A little background…
Doug Breaker here, CEO of Earth Class Mail. One of my favorite video clips is a South Park episode where a few entrepreneurial gnomes come up with the next great startup idea. Their plan goes something like this: Step 1. Collect underpants, Step 2. ?, Step 3. Profit!
I love this because it illustrates really plainly the most common pitfall budding entrepreneurs make, that is how they’re actually going to make money. I’d find this funnier except that almost every entrepreneur and founder I know has fallen prey to this.
I know I did, multiple times, stubbornness is both a strength and a weakness.
The pattern goes like this:
Inspiration hits, “Wow, I’ve got it!”.
The soon-to-be-rich-and-famous founder jumps immediately into building, planning, strategizing, and daydreaming. Big funding rounds and massive success here we come!
Months or years later the business launches, woohoo! They’ll shout “My creation is alive!”, “Revel in its beauty!”, “Kneel down to its glory!”. Then some time passes…a week, a month, maybe a few go by.
In that time some customers trickle in, just a few, if at all. “Where are all the customers?”, asks the founder. Oops! Sounds like someone forgot Step 2.
What is Step 2?
I’ve personally had to survive more than five failed product launches: a monthly pickle service, an accent training service, a moving company website, and I could go on. It took those failures and more for me to break this habit and finally focus on Step 2.
So again, what is Step 2? It’s customers! More specifically, it’s finding a lot of customers at a profit. That is Step 2.
The goal of any for profit business is to collect more money than you spend. To collect that money you have to find customers that will pay you money. Let me hammer that point home…
You. Have. To. Find. Customers. That. Will. Pay. You. Money.
Your business must find enough customers that pay enough to cover everything your business needs to operate in the black, i.e. above breakeven. That is salaries, benefits, technology, the costs of goods sold, taxes, rent, and etc.
It’s also important to remember that it costs money to find those customers. You must figure out how to find enough customers at a cheap enough cost so that the money those customers pay is more than all the other costs to run the business. Sounds pretty simple right?
To understand Step 2, ask yourself:
- How many customers can I get to buy my product or service?
- How much will it cost me to do that?
- Will the money left over be enough to run and grow the company?
Only AFTER you understand that should you start building. Put those daydreams on hold, and let Dr. Math tell you what your idea is worth.
Great smartypants, so how do I do that?
Ah! Great question. I love the internet. It’s the perfect tool to answer Step 2 cheaply, quickly, and confidently. You can get your answer for less than a $1000, a few hours of work, and few weeks of testing. Which option sounds better to find out if your idea works?
- Spending tens or hundreds of thousands of dollars and months or years
- Spending less than a thousand dollars and a few weeks
I am going to save the specifics for my next post, so I can get to the point of this one.
What the heck does this have to do with Earth Class Mail?
As CEO of Earth Class Mail I own ultimate responsibility for how awesome our product and service is, and how much value our customers get from it. We want to make SMBs, startups, independent entrepreneurs, and digital nomads more amazing.
We especially want to knock it out of the park for our business customers who crave efficiency and reliability. We want them to spend more time growing their business, not stressing about mail.
The best way I know to do that is to walk in their shoes and use Earth Class Mail ourselves. We already use Earth Class Mail for all our inbound company mail, but I want us to really feel what our customers feel. I want us to experience their joy, and their pain.
To make all that happen we’re going to go through a real world example of starting a business, from idea to launch. We’ll start with testing if our idea can attract enough customers, and share all the things we learn along the way.
Then we’ll walk through everything from the techie things like creating a website and the actual service, to the mundane like registering a corporation and setting up a bank account.
Along the way we’ll dig deep into the Earth Class Mail service, and the ways it can make running a business easier.
Hopefully this process will help a few entrepreneurs launch more successful businesses. I can’t wait to see how it helps us build a better service for our customers.