A young man was impressed with one of his Grandfathers rich friends. Being the curious and bold kid he was, he asked how the man had made his money. The old guy fiddled with his fob watch and said, “Well, son, it was 1932… the depth of the Great Depression and I was down to my last nickel. I invested that nickel in an apple, spent the entire day polishing the apple and, at the end of the day, I sold the apple for ten cents. The next morning, I invested those ten cents in two apples. I spent the entire day polishing them and sold them for 20 cents. I continued this system for a month, by the end of which I’d accumulated a fortune of $1.37.”

“And that’s how you built an empire?” the boy asked in disbelief.

“Heavens, no!” the man replied. “Then my wife’s father died and left us two million dollars.”

One of the questions I’m asked frequently is: “What did you do to get started in the (X) business?” which loosely translates to “How in the hell does a geek like you put food on the table?” I can’t really blame them for wondering… I don’t exactly look or behave like a stereotypical business owner. I imagine after meeting me most people have sudden visions of their mother shaking her finger and saying “life’s not fair” flash before their eyes. On occasion some are actually curious and really want to know because they have an idea… we usually become quick friends. It’s not because I like to talk about me or my adventures but because what really makes me tick is the challenge of something exciting and unexplored. No one is more excited than someone with an idea… and I just feed off of that kind of excitement. They are on a mission and I’m happy to be allowed to brainstorm a bit, give some input, and help them get moving along in any way I can. Usually it begins by asking 5 questions that involve a bit of homework. What I call my “baby steps”.

Photo by: Radhika Bhagwat

Here they are… my 5 baby steps to beginning an “Adventure in Capitalism”.

1) What problem(s) will you or your product solve?
I think this is where most of the would be self employed end up shooting themselves in the foot. It seems that the majority of the dreamers go at this a bit backwards. In my experience it has not worked out well to come up with a pretty widget then try to push the square peg into the round hole searching for people who want it. I’ve had the most success when either I’ve personally gotten frustrated about something or witnessed someone else complain about how something frustrated them. Personal experience with a situation where I’ve shouted “There has to be an easier way!” is simpler for me because I can fully experience every aspect of why the problem is annoying and what would make it easier for me. However, just because I’m having a problem doesn’t mean anyone else is… so I go looking for others. I want to explore the feelings of those who have had a similar negative experience for confirmation of a direction and additional input. It’s magical how turning a negative experience into a profit can quickly turn even the biggest pessimist into a silver lining kinda person. Get a note pad or a mind mapping software program and write out as many emotions you or your subjects are feeling. Start with at least 5 and be as detailed as possible including “the why” behind the emotion being felt. (i.e. I feel stupid because this thing has so many buttons I can’t figure out how to stop the time on the clock from flashing.)

2) How will you or your product solve a problem?
Now it’s time to get into the development of a product or service. I take out the list created in the first step and run through each emotion and it’s “why” one by one asking myself or the person I’m working with how (in plain language) will this emotion be avoided and a problem solved? This step is important for several reasons and I think I’m going to go into more detail on a later post, but for now the main point is to help you identify a path for development. Maybe you know exactly what you would do to solve this problem, but if you don’t this will give you the ability to identify what you need to research or brainstorm to create your “fix”. It’s important to be specific and clear on exactly how the details of the manufacturing, or labeling, or design, or packaging, or process, or all of the above are going to improve your customers lives. Using plain language instead of technical jargon will help you explain what needs to be done for your team when you need one, and keep it easy for your customer to grasp why they will love it. I like to try and explain it to my kids… if they understand what the benefit is I’m golden. When Apple launched the iPod everyone knew exactly why they loved it because Apple explained it as “1000 songs in your pocket”. They didn’t focus on memory size, the track wheel navigation, the size of the screen, the quality of the headphones… just what it means to me in plain language. Brilliant!

3) Who is your customer?
In the first step we found a problem, in the second we’ve talked to others with the same problem, and now we can most likely describe who our customers are “demographically” by answering a few questions. What activity were they doing to when experienced some of the emotions in step one? What conclusions can you draw about someone who likes or performs that activity? Are they likely to be in a certain age group? Do you think they would be primarily male or female? Where would the most likely live? I’m sure you can probably think of more questions like these… I’m just trying to give you the general idea. The more details you can determine about your customer the better you’ll be able to relate to them, develop your product/service to cater to them, and then explain why they NEED what you have. Note: Once you’ve launched your adventure don’t stop asking these questions… now you’ll have more people who you can talk to and learn from. Listen to your customers. Don’t get upset if they have a complaint, instead make note and if it becomes a common question or concern… address it immediately. Remember the idea is to continually be looking for an opportunity to turn a negative experience into a profit, so they just did you a favor!

4) How do you make money?
I have a personal list of 20 rules I try to live by and rule number 1 is: NEVER loose money or break even on a transaction. The way I do that is to break all my expenses for an adventure down into a per transaction cost. Error on the side of expensive and then add another 35% for things you didn’t think of just to be safe. It’s easy to charge less if you WANT to compete… but very hard to start charging more because you HAVE to stay in business. It sounds simple but it’s easy to get off track. This is something that I feel should almost be in constant review not for the sake of growing wider in reach, but instead deeper in understanding HOW you are making money. The temptation of brand extension is ever sooooo beautiful from a distance and it’s easy to get “grass is greener” goggles. What typically happens is the success of being focused on a single and profitable product/service get’s all sideways… and a company will wake up spread thin over too many products/services, loosing money for lack of ability to focus on what is making them successful. If they wake up that is. I would be doing you a disservice to not warn you that this particular step isn’t something you do only once and then keep right on trucking oblivious to the construction signs telling you the road is ending. If you’re a big music label who’s core function is promoting your acts so you can sell their music and concert tickets to make your profits… you’ve driven past the signs, the bridge is out, and your hood is on fire. Google a band called “OK Go” and tell me I’m wrong.

5) In once sentence… what does your product/service do for me?
I saved the hardest for last cuz I’m sick like that. I’m kidding… this IS hard, but it’s last because you really need to do all those other baby steps before you can do this one. The reason this is hard is because you just spent all this time coming up with all these great solutions to a problem… most likely with a bunch of bells and whistles… and somehow you’ve got to boil it down into once sentence like “1000 songs in your pocket”. But this thing is shiny, it’s got all these color choices, check out how easy it is to navigate, its a snap to just plug it into your computer and it automatically syncs your songs, and, and, and. Yes, yes, I know… those are all great features and benefits… but what’s in it for me? Don’t talk about your product. Talk about me. What does it mean for me? You can tell me all about your product in the specs, but right now you need to grab my attention with a tag line not a laundry list of cool gizmos on your widget. Go back and take a look at step 1 to review the (at minimum) 5 emotions and the “why” behind them. Which was the most common? Which could you personally identify with after talking with other people? Take that information and in once sentence tell me why I will never experience that emotion again. Don’t worry if you don’t nail it the first time. I’ve changed tag lines up to 7 times before I felt I finally nailed it and then even after launch had to change it again because of new information from customers.

This obviously isn’t an end all be all “5 steps and you’re in business” kind of thing here. That’s why I call them baby steps. They are intended to get you thinking… to get you to be on the lookout… and to help you qualify an adventure before you sink too much money into it.

Let’s talk now. How can I help you turn your idea into an opportunity? What topic should we explore together next? Maybe you have something to add and convert this into 6 or 7 steps? I’m open to taking this blog where anyone wants to take it. I love to interact with anyone who’s got an idea.

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