It’s a story I hear over, and over, and over, and over, and over, and over again.
It usually goes something like this:
“Hey, so we’ve poured thousands (or tens of thousands) of dollars into developing this super awesome killer product made out of solid gold, complete with nine hundred widgets, encrusted with rubies, sporting angel wings, containing a unicorn’s heart, and bearing an inscription written by George R.R. Martin himself. It’s our baby, and we love it. But now we need to start marketing it, and we want your help.
But there’s this complication: We already tore through mounds of cash so large they’d make Scrooge McDuck jealous. Basically, we spent all our money on making sure our product was painted the exact right shade of smaragdine with tinges of xanadu and fulvous. So we can only give you six dollars, a wad of sweaty pocket lint, and a coupon for 10% off when you order two large pizzas at Domino’s. And in exchange, we want you to write an 18-page website and two press releases, and we need it all delivered to us an hour ago. Can you help us?”
And of course, that’s when I can’t help but laugh, because these people have it all backwards.
Quite simply, what I just narrated above is a terrible way to run a business. You don’t build a product before even seeing if it has market validation. What’s the point in building something that nobody wants to buy?
See, here’s what people often forget:
The primary purpose of a business is to MAKE. MONEY.
That’s not to say that a business can’t have secondary purposes, as we see with social enterprises, (hell, I run a lifestyle business, where a big part of the business’ purpose is to give me an outlet to express my individual talents), but rather, the core feature that differentiates a business from a hobby or a charity is that a business MAKES MONEY.
That’s why, if your business isn’t profitable, you need to seriously look at your business model and evaluate whether it’s really working for you. When you start a business, your first priority needs to be GETTING SALES. And when you’re done getting sales, you need to be GETTING SALES. And don’t even think about investing into another iteration of your product until you’re done GETTING SALES.
See, the people who say they don’t have the money to market themselves have made a critical misstep in their thought process. They’ve made the huge error of thinking that getting sales is a result of your business being successful rather than a cause of it. But in reality, successful businesses don’t get sales because they are successful – rather, successful businesses are successful because they get sales.
To use a really easy and somewhat cliché metaphor, if your business is your baby, then your sales are your baby’s formula. Formula is what makes your baby grow big and strong. Formula gives your baby the nutrients it needs to crawl and giggle and spit up on your shirt. Saying that you don’t have a budget for marketing is like saying you can’t afford to feed your baby – except in the business world, there’s no Child Protection Agency to step in and make sure your baby gets fed if you’re not being a good provider.
A recent study by Direct Line for Business found that 20% of small business owners say they wish they’d taken more time to get their foundations established. This includes things like wishing they could have built a pipeline of clients before leaving full-time employment, and wishing they would have “gone easy on the bright ideas, even though sticking with what’s profitable does get boring.”
Why Does a Product Development-First Approach Fail?
Quite simply, businesses have overheads. I was lucky in that the business I chose to start – a freelance writing business – had low overheads, but I had overheads nonetheless.
Right from day one, before you’ve even acquired your first customer, you need to start paying for expenses like office or retail space, staff salaries, photocopies, electricity, and so on. So if you’re also investing heavily into your product at the same time, you’re going to run out of cash very quickly. It’s like your business is in free fall, without a parachute.
There are two ways to prevent your business from hemorrhaging cash: Either cut your expenses or boost your revenues.
But sometimes, boosting your revenues requires adding to your expenses, at least in the short term. That’s why it’s important to recognize that not all business expenses are created equal.
Some expenses (like retail or office space) are absolutely necessary to the foundations of your business and make profit possible, even if they don’t directly cause your revenues to increase.
Some expenses (like a dedicated business phone line) are nice to have, but not entirely necessary if you can get a little creative.
And some expenses directly generate profits at a later date. Expenses like marketing and sales.
With a product development-first approach, you’re prioritizing expenses that are nice to have over expenses that generate profit.
Marketing is as fundamental to business as breathing is to people.
If you think you can build a successful business without any marketing budget whatsoever, I dare you to hold your breath forever.
Amy Hoy, one of the founders of the time tracker Freckle, says that smart business owners recognize that running a business is 90% marketing, 10% product.
Hoy notes that “All the ‘features’ in the world will not matter if you don’t have the customer pipeline…(Here at Freckle) we did not at any point do enough marketing. Never. Not once. Not even now. It’s #1 on my agenda for this year. …So, what would I have done differently for the past 7 years? In one word: Marketing. Marketing marketing marketing. Marketing. Marketing marketing. Marketing. Marketing. Marketing. Marketing. *whispers* Marketing.”
I am in full agreement. When I first started my business, the one area where I completely and utterly failed was in doing enough marketing. I still don’t do enough marketing. (But I’m working very hard to change that, and you should be, too.)
The smart way to run a business? Is the MVP way.
No, I don’t mean you need to go out and hire a hockey-playing chimp. (Although if you did, I’d think you’re the most badass person on the planet.)
What I mean is that you need to build your business around a Minimum Viable Product.
Your Minimum Viable Product is the earliest iteration of your product that has the core features it needs to perform its primary function. Once you’ve created your Minimum Viable Product, you can say you have something to sell.
And that’s exactly what you do. Create your Minimum Viable Product and nothing more, and then invest as much time and money as you can into marketing. The more you invest into marketing upfront, the faster you’ll acquire a client/customer/user base and the sooner your business will become profitable. Plus, a gigantic marketing push right at the start gives you tons of momentum that can help you get through the difficult lean times that come with running an early-stage business.
See, if you think you don’t have money for marketing, you’re approaching your entire business model backwards. Marketing isn’t an expense. It’s an investment. And it’s absolutely necessary if you want your business to be successful. That’s why smart business owners invest just enough into products and services that they don’t look like complete idiots, and then go for broke on marketing – because they know that a dollar spent on marketing will come back to them and then some, whereas a dollar spent on product development is a shot in the dark.
What excuses are holding you back from marketing yourself properly? Where can you cut costs in order to give yourself a marketing budget?Sharing is caring!