Monday, July 24, 2017

Start with Insider Intelligence: 10 Tips for Your New Startup

(1) Presell Your Product -  Before you manufacture/ produce your widget, make sure you and your team give a 120% effort on trying to presell your product on initial interest contracts to your target audience.  This gives you two advantages: one, it forces you to identify and zoom in on your target customer before you take the leap of faith into business; and two, it increases your confidence levels about how to make “the sale.”  Any entrepreneur's dream situation is to know in advance of production where, to whom, for how much and the quantity of product is being sold. This is a guaranteed return on investment.  For example, if on turn number one you intend to produce 10,000 widgets, then your TEAM should try its very best to have 10,000 units pre-sold by the time you release payment to your suppliers to begin production.

(2) Build a Minimum Viable Product - At first, if you must choose between your product being high quality or low price, then always choose lower price (also known as a minimum viable product).  Your product’s highest quality / perfection comes later. Potential buyers will try something new especially if their cost is low, because it is low-risk for them. Plus, if you must give away a few as demos, or first purchase “bonuses”, you'll be better off when your production cost per unit is low. Let your product age like fine wine, its quality will come over time. Once you build up an increased demand for your product, then you can increase price, and then you can justifiably get that sexy label you’ve always wanted, or that impressively colored (or shaped) product packaging.

(3) Your Job is to Sell – Do yourself a favor and never categorically turn down a sale, even if it doesn't make profitable sense immediately. As a startup, your cash flow is very important, especially at the onset.  If there is money in the bank, then you can afford to continue to learn, and the longer you are in the game, the better your chances are of survival (or thriving).  Remember that what was unprofitable today may become profitable tomorrow.   As your sales increase, you can press your suppliers to have production costs decrease.  Also, as sales increase, you can ship more at once so logistics costs decrease and in addition an empty warehouse is a decrease in risk too.

(4) Avoid Overproduction – When you start out, only pay to produce/ manufacture the amount (or just a bit more than) you know you already have pre-sold or the amount you know you can sell in a reasonable amount of time.  On a first turn/ iteration, try buying 1000 or 5000 widgets, not 50,000 or 100,000, unless you already have buyer(s) lined up.  Overproduction and warehousing fees are often the poison pill for a startup.

(5) Your Customer Knows Best – If you do nothing well in business except one thing then let it be that you listen extremely closely to your customer complaints, compliments, and comments. Whatever you do, don't let your ego (or intellect) get in the way of a good business decision. Trust me, you do not know what's best for your business - your paying customers do.  Your job as an entrepreneur is to add value to your paying customers, where it did not exist before. Your customer will often tell you exactly what he/she is looking for, and why, and how much he/she would pay to get it.  Just keep reverse engineering what your customer demands, it gives you the leverage in business. Use consumer feedback as key data to make justifiable business pivots or tweaks.

(6) Fundraise 3x - When raising funds for starting your company, from investors, always aim to raise triple the amount that you think you absolutely need to get started.  It is impossible to see all the costs associated with doing business, and as a first-time entrepreneur you will be surprised at all the initial hurdles.  G-tins, LLC fees, paying yourself, buying a domain name, advertising at a trade show, and other ritual events will not always be foreseen or foreseeable.  You'll be best served by having extra cash on hand.  This does not mean you need to spend 3X, but use the surplus wisely.   In case you need to make a power move, or in case you hit especially hard times (sometimes your product is seasonal in so far as when the majority of your customer base buys). At times, you may have to be patient, and bleed out a bit. Try to stop the bleeding with your preselling efforts, and by creating and communicating incentives for your customers to "buy now" as opposed to later.

(7) Leverage Your Anchors - Find an anchor customer or two or three as soon as possible.  An anchor customer is someone who regularly buys a large amount of product from you, consistently, and is happy to continue buying.  Once you find one, two or three anchor customers, you can begin to breathe, and start focusing on the bigger fish.  Leverage your relationship with your anchor customer by using your anchor customer's testimonial as living proof your product works. You can incentivize your anchor customer to spread the word by making his buying experience better (either by lowering his cost or by providing something else of value). Every time he gives you a warm lead, or a buyer-referral, then give him a bonus.

(8) Embrace the Love – Treasure and cherish the people who help you in your business pursuits.  Whether it is your actual business partners, your family and friends' support, an investor, or a teacher or mentor's wisdom.  Not everyone you meet in life genuinely wants you to win, but those who do are your lifeblood, and your motivation to succeed.  Use their desire to see you win as the wind beneath your wings.  Share all your joy with them, as there is no better feeling in life than to share your success with others. Feed off their energy, they are an endless source of fuel for your entrepreneurial desire.  Give back, share often, and rejoice collectively.

(9) Partner Wisely – As a startup, you must choose your business partners, investors, and initial hires very astutely.  You need those first team members to be as impassioned, excited and eager as you.  Partner with people who are like-hearted, not necessarily like-minded.  More importantly, look to select people who have complimentary skills sets that you lack, and give them the authority and responsibility to become a master of their domain. Your job is to hire and surround yourself with people smarter than yourself, always, and in all capacities of business.  Truly the best CEO is the person who is willing to hire people smarter than himself and step aside. A CEO's function is part visionary, part cheerleader, part mentor, part fundraiser, and part culture officer. Build a team culture of respect for others, always be ethical and moral, and incessantly applaud innovation.

(10) Resilience - Give yourself a chance and another.  Life is about learning from your mistakes and gradually improving after each failure.  No one is perfect, you will fail, more often actually than you succeed.  Every no gets you closer to yes. Every dark night is followed by a bright day.  Keep your calm, be persistent, be patient, and never stop improving.  Measure your success based on how you deal with each failure.  Renew yourself every day, reinvent your enthusiasm each morning, and keep focused on the end goal.  Be tenacious to add value to others so much that your presence becomes their necessity.

--Jarrett Rumoro

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