Sell first, build second

‘Build and they will come’ is a relic of the industrial revolution.

Today smart entrepreneurs are selling first — and only if they can sell it, then will they build it.

Here’s the problem. Entrepreneurs have been plagued since the dawn of time with the prospect of investing large amounts of capital in a project and only once that capital is invested and sunk, will they know whether there is sufficient demand and a good ROI. Market research and a unique understanding of the industry helped de-risk that process, but not by much.

Today, crowd funding de-risks capital intensive startups in a big way. Instead of putting down vast amounts of cash and time in product development and large-scale manufacture (before receiving any kind of market acceptance), entrepreneurs can invest proportionately small amounts of time and capital into early-stage prototyping, drive campaigns around that prototype, and then go to manufacture only if there is sufficient demand for the product.

And its proving to work remarkably well. Below are key stats from the world’s largest crowd funding platform, Kickstarter

86% of Kickstarter projects were funded in 2012. However, the revealing (and probably more interesting) fact is that 14% weren’t. This equates to $45M worth of project money that didn’t reach the project’s funding hurdle and therefore proved to be a non-marketable idea for those entrepreneurs. Put another way, in 2012 entrepreneurs worldwide (using the Kickstarter platform alone) collectively saved themselves at least $45M from what was ultimately going to be an unsuccessful product from the get-go, for them. Now notice I say, for them. Its not to say these were totally bogus or non-marketable ideas. Its just for that particular entrepreneur and that particular product, they were unable to sell it. If they can’t sell it, then it doesn’t matter how good the idea or product is in theory, its never going to work for them. Better to know that before going to full-scale production than after.

What’s more, platforms like Kickstarter also provide data on what tastes, demands and product categories are trending worldwide — and most importantly — what products people are willing to pull out their credit cards for.

Here is the break-down:

Graphically this looks like this:

Yet knowing which product categories and industries to put your time, money and effort into isn’t enough. Here’s some things you want to do before you create the product or scale production:

1. Write a brochure
Writing a brochure is a magical process that’s massively undervalued by small business. It does a few important things:

i.) It helps you get clear on the value proposition of the offering/product. This in turn helps you pitch the product powerfully.
ii.) It creates enough sensory cues (look and feel) to sell the product even if the product isn’t in front of you or for that matter, even exists yet. This is especially important if your product is intangible (i.e. a service). Put simply, a brochure wraps the tangible around the intangible, turning your service from nothing more than the words you use to describe it, into something you can touch and feel. The more beautiful and outstanding the quality your brochure, the greater the cues around the quality of your product. Effective sales collateral/messages/environments engage as many of the senses as possible. Think what its like to walk into a Nespresso shop — magnificent colours (sight), stunning packaging (touch), enticing aromas (smell), welcoming staff (emotion), pleasant music (sound). For great, iconic businesses like Nespresso, none of this stuff happens by accident. Yet stop and question; How much effort are you putting into creating a sales environment for your products and services that engage all these senses in a way that is consistent with your brand and your target customer?

2. Develop promotional collateral
You need to create collateral that helps you, and more importantly, other people, sell your product on your behalf. Brochures, email copy, sales scripts, banners, images, Point of Sale (POS) materials, pull up banners etc. This comes down to anything that lubricates the sales process for the sales person and catalyses the decision making process for the customer.

3. Create a simple website
This is the centre piece of your lead generation machine. Much like the hub on the wheel of bicycle, your website is the hub of your business and all other distribution channels (such as social media and partners) are the spokes leading to this focal point.

4. Build a community
If you’re going to create a product you need people to sell to. Therefore creating a community of your ideal target customers before you have a product to sell, enables you to gain traction faster when you do. However, people will only buy from you if they know, like and trust you. So focus predominantly on adding great value, rather than constantly selling. In this instance, being around for a long time and not just a good time, will yield the greatest pay-off in the end.

5. Implement a sales funnel
Create multiple touch points (or trust points) of content and well-timed calls to action. You need to clock up an average of 10.4 interactions on and offline for someone to make a decision to buy a relatively low priced item, say less than $2K (without a sales conversation).

Some of the best business minds in the world agree that you should always look to sell first and build second.