Many (would-be) entrepreneurs approach me to ask for help implementing their idea. They already went too far.
“What do you think people would be willing to pay for this? I think I should charge 100€ per month.” – and, without skipping a beat, they add “So as soon as I sold 40 subscriptions, I can quit my day job and work on it full-time!”.
Awesome plan! But the next thing most want to do is create the product they’re envisioning. So they figure out what resources they need to create it, worry about financing, pull huge numbers about their idea’s economic potential out of thin air, and start to pitch “investors”.
If they don’t understand your business model, feel free to disregard their opinion—you know it’s a great idea! Friends, family and fools will join the up-and-coming entrepreneur in hyping up the idea. Most people you talk to on your quest for getting FFF funding will therefore encourage you to create your product—because once it’s perfect, you’ll quickly achieve huge financial success!
Time to stop the cynic, because we have a couple of things to talk about right now:
- No product survives the first contact with the customer. It’s the law.
- You’re based on hit-or-miss assumptions. With that as a foundation, the resulting projections have to be way off.
- If you’re already trying to scrape money together to build the first version of your product, there won’t be a budget for changes left.
- If you make the budget bigger by raising more seed money, you’re already giving the company away to investors before you even started.
Now there certainly are cases where raising a huge amount of money upfront makes sense. But those are usually earmarked for more seasoned entrepreneurs with more experience under their belt (and it’s not necessarily more attractive).
The better way? Sell your product first, then build it using the funds you already have!
If you have an idea and you think it’s a great idea, go sell it. If nobody buys it, you have your answer. Anybody can tell you your idea is great, but if they don’t give you a dollar, it’s worth nothing.
–Monika Wingate on Entrepreneur on Fire #1320
This is called pre-selling. All you need is a little bit of your time and enthusiasm: Use it to talk to prospective customers and figure out how to perfectly cater to your audience’s needs. Once you know what they need, you can design the perfect offer, as if you already had the product. And then sell it to the people you already talked to—and others!
Give them a special offer: Let them know what you’re about to build and how it’s going to help them. Don’t worry about people stealing your idea because you told them about it. If that even happens, you’re lightyears ahead of the competition.
Light their fire. Tell them how you’ll give them 50% off the subscription price for the first 2 or 3 years for a lump-sum payment TODAY.
Some will have objections, of course. But many will trust your ability to deliver and advance the money for your project to be able to profit from using it as fast as possible.
This way you hit at least three very important milestones in the shortest amount of time possible:
- The first version of your product will be in much better shape than any amount of “thinking things through” by yourself could have made possible.
- You validated your idea by actually selling it. There’s a huge difference between everybody and their mum telling you “Great idea, I’m going to buy this once it’s available!” and then actually handing over their credit card.
- You converted your customers into investors. This will make them feel special about your product and they’ll talk about it to other potential customers. Oh, and you didn’t have to give them a stake of your business in order to get the money you needed. Nice, huh?
Remember: If you have a great idea, go sell it! If you’re unable to sell it, maybe it wasn’t that great after all—and you just saved a hell lot of time, money, sweat and tears.
Listen to this post: