Turning your passion into a business isn’t easy, but it can be done.
I have this conversation with aspiring entrepreneurs all the time. They show up at our meeting with a lot of energy and a lot of hope. What they don’t have is a lot of clarity about how to get started, or even if it’s an idea worth pursuing. Here are six questions I ask them in order to help them get clarity on both.
- Why do you want to do this?
Is this really something worth pursuing or are you running from something else? Sometimes I find that rather than a real passion for doing something else, they just hate their current job and are looking for a way out. If your new business is just an escape from your current reality, it’s doomed.
The more you believe in your “why” for this new business, the more likely you are to do what it takes to make it happen. That’s not to say that their business has to be about saving the world, but it had better mean that much to them.
So why exactly do you want to start your business?
- What are you willing to sacrifice in order to make it happen?
Remember that time that your buddy asked you to come help him move? He told you that it would be a piece of cake, everything will fit in the truck, and you would be out of there in three hours. But seven hours into the move, the truck was so full that you couldn’t fit the stand alone freezer so you had to make a third trip.
Building a business from scratch is the same way. It will take exponentially more time, more money, and more effort than you think. It’s helpful to get clarity up front about what you are and are not willing to sacrifice in order to make it successful. You might have to sacrifice sleep by getting up two hours early to work on your idea before you go to your full-time job. You might have to sacrifice the cush lifestyle you enjoy. You might have to sacrifice spending most evenings playing with your kids or hanging out with your wife. You will definitely have to make sacrifices, it’s just a matter of what.
So, what are you willing to sacrifice in your own life in order to make your business become a reality?
- Who is your ideal client?
Normally, when I ask this question the first time, they answer “Everybody’s my customer!” Wrong answer. Your new company needs a compelling brand and a compelling value proposition. If you build it as to be so bland as to try to appeal to everybody, you won’t appeal to anybody (not even yourself). Your ideal client description should exclude 95%-99% of potential customers. For example, Forging Leaders ideal client is a man, 30-55, in a leadership role in their business, who earns at least $175,000. This is who our brand is built for, and our marketing targets this demographic.
Now, that doesn’t mean that we only work with people who fit that criteria. In fact, some of my favorite, most successful clients don’t fit any of those categories. The point is that we have a focused brand that resonates with our ideal client. You should too.
So who’s your ideal client?
- What are you selling?
Time to get specific. What exactly are you selling? Seems like an easy question, but this usually takes time to work through. Now, if your business is built around a product, the answer might be obvious, oh, you’re selling an iPhone case with a built in flashlight and bottle opener. Cool. So, how many colors are you selling? Which models of iPhone will your cases fit? Are there different models, maybe one with a colored LED, or optional bottle opener?
The answer to this question gets more complicated when you’re selling a service. If you have an idea for a graphic design business, what exactly are you selling? For example, with Forging Leaders, we sell leadership coaching. Our standard coaching package is (2) one-hour coaching sessions per month. We also sell workshops (four-hour, one-day, or two-day), and keynote speaking for groups. This year, we’ve added consulting (in ten-hour bundles). There are dozens of ways we could deliver leadership development, when I started the company, I knew I needed to get clear on exactly what it is that we sell
So what exactly are you selling?
- What are your prices?
There are really two questions to answer here. 1) What are your ideal clients willing to pay for your product or service? and 2) What do you need to sell it for in order to make a profit?
Now It’s time for market research. How are other comparable products/services priced? What price does your brand support? Are you looking to compete on price like Walmart or on quality and customer experience like Nordstroms?
One of the biggest pricing mistakes I see people make, especially with service based businesses, is pricing too low. You are basically selling your time and your expertise. Don’t undervalue what you do.
When I started Forging Leaders, I knew that I wanted to make $10,000 gross revenue per month within my first 12 months of operating the business full-time (I had been coaching part-time for a year at this point). I knew that I didn’t want more than 10 client meetings per week to start. That work out to 18 clients being the maximum number I would work with at any one time. That worked out to about 22 hours per week of coaching meetings plus prep and follow-up. This still left me with plenty of time to do all the other business building activities I would need to do in order to find clients. So, after a little math, I determined that I should charge $650 for clients I met with twice a month, or $950 for clients I met with weekly. Voila! That was my initial pricing.
Since then, every time I’ve hit capacity with the number of clients I have, I’ve raised my prices a bit. Right now, our standard pricing for leadership coaching is $1,250 for two 90-minute meetings per month.
So where are you going to set your prices?
- How are you going to generate leads?
This is the most overlooked aspect of the aspiring entrepreneur’s business idea. Most people I meet have only a vague idea of how they will find customers. Here’s the brutal truth. Your business is most likely going to fail because you don’t find enough customers.
There are a lot of things you are really excited about with your business idea, doing sales is probably not one of them. That’s a problem. More than anything else, entrepreneurs have to be salespeople. Now, I don’t mean that you have to have a background in sales. What I mean is that you had better be willing to devote most of your energy to finding customers and getting them to buy from you. And you won’t just be selling to customers…. you will need to sell your idea to people you want to hire, people you want to invest, people you want to refer business to you, and people you want to partner with. So, are you ready to start selling?
So, what’s your plan to generate a consistent stream of leads that you can convert to customers?
There is a lot that goes into taking an idea and turning it into a business. These six questions are just a place to start, not a comprehensive list. It’s also likely that your first answers won’t always be the right answers. Building a business is an iterative process. Your brand, your offerings, your pricing will change over time. That’s OK. You still need somewhere to start.
Are you ready to stop just thinking and talking about your big idea and actually do something about it? Good for you!
But first, answer these six questions.