Blog — FDL

My first business tanked…

I was 10 years old, and I wanted to earn some money. So, my friend Anne and I decided to start a car washing business. I was told this would be a very lucrative business model for 10-year-old girls. We went door-to-door in our neighborhood, asking if people needed their car washed. After a couple of hours, several people were willing to trust two young girls with their precious cars and we started washing.

All-in-all, we cleaned three cars, which took us four hours (our process lacked some efficiency), earning us a grand total of ƒ7,50 (US $3.40). Which we had to divide between the two of us, which left us with ƒ3,75 each. At that age ƒ3,75 is not bad money; it would buy us exactly five scoops of ice cream. However, for a total of six hours work, we were very disappointed, mostly because there are a lot easier (and quicker) ways of getting ice cream.

So, this marked the end of our car-washing business. Maybe we gave up too soon — we’ll never know. There was a car wash company around the corner, so our competition was murder. I like to think we made the best strategic decision. But let’s consider whether there was any way we could we have made this business model work.

Knowing what I know now, I would have advised my younger self to run the 5P business check, to make sure we had a perfect offer. What’s a 5P business check?

Although I didn’t develop this system myself, I call it the 5P system because, memorably, each step begins with the letter P: projection, problem, prospect, product and process. Let’s look at each step, one at a time:

PROJECTION: Having a goal in mind makes your offer better

Ambitious entrepreneurs often have the habit of starting without a goal in mind. They’re not yet sure of the price of their products, how many sales they will get, etc. Nevertheless, it is important for them to begin with a clear goal.

That said, I think it’s worth mentioning: Goals are not meant to be met. They are there to give us a general direction, and help us focus, and make sure we keep our dreams grounded in reality.

You should begin by getting your goals clear. What kind of business do you want to have in a year? What is your big WHY? How much revenue do you want (and need) to make?

Start with your end in mind, and then trace it back to now. If you want to achieve your projections in one year, where do you need to be in three months? And one month? What steps do you need to take this week? … And today?

Tracing back will bring clarity to your actions. After getting clarity on your goals, it’s time to get out your calculator. How much revenue (approximately) do you want to earn in one year? And three months? Now, look at the other side of the ledger. What do you budget for costs? What does this mean for your profits? How will that impact you and your life?

From these numbers you deduce your projections. How many sales do you need to have? How many clients? How many leads do you need? At what rate can you convert potential customers to buyers? How much are you going to spend on advertising? If your projections show your goals to be unrealistic then you can adjust your goals accordingly.

In my experience, entrepreneurs sometimes aren’t realistic enough about what it takes to run a successful business. They forget that a business that isn’t able to generate profit, isn’t sustainable. I believe investing in your business is important, but don’t use that as an excuse to keep pumping money into a business that is beyond fixing.

If you’re unable to generate profit, or you’re afraid you won’t be able to, you are either in the wrong business or in the wrong business model. Get real about the numbers, so you can stop fooling yourself.

PROBLEM: Having the right problem

Do you know the exact problem you are solving for your clients?

A good problem is characterized by specificity, necessity, and consistency.

Consistency:

A lot of entrepreneurs are afraid to be consistent and stick to the thing they do best. They fear losing clients. So, they claim to do it all. They say they will grind the grains, mix the flour, knead the bread, bake the bread, deliver the bread, and iron your shirt to boot.

Sticking to what you do best can be scary, but it’s absolutely necessary. If you try to do it all to please your clients, or because you are afraid you will lose clients, you will end up compromising on quality. This will hurt your business more than simply referring your clients to the right place.

Specificity:

When you lead with a specific problem, you grab your audience’s attention, don’t begin with a broad and general description, such as coach, graphic designer, IT guy. These descriptions are bland and make you out to be just one of many. Don’t be too ‘general’ about what you do.

Get clarity about the specific problem you solve for your clients. If you don’t have clarity yet, ask your current clients for suggestions. Focus on the problem you solve. While it's nice to have a fancy title, it doesn’t help your potential client get clarity on your offer.

Necessity:

But there’s no use being specific about something that’s not necessary. You build your business on a problem that people need to solve, as opposed to one that’s ‘nice’ to solve. Compare somebody who fixes leaking roofs with somebody who creates animal-shaped shrubs. By focusing on a problem people don’t need to solve, you’re setting yourself up for failure.

When times get tough, as they often do, you don’t want to be the first service customers cut to save money. Build a solid foundation and make sure the problem is important enough to your audience. If you do, there will be a pull from the market. And you won’t be wasting energy on pushing your product to a market that doesn’t need it.

Your business falls or thrives by being clear on the problem you solve. This problem should be specific, necessary, and consistent. Your clarity will make your messaging a lot easier. To tighten up your messaging even more, communicate the problem you solve with a clear metric and timeline.

PROSPECT: Having the right audience

Your ideal client — sometimes called your prospect, dream client or avatar — describes the person to whom you want to sell. Clarifying your ideal client is essential for the foundation of your business, and it will make your marketing efforts skyrocket.

You might think, “If I get clear on ONE ideal client, does this mean I can’t work with anybody else?” No, don’t confuse your audience with your ideal client. Your audience is the people who are attracted to your offer and your ideal client is the person you have in mind when creating your offer.

Getting clear on your ideal client will help you laser-focus your marketing and will improve your market reach. Make sure you’ve written a highly detailed description of this person. This is not a place to be imprecise. You might think of your ideal client as a mannequin. You need specific measurements for ONE exact person to create a great outfit. You will use client interviews and market research to create your ideal client snapshot in detail.

In your description, include name, age, income, favorite magazines, hobbies, and much, much, more. You and everybody else who reads the description should get a real felt sense of that ideal client. The ‘person’ can be an imaginary description, your best client, or a mixture of your best clients. But true data will be more effective in your marketing.

With a complete snapshot of your ideal client, you will improve your message-to-market match and crush your competition. A good message-to-market match will yield high returns on your advertising campaigns. Update the snapshot regularly. I recommend that my clients update their avatar every three months. Note that if you are in a place where your business is so successful that you can add more products, you will make multiple avatars. Don’t create a ‘general’ avatar that will fit with every product.

There’s power in saying ‘no’. I only work with…

Finally, decide with whom you can and want to work. Then, even more importantly, decide with whom you can’t and won’t work. By being more ‘picky’ about your clients, the quality of your results will improve. This clarity enhances the message-to-market match even further and increases your marketing efforts. After all, having satisfied customers will take care of 90% of your marketing.

PRODUCT: Having a clear product for selling

Pricing can be difficult. And the recommendations are all over the place. One of my least favorite pieces of advice is: “Price what you’re worth.” I don’t believe you should sell yourself. You sell a product or a service. Charge what your product or service is worth.

If you offer a service, you can transform it into a product; this helps to separate you, as a business owner, from your offer. After all, you aren’t for sale. You are simply the person selling services or products. A product is an offer with a set outcome and timeline. Your clients will know exactly what they are getting. They buy the result, regardless of the hours. Stop pricing what you’re worth and start offering a product.

So, how do you create a product?

Start with focusing on the one problem you solve for your one prospect and build a product around that situation. You only solve the one problem. Specify what you offer, what results you bring and how you get those results.

I recommend using graphic design to help your customer see how you will bring the results they want. This visual display will separate you from your competition. Don’t say you can help them, show them how you can help them.

When you create a product from your services, you improve the quality of your work. Instead of customizing your offer every time someone does business with you, you have a fixed offer – a product. Then, you’re deciding if the potential buyer fits your product — and they, too, are deciding whether your product is a good fit for them. If there’s not a good fit, then you don’t sell.

This saves you a lot of time and helps you screen for the ‘right’ clients. But the sales process is not for your benefit alone — it will help you protect your client’s money and time, too. When you are clear about what you do and how you do it, you only get better. You increase your efficacy and the quality of your results. You make sure everybody wins.

How much do you charge for your product?

You consider two facts: the market and the value of the results. Start by doing market research, considering your competitors. What are they earning? Make a range by comparing the top, middle and bottom earners in your niche.

Next, investigate the value of the results. How much return can your clients expect after working with you? If it’s not strictly a monetary return, place a monetary value on the return. (For example, a relationship coach might consider the cost of divorce, alimony, emotional distress.) Your pricing should be around 10 to 20% of the value you create. If you price your products in this way, you will always have a fair price.

PROCESS: Having a clear process for marketing

After you’ve decided on your projections, the ONE problem, your prospect and your product, the next part begins. How do you deliver your offer to your clients? You need a three-step process to convert strangers into customers.

Every customer goes through the same three phases. These phases have many names, but are often called the Know, Like, and Trust phases. The process you have in place leads your client through these phases, one by one.

You should be strategic about this process by always taking the customer journey into account. The customer journey describes where your potential client “travels” before becoming a paying client. When you make wrong decisions, it can cost you a client or waste a lot of your money and time.

Getting clear on your process allows you to allocate your time and money wisely. You can track your projections and see whether you are getting the return that you expect. And, if necessary, you can adjust and tweak.

The Know phase is about the client learning that you exist. This is the phase where blogs, videos, and other non-committal content is located. You are focusing on getting the word out there and being top-of-mind. This means your target audience hears from you regularly so that you are still fresh in their minds.

The Like phase is about building a relationship. In this stage, the goal is to make your client prefer you above other people who do the same thing you do. You are building a relationship. This is the perfect time to ask for a small commitment. This is the place for lead magnets, newsletter subscriptions, asking for comments or shares, and surveys.

The Trust phase is where you can ask for a sale. Do not ask for a sale sooner. Asking too soon is like proposing on the first date, a big no-no and it can ruin your potential relationship beyond repair. In this phase, you focus first on creating a trusting relationship. You are building authority. Your client should feel that you are competent in your area of expertise. When a trusting relationship is established, you can ask for a big commitment, like a sale.

So, the process is a way of advancing the conversation, growing the relationship. Conversation instead of conversion. You don’t focus on sales. Focus on building a relationship in a way that is efficient and effective.

Using ad strategies, like re-targeting and funnels, you lead your potential customer through each phase. An optimized process will yield a constant and reliable stream of paying clients.

You should always consider five steps before launching any offer.

Projection – start with the end in mind
Problem – solve ONE problem only
Prospect – target the right audience
Product – have a foolproof method for selling
Process – have a process to deliver your product to your audience

Together, these five steps provide a clear pathway to success.

If you look at any lucrative business, you’ll see they have employed these five steps in the right way. If all the steps are accounted for you will have an offer that’s unbeatable.

I wonder what my 10-year-old self would have done with this information. Let me know in the comments below which steps need more attention in your business.

What is a lead magnet? A lead magnet is a product you create for your customer to try out your services. It’s a way to introduce yourself to your clients and for them to get to know your style and your work. When we zoom all the way out, your lead magnet is the first step in the funnel phase. Before you start thinking about a leadmagnet you need to be clear on your business goals, your avatar, your messaging and your offer. If you are not clear on those you do not need a lead magnet yet.

The objective of a leadmagnet is to convert strangers to leads. And how do you do that? Just like how you would make a new friend, you start a conversation. With a leadmagnet you want to advance your audience through your funnel, make them go from know, to like, to trust. But it’s not about getting as many leads as possible, it’s about high quality leads.

A leadmagnet should be highly desirable for your audience. It should not be difficult to consume. Depending on where you are in your business, you can either optimize for more high-quality leads (easy to consume) or optimize for higher quality leads (hard to consume). I always recommend starting out with an easy to consume highly desirable leadmagnet and when you want to filter your audience a bit more, make the content a little harder to consume.

The priority of your leadmagnet is to create value. You want to focus on what your audience is interested in – that’s where you need your avatar research – and you want to give the value in the context of your offer – that’s why you need to be clear on your offer. Don’t be afraid to ‘give too much away’, you have one chance to connect, I’d rather you overdeliver. WOW your audience with your leadmagnet.

The leadmagnet should get them results in a short time window. They have expressed interest in what you have to offer, make good on that promise. Get them the results they are looking for, if it’s too much, chunk it in smaller pieces. They should be able to consume it within 5-10 minutes. Your ideal client is probably on the subway somewhere, they don’t have the time and patience to read a 200 page ebook.

By giving them a lot of value and helping them get transformational results with free content you build trust. Building trust is important to advance the conversation to sales. If there is no trust yet, do not start offering them paid stuff. You have this one opportunity to build trust and rapport with your potential client. Do not blow it by moving too soon. You wouldn’t ask somebody to marry you on a first date, right? Patience is key. And having a conversation is a priority over having ‘a conversion’.

When you focus more on starting a conversation, your communication won’t be so cheesy and sales-y. And it’s easier to prevent falling in the trap of perfection. Communicate in a way that comes natural for you, maybe you are more of a writer, maybe you are more of a speaker, think of ways to connect with your audience in a way that you enjoy. Trust your unique style, it’ll come off as fake if you don’t.

In the end you want to think bigger than a leadmagnet. Keep it fun, for you and your audience, don’t be afraid to think different. And keep in mind, it’s not about getting that email, it’s about connecting.

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