My introduction for the session on "Bridging the death valley: on your bootstrapped way to first success" at Tech Startup Day 2015 in Brussels. Slides are at the bottom.
So you think you can dance ...
You’ve been working hard on your startup idea, for weeks, months, maybe even more then a year. And after a number of pivots, you finally have found proof that your idea turned into a product has enough value that people will actually pay for it. Now things are getting serious, you have to start selling systematically.
There are a number of basics you have to nail down before you attack the market. Many of these things should have been fleshed out in the ideation phase. But due to the multiple changes you probably made in the solution you offer, the customers you target and the way you want to do this, your go-to-market strategy may have gotten a bit fuzzy. So it’s good to recap the fundamentals of your business. Re-iterating a Business Model Canvas (BMC) you made before could be the way to go, provided you are disciplined enough to ‘just write down the facts’. That may be a challenge as a BMC exercise is actually conceived to make you think about your business and question your assumptions. That’s why we recommend to cut down to the basics so you can move to an actual plan more quickly. You’re under time pressure, you’re running out of money and initial investors are getting impatient to see a systematically growing flow of buyers. So let’s not lose time!This is what we want to put on paper for once and for all (well, until the next pivot that is).
Your fundamental strategic framework:
1. Why are doing what you do? Why do you want to change the world the way you are planning to do? What’s your vision, your mission, your dreams and your ultimate objective? What does the dent you want to put in the universe look like?
You may have read Simon Sink’s book “Start with why”, if not now is too late. But you should be able to spare some time for his TED talk: “How great leaders inspire action”, that’ll fix you up in 18 minutes. The why question is often answered by an anecdote about when the initial founder came up with the idea of her/his startup.
2. How are you putting this dream to work? Starting from the why question, how do you put this in practice? That should immediately explain what makes your venture different from other ones with maybe similar products. This is where you walk the talk.
3. What do people actually buy from you? This is the easy part, clearly define what you are doing and selling. If you have completed your ideation phase you have all of this already lined out and you sold some of this stuff to people who are happy with it and are waiting for more.
Once you have the why-how-what crystal clear, it’s time to look at your customers.
Who are these people? At a very basic level you want to define whether you’re hitting a B2B or B2C market. On top of that, now is the moment to define more clearly who these people are who are willing to pay for your product. Think of the times you were talking to customers, be it to get them to buy or whenever you were solving an issue they had. Distill that knowledge into 3 tot 5 buying personas. When defining these personas make sure you don’t get lost in demographics and other easy to use metrics. In stead, focus on the problem you are solving for these people. What value are you adding to their lives? Define your persons based on actual problems your target group experiences, rather than what age or sex they are.
Now figure out how these potential customers are going to get to your solution. Map out the customer journey for each of your buyer personas and decide which hurdles in that journey you need to work on first.
- Do your prospects know the type of solution you offer exists? Are they looking for it, or are you bringing a disruptive idea nobody has even thought of? If you have uncovered a true need (that’s the purpose of the ideation phase) but people don't realise yet realise they have this need, you will have to evangelise this idea. This could be expensive, so you may want to look for wealthy or powerful partners in this process.
- So people are looking for solutions to the problem you solve? How do they do this? How do they explore the market and how will you make sure they end up on your property?
- If the two previous points are covered, you just need to reel in those customers. This is where your website will probably be crucial. Unless you are selling person to person. In either case, conversion and how to realise it will be your focus.
- Last but not least, you want to take care of your existing customers. First of all, it’s much cheaper to keep existing customer than it is to make new ones. So keeping the churn down should be a number 1 concern. Secondly, happy customers are your best ambassadors, they will convince people looking for a solution to choose for your product.
Priorities and messages
While doing this exercise the priorities for your commercial approach will become clear. Set your priorities for the go to market strategy based on the outcome of your customer journey exercise.
The same customer journey priorities will point you in the right direction when it comes to choosing communication channels. Each step along the journey requires different communication channels. Starting with more intrusive channels such as advertising, PR or Facebook in the beginning of the journey, to blogs, Google and Twitter in the exploration phase and your own media (like your website) in the conversion phase and once people are customers.
Now comes the fun part. It’s time to map your why-how-what thinking to the customer journey priorities your defined. If you’re trying to make people aware of the fact they have an unadressed need, you will focus on the first phase and your message will be based on the ‘why’ of your company. When the priority is in picking up customers who are exploring the market for a solution, your focus will be on the how-story. How do you deliver a solution to their needs. And when they end up on your website and are ready to buy, you only talk about what you actually deliver. Existing customers are lifted back up again to the why level to boost their loyalty.
On bootstrapping ...
There’s good news and bad news in this stage. Let’s start with the bad: as of now you will have to start spending real marketing money. Not just the occasional designer for a logo or consultant to take a next step, but recurring cash-out that will have to bring in sales. The good news is, this is the first time as a startup you can start making real money. These are some thoughts on how to approach spending and making money in this phase.
Don't spend too much money, be frugal. Being frugal does not mean you shouldn’t spend money, successful entrepreneurs invest their funds wisely. Your guiding principle here should be ‘affordable loss’. You spend just as much money as you can afford to lose. Test a marketing approach with a few hundred to a few thousand euro (depending on your financial situation) and if it works, if the return on investment is satisfactory you step up the investment. If not, you try something else. You limit your risk exposure by taking small steps that will not kill you if they go wrong. Think in term of how much you can afford to lose rather then how much you could win if you happen to be right.
The whole growth hacking trend gives you loads of ideas and tricks to start winning customers without spending tons on marketing from day one.
On the upside, there are ways of making enough money to keep your startup afloat during this phases, when sales is not yet systematically rolling in. As an entrepreneur you build on your strengths and pick low hanging fruit you discover while defining your business and exploring the customer journey. During these exercises you will most certainly bump into customer needs that can be easily answered with your existing know-how and team. You may choose not to pursue this path as the final direction for your business, but it can be a simple way to make some nice money that will fund your marketing or other efforts. Think of short term consulting missions (at high rates) fuelled by the know-how you gained building your startup, ad hoc use of parts of your tool (a subset of the code that will make out the final solution) or quick sales to customers who are OK with a simplified version of your tool. If you get it right you can even prepare the path for future customers through these methods or market test parts of your solution.