‘What I discovered was that business was no great mystery. It’s not something like physics or medicine that requires extensive study. You just try to get people to pay you for stuff.’
—Paul Graham
AN IDEA, BRAND name, logo and website do not make a business. What makes a business is sales. Whether it’s a product, service, membership, event, club, app, consulting, freelancing or software subscription, your first key milestone in creating a business is to sell it. Once.
Now is not the time to worry about the colour of the curtains in your future headquarters or which accounting package you will run the company on. Just make an offer and get someone to buy it. What do I mean by an offer? Let’s find out …
An offer is simply a description of what you’ll provide and how much money you want in return. The large management consultancy I once worked in called that a ‘value proposition’ (but, hey, they have to justify their rates somehow!).
For our purposes, it’s really very simple. Here are some examples:
Tomorrow we’ll look at how to turn a simple statement like these into a promotion you can make a lot of money out of very quickly, but for your first few sales you can personally explain what you’re providing and take payment.
Your first sales will usually come from your existing network of friends and colleagues (or friends of friends). One of the great challenges of selling is that people need to trust that you will deliver what you are promising. Your friends and colleagues already know and (hopefully) trust you, so you don’t need to have all the things in place that convince a stranger that you’re trustworthy – a professional website, slick ordering system, convincing marketing copy and so on.
Even with your existing network, you will still have to sell your offer. So that means explaining why you can fulfil on the promise – for example, ‘I’m now putting my skills and experience from ten years in corporate marketing into helping small businesses and startups and I’ve already doubled traffic to one client’s website.’
If you’re still developing your skills you can offer a discount: ‘The typical price for this kind of product/service is £500 but as I’m just starting out, I’m offering it at just £200 for my first ten clients.’
Make this description as clear and as tempting as you possibly can and email it to your friends or post on your social networks. Ask also that they share it or forward it on to anyone else who might find it interesting. Call people you know who you think can benefit and talk to them.
You might think that this kind of very personal selling doesn’t apply if you’re running a tech startup, but in fact it can be very valuable to approach your first test clients, explain the product and see if they’re willing to pay. That way you can take note of every question they ask and if they say no, you can ask them what would need to change for them to say yes.
Remember, it’s only a sale when they give you the money! (See below how you might be able to get paid in advance.)
Making your first sale for this project that excites you – your first Playcheque – is an important landmark. So celebrate it! Put a photo of the cheque on the wall, buy yourself a bottle of champagne or take a photo of your first project so that you can remember it in the years to come.
If you’re queasy about sales, you have the wrong image in your head. Forget the dodgy secondhand-car salesman. Selling is something we all do every day: convincing someone to go out with you, persuading your friends to go for your choice of restaurant, encouraging your children to eat their greens, convincing your partner to get fit or your boss to give you a chance on a new project.
Selling is something we all do every day: encouraging your children to eat their greens, convincing your partner to get fit or your boss to give you a new opportunity
If you can provide something useful, interesting, or entertaining for people, then frankly it’s time to get over yourself and go communicate the value you can provide. That’s all that sales is in its simplest form: check whether the person you’re talking to can benefit (that’s called qualifying the sale) and, if so, communicate the value and ask for a commitment.
Remind yourself why you’re doing this. Do you care about this idea? Will it make people’s lives even a little better if they buy it? Then do everything you can to ensure that they do.
At its most basic, business is two steps:
Richard Branson is the ultimate example of how simple it can be to start a business.
How Richard Branson sold his first airline tickets
IN THE 1970S, Richard Branson was busy running Virgin Records but a problem at the airport while on holiday sowed the seed for a whole new business …
In ’79, when Joan, my fiancée and I were on a holiday in the British Virgin Islands, we were trying to catch a flight to Puerto Rico; but the local Puerto Rican scheduled flight was cancelled. The airport terminal was full of stranded passengers. I made a few calls to charter companies and agreed to charter a plane for $2000 to Puerto Rico. Cheekily leaving out Joan’s and my name, I divided the price by the remaining number of passengers, borrowed a blackboard and wrote: VIRGIN AIRWAYS: $39 for a single flight to Puerto Rico. I walked around the airport terminal and soon filled every seat on the charter plane.
As we landed at Puerto Rico, a passenger turned to me and said: ‘Virgin Airways isn’t too bad – smarten up the service a little and you could be in business.’ – From a speech in India by Richard Branson as reported by blogger Ravi J. Mevcha
Note that Richard cleverly made this inaugural flight of his makeshift airline profitable: by dividing the cost of the charter flight by the number of passengers excluding his fiancée and himself, he made his own tickets free.
(In case you think Richard shortchanged the other passengers, remember it was Richard who did the work to find a charter plane and sell the tickets and he took the risk that something might go wrong and cause him to lose out on the deal. In return he benefited a little financially.)
Within a few years Richard decided to start an airline for real, as he explained in The Telegraph in 2014:
So I called up Boeing and said I wanted to buy a second-hand 747. They asked what I did. I said I ran Virgin, and we had Sex Pistols, The Rolling Stones and Janet Jackson. When they saw I was serious they agreed to the deal.
I was very careful to protect the downside, with the key ruling being that we could hand back the plane in 12 months’ time if Virgin didn’t get off the ground. Many of my team at Virgin Records thought I was mad, but I believed the Virgin brand could expand.
There are ways to get paid before you’ve even finished creating the thing you’re selling (if you know for certain that you can create what you promise!). It reduces your risk to sell a product, package or programme before you invest the time to create it. After all, there’s no point making something that nobody wants. And the only way to know for sure is to sell it!
Pre-selling your product is also great if you are doing something expensive, such as manufacturing a product or making a movie. Instead of taking a loan, you pre-sell the product to customers willing to trust you to deliver on it. Then you can use the money raised to produce your product.
There are now some superb platforms for this kind of crowdfunding as it’s called. Kickstarter is one of the most well known. Kickstarter has received more than $2.2 billion in pledges from 10 million backers to fund over 100,000 projects, including films, music, stage shows, comics, journalism, video games, technology and food-related projects.
There are many other platforms. Indiegogo has an international user base that includes lots of music, film and creative projects. Pozible is a crowdfunding site in Australia. UK-based Unbound provides crowdfunding for books.
A particularly interesting crowdfunding platform for artists and musicians is Patreon. Patreon allows members of the general public to become a small-scale patron of the arts. Patrons agree to pay as little as $1 every time their chosen artist releases a new work, whether it’s a song, poem, animation, comedy video or podcast. Committing to a larger amount can bring larger rewards – all the way up to $1,000 or more, which might get you lunch with the artist!
How Matt Inman and his friends raised a million dollars in one day for a card game about exploding kittens
MATT INMAN CREATED the website The Oatmeal, featuring hilarious and sometimes educational comics about technology, cats, coffee, web design, English grammar and zombies, in 2009. Matt’s cartoons were so good that within a year or so he had more than 4 million unique visitors a month. He started making money from merchandising (books, posters and more) and some advertising and by 2012 he was making half a million dollars a year.
That same year, Matt decided to help save pioneering inventor Nicola Tesla’s lab, called Wardenclyffe, and turn it into a Tesla museum. He ran a crowdfunding campaign on Indiegogo to raise $2 million for non-profit organisation Tesla Science Center at Wardenclyffe, with the promise of an extra million from Tesla Motors founder, Elon Musk.
Then things got really crazy. In 2015 Matt got together with a friend who had an idea for a card game. After a few hours’ work they turned it into Exploding Kittens, ‘The card game for people who are into kittens and explosions and lazer beams’. They decided to run a fund-raising campaign on Kickstarter to raise the money to produce the game.
The funding goal was $10,000. They reached that goal within eight minutes of Matt announcing it to his followers. And they went on to raise a staggering 1 million dollars in the first day. When they ended the campaign a few weeks later they’d raised over $8 million from 219,382 backers.
Matt and his friends created something simple, executed it extremely well and made it both funny and shocking. The result was that Exploding Kittens became the most funded game in Kickstarter history and the project with the largest-ever number of backers.
Throughout the history of The Oatmeal, Matt has cared about creating a high quality product and he’s followed the kind of principles you saw in Day 25 – he writes and draws funny and shocking pieces that are quick to read and he manages to catch the mood of the time, saying what others are thinking but are afraid to say.
Crowdfunding sounds like a dream come true – get paid in advance and use the money to produce what you really want to create. But unfortunately it is not a magic cash machine. Running a crowdfunding campaign is a significant project in itself. You’ll need a great story about your project (often shown as a video) and be willing to throw plenty of energy into drumming up support. On Kickstarter, you set a funding target and if you don’t raise the entire amount you don’t receive anything.
But if you have a strong track record or you are partnering with people who can deliver the product, crowdfunding can enable you to pursue projects that you otherwise couldn’t afford.
Even if you aren’t yet ready to go down the crowdfunding route, it is possible to get paid in advance. Remember that that can be as simple as sending a PayPal link to the people who say they want what you’re offering!