. Next, reports need to be able to convince others so they must be accurate. This means use your clients and test subjects as actual data points. Don’t massage the data to make it look nice in order give you the results you want - you’re only hurting yourself. Once your report gets too complicated, there’s more room for error and it becomes less convincing and less accurate. Lastly, it needs to be available to and easily understood by everyone so that they can learn from the data as well.
We are now going to look at how to sustain growth within your company and more specifically, what type of business model you are working with in order to grow:
- Is your company going to grow solely by word of mouth, where each customer will then bring in new customers due to satisfaction with your product?
- Will the profit from your customers help pay for advertising to increase sales and eventually fund your company?
- Or will customers continue to purchase your product for long periods of time, increasing the lifetime value of each customer?
Each of these mechanisms provides a means for sustainable growth where the acquisition of new customers stems from the actions of prior customers. Sustainable growth is the best way for a company, especially startups, to flourish. Again, cohort analysis is imperative here.
One important thing to remember in this venture is that you won’t get everything right the first time or second or third … and that’s ok. That’s not your job. You want to empower your employees without applying too much pressure, which is very hard to do. Really, to empower with minimal pressure is to admit to yourself, your team and everyone around you, that mistakes will be made. Just be sure to learn from them. Failure in business is expected - and encouraged. (How else are you going to learn?)
Messing something up gives you a chance to learn and grow your company by improving, learning, and building your intuition for what will and won’t work. It’s almost to your benefit to mess up now and again.
So that’s it. If you take anything from this post let it be this:
- Keep everything simple;
- Always test, build, and measure;
- Test as much as you can in order to validate that with what you’re working on; and
- Allow yourself to make mistakes and learn from them.
Now go be an entrepreneur.