There is nothing better than leading a company that you are passionate about. You have big dreams, and rightly so – there’s no one better equipped to change the world than a highly-motivated entrepreneur. But what, exactly, is it that your company sells?
For example, you may stock your bakery with cupcakes, cookies, and brownies. Is that too many products or not enough? Should you expand into special occasion cakes or cut out the cookies since they don’t sell that well? Enter the “business owner’s dilemma.”
Startup wisdom holds that you should find the smallest possible market and own that market first, because this is the most cost-effective way to learn about your customer before scaling.
Keep in mind that when you scale you are also expanding the methodologies you learned to own a market. Facebook executed this better than anyone. They started out as a social site at just Harvard, then ten schools, then all colleges, then the US, then worldwide, and they did not grow until they dominated the market they were in.
Facebook is a great example, but surviving massive losses requires early funding.
It is very hard for a business owner to turn down immediate cash flow that will feed their families in order to maintain a small market. This creates a dilemma for business owners.
If you are raising a seed round you have to be laser-focused on a small market and show what benchmarks you will achieve with your funding prior to your A round, and profit or riches is almost certainly not one of them. However, many venture-backed companies do lead to big payoffs in the long run.
It is not possible for all businesses to only test and service one segment at time.
Business owners need to feed their families and pay their mortgages. Test multiple channels – if they all work, decide if you want to combine them into one venture or split into many.
Action Items & Steve Blank
An alternative to being laser-focused is creating separate landing pages and/or websites for the different segments that you want to approach and see which one(s) takes off. This will allow you to get as many immediate sales and as much cash as you can while testing which segment will be the most profitable in the long run.
QuickMVP is a great site that will walk you through setting up quality landing pages and placing PPC ads.
Bottom line: Everything you (or your consultants) believe is a hypothesis until you have data to back it up.
Steve Blank says: Write down the top four reasons “you know” your business will be successful. Those four points are not facts – they are hypotheses that you should set up a series of experiments to verify.
Test, test, test, deliver things people want, and decide if you want to be paid now or later. Only you can answer the business owner’s dilemma.
We are Family!
At 360 Payments, we know that launching a startup is hard – we’re entrepreneurs ourselves! While only you can find the answer to the business owner’s dilemma that makes sense for your company, we can help with another very important piece – accepting credit cards. Give us a call at 1-855-360-0360 or drop us a line on our website. We’d love to help you get started.
PS – Not sure if accepting credit cards is right for you? Find out here. (Hint: it is.)