In my last blog post I profiled a too common scenario. A person with passion, drive, and talent created a handful of products without considering the many factors of launching a new company in a complex, overcrowded market.
“Think of it this way,” I continued. “Look at these early product concepts as prototypes, a proof-of-concept,” I continued, “you can test pricing, sales, returns, which SKUs sell at the fastest clips, and general desirability for the whole line.”
She had a lost look on her face. Then, I unintentionally made the lost look sour by asking, “Where did you plan on test marketing these?”
“Brother,” she said in her bewildered-yet-trying-to-stay-cool tone, “I know not of what you speak, test marketing.” Silence engulfed us.
“Well, you have to see if anyone will buy it. Based on the local angle and high-end, hand-crafted sensibilities, maybe you should try a few boutiques, gift shops, and even a farmer’s market,” I said. “You’ll know in a few days if there is market for your products.”
“How do you do that?” she asked. “Who has time to do it?”
This question made it clear to me that she was thinking like a creator, a craftsperson, and not a like a business person.
“My dear friend, how long did it take you to gather all the materials, discover the right mix of ingredients, and price what you have?”
“My whole life.”
“And you can’t take a few mornings and do a little business development?”
“I thought I’d just set up a free web site and sell it through it.”
“How are people going to know you exist? Once you tap your social media connections and email list—your low-hanging fruit, you’ll have to set up SEO, pay-per-click advertising, produce and update a blog, and more, just for starters, but,” I added, “you’ll need to understand the market first. Where are the watering holes where your tribe hangs out—what web sites, what Pins on Pinterest—who are your competitors? What are their costs, who are the brands, what are their strategies? What are the trends in this segment of the market? And, what happens if you do only a handful of these tactics, according to written strategy, and your sales take off? Can you produce enough to meet demand?”
“Then, when it is time to scale growth, you’ll have to have a distribution plan. What are the channels? What are your wholesale margins? What is your plan for manufacturing at scale? Have you modeled out your costs? Do you have a formal pricing strategy? Marketing plan? What about capital? You’ll need money to make all of these moves and hit growth milestones. Also, you should benchmark companies you like.”
“Wow, wow, wow—that’s a whole lot. How would you suggest I even start?” she asked.