Its Your Money, Why Burn it?

I was editing one of the final chapters of the Market is Always Right this morning to get it ready for publishing and felt very inspired to ask a question in this week’s blog.

Right now more than 70% of new businesses don’t survive to their 3^rd anniversary.

We know from endless publications and pieces of research that in the main businesses simply run out of money because they can’t make the sales they need in order to survive. We also know that there is only one reason that companies don’t make sales – they are trying to sell something their market does not want to buy.

I find this surprising because when you consider starting a business, you pour in your passion, ambition, belief and your money to make it work. It takes over your life as you focus on your ambitions and your goals. All of this is brilliant and incredibly important, so why do so many fail to make the sales they need?

So here is the big question. While your ambitions and ideas are all great and I hope you achieve them all, what about the market’s needs?

Would it surprise you to know that in our experience and that of others a lot more than half of new businesses have nowhere near the level of market knowledge they need to maximize their chances of success?

This is quite surprising in some ways, because market research is incredibly inexpensive and you can do it yourself before you invest money in setting up the business and spending your savings on a business that is not fully developed and according to the stats, is therefore likely to fail – which is pretty much like burning your money you don’t need to.

This is not a negative post, in fact I hope you take it as a hint that there are some simple, low cost and very effective things you can do that will save you a lot of wasted money, time and stress simply by doing more to get to know your market as early as possible.

Tomorrow, I’ll continue this theme with some ideas you might want to consider when researching your market.

Good news - more rules

One of the single biggest things many new businesses and entrepreneurs find very challenging is the way their target markets behave. Even with our knowledge and experience, there are moments when it looks like everyone in a market has given their brains the day off.

However there is good news, there are rules and all markets follow them. This makes it much easier for you to understand why your target markets are not doing what you expect them to. We call them the Market Rules and if you have read through the website, you already know rule number one. If not you can always read about it here - http://bit.ly/YmuuIr 

Here is another one for you consideration – Its not your product customers buy, it’s the outcome the product delivers they buy.

This rule is like rule one, in that it is unbreakable and if you think about it pretty obvious. The reason I want to mention it on this blog is to discuss new or disruptive products and how to use this rule to your advantage.

If you are selling a known product in a known category like a watch for example, you don’t have to describe what the product does – unless your target market is an as yet undiscovered tribe of Amazonian natives who might not know what a watch is. Why, because we all know what watches do, its just a question of positioning it in the market to attract your target market.

On the other hand if you are selling something completely new that no one has ever seen or used before then how would they know what the outcomes are?

Those situations are where going through a proper commercialization process is vital if you want to get the market and enjoy the volume of sales you are aiming for.

Think of it this way, a long, long time ago when someone invented the wheel how did they get the message out there that wheels were the best product for people wanting to move large or heavy objects any distance? The inventor would have had to explain what the product does and the outcome it delivers - faster movement with fewer people required for example.

Without that what would people think – “ooh that’s a big plate,” or “wow that would make a great coffee table when they invent coffee.” 

I am being frivolous, but I also hope the point is coming across for an entirely new product, you have to find a way to get the message across about all of it, but most importantly you have to be able to demonstrate to your target customer that your product outcomes will benefit them.

By Tim Sandford

Day 1 and First Principles

Hi and we are on day one of getting the company I mentioned in yesterday’s blog to market and selling.  For the purposes of this very candid set of blogs, we are going to call it Triple X.

We hope this will let you see the Backwards Business process in action and how to apply it so that it could help your business achieve its sales goals.

Today as we always do when we are starting the communications stage of a programme, was spent going through all our research, the early sales and the other insight we have gathered on the market to make sure we have fully understood everything and are offering products and services the market wants and will buy.

This is first principle stuff in Backwards Business as the diagram below shows.

For the last 2 months we have been working closely with the Triple X’s market to define exactly what is required for them to move to the new way of doing business. In reality it is pretty simple and down to one word – more.

For this particular market the trigger is more:

• More Choice for buyers from the supplier base
• More opportunities for vendors
• More confidence in suppliers
• More business being done between buyers and suppliers

Now the reason this is not a particularly easy programme is that the products and services offered by triple X are disruptive and mean the market adopting new habits.

There is plenty of evidence that this is welcome, but it is a disruption and addresses some areas of operation that are historically inefficient and more expensive than they need to be.

So the point of today’s blog is this. We know there is a market and purchases are being made, but we need position the products as an additional benefit as opposed to the solution to the problem. Semantics?

We would like to suggest not and here are a couple of examples to let you see what we mean:

• In an industry where vendors traditionally find generating demand for their products difficult, a contract with Triple X puts your products directly in front of your target buyers to generate the demand you need to win business

• A contract with Triple X puts your products directly in front of your target buyers to generate the demand you need to win business.  

Both say exactly the same thing. However the first one is dominated by the opening statement, which highlights a problem and even with the strong positive outcome, never quite feels positive. 

The examples are pretty rough, but we hope you get the point that even when you are solving an acknowledged problem, our experience is that staying on the positive and focusing on the desired outcome is the most successful way of generating business, which is really the point of commercialising a new business.

By Tim Sandford