I Launched My Startup Without A Product
Zero To €100k Revenue In 12 Months — Month 1
In my previous post, we looked at idea creation, testing your theories and launching on a small budget with maximum impact. If you haven’t read that, take 5 minutes now to read it.
The success of my test launch had created a great problem. I had two customers and no finished product to cater for their demand. I had to quickly scale my team, continue to add new customers and start making money.
“If somebody offers you an amazing opportunity but you are not sure you can do it, say yes — then learn how to do it later!” — Richard Branson
Building MVP 1.0
My business had two different sides that needed to work together.
- Communications and guest relations (meet & greet)
- Property preparation/cleaning
I could handle the communications and guest relations. I was tech savvy and it all fell within my comfort zone. Anything I didn’t know, I was confident I could learn.
My tasks involved listing the properties on Airbnb, setting prices, replying to queries and meeting the guests. I was fully comfortable with that side of the business but on the flip side, I’m not skilled at delivering a hotel standard cleaning service. The cleaning was going to need outside expertise.
From conducting market research with landlords and hosts, I had learned cleaning was the number one area that can cause massive issues. I had to find top class cleaners to join the team.
Hosts live in fear of a bad review and I had the added pressure of knowing that a bad review would have a really negative impact on their listing.
In order to understand the market, I called or emailed every single professional cleaning company in Dublin. I also placed ads on all the main advertising forums looking for cleaners. The cleaning team were going to be an integral part of my business and representing my company. I had to get this element perfect.
I shortlisted 3 potential cleaners who had Airbnb experience and a hospitality background. It was vital they had the speed required to turn over properties quickly and the attention to detail needed for happy guests.
I couldn’t risk using unknown suppliers on guest properties so I booked all 3 shortlisted cleaners to clean my apartment and the apartments of two friends.
Never Accept Norms
Cleaning as a service is almost always charged per hour but this would not work for me. I knew some jobs would take 2 hours whereby some would be done in 20 minutes.
I struck a deal that they would be paid per cleaning, not per hour. This was one of the best business decisions I made for HostButlers. It meant my downside was limited while ensuring cleaners were incentivised to be as efficient as possible.
Key Tip: Make sure all your costs are fixed where possible. Question all industry norms and change them if they don’t work for you.
With a cleaning team in place, I wanted to double down on marketing efforts to scale the business as fast as possible.
Throughout the month of November, I got in touch with over 100 Airbnb hosts in Dublin. I spent hours crafting messages and reaching out to each host individually.
I selected successful hosts and Superhosts on Airbnb in areas that I wanted to launch HostButlers. The assumption was hosts who are already doing well on Airbnb would need support and be delighted to take on my service.
This was time consuming, tedious and a monumental waste of marketing efforts. I did not get one single customer from this method!
The hosts I was contacting were successful for reason. They were great at what they did and had their systems perfected. Or the properties were managed by professional hosts who were running their listing like a business. It was time to go back to the drawing board.
Lesson Learned: Test all your assumptions. Avoid reverting to old habits that no longer work. Be brave and try new methods.
Right On Time
Timing is everything when starting a small business. Entrepreneurs are reluctant to admit it as it means so much of their fate is out of their own hands.
I managed to launch in Dublin at the tipping point of when Airbnb was gaining market traction. In November 2015, Ireland was starting to emerge from 7 years of economic recession.
Dublin had a huge number of empty properties that house owners were struggling to fill or had been receiving a very small rental income from during the recession. People who managed to hold onto their properties now had the opportunity to list the units on Airbnb and start making a solid return.
The economic realities of Airbnb were clear. Property owners could make a 1.75x or 2x return on their property when compared to the earnings from a traditional rental.
Create Win/Win Model
I would like to say the growth of my fledging business was due to my personal brilliance but it wasn’t. It was mainly down to the nature of my business model.
Despite working in sales roles previously, I hate the traditional method of sales. Cold calling and emailing are still widely used by hungry young startups but simply don’t work in all scenarios.
When I talked to potential clients about my new business, I didn’t hard sell them. It was simple logic, you can double the return on your property and I will take care of it all.
The more success we had, the happier the client was and the more money I made.
Lesson Learned: Build a business so good that you don’t need to hard sell.
Month 1 Profit/Loss Breakdown
Facebook Ads: €1 per day = €30
Squarespace Website Hosting = €10.25
Welcome Packs for guests: €3 per pack x 8 guests = €24
Designer (created new logo)= €100
Cleaner Trials: 3 cleanings @ €30 per cleaning = €90
Total Expenditure = €254.25
Client 1 = €162.80
Client 2 = €50
Gross Income = €212.80
Net Income = €41.75 Loss
Next Week — Month 2
Next week, we delve into month 2 when our cleaning team mess up and our guests go missing.