Creating a profitable business lies in selling a product or service that people are willing to pay for. Discover a problem that needs a solution, and create a brand that makes customers understand the quality and benefits that your product offers. After you’re at this point, you need to pay attention to your customers by impressing them, do a lot of press marketing, have a good website, develop relationships with the customers beyond the end of the purchase process, use the right tools, test and improve. Pay attention to your competitors as well and build strong networks just stay on top of it!
When I started Flux Chargers in the Summer of 2015 at StartupUCLA, I was selling our product in the streets of Santa Monica during the weekends making just a few bucks per day. Online sales were hard to come by. Fast forward 18 months later, our eCommerce brand grew to reach customers in over 90 countries and generate over $100k/month in sales.
I’ve learned a lot during this period, especially in the last 6 months when growth really started happening so I wanted to share some of those lessons with you.
(Although I am drawing these lessons from my ecommerce business, most of the principles apply for any type of business.)
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First you need the product (and the niche)
In order to create a profitable business, you need to sell a product or service that people want and will pay for. Period.
To find the product, you need to keep an eye out for any emerging trends by:
- Taking a closer look at what types of ads you are being shown on Facebook and Instagram.
- Going through your daily routine, identifying any problems that you run into (at home, at work), and trying to come up with potential solutions.
- Asking other people what problems they are experiencing. Pro tip: Try finding people that work or are related to an industry that you have experience in.
- Checking Google Trends, which will also allow you to understand if a product’s interest is growing, stagnant or fading.
You can identify potential customers by running Facebook or Google ads to your site and creating a mock-up product (or MVP) to gauge interest. If enough people sign up (or pre-order), you have a potential winner.
Once you have candidate products, in the case of it being a physical product, contact manufacturers and get quotes. Most manufacturers have MOQs (minimum order quantities) so make sure you understand the initial investment that is required. Don’t forget to include estimates for shipping, handling and marketing.
For software products, the costs at the beginning are development and marketing. Make sure you budget accordingly and also set up a realistic timeline.
If you want more ideas, I wrote a more in-depth niche finding strategy in my Huffington Post blog.
It is certainly not easy to come by your own Golden goose idea. Those types of ideas are characterized by a lot of customers and can hold a high price on the market. The first company that comes to mind when mentioning a Golden goose idea is Apple. Millions of people around the world are willing to pay thousands of dollars for premium products because of the brand strength that Apple has. Why are these Golden Goose ideas so important? It’s because the entrepreneurs managed to successfully identify and respond to big customers’ problems. Giving them a good solution for something that is a problem, creates a Golden Goose idea.
Other than Apple, a good example for identifying and responding to problems that the customers are facing is “Life after college” by Jenny Blake. Any person that graduated from college can understand how frustrating and confusing life can be when you’re not sure how to choose what comes next. Jenny Blake saw that young adults have a big problem finding their path after they graduated, so she created a “Career Pathfinder” course which costs almost $1000. The product is used by a lot of customers, and it holds a high price on the market- both identifiers for a Golden Goose idea.
You have your product and target customer. Now you need the brand and the message
Creating a brand allows your customers to have a name to reference. It also allows your products to carry a much higher price point.
A brand helps the customer understand the quality and benefits expected from your company. Want a pursue that everyone will envy? Pick Louis Vuitton. Looking for easy to use technology? Check out Apple.
Since branding is so important, a good amount of thought must go into it to ensure that you create the right message and expectation from the get go.
Steps to create a powerful brand:
- Pick a name that is short and memorable to help you achieve word-of-mouth marketing. (Ideally, also check that the social media accounts @yourcompanyname are not taken)
- Choose the brand colors that align with your target demographic and sector (i.e. for beauty products, lighter colors work well; for tech, darker shades tend to do the trick).
- Craft the right message (i.e. Nike’s “Just do it”). A good message will resonate with your target audience. It shall use the language that your target customers use to inspire them to take action and believe in your company. The longer you stick to your message the easier it will be for your customers to remember it and be persuaded by them (i.e. “15 minutes could save you…”)
Everything described above was basic, and is what 98% of the companies do. Here’s how you can actually beat them and create a profitable business.
Find profitable and unique customer acquisition channels
Where do your prospective customers hang out?
This should be the guiding question to keep in mind when you decide where to allocate your marketing resources.
Where do your prospective customers hang out that my competition hasn’t discovered or mastered yet? Are there any other profitable demographics that my competition is not targeting?
These are even better questions. This is where the opportunity lies.
If you’re marketing to college students, Facebook ads and Instagram shoutouts can help (everyone does this). But don’t neglect TEDx talks, campus fairs, college blogs, and other forms of guerilla marketing. The key here is to do what other players aren’t doing (obviously while still keeping in mind the cost vs. benefit obtained).
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Here is what we did for Flux Chargers:
- We noticed that most people started their power bank purchase with a Google search with keywords like “portable chargers”, “portable iphone charger”, etc.
- Like many people they only clicked on the first few results and made a decision from there.
- Luckily for us, the first 10 results on Google were compilations of various portable chargers. So we reached out to the sites that created the lists. Don’t get discouraged, it took a few emails until we got a response from them.
- Once we got into those sites, we very easily increased our traffic and sales by 5x.
Wow your customers
There is nothing better than word of mouth when it comes to marketing. Each of the first few hundred customers that bought a portable charger received a handwritten note from us. While this was time consuming, every time a customer tweeted about our thank you letter our reach grew and our brand solidified.
Do a ton of press marketing
Getting featured on big publications not only gives you credibility but can also lead to massive amounts of revenue. For instance, we got Flux Chargers listed as #1 on Digital Trends. This mention alone brings us $30-50k in revenue per month. Another side benefit of press is that it builds powerful backlinks to your site which will increase the SEO of your site quite dramatically, allowing you to rank higher for harder keywords.
Actually have a good product (and website) that speaks for itself
People make a decision about how they feel about your company within just a few seconds of landing on your site. Make sure that feeling is positive and of trust.
Invest a lot of time and effort into making a site that is professional and that loads quickly. At Flux, we spent quite a lot of time and effort making sure the site was crisp and that it was designed well enough to generate leads.
More importantly, make sure your product or service over-delivers on its value proposition. Whether it is through an unexpected feature, unbeatable unboxing experience or excellent after-purchase customer support, if you are planning to create a long-lasting profitable brand, your product must be stellar.
The relationship with your customer should not end with the purchase
It is much easier (and cheaper) to sell to an existing customer than it is to acquire a new one. Coach your customers so they go from regular customers to loyal fans. You can do this through webinars, seminars, email campaigns, etc.
What gets measured, gets improved. (Test as much as you can)
You can only improve what you measure. If you want to decrease your site’s bounce rate or increase conversions, you first need to know what your baseline is.
Use tools like Optimizely to run different versions of your pages to see which ones get the most engagement. Try using different words on your sales copy and Facebook posts and analyze if that brings any extra revenue.
What any ecommerce store should measure is number of visitors per month (per day), CAC (customer acquisition cost), conversion rates, profit margins and revenue.
Use the right tools (don’t be afraid to pay for some of them)
Have you seen the difference between a professional craftsman and an amateur one?
If you visit their shops, they are quite different. One of them has a limited toolset while the other one has the right tool for each material he is working on. This not only improves his performance but also drastically influences the quality of his output.
Every time you bring a new tool to your toolbox, you free up your time and increase your output capacity. In 2017, you need tools for email marketing, social media management, team communication, quick prototyping and more. Before you try to do anything manually, search the web to see if there are any scripts or programs that can help you achieve what you need.
Lastly, don’t be afraid to pay for the tools that you use. First, this ensures that the developers behind it have something to eat and can keep building more features that benefit you. Second, it will probably give you a higher ROI.
Encourage your product/service recommendations
Whenever you’re interested in a certain product, you go online and check what people have experienced so far in regards to the product and its characteristics. It’s just the way it is. That’s why, you should encourage recommendations and reviews. Start with asking your already satisfied customers, and even friends and family to “spread the word” when it comes to their customer experience with your product.
Online reviews and testimonials can make a significant difference when it comes to building a loyal and profitable business. Moreover, you can include these positive testimonials in your newsletter, share them on social media platforms, or use them in another way to market the good experiences connected to your product.
Build a support network
You don’t have to do it all alone! Remember that there is a time when your support network can really put you in front of your competitors. I personally recommend the following ways in which you can build a good support network:
- Engage with the business community- be in touch with what’s happening in your industry or niche. And don’t be a mere observer, engage with it. Talk with colleagues, share ideas, collaborate. Sometimes, the Golden Goose ideas are born via these business community networking practices.
- Use expert support when needed- at times, all of us need some support in fields we are not knowledgeable or experienced enough in. Recognize when an expert support is needed, and seek it. Having somebody who knows what they’re doing in your corner can really kick-start your idea in the right direction.
- Network, network, network- as I previously mentioned, always include your customers’ testimonials in your social media platforms. Go to meetings, seminars from the industry that are relevant to you. Create a blog relevant to the work you do. Be social overall with people, whether they’re customers, or competitors. Sometimes, good things can come out of networking.
Out-learn, out-work your competition
This is perhaps the key to anything in life. The job of entrepreneur is to go learn the skills that he or she is currently lacking.
A lot of people are fearful and act fearful because they say “I don’t know how to do this”.
Not familiar with SEO? Google it and learn it.
Not sure how to do Instagram Marketing? Google it and learn it.
Never written sales copy? Google it and learn it.
Unfortunately there is not one single website or video that can teach all you need to know. Over the years I’ve found the following strategies very helpful.
Join mastermind groups on facebook (or in real life)
Who said you had to go through the entrepreneurial journey alone? There are a lot of people that have gone through the same hardships as you that are willing to help you out. Talk to colleagues or form your own group of entrepreneurs, I am sure you at least know a handful of them personally. Every tip you learn from them can save you months of learning and a lot of money.
I created a site called Future Sharks, where I pick the brains of various social media influencers, young entrepreneurs and leaders and ask them what their secrets are. You should check it out.
Read books or blogs and act on them right away
I prefer to do this and act of the new knowledge immediately. That means that if I am looking to learn about SEO, I open up the first link and as I read through the article I try to follow along while I work on my site.
Creating a profitable business is hard, but not impossible. A profitable business is at the intersection between a great brand, a great product and proper marketing. The people that put in the time to study the game and become knowledgeable will have a better shot than the people who don’t. The learning process is arduous and will take time but the benefits are priceless. Acting on the acquired knowledge and focusing on the right metrics is what will take your company from average to good to great. Any company should always be re-evaluating their efforts and trying to find new growth opportunities. Hope you are excited for this wonderful journey of becoming an entrepreneur!
What type of business are you working on? Let me know in the comments! I would like to help you if I can!
Also, if you are looking to take your business to the next level, hire me as your ecommerce and marketing coach. To get started, just send me a message.