Business Resources

Ahh, the old “Chicken and Egg” sales conundrum.  An entrepreneur cries about not having capital to build their product, and thus having no idea whether a customer would buy that product to begin with.

“How do I close a sale on my product when I don’t have a product to sell yet?”

The typical logic goes that once an investor ponies up the dough to build the product, the entrepreneur will then go out and make the sale.  While it would be nice if we could all build the perfect product and have the customer fall at our feet to buy it, that’s just not the case. 

Entrepreneurs need to sell first, and build product later.

Selling a product before it’s produced isn’t about selling swampland or vaporware.  I’m not suggesting that you lie to customers and tell them to pay for something that you can’t deliver upon - that’s just dishonest.

Instead I’m talking about presenting your product concept in a way the demonstrates all of its benefits without actually having the final product in place.  You buy products like this all the time whether you realize it or not.

When a home builder shows you the architect’s rendering of your house, it’s not built yet, but you understand the concept enough to take out an enormous personal loan to buy it.  When a Web developer quotes you on a big web development project that he’s going to build for you, you don’t have the Web site built, but you agree to pay for it anyway.

The difference between having a product to sell and just selling swampland is your ability to deliver on your promises.

Therefore your first step in selling your product is having some basic demonstration of the product or at the very least the product concept.  This doesn’t have to be the all and final “go to market” version.  In fact, if you’ve never shown it to a customer before, the likelihood that it will be everything they ever wanted without seeing it is probably pretty low.

It’s OK to show a product to a customer that isn’t full refined, as long as you have the ability to educate the customer on its overall potential. 

Use your demo not just to get a customer interested, but to get a customer’s feedback and learn how to make them more interested.  When I talk to entrepreneurs about their new ideas, I always ask them how customers have reacted.  When they tell me they have never presented to a customer or tried to “pre sell” the product, I get really nervous.  You desperately need customer feedback, both good and bad, before you fully develop any product.

Don’t think of the sale as only “when a customer writes a check.”  Granted it’s the most important part of the sale, but getting a customer to say “Yes, I’d buy it” even before cash has been exchanged, is still very important.

I’m a big fan of sell first, build later.  I think entrepreneurs need to fully understand not only the customer and the product, but the full effect of the sales cycle before they can truly know whether there is a market for their wares.  The traction you get from customers saying “yes” is what creates the incentive for investors to write you a check and to build your own confidence to press on.

Now go sell something!

There’s a lot of talk among entrepreneurs about the value of an idea. Many entrepreneurs believe that a brilliant idea will spawn a great company. We read about companies like eBay that took one simple idea – online auctions – and turned it into a powerhouse company.




Yet ideas alone aren’t worth much. Very few companies, including eBay, became successful based on just an idea. Unless your idea turns into a patent that no one can replicate, it’s worth nothing until you can add the right elements to it.




Therefore a savvy entrepreneur will quickly try to back their idea with smart management, paying customers, and strategic partners as early as possible in order to build value around their idea. All of this can be done even before the company is ever officially launched, generating a ton of value in the formative stages.




Smart Management




There’s an old saying that the wrong idea with the right management team can at least have a chance of surviving, but the right idea with the wrong management team is altogether doomed.




That’s because the true value of an idea isn’t about the idea itself, it’s about the execution of that idea. There were lots of companies that easily replicated the idea of online auctions to compete with eBay. Do you remember them? No? Neither do I. That’s because eBay’s management team executed so much better than their competitors who had the exact same idea.




You can brag and boast about your great idea, but unless you can pull together a team that can actually pull it off, you’ve got nothing. Investors are well aware of this fact, which is why they often evaluate their investments on the merits of the management team of a new startup company more so than the business idea itself.




You can pull together a management team on paper without having to actually hire all of the members. Many startups have commitments from each key member of their management team long before the company actually launches, and most of those folks will probably be working at their old jobs for a while even after the company launches.




Paying Customers




It may be hard to think about having paying customers simply at the idea stage of your business. Let’s assume for a moment that the business hasn’t even launched, so landing real paying customers isn’t even an option.




Regardless, an idea is just an idea until you have a paying customer attached to it. Only then is it considered a business.




In order to get to the “business” stage then, you need to validate your idea with customers. This can come in many forms, from having initial conversations with potential customers to actually getting a purchase order ahead of delivery. Think about building up a “pre sales” pipeline of customers just as if you had already launched the business and were selling for real.




Anyone can question the merits of your idea, but no one can second guess a paying customer. The more customers you can find that are willing to buy into your idea (once your company has launched) the more value you’ve created for your potential company.




Strategic Partners




Strategic partners come in many forms, from investors to advisory board members to key industry partners.




Not every new company needs investors, although more than a few certainly would like to find one. Although investors can provide some much needed capital to launch or grow a company, the right investors also provide strategic value to your idea.




The most ideal partner would have either launched or invested in a company just like yours. They would know the ins and outs of your business completely and have a deep rolodex of customers, managers and potential acquirers.




With a partner like this, your idea gets some invaluable guidance to avoid costly mistakes along the way.




Lining up partners is really the last step in the process. Once they can see that you have the right team assembled and enough demand from potential customers, making a decision to partner with you, or in the cast of investors, to write you a check, becomes a whole lot easier.




The Value Hat Trick




All in all, your idea itself is nothing more than the foundation of your company. It’s the key building blocks of management, customers and strategic partners that truly build the structure.




You’ll notice that as you add each of these elements your sales pitch will become more and more bulletproof. More importantly, people will start to spend less time debating the merits of your idea and more time taking interest in the value you’ve created in your company.




Bringing all three elements together is the ultimate hat trick for an aspiring startup and frankly, a goal that very few entrepreneurs ever pull off. Yet if you want to get some traction with your big idea, it should be your first goal.

There is a great book authored by a friend of mine, Keith Ferrazzi, called “Never Eat Alone”. In it, he talks about the power of relationships to get where you want in life. He also talks about the power of gratitude. From my personal experiences, you will often hear me say that all of my first deals (money, investors, sales) have come from people I knew. These are the people who believed in me as a person, and knew that even if the business hiccupped at any point- that I would be around to make sure they were taken care of. They were willing to take a bet on me more than taking a bet on the business.

That’s why cold calls are not necessarily the best way to make a sale. People cold calling don’t have any connection to us other than they are calling to make a sale. Who wants that? No one in my book. A friend of mine at Microsoft told me once, “People like to buy from their friends”. Its such a common sense comment- but him reminding me really struck a chord with me. I thought- how true this is! If your friend calls, or a business colleague that you have created a relationship with and who you know knows how to take care of you calls- then you are likely going to pick up the phone and take a minute to talk and more importantly, listen. Then an interesting thing happened.

I got an email from a guy named Lawson Tree. Lawson has a great business idea and knew that I could likely connect him to people that could help him grow his idea and his business- especially funders. So like many people do- Lawson emailed me to see if I could help him. Being swamped, I saw the email and thought, I will get back to this. The reason is, before I can help someone, I have to have an understanding of what they are trying to do before I can open my Rolodex. People I send opportunities to know that I will do so because I think there is an opportunity for a real win-win. So all of this takes time- which is what I have very little of. Then Lawson did something VERY clever…

Knowing I am pretty busy, and Lawson needing and wanting help right away, he sent me an email that said, “As I mentioned I really appreciate the work you are doing. I learned something in the last few days: if I need help with something, I must help that person out. Therefore, I had an idea of how I could help you and “American Made” out with some cool content. Perhaps, I could arrange an interview with Dr. Andrew Weil for you as a service that I could provide to you?” Dr. Andrew Weil?! I would LOVE to interview him, have never met him, and until now, had no easy way to get to him. I had heard that he has even turned down interviews with CNN. A lot of you probably know Dr. Weil. He is an amazing health expert that is frequently featured on Oprah.

Long story short, Lawson reached out to Dr. Weil, arranged for the interview with me and came back to let me know when and where it would be. He made this happen for me! “Lawson, I would LOVE to interview Dr. Weil.” Honestly, knowing how difficult it can be to score guests for interviews a part of me thought “lets see if he can make this happen”. Just to provide some background, its hard to believe- but people who are already very high profile move from wanting/ needing PR to wanting to protect their privacy as much as possible. SO this can make getting interviews very difficult. A few days later, I get an email from Lawson saying, “Ingrid, I have secured the interview with Dr. Weil as long as we can do it in January and as long as its in Tucson (where he is located).” “YES!!!!”- this is wonderful! So, Lawson totally hooked me up.

So what was my very next step? I picked up the phone and called the venture capitalist he wants to meet and that I know. Lawson is getting his warm introduction and I scored an amazing interview. So what is the moral of the story?

If you want to grow your business- then reach out to other people and ask them how you can help them?

Do something for them and ask them how they can help you.

Build that relationship, protect it like its family- its gold…and remember, “People love to do business with their friends.”

About the Author

Ingrid Vanderveldt is the CEO of Club E Network, a Broadband TV & Social Network for entrepreneurs. Club E provides original television programming and resources for entrepreneurs and connects business owners around the world through its online community and on the ground chapters. Ingrid also hosts CNBC’s “American Made” and “On The Road With iV”, interviewing some of the Nation’s leading entrepreneurs.

When you think of billionaire real
estate developers, why do you think they do what they do? Money? Fame? Power?
Excitement?

Phoenix real estate developer,
mega-entrepreneur and professional Indy race car driver Ken Losch spoke at last
week’s Tempe Club E meeting at Purvine his local winery.

While I must add how delicious the
wine was (and I am not a wine drinker), what was more impressive was the
mission behind the winery. Purvine was established for the sole purpose of
supporting the economic rebirth of 10,000 people in Zambia, Africa.

Ken told us that early on in his
career, he made a declaration that he would become a billionaire. He said this
goal had very little to do with having a lot of money to spend on himself, as
he could never possibly consume that much money, but that by becoming a
billionaire, he could empower the world.

Ken credits much of his success to his
ability to train his mind to see everything as an opportunity, when others only
see obstacles. He also raved about the Kolbe Index, an
assessment tool that allows you to “find your genius”, as Ken puts
it, identifying your strengths, weaknesses, and accurately pairing you with
others that compliment your skill set. Ken’s foundation, TRACares, partnered with Kolbe to offer the tests through its website, with half of the proceeds
going directly to support TRAcares cause in Africa.

What pumped me up most about the talk
with Ken was not only the challenges he faced as a kid, with teachers telling
him he would amount to nothing more than
a car wash attendant, but the words he had his wonderful partner Andrea write
down on the white board during his speech, “Empowering Community”:
which Ken refers to as his “passion statement”. “If it doesn’t
empower community, we don’t do it”, said Losch. Empowering community is
what we do at Club E Network, and
what I aim to do with a film project I am working on with a number of talented
entrepreneurs. I can’t think of anything more worthwhile for all of us to spend
our time on!

Corey Kossack is President of Club E Network, a Broadband TV & Social Network for entrepreneurs. Club
E provides original television programming and resources for entrepreneurs and
connects business owners around the world through its online community and on
the ground chapters.

Had a great visit a few weeks ago to the Vator.tv offices and shot a quick interview with Bambi Francisco.

You can View My Interview here.

Vator is giving entrepreneurs the opportunity to create video pitches of their business, making them available to investors, partners and potential employees.

What I liked about Vator from the start was that they provide a very human element of the pitch process. It also gives other entrepreneurs the opportunity to see how different pitches are delivered, from the very people that are giving them.

In this video I’m pitching both GotCast and Go BIG, so you can see me in pure entrepreneur form selling both concepts at once, which is somewhat unusual.

It’s also the first time I’ve shaved my beard off in over a year, which for better or for worse, transported me from my mid-30’s back to my mid-20’s, which now that I’m in my 30’s, is pretty damn refreshing.

Special thanks to Bambi, Roland and Meliza for taking such good care of me. If you haven’t had an opportunity to post a pitch for Vator yet, I suggest you do it now.

Post a Pitch for Vator