By Rob Johnson
Step #1: Find a single customer to buy a service from you
|Following a business plan helps reveal the route to success|
- Social media marketing
- Helping companies accept bitcoin
- Providing services to companies who want to publish a kickstarter campaign
It doesn't necessarily have to be something that's growing massively, it can be something that's stable as well like carpet cleaning or moving services. Figure out what you're interested in and what you're good at and build a service offering around that.
When you do find that first customer, over-deliver on value. Truly give them the 5 star treatment.
NOTE: If you really struggle finding that first customer, offer to sell a service to one customer for free. When you have a customer take you up on that offer, over-deliver significantly and use the success that you bring them as marketing material to sell your first paying client. How you do this is dependent on your business, but think about getting testimonials, measuring how much you've helped them, etc.
Step #2: Find 9 other customers
Believe it or not, finding that first customer is much harder than finding the other 9. Now you know how to find them, how to craft your offering, how much to charge, the logistics, etc.
Now go find 9 others.
The reason is for doing this is two-fold:
- Every subsequent customer that you find teaches you more about the business and the industry. It also gives you one additional contact that you're giving the 5 star treatment to that will go out and talk about you.
- There's a psychological boost that you'll get each time you exchange goods or services for money. It's really a thrill the first time an entrepreneur receives money from something that they've created.
Use this time while finding the 9 other customers to start analyzing the business model. If the business never grew further than providing this service, is it profitable? Does it at least provide an adequate living for the people delivering the service?
You need to start to get a feel for the numbers around the business. If you're in the fortunate position where the business is already profitable (or even break-even) you should be really happy. Getting enough clients on-board for a service business alone can make it attractive for a potential acquirer.
Step #3: Sell one customer on a recurring package
Steps 3 and 4 may not apply to all business types. If it doesn't apply to you, feel free to continue down to step 5.
If there's a way to take what you're selling and sell it on a contractual term or a package, do it.
For example, if you're doing social media marketing for small businesses and up until now you've been selling one-off marketing campaigns, see if you can get one customer to hire you as their primary marketing firm on a monthly, quarterly or annual basis.
This will be more difficult to do obviously than selling a one-off package, but it provides your business with more security because you have reliable income.
Step #4: Find 9 other customers to sell on the recurring package
For the same reasons as step #2, we want to scale up our recurring package to 9 other customers.
Depending on what type of business you're running, having 10 recurring customers alone has the potential to be a respectable lifestyle business.
At this point you'll be in a position to really understand a lot about the business, the industry and have a lot of great contacts. You'll know where your customers spend a lot of their time and have marketing channels in place to reach them.
Step #5: Productize the service
Start experimenting with ways to productize the service that you've been providing. It might be through an info product of some kind like an online video course or eBook. Or perhaps it's a software-as-a-service platform that helps your clients manage all of these tasks for themselves. Perhaps some other combination.
Talk to your customers about what specific pain your service has really helped them with. Really try to get down to a small specific burning pain that you've helped them with, then package that pain into some sort of a product.
As you're building the product, get frequent feedback from your existing customers that you're still providing the service to.
Step #6: Sell the product off the back of your service business
This can mean that you try to upsell your existing service clients or just use it as an alternative offering in your sales channels. Take note of what works and what doesn't in terms of selling the product. Pay special attention to the feedback that any buyers give you.
Step #7: Iterate until they love it
This is really just a continuation of step 6, but you need to iterate on the product until everyone who uses it absolutely loves it. Really pay attention to feedback. What do your customers like about it? What do they hate about it? Experiment with alternative forms of delivery.
Can you make it more valuable in some way? Is there a way to deliver it in a different format?
Step #8: Scale
Now you're in a position where you have several service-related consulting clients who are probably a mix of recurring and one-time fees, plus you've got a great product that helps them.
Now it's time to scale.
Once you're confident that the product is truly exceeding the needs of your clients, figure out how to get it in the hands of as many people as possible. All of the products that I listed above (infoproducts, SaaS solutions, etc.) should scale quite easily from a dozen customers to hundreds or thousands.
This is largely a marketing exercise and spending a little time with Google will push you a long way towards solving this problem, but here are a few places to start:
- Content marketing: Start creating content that's useful for your customers. It might be a blog, a youtube channel, a podcast - whatever. Figure out the medium that works best for your type of business and start creating awesome content. This will establish you as an authority in the space as well as start to drive traffic towards your product.
- Build an email list: Through your content channels, drive people towards an email opt-in form that gives away a small product like "10 steps to solve [insert a problem that your customers have]" to start building your email list. Email lists are still hugely valuable.
- Pay per click (PPC): Give yourself a small budget and try to pay for Twitter or Google ads to drive people to a landing page that sells your product. If the cost of acquiring a customer is less than what you make over the lifetime of your customer, you essentially have a money-making machine.
- Partnerships: Is there another product that compliments yours? Approach them and see if there's a bundle that could be built in combination of the two.
There are many ways to drive traffic, those are just a few.
Step #9: Sell the company or collect dividends
A solid service business with a growing product business is a valuable asset. What you do with that asset is highly dependent on your personal situation and goals. You could continue to grow the business and run it as a lifestyle endeavor for yourself. You could try to hire someone else to run the business and then just sit back and collect dividends from the profits which frees you up to do something else (or nothing at all).
You could sell the business.
Selling a business usually takes many months (if not longer), so be prepared for this ahead of time. Start by approaching all of the potential acquirers: competing companies, competing products, etc. Tell them that you're looking for potential ways to work together and sit down with them.
While sitting with them, let them know that you wouldn't be opposed to selling the asset for the right price.
Most of them will tell you "no" and that's fine. Tell them that you'll send them a monthly status update in case they change their mind.
Every month, email each of them with a short update about how the company is growing, any major changes or initiatives, etc. There's a good chance that one of them will eventually reason that it's easier to acquire you than continue to compete with you.
If that strategy fails and you're still looking to sell the company, consider approaching a business broker or a private equity firm. If the business is profitable, it's an asset. That asset has value and they can help you figure out how to extract the value (for a fee).
There you go. Nine steps to creating and selling a company.
It's obviously a general step-by-step system, but the likelihood of success for a process like this, as opposed to "let's go raise a bunch of VC funding and sell to Google," is much higher. You're probably not going to sell a company like this for hundreds of millions, but for a lifestyle entrepreneur this is a great process for understanding the intricacies of coming up with an idea, building an offering, scaling that offering and then navigating the waters of an acquisition.
Good luck and let me know how it goes :)
About the author: Rob Johnson is the cofounder of Makers Academy - Europe's largest coding bootcamp. Rob consults with organizations like Tech Stars, Startup Britain, LeanConf and Imperial College on how to help entrepreneurs validate their business ideas cheaply and quickly.
Image: Author owned and licensed