For the first blog in the series on the IDEA, click HERE. To read part 9 on the GIVING BACK, click HERE.
Spend less than you make.
Truly I could stop this blog right here and trust me, I was tempted to do just that, because it is just that easy and it is just that hard. Plus, it would have been just a tad funny....
1. The first step on the path to profitability is to build revenues
If you are not in a position to hire a full time sales or business development person, there are amazing resources available on the Internet on every topic imaginable, including sales. So if you need to learn some things that you could do on your own to build revenue, YouTube is a great place to start.
One of my favorites about building revenue in a B2B (business to business) venture are short vignettes from Andrea Sittig-Rolf, the Blitzmaster @TheBlitzMaster. Another is the Go for No channel, by Andrea Waltz and Richard Fenton +Goforno. Both of these resources are amazing and give you really practical ways to get over your fears (which by the way are totally normal) about sales.
If you are in a B2C (business to consumer venture), you will want to search for resources on driving traffic (online) and about attracting customers. If you have a website for consumers, don't overlook partnering with someone that already reaches your desired customer base to see if they could simply partner with you. This is called B2B2C.
2. Price wisely
Pricing your product in such a way that your hard costs are covered is also essential. This is true whether you are selling a physical product or a service. That is not to say that there is not a time for discounting to "seed the market", but this cannot become the norm.
It is also critical to know your competition and how they price their product. If your costs are substantially lower, you can elect to undercut their price. But be aware that if their pockets are deeper than yours, it is easy for them to play that game, potentially driving you out of business.
Regarding pricing, years ago I remember Bob Crandall of AA say that you are only as smart as your dumbest competitor.
If you don't know how to price your product, then you need to go back to steps 2 and 3 and ensure that you know how much people are willing to pay for the need that you fill and ensure that your plan has specific revenue projections. You must k
3. Measure, Measure, Measure - KPIs are your best friend
What gets measured gets accomplished and what gets rewarded gets repeated.
The other thing is to make sure that your metrics are profitability oriented. Many companies measure revenue, but they do not know their cost of acquiring a customer or the cost of delivering the service.
Figure out your Key Performance Indicators (KPIs). Build yourself a dashboard that keeps track of those metrics on a regular basis. For online businesses, you may need to look at the dashboard daily (or if you are fortunate... hourly) or you may only need to measure monthly.
Year over year comparisons are important as your business matures. Also, you must know your business seasonality, as month over month comparisons can be misleading without taking that into account.
4. Don't try to do everything on your own.
I fight this battle daily with my new venture. I am the quintessential do-it-yourselfer.
I have finished building phase 1 of my product and I would love to just go ahead and hire everyone that I need now to get revenues flowing. But if I do that, I must choose the investment route, taking in outside money and that is not the path I have chosen at this juncture.
But I know from experience in previous ventures that if you need help, you can look for people who have the skills that you need. Tell them your story and your vision and see if they are willing to help in some way. Not everyone needs to be hired full time.
Some will defer billing for equity or simply for deferred payment. Others will barter. You may even find someone that you could even partner with, who is willing to contribute their skills, or someone who would be willing to serve on your advisory board.
Look for complementary skills to your own. If someone is recommended to you, take the time to vet them carefully.
5. Set aside time to work ON your business
In closing, the most important advice that I can give entrepreneurs is to make sure to schedule time to work ON your business versus working IN your business. Take time to plan, to set goals and to ensure that you are meeting those goals.
Thanks for joining me for the Entrepreneurial Success Series.