Believe it or not, I rely on this little scrap of wisdom to guide much of my consulting work. More specifically, if you’re considering expanding your business by adding products or services, I’d urge you to think one step ahead of where you are in the process. It will save you time and money, and help you make the most of a good idea. Let me explain.
It’s very common for me to receive calls from company owners and entrepreneurs who are eyeing expansion. If somebody’s going to pay for a consultation, it’s often during big moments of transition like these when lots of money is on the line.
Here’s how these calls usually go:
Brimming with energy, the business owner will tell me that they’re thinking of adding a new product or service. They’ve often already made great strides in this regard. Not wanting to dampen their enthusiasm, I nonetheless have some tough questions to ask.
First, I tell them to imagine that their project is ready to go. “Let’s pretend that you’ve already sunk six months into research and development. This new product is as good as it’s going to get.” They’re happy to play along, but it’s about to get serious.
“Everything’s ready to go, so what’s next? What did you have in mind for advertising?”
A few seconds pass with no reply. Sometimes, I hear a sigh whisper through the receiver. It’s like I’m deflating a balloon. I move on.
“Who’s your target audience?” Stunned silence.
“How do you monetize all of your hard work?” Nothing.
At this point, I’m sometimes told that I’m getting ahead of myself. Why would I think about monetization before the product has been perfected? After all, bands don’t start booking shows before they’ve bought their instruments, picked a setlist, and nailed their songs at rehearsal.
Truth be told, this behaviour is equally problematic for the band and the business owner.
Imagine a band whose members haven’t decided whether they want to gig at country bars, punk-rock dives, or orchestral lounges. They spend months building a random set list with no target audience in sight.
Nobody books them. They put in the work and paid for quality instruments, but nobody wants to book a band who plays Chopin, Keith Urban, and the Sex Pistols back-to-back. Now they’ll have to spend more money on new instruments and learn 100 new songs in a particular genre. More time, more money; these poor starving artists are now digging themselves deeper into a hole, and why? They didn’t think one step ahead.
I can’t tell you how many times I’ve worked with business owners who’ve made this same mistake. Their product is nearly good to go, but they haven’t thought about which audiences should be targeted or how they plan to get word out. They’re taking an expensive, time-consuming shot in the dark, and often find that it’ll take too much to get the project off the ground.
If you haven’t thought through your monetization and marketing plan, start right away. When you plan one step ahead, you give your expansion a great chance of success. You’ll be able to tailor your offering to the target audience during the development phase, which saves you lots of fine-tuning time down the road.
What’s the “bottom line”? Plan one step ahead of where you are in the process. Consider the following:
Paint the entire picture before you launch your masterpiece expansion. Once you’ve come this far, you can weigh the projected profit/loss to see whether it all makes sense. And if it doesn’t make dollars, it doesn’t make sense.
A business man holding a paper in front of his face with the message always one