Day 3: Plan Your Success – Discover How You’ll Make Money
“If you want to build a business, you can’t just say, ‘I want to build a business.’ You have to figure out exactly what you want to do and then do it.”
Remember those two explorers who tried to cross the Pacific Ocean without water, food, or sails? Neither do we – because they died before they even got to Hawaii.
You wouldn’t set out on the high seas without a plan and you shouldn’t start a business without one either. That’s why we asked every young entrepreneur we interviewed to give us a bunch of advice about how to plan a business when just starting out.
A lot of that advice is below. By the time you read through this portion of the guide, you’ll have your roadmap to success – and you’ll be able to proceed confidently from there.
What Problem are You Solving?
“My main goal is to create value for the customer.”
Every good business solves a problem. Lemonade stands wouldn’t work if people didn’t get thirsty. Knowing the core problem that you’ll be solving is vital to the ultimate success of your business.
It’ll be the first thing you tell people when they ask you about your business and it’ll be plastered all over your marketing materials (i.e. “I realized [this problem]. So I’m fixing it by…”).
If you don’t know what problem your business is solving, then you need to figure out right now.
In our case, we realized that 69% of young people want to start businesses but 90% rate their entrepreneurial knowledge as poor or fair at most. So, we’re going to fix that by offering all the tools and resources that young entrepreneurs need to start and build their businesses. This is just the beginning ;).
All businesses start by solving a problem. The bigger the problem, the bigger the opportunity. But it’ll be hard to compete if another company is already doing a great job of solving the problem.
What will You be Selling?
“They can sell you your own shoes in two minutes.”
If you’re a good salesperson, you can sell somebody their own shoes. But it’s not recommended. Here we break down how to present your product or service in a way that makes it irresistible.
Feature: What is Your Product or Service?
You know your product or service like the back of your hand (warts and all), but your potential customers are clueless. They’re not going to want to put their hard-earned cash in your wallet unless you clearly explain your product/service and its features, attributes, and specifications.
With our book, ’50 Interviews: Young Entrepreneurs (Vol. 1) – What it Takes to Make More Money than Your Parents’, we included its feature right at the beginning of our title. Our book includes interviews with young entrepreneurs and we wanted everyone to know that straight from the get-go.
Advantage: Why is Your Product or Service Better than Alternatives?
Have you ever seen those commercials where Tide claims that their laundry detergent gets your clothes brighter, fresher, and softer than the competition? Of course you have, because it’s a proven marketing strategy. So when you tell people about your product or service, think about how you can demonstrate the ways it is better than the rest.
Check out the subtitle of our book: The world’s top young entrepreneurs share the secrets to their success. We emphasize that these are the top young entrepreneurs in the world and thereby demonstrate our advantage over other resources. The truth is, there’s no other book that exclusively features in-depth interviews with these young entrepreneurs, so maybe we could have done a better job of demonstrating our product’s advantage in the book’s title.
Benefit: What’s in it for Your Potential Customers?
Customers are selfish. Their three favorite words are ‘my’, ‘me’, and ‘mine’. So you need to practically hit a person over the head with how beneficial your product or service is going to be for them. Never forget to clearly state why you are the right answer, solution, and investment for them.
Part of our book title is designed to demonstrate the benefit of reading our book. Our book is going to reveal What it Takes to Make More Money than Your Parents. With that, we’ve squeezed the feature, advantage, and benefit of our book all on its title page.
The trick to balancing cockiness and humbleness is confidence. Don’t be cocky or people won’t like you, trust you, or want to buy what you’re selling. Don’t be purely humble or people won’t think that what you’re doing is worth their while. Just be confident.
Determining Your Start-Up Costs
“When I started Grand Slam Garage Sales with my friend Matt, we went to Walmart and bought two red polo shirts for about eight dollars apiece [as uniforms].”
If your only start-up costs are a couple of polo shirts, then consider yourself lucky. In any case, you need to know how much your business is going to cost to get off the ground. You don’t want to be blindsided with an unexpected expense and an empty wallet. Here’s how to prepare:
What do You Need to Start?
Every business needs something in order to be effective. It could be a real-life tool, like a lawn mower or a truck. It could be a real-life product, like a batch of brownies or a book. And it could be something that you can’t touch, like a website or an education.
Before Joe Penna dropped out of medical school, he made sure that he had everything he needed to start a successful YouTube channel: a camera, video editing software, video editing expertise, and – in his case – a pair of black sunglasses.
Double Your Estimated Costs
We’re optimists – but starting a business generally costs about twice as much you first think. There are unexpected challenges and expenses lurking around every dark corner. To be on the safe side, plan on spending about twice as much as you first estimate.
(Don’t worry too much: we’ll show you how to do things as cheaply as possible).
We thought that we had all of our bases covered with the publishing and promotion of this book. That was before we were blindsided by additional expenses, like a publishing revision fee, an Aweber subscription, cover redesign, shipping materials, video recording software, and plane tickets to Chicago (about $1150 all told).
Always, always Bootstrap
Entrepreneurs have to pull themselves up by their bootstraps. That means finding ways to get your business up and running as cheaply as possible. Every expense is an opportunity to find a way to get something done at a better price. Always research the best option, focus on efficiency, and don’t be afraid to ask about discounts. You got this guide for free, so you’re already bootstrapping!
Today, Joe Penna lives comfortably on the money he earns through his YouTube channel. But, when he first moved to Los Angeles, CA, he was making only $900 a month and he had $850 in monthly rent. In his case, his biggest expenses were the daily needs of life. Joe’s bootstrapping solution: Ramen Noodles.
Start by making a list with all of the things you need. Then, look for used items and student discounts. Some good places to start are Craigslist.com, Half.com, and Ebay.com.
Settling on Your Pricing
“Initially, [customers] are hiring you for the price.”
Pricing your product or service is one of the hardest things you’ll ever have to do. A low price will help you attract more customers and earn more market share. A higher price will make you more money per sale. We’ll help you make like Goldilocks and find your ‘just right’.
What does it Cost You?
Maybe you would like to sell your product for five dollars, so you can sell it to as many people as possible – but that’s not going to fly if the product costs six dollars to make. The first thing to think about when pricing is what your product is going to cost you, in dollars, minutes, and energy.
When Emil Motycka started mowing lawns as a nine-year-old, he charged $10 per lawn. That $10 included the half-an-hour he spent mowing, the time it took to get to the lawn, the price of the gas, the price of maintenance, and the energy Emil spent mowing. Emil’s conclusion: “$20 per hour – none of my friends made that much.”
What does Your Competition Charge?
The great thing about having competition is that they’ve already done a lot of your work for you: they’ve researched the price that customers are willing to pay and the cost of providing the product/service in question. Their carefully chosen prices will be available to their customers – and to you.
Take this guide for example. We found a competitor who’s charging $97.00 for a guide called ‘How to Start a Gift Basket Business’. That gave us a hint about what type of price we could charge for our guide. We think this guide is worth every penny, but we decided to give it away for free instead. Aren’t you lucky?
What is the Value to Your Customers?
Every customer is looking for value. The value of your product or service should be greater than or equal to the value of the money that you are asking in return – otherwise, nobody is going to buy it. The value to your customers is partly determined by the amount of money your product/service will save them. Try surveying some potential customers in order to figure out how much they value what you’re offering.
Adam Horwitz sells ‘Mobile Monopoly’ (a guide not unlike this one) for $77.00. Why do customers think there is $77.00 worth of value in it? He demonstrates the value on his sales page, by showing that he used the techniques revealed in ‘Mobile Monopoly’ to earn $51,641.20 in 6 months.
Fine-tuning with Price Points
Do you ever notice how many prices end in .99 cents? Psychologically, it seems like less money to the consumer. Online, it has become common practice to end the price of your product in a 7 (the example above, ‘Mobile Monopoly’, is $77). Our book bucks the trend and costs $19.88 (but that’s just because it’s our birth year). Try out some different price points and see what works best for your business.
Michael Dunlop recently launched his first product, called Popup Domination. As of this writing, the price is $47. That’s an effective price point, partly because it’s just under $50, so it seems like less money.
For pricing offline, you might want to consider the bills that are in your customers pockets. People don’t like change and you will get tired of making change, so try pricing your product or service at $1, $5, $10, or $20. When we sell our book in person, we charge $20 (instead of $19.88).
Great job today! But you’re not quite done. Get in the habit of putting action to your knowledge and you’re bound to be successful. Here are two things I want you to do this week to help you start your business.
See you at the top,
Nick Tart & Nick Scheidies
P.S. This module is just one part of a ten step outline to business success. Use it to launch your product, service, internet business, or something nobody else has thought of yet. The next module will give you a brief guide to all the legal mumbo jumbo that you’ll need to know – but the only way to get it is to subscribe to the guide. It’s an investment in your business and it’s absolutely free.
P.P.S. Since we’re giving you this course for free, we just ask that you “Like” it, “Tweet” it, and otherwise share it with everyone you know. Thanks!