Birth of a Product Company Pt. 3
Dear reader, this is the third column of four. You may find the previous two in the Crazy Talk archives.
At this point in the dialogue, I felt the need to break down the conversation into helpful actions in two main categories: test marketing and business planning.
“You asked what to do first. First: stop working on your products. You have beautiful prototypes built. Now, focus on the business,” I said. “In time you’ll need to think about capital, but first you have to prove yourself, so go and see how the market reacts and also draft a business plan—this way potential investors will know you are serious. Remember, they are betting on you, not on the products.”
“Whoa—how do I do all of that? Where do I start?”
“You already have begun test marketing by displaying your products on your shelf. Now, keep good records of what each one cost to make, which ones sell faster, and what the profit margins are.”
“Then, expand the test a little. Try to selling a few of the pieces you’ve created at your current asking price at the farmer’s market and a local gift shop or two for a set period of time, keeping good records on what sells, what doesn’t, and any feedback you get from people.”
“Most important, write a thorough business plan.”
“A business plan?” she sounded as crestfallen as someone just told they have been diagnosed with a terminal illness.
“I know this point sounds rough, but if you want to be successful, focus on the business. You have great product prototypes, but from this point forward it is not about the products—as long as quality is consistent—it is about growing a business.”
“A business plan …” she uttered this phrase with sour contempt, sounding defeated before a match.
Silence deafened us both. I couldn’t take it any longer, as she’s a friend, but she beat me to it.
“Can’t I hire someone else to write it?” she asked.
“That’s like asking who are you going to trust to raise your baby,” I responded, then switched metaphors: “do you know that old saying ‘you can’t hire anyone to do your push-ups for you?’ well, the same is true with business planning. You have to own it and do the hard work and homework to own it. That is, if you want to grow this effort into a business and you want to control it and be able to make the decisions.”
Her head nods affirmatively.
“There is one alternative,” I add, “if you want to take on a business-minded partner whom you trust and with whom you can work closely, you can focus on products. Still, you’ll have to have a deep, visceral understanding of costs, materials, manufacturing, distribution, marketing, business development, sales, cultural trends, the competition, and adapt your strategy according to these dynamic forces once you have a grasp of them.”