Building a business from scratch requires two things:
something to sell;
someone to sell it to.
Now, that might sound obvious, but it’s amazing how many people leave out the first step, assuming that they already know what it is that the market needs. In a recent interview for Mixergy, Sam Ovens revealed many techniques for creating a business from scratch, but one stood out in particular – Talk to the Customer First.
The process works for physical and information products, as well as services, and even software as a service (SaaS).
There are a number of ways to put yourself in touch with your potential customers, such as emailing them, offering to call at a time that suits them to talk about their main pain points, and developing the relationship from there, and which you choose will depend on the industry.
Extracting the Product from the Customers
Once contact is made, it’s important to allow them to relate their issues in their own words, without preconceptions, or offering any one solution. To enable them to actually think about what is important to them, it is also useful to ask them to rank their issues in order of importance to their business.
Having extracted a list of issues, and selected one that can be solved with the skills at your disposal, the next stage is to deliver a solution, on paper, to the potential customers.
Their feedback, at this point, will help shape the product offering, but also will need to be filtered. Not every suggestion that they make can be carried through, and not every tweak that they offer will make sense.
A bit of back and forth will be required until most of the customers are happy with most of the features.
It’s vital at this stage (product development) to remember that you shouldn’t be offering features, but helping the customers to identify shortcomings or needs, and tailoring features to meet them.
Fixing the Price Point
With a rounded out product to offer, it’s time to fix a price point that will be enough to keep you interested beyond the initial roll-out. In the same way that an investor needs a large enough share in a company to provide them with the potential return to keep them involved, the entrepreneur needs to generate enough revenue to remain keen.
Remembering that in a B2B context, the price is just another business expense, but in a B2C context, it represents a personal investment, a sensible price can be fixed that everyone is happy with, if not necessarily ecstatic.
Finally, with a product designed, and price fixed, it can be offered to the market.
The package can first be offered to the initial customers (at a discount) and then to a larger collection of the potential customer base by way of a validation of the usefulness and price of the offering.
By paying up front, the development can even be partially, or completely pre-funded, removing one of the major obstacles for getting a product to market.
Using this process to extract the product and price from the customers themselves, the business is much more likely to succeed than if the product was developed in isolation and presented to the market as a fait-accompli.