Product Demand Creation

You have a product. The product is a great idea that fills a need for a particular consumer. You feel for those consumers, you know them, you might be them. But how exactly do you get consumers to actually want the product? Said another way, how do you create demand for your product?

I found an article. It’s an oldy, but a goody. Yes, it was written only a couple of years after the recession of 2008, but the key themes of product demand creation still resonate in 2019. The article is written for Fast Company by Adrian Slywotzky who literally wrote the book on creating product demand.  This article is called The Six Secrets Of Demand Creation. Knowing that Slywotzky wrote an entire book on the subject, you can trust you are getting some great high-level cliff notes to further explore as you build demand for your product.

Here are the six (read the article or the book for more info):

  1. Make It Magnetic- emotional connection with customers
  2. Fix Our Hassles- study the needs of customers in multiple markets
  3. Build on the Backstory- what was the problem, and how can you take that concept further?
  4. Find the Trigger- what is the tipping point to get consumers off the fence? Study it; duplicate it.
  5. Build a Steep Trajectory of Improvement- launch day is just the first step, immediately try to get better.
  6. “De-Average” the Customer- one size does not fit all and different segments of your customer base may need slightly different problems solved or at least a different marketing narrative.

I will definitely be using some of these tips and insights as I write about my course work and help A.D. White continue to build demand for Asheville Hustle.

Testing, Testing, 1,2, 3

One of our assignments for class has been to write product assumptions. In that assignment I learned about minimum viable product (MVP). MVP is a proof of concept, the act of “getting something” out there. Some people go as far as defining it as 6-20 customers and most folks agree that by releasing an MVP, you give your company credibility. Yes, it’s important to get a product to market, but I wondered if there were some things companies shouldn’t do when launching a product.

Entrepreneur magazine is a trusty source for a lot of my research given they tailor content to start-ups and small business owners. Today wasn’t the day to let me down. Contributor Cory Levy wrote an article called, Starting Up Wrong: 6 Product Testing Mistakes You Need to Avoid. Spoiler alert, there are 6 things he says to avoid in this process and you’ll have to read the article for the details but here are the headlines:

  1. Letting Bias taint, the process
  2. Data problems
  3. Relying on technology to test
  4. Ignoring the competition
  5. Waiting to ‘sell’ until it’s built
  6. Leaving assumptions untested

While it’s important to get a minimally viable product to market, it’s also important to balance that with testing.

What Are You Looking at!?

As an entrepreneur you try your best to find out what’s on your customer’s minds. You send them surveys and ask them for suggestions. You might even incentivize their spending through a loyalty program like a discount card or frequent shopper bonus. So, what would you do if someone told you that you could study their behavior by installing cameras in your shop displays?

In an article for The Atlantic, Sidney Fussell exposes how Walgreens has launched “smart coolers” in major cities across the United States. These refrigerated cases can scan your buying behavior as you look upon the selection in a drink case. The author describes this as “new tech that turns your purchases, your movements, even your gaze, into data”. The main purpose of these cases is to figure out if the way a drink company, for instance, markets or displays a product influences the demographics they are targeting.

Fussell goes on to explore the legal implications of using technology that requires facial recognition as it is outlawed in several states. He also points out that this type of “smart cooler” is only one of many emerging technologies that aim to study consumers in their native retail environments.

How long before creative entrepreneurs can afford to use such technology?

FINALLY! Someone Talks About Intrapreneurship

The name of my blog is The Strengths Focused Intrapreneur, and yet, for the past four semesters, the classes in my program at WCU have focused on entrepreneurial pursuits. Don’t get me wrong, the info is helpful, especially for managing the business side of my husband’s writing career. But what I do in my “day job” is live the life of an intrapreneur. I have lots of autonomy in what I do to manage the departments and functions that report to me, and I basically have little micro-businesses within a larger corporate structure.

So, imagine my delight when in our assigned text for the semester I found a whole chapter in Rogers’ Entrepreneurial Finance on Intrapreneurship!

Joseph Alois Schumpeter, himself, asserted that entrepreneurship did not have to be confined to start-ups. He said, “Innovation within the shell of existing corporations offers much more convenient access to the entrepreneurial functions than existed in the world of owner managed firms. Many a would- be entrepreneur of today does not found a firm, not because he could not do so, but simply because he prefers the other method.” (Rogers 269).

I feel the essence of Schumpeter’s conclusion every day. I am an intrapreneur, and I make the conscious choice to hustle within the corporate structure because I grew up in a family business. I want to know that my paycheck will be on-time, that the collections department is doing their job, that billing statement need not be stuffed around the kitchen table at the beginning of every month, and that my 403b/401k has a handsome match provided by my employer. I loved our life growing up, and also, being the family-owned business is HARD. That’s not to say my life as part of a larger company is easy, but it’s certainly not an 80+ hour a week job, either.

Rogers asserts there are two types of Intrapreneur. He even offers a nifty model (Rogers 270):

Intrapreneur Spectrum

Caretaker– the anti-intrapreneur; happy with the status quo. Not interested in anything outside moderate growth or development of a product.

Developer– looks at the status quo and finds growth opportunity in existing business lines; might find new markets or customers to facilitate growth.

Innovator– creates new products, services or business models outside of regular R&D.

Some days I wonder what it would be like to start my own company or leave my large company to head-up human resources for a growing entrepreneurial endeavor. And then I read articles like these that remind me why I harness the power of my entrepreneurial spirit for intrapreneurial good.

Here are a few articles that might help ground or propel the budding entrepreneur:

I hope you find these articles helpful for choosing your own path as an entrepreneur, intrapreneur, or neither. As for me, my day job will mostly fulfill me in my intrapreneurial pursuits, and I’ll continue being an entrepreneur at home in helping manage my husband’s business and in the multiple side hustles I find myself involved in.

Additional Resources:

Rogers, S. (2014). Entrepreneurial Finance: Third Edition, Finance and Business Strategies for the Serious Entrepreneur. 269-278.

Interview- Jeff Kaplan- Director, Venture Asheville

Interview with: Jeffrey Kaplan, Venture Director. Tech junkie. Media maven. Academic entrepreneur. Dog lover.

Interviewed by: Nancy Critcher-White, Leadership HR Professional and Graduate Student at WCU, studying Entrepreneurship

Website: http://ventureasheville.com/

LinkedIn: https://www.linkedin.com/in/jeffdude/

Nancy (N): Thank you for joining me today, Jeff. While I know many entrepreneurs, when it comes to the topic of , you have a different perspective that I’m interested in learning about. Thank you so much for agreeing to be interviewed.

N: What is your business background?

Jeffrey (J): Education, Academia, and start-ups. I was a teacher; worked for non-profits, went to grad school, did some sales and marketing. Product Owner and Consultant Anthroware. Product development and consulting for product developers. For Hatch, I did program events and new venture creation. Bullet points are ok, right?

N: Yes, of course. Bullet points are great. What personal strengths have contributed to your success?

J: I build rapport very quickly. We just met, but we’ve already been bonding and chatting, right?! That trust building was especially important with my consulting and sales positions. And even now with the companies that come to Venture Asheville, I build trust so I can help people in those business cohorts. Other things: I read quickly, usually articles and finance books. I know how to leverage resources and help others leverage resources. Public Speaking is fun. And I have an ability to convey a creative vision.

N: What was your very first entrepreneurial endeavor?

J: In 8th grade, I bought a CD burner. At school, people would give me a list of songs they wanted on the CD and I would download the songs from Napster and burn their CD and deliver to them the next day. Blank CDs were cheap, and I had a good business going. Another guy entered the CD burning business and started a price war with me, plus his parents had faster internet.

N: How would you describe your current business and what you would tell someone who doesn’t know what Venture Asheville does?

J: Two things- Build Entrepreneurs and get companies funded. That’s my pitch. As the director, I direct. I meet a lot of people. Help businesses make connections. I’m usually either meeting with businesses or entities (sometimes other businesses) that can support the businesses in our cohort.

N: I know some folks might come to you with half-baked ideas, what do you look for in the businesses that are accepted into your programs?

J: We won’t take half-baked ideas. If people come to us at that stage in the process, we send them to Hatch or some other business development help. That part of the process is fun, and I still help with Hatch, but it’s not what we do at Venture Asheville. We are looking for businesses that need help scaling. We want a committed founder. I realize a lot of people have side hustles, but we are looking for founders to be all-in. As an aside, I would like to start some workshops on helping people turn their side projects into their full-time work. Other things we look for: Is there a product/market fit? Does it speak to an underserved market? I love unconventional business ideas and novel value creation. Sometimes that might look like an idea or software platform used for one purpose that a business owner wants to use for an unrelated and underserved group.

N: What types of attributes or success are your Angel investors looking for in the businesses they back?

J: Initially, they want businesses that are already making money. They are looking for 10-35% equity. They fund $100,000 to $800,000. They want companies that can grow and scale successfully. They want businesses to sell in 3-5 years of their investment and a 10X return or 7.5X return across all deals. No real estate deals.

N: This interview will be posted for other entrepreneurs and intrapreneurs to view and learn from. As a serial entrepreneur or serial investor, I’m sure you have financed ventures in multiple ways. Do you mind sharing some of your tactics for funding a start-up?

J: Personally, most of what I’ve done is bootstrapping, pinching pennies, and personal savings. It is really helpful to have a working spouse. I’m familiar with all sort of financing tactics because of my work though. Customer financing through pre-sales is a good option for some businesses. Strategic partnerships are something I did a lot of with my Dogphredly guide, which was acquired. I’m thinking of doing some crowdfunding for a current project, oh and equity crowdfunding is a really interesting concept. Seems a little scary but I think we’ll start seeing a lot more of equity crowdfunding.

N: What are your thoughts on financing tactics like angel investors or using crowdfunding as a way to start a business vs. getting a traditional loan or line of credit?

J: When you are in the earlier phases of a business, it’s hard to get traditional financing. I send people to Mountain Bizworks a lot. Lines of credit are great options early on. If you still need money after angel investors have invested, it’s possible their investments will get squashed, so that’s something to be aware of.

N: What general advice do you have for someone who is starting a business?

J: I see too many founders go for the path of least resistance and they don’t stay true to their vision. It’s going to be hard but don’t compromise your vision. Be tenacious and resilient. Be prepared for a lot of shit to go wrong. It’s harder, longer, and more expensive than you think.

N: Do you have any financial advice you would be willing to share?

J: Don’t spend what you don’t have. Take care of your people. Leaders eat last.

N: Is there anything I didn’t ask you that you would love for those listening to know?

J: As a founder, you can get pretty far before you need to hire a chief financial officer (CFO). That said, you need to know your basic financial documents, and you need access to your books. You need to know your balance sheets, your PNL, cash flow, income, payroll, and run rate. You’ve got to know what you are looking at.

N: I appreciative of your time today. Thanks so much for your words of wisdom for those reading. One last thing before we end…I’m working on a funding proposal for my husband, A.D. White, independent author/publisher. When I complete the draft would you mind giving your opinion on it?

J: Yes, I’d be happy to take a quick look at the funding proposal. In the meantime, have your husband come to the pitch parties at Hatch for open mic night.

N: You said you read a lot of business and finance books, what are you reading right now?

J: [pulls a book from his bag] This one is “Never Split the Difference: Negotiating As If Your Life Depended On It” by Chris Voss. It’s non-intuitive advice on negotiating.

Raising Capital Might take More Than a Lucky Cat

“A bank is a place that will lend you money if you can prove that you don’t need it.” – Bob Hope via goodfinancetips.com

This week we are choosing topics to research that pertain to raising funds for entrepreneurial pursuits. We’ll be publishing an article in a few weeks about the topic we research, and I chose a pretty traditional form of funding to explore. My topic is “Loans & Lines of Credit (to include SBA guarantees)”.

So far, I’ve learned the Bob Hope comment about banks loaning money only to people who prove they don’t need it is entirely true. Most banks are pretty risk-averse. This explains the popularity of other non-traditional forms of funding for modern entrepreneurs; options like:

  • Angel Investors
  • Crowdfunding
  • & Business Incubators

For entrepreneurs who have collateral to offer and/or extremely great credit, traditional loans and lines of credit can still be a good option but are usually not the only option to pursue. As I conduct more research, I’ll post the whole article on my blog to share.

In the meantime, I’d like to share a couple of thought-provoking pieces about funding.

The first is a quick bit of advice posted on Entrepreneur.com from Amy Williams, CEO at Citizens of Humanity on choosing investors wisely: https://www.entrepreneur.com/video/310046

The second is an interesting article about the story you tell when pitching a start-up to investors. It’s an HBR piece called Startups That Seek to “Disrupt” Get More Funding Than Those That Seek to “Build” by Dana Kanze and Sheena S. Iyengar.

I hope this gives you some food for thought until my next post.

Cash Flow- Sinking Ship? Let’s Hope Not.

“Beware of little expenses. A small leak will sink a great ship.”

– Benjamin Franklin via brainyquote.com

This week we are researching and writing about cash flow management. Each person in my entrepreneurial finance class has taken a cash flow topic and writing about it for the benefit of our other classmates. I chose the topic of “how to collect cash owed to your company”. Collecting cash owed to your company can be a hard task to manage. The easy solution might be to say, “why not require payment in full before products or services are delivered?” Unfortunately for many industries and businesses, cash payment up-front is simply not how business is conducted. It might be an issue of convenience, corporate billing structure, or needing to deliver upon a service before being paid in full. For many entrepreneurs, collecting cash owed has to be an integral part of daily, and at least monthly, operations.

The first step to ensuring proper and timely collection of payment is an accurate and proactive accounts receivable system. If an entrepreneur anticipates needing to bill customers for products or services rather than or in addition to point of sale transactions. Entrepreneurs should invest in a record keeping or point of sale system with built-in billing/monthly statement generation capabilities.

While I used several resources for the full report, I wanted to share a great article that I found about collecting money owed to your business. As usual, Entrepreneur magazine (and electronic content) published this great piece from John Rampton in 2017 called 6 Strategies for Dealing With Unpaid Invoices That Get You Paid Sooner.

Here are the 6 tactics:

  1. Make sure you followed procedure and then follow-up politely.
  2. Give discounts and charge a penalty.
  3. Abandon the stiff business approach.
  4. Collections, arbitration, mediation, court.
  5. Contact a Business Reporting Bureau.
  6. Factor them.

Make sure you click on the article for the details and some other great links to resources and definitions of some of the terms. I had never heard of “factoring” debt until I read this article.

 

Work Cited:

Rampton, J. (2017). 6 Strategies for Dealing With Unpaid Invoices That Get You Paid Sooner. Retrieved from https://www.entrepreneur.com/article/302037