How to start a business when you DON’T have a product or service

I’ve always aspired to be a business owner, even when I was a kid. And I would stay awake at night dreaming up business ideas. In high school and college, I obsessed with the question: “What product or service should I sell?” I remember coming up with and discarding so many ideas.

I think the need for a product or service actually held me back from taking action.

When I finally started my business, it was out of desperation to get out of a job I hated — I couldn’t stand it anymore so I quit on the Friday and on Monday I was “in business”, even though I didn’t fully know what I was going to sell.

Even though I didn’t start with a product or service, here I am today with a fully-booked writing/consulting practice that primarily delivers copywriting for real estate investors.

And that was a huge lesson for me. I would love to go back and tell my younger self this lesson. (And it’s the exact same lesson I tell EVERY aspiring entrepreneur who wants to start a business and may or may not know what they want to sell).

Understanding this lesson will transform your new or existing venture, bring in more money than you ever thought possible, and eliminate all the worry and frustration that most business owners face about where their next sale is coming from.

Here’s the lesson:

YOU DON’T NEED A PRODUCT OR SERVICE TO START A BUSINESS

The ONLY thing you need is to find someone who has a problem and then solve that problem.

That’s it. Find a problem and solve it.

And the great news? There is no shortage of problems in the world. And, people are willing to pay (sometimes a lot) to have their problem solved.

I started a business once and it struggled because I tried to sell what I thought needed to sell. But the second time I started a business — after quitting the job I hated — it was different. On the first day I decided I was “in business” I connected with a friend who had a problem that I could solve. And I solved it. He became my best-paying, longest-lasting client, and I only recently dropped him as a client when our businesses evolved in different directions and I was no longer able to solve the new problems he faced. (Good news: Someone else is helping him now).

BUT WHICH PROBLEM SHOULD I SOLVE???

There are a million problems out there — from the relatively simple need of learning how to read sheet music all the way to a larger-scale need of solving global hunger. You can’t help them all. So consider the problems that your knowledge and skills and passion and industry contacts can solve.

I have a friend who is very skilled at analysis and she has been in management for many years. She feels somewhat trapped by her position and she’s been at it for so long that she isn’t sure how to make the move away from the job she has. She doesn’t realize how valuable her analytical skills and industry contacts are (well, I’m trying to tell her!). Here’s what she needs to do (and, if you’re in the same position, here’s what you need to do)…

  1. She needs to think about all the problems out there that her analytical skills and industry contacts can solve.
  2. She needs to find the people who are facing those problems.
  3. She needs to offer to help them solve those problems… for a fee. Some won’t want help but some will.
  4. Then she needs to solve those problems.

Voila! She has a product or service to serve a ready market.

Find the point where the problems of the world intersect with your skills, knowledge, passions, and contacts.

Heck, if you don’t feel that you have skills, knowledge, passions, and contacts, that’s okay too. (When I started my business, I had passion and a bit of skill but that was it.) You can figure out the rest. Just go and help someone.

HOW DO I MAKE MONEY SOLVING PROBLEMS WHEN I DON’T HAVE A PRODUCT OR SERVICE?

If you’ve never helped anyone before, I would just go out and help them. Maybe ask for some money to cover any expenses you might incur. But mostly just invest your time and effort to help one person.

With that success story in hand, figure out what it was worth to that one person and set a price around that, then go find other people with the same problem.

Boom. There’s your business plan to start your next business… or your next 10 businesses. It really is that easy.

And you don’t have to actually know the solution before-hand. You just have to know the problem and have some confidence that you can figure out how to solve the problem with the combination of knowledge, skills, passion, and contacts that you have.

MORE EXAMPLES

What I’ve been telling you applies to every single industry or niche or sector or marketplace (or however categorize yourself).

A friend of mine is a musician. He’s enjoyed a bit of national recognition but his marketplace is primarily regional — Western Canada. For a long time he’s been “selling” (although he would never use that word) his concerts. But one thing he does pretty well (and he’s getting better and better at it) is that he positions himself as a problem solver. He knows that his concerts solve a problem, just as all products and services do. He identified the group of people who have the problem and he’s been marketing to them and positioning himself as THE solution to their problem.

I know someone else who is trying to start a nursery school in a small town. Frankly, they’re struggling to find clients, even though their marketplace should be able to sustain the business. I’ve been trying to help them understand that they can’t just push their nursery school concept and then wonder why people aren’t signing up. Instead, they need to figure out what problem their nursery school solves and tell people the good news that their problems are completely solved by signing their kids up.

I’m starting another brand (because I don’t have enough already — haha) and the only reason I’m starting it is because I’ve noticed that there’s a problem that is not being solved. I’m not 100% sure how I’m going to solve it but I know I can so I’m putting the pieces in place for it right now.

What problems are out there that you have some combination of knowledge, skills, passion, and contacts to solve? Great! Go out and solve it.

Case study: Arming salespeople with effective sales information

If you want to sell more products, you need to equip your salespeople with effective information. When you give them the information they need, they’ll go out and close more deals for you.

I did a bunch of work for one of the world’s largest enterprise software companies to help equip their sales teams. They created massive applications that store information, crunch numbers, and perform all the tasks you need to run a big business… and they sold these software applications to all the other big businesses in the world. Their software applications were mind-bogglingly immense, and complex, and they could be sold into numerous industries.

So when this software company’s sales teams were calling on a prospective client, the sales team had to get up to speed fast on the software they were selling.

That’s where I came in. Not just me, actually. I worked with a team of people including graphic artists, technology experts, editors, and a project manager; I was the writer.

Here’s what we did:

I, and the team I worked with, would get massive amounts of information from the corporation — content that included case studies, technical specifications, brochures, presentations, industry analyses, etc. — and we would distill this information into really sales-specific points. We followed a basic template in which we’d cover topics like the key industries that the software would help, what benefits the software provided, what marquee clients were already using the software, conversation starters that a salesperson might use to talk about the software, etc. Then we’d write this information up into a 20 minute interactive online presentation that covered all the topics quickly but thoroughly, allowing a sales team to get up to speed on the important parts of the sale in a very short amount of time.

It was sales training but not generic sales training — it was highly specific sales training to accomplish a goal: To empower the client’s sales team to get up to speed on their products fast so they could sell more effectively.

Each project would take anywhere from 6 weeks to 3 months to build, going through several levels of review and refinement. In total, I worked on more than a dozen of these information products, and was also sometimes tasked with writing content that would be used in customer-facing scenarios.

Even more interesting was that the projects were sometimes fairly standard (hey, it’s enterprise software — how exciting can it get?) but there were times when we were called upon to go above and beyond: When the executives in the organization asked us to help them “sell” a very sensitive price increase, we delivered. And when we were tasked with helping the organization through a complicated merger, we delivered.

The projects were very valuable for me: They taught me to apply sales skills into a multinational organization context, I got to work for a fairly well-known company (as well as their partners, which are just as well-known) and I got to work with a team, which is something I enjoy but don’t always get to do.

And the projects were valuable for the client, too. The content we produced was initially intended for a small, internal audience and they used it to help them to close multi-million dollar deals. And later, our work expanded somewhat beyond that scope and that content was sometimes used to educate the larger organization about their product and even as part of the customer-facing sales presentation.

I’m particularly proud of those projects because they had highly tangible results for a variety of audiences.

Customer service and customer relationships are similar but different. Here’s why customer relationships are better…

A lot of my blog posts are just my thoughts about business; my reflections about what business could and should (and shouldn’t) be.

And lately I’ve been thinking about the difference between customer service and customer relationship.

I suspect that too many businesses think they are interchangeable. But I don’t think they are.

Customer service: I tend to think of customer service as how you handle the customer before, (but especially) during, and after the sale. In many ways, customer service is transactional; it’s built around the transaction of a purchase: A customer experiences your customer service when they interact with your business — when they try to buy something, when it gets delivered to them, when they have a problem. Let’s measure customer service this way: How easy is it for a customer to get their money back when they ask for a refund?

Customer relationship: I tend to think of customer relationship as a more interactive/intimate connectedness. It’s how much your customers think of you outside of the times when they need whatever you’re selling. Customer relationship is what you do all those other times when you’re not selling. Customer relationship is not transactional at all (although it can certainly lead to more transactions). Let’s measure customer relationship this way: When was the last time your customer invited you to a barbecue or their kid’s baseball game?

HERE’S HOW CUSTOMER SERVICE AND CUSTOMER RELATIONSHIP SHOULD PLAY OUT IN YOUR BUSINESS

You should have good customer service — of course. It should be easy and enjoyable for customers to transact with you. But too many companies brag about the quality of their customer service yet never really make it special. Worse still, they don’t realize that every other business out there is also bragging about customer service (and to a customer, it all kind of looks the same). And too many companies put too much of their focus on creating positive customer service experiences and they forget about the broader customer relationship experience.

Guess what: Your ability to deliver the product or service with a smile seems exactly the same as your competitor’s ability to deliver their product or service with a smile. Your toll-free troubleshooting line seems exactly the same as your competitors’ line. Your no-questions-asked 100% money back guarantee seems exactly the same as your competitors’ guarantee.

If you want to compete on customer service, you need to be absolutely amazing in a zany “I can’t believe they’re doing that” way. You need to give the CEO’s cell-phone that she or he answers 24 hours a day even on vacation. You need to give a 200% money back guarantee. You need to not only deliver the product with a smile, you have to also deliver another free product, set them both up, and then cook the family dinner. That is the kind of customer service that you need to offer if you are going to focus on customer service: Ridiculously crazy customer service.

But likely you won’t offer that (it’s expensive and few companies do). That’s okay because you should be doing something else instead: You should be…

BUILDING A CUSTOMER RELATIONSHIP

A customer relationship is how much your customer thinks of you when they are not buying from you. It’s how often they invite you to their spouse’s birthday party or kid’s ball game.

A customer relationship is intimate. Interactive. Mutually meaningful. Sacrificial. Generous. And it needs to expand beyond the narrow confines of the conversation about your product or service.

A customer relationship looks like this: You’re a real estate agent who sold a house to a client. You also show up to help them pack boxes and put them in the back of the truck, and you pick up the tab for pizza. You send them a newsletter every quarter that doesn’t talk very much about you and your accomplishments, or even spends a lot of time talking about new houses on the market, but rather talks about the kinds of challenges and opportunities they face in their lives — raising kids, getting promoted, saving for retirement, buying a car. You stop by their house on the anniversary of their purchase every year and give them flowers or a bottle of wine. You send them birthday cards. You pay attention to their lives and call them up when something good or something bad is going on. You share your own personal challenges and wins with them. You ask a lot of questions and you savor every answer. You ask about their kid’s baseball games and you show up and cheer.

THAT is a customer relationship.

It’s the kind of interaction businesses want (although they are too busy focusing on service to realize that they’re aiming for the wrong thing).

It’s also the long game with a higher up-front cost but a very significant long-term pay-off.

Confession time. As I write this, I think of my customers and my brands. Do I have this in any of my brands? Absolutely not. I know a few things about my customers — important hobbies or spouse’s name or the number of kids… maybe. But I don’t do anything to build the relationship. So don’t read this blog post as someone who has it all together and is now meting out wisdom from atop a mountain. I’m an amateur who is chewing through my own thoughts and sharing a major failing with you.

On that note, I think I’ll sit down right now and chart out some changes in my business. I hope you’ll do the same in yours.

Consistent sales versus frequent sales: Are you focusing on the wrong one?

If you ask a new entrepreneur what they should be striving for, they’ll probably tell you that one of their goals is to sell with as much frequency as possible.

And at first glance, it might make sense to an entrepreneur to try to get as many sales as possible to rake in that money. However, at this stage in the life of a new business, frequency of sales is not nearly as important as consistency of sales. That is: You shouldn’t be striving to make a whole bunch of sales tomorrow. Rather, it’s better to make a consistent, predictable drip of sales every day (or week or month or whatever).

When you focus on frequency, you end up with bulges in your sales funnel; you end up with a boom/bust business that suffers from inventory shortages and overages. You create a business that is unpredictable and ultimately wasteful as it reacts to one problem after another. You sometimes end up with more costly inventory than you can afford to keep (and a resulting lack of cash flow, and perhaps the need to sell at unprofitable prices) and you sometimes end up with no inventory at all (and a resulting lack of cash flow from upset buyers who desperately want what you have to sell… and who will take their business to the competition).

Frequency, at least in the very beginning stages of a business, is not a preferred goal.

The better choice is to focus on making consistent sales (even if they aren’t very frequent in the beginning). The goal shouldn’t be to get as many sales as soon as possible but to get as predictable as possible. Rather than trying to get 100 sales tomorrow (and then worrying tomorrow about what you’ll do the next day), try to get 3 sales a day for the rest of the month.

By doing this, you’ll generate a smoother flow of cash into your business, as well as a smoother flow of your inventory out of your business. You’ll wake up with the confidence each day that you know what is going to happen. That kind of predictability is invaluable for any business because it allows you to plan, to invest, and to grow in a way that makes sense. You’ll gain an understanding of the efforts required to bring in a certain amount of income each and every month. And, consistency can help you grow profitably: When you know that you will generally make so many sales in a given period, you can work to increase it slowly, without risking your inventory.

If you’re starting out in business and you’re hoping to be around next year at this time, work on consistent sales.

The 5 steps to identify your sales funnel… This is the starting point of a more profitable business!

I frequently assert that your sales funnel is the most important asset in your business. It’s the structure around which you build your business, it’s the pathway that prospective buyers follow on their way to giving you money, and it’s a strategic tool you can use to grow your business.

The starting point for you to master your sales funnel and take control of your business is to draw out your sales funnel. Draw it out, add notes to yourself, and the document becomes the useful tool you can refer to daily in your business to help you make decisions and work on your business.

Here’s how to draw out your sales funnel…

1. IDENTIFY YOUR TARGET MARKET

You need a narrowly defined target market — one that is large enough to to market to, has enough money to pay you for your product or service, but small enough that you can establish yourself as an expert. (Note: “Everyone” is NOT your target market). Take some time to research your target market and learn about them. When researching, dig beyond the point where your target market’s needs intersect with your solution. Learn everything you can about your target market and you’ll uncover new ways to market to them and new opportunities to add value. To get you started, use this tool I created: 55 questions to answer when defining your sales funnel’s target market.

2. IDENTIFY YOUR TARGET MARKET’S MINDSETS

People buy a product or service to solve a problem or fulfill a need. They never rush out and buy the very first solution the millisecond they discover their problem or need. There’s a progression in their thinking:

  1. At first they discover their problem or need.
  2. Then they realize they have to do something about it.
  3. Then they seek out some solutions.
  4. Then they weigh those their solution options.
  5. Then they decide whether the solutions are worth the cost.
  6. Then they buy.

Those steps I’ve just outlined are an over-simplification of the “evolution of mindsets” that people go through before buying from you. For small purchases (like an impulse item in a grocery store check-out line), these evolutions are measured in seconds. For major purchases (like a house), these evolutions are measured in weeks, months, or sometimes even years. After researching your target market, write out the mindset evolutions that they are most likely going through. (Use the list above as a starting point but then make adjustments according to your knowledge of your target market).

3. OUTLINE THE ACTIVITIES

Once you know what your target market is thinking on their way to buying from you, you can craft marketing and sales messages around those thought processes with the goal of moving them from one step to the next. Activities are comprised of two things: The message you want to communicate and the action you want your target market to take.

Pro tip: Don’t try to get your target market to move from their current mindset to the point of sale. Just get them to move to the next mindset in their mindset evolution.

4. DEPLOY TO CHANNELS

Once you know who your target market is, you know where they like to spend their time and attention. Once you know what mindsets they have, you know what it takes to sell to them. Now you can use this information to put your sales funnel to work. Create marketing and sales messages (see Outline the Activities, above), and then put those messages in the channels (media) where your target market will notice them.

5. ADD PAYGATES AND DELIVERY

Your entire sales funnel “points” to a sale. And that can look very different from one business to another. Some businesses charge up-front and then deliver the product or service; some businesses deliver first and then charge. And there are other paygate/delivery configurations as well. (Check out my blog post Sales funnel paygates for more information and for a list of other blog posts on this topic). Select a paygate and delivery model that will encourage the most purchases from your customers but will also ensure consistent cash flow and manageable accounts receivables for you.

A FEW CLOSING THOUGHTS

This really simple step-by-step method to crafting your sales funnel is useful for new and existing businesses that need to optimize performance and improve profitability. It’s also just a starting point. Check out some of my other blog posts about sales funnels.