Wednesday, January 28, 2015

The Importance of a Prototype

by Geraud Staton

There are steps that one must go through in order to get a product or service into the hands of your first customer. In fact, in the spirit of there being more than one way to skin a cat, let's say there may be quite a few ways of getting your product into your first customer's hand. In small business, the worst way to do it seems to be the most common. 

Josh Kaufman in The Personal MBA described it this way: "Develop the offering in private, make everyone involved sign non-disclosure agreements, raise millions of dollars in venture capital, spend years making it perfect, then unveil your creation to the astonishment of the world and the thunderous sound of ringing cash registers." Of course, Josh goes on to say that this is not the case. You are more likely to be in for some major disappointment if you operate this way. 

As president of my university Entrepreneur Club, I have seen it hundreds of times. We would have a meeting where we talked about out next project or business venture, and we would open the floor for questions. This is a time when people, who are working on their own businesses, could ask a room of like-minded entrepreneurs for their advice, discuss issues, or tell us about some resource that we may not know about. The Club is amazing for that sort of thing.

Often, I would get some student to approach me at the end of the meeting like he was about to sell me some stolen watches. He'd pull me aside and tell me he had a business idea and could he present it to the group. But, he wanted to make sure no one stole his idea, and he wanted to see if we had signed non-competes for all of the club members. And even then, he only wanted to talk to the most senior members of the group. 

This attitude is, unfortunately, not rare. There is a fear that people are just sitting around in the shadows waiting to nab your idea and make it theirs. I'm not saying there aren't some shady characters in the business world, but I do know this: starting a business is difficult work. And doing it alone makes it even harder. Doing it alone and doing it RIGHT is next to impossible. How do you know what your customers want if you don't ask a bunch of them? How do you find out information about distribution and the sales cycle and financial sources if you don't ask people who know? How do you start looking for partners or even employees if you don't let people know what you've got going on?  

And one of the best ways I know to show what you have to offer is through the creation of a prototype. Prototypes are not just for robotics! You can tell me a hundred times what your product is and what it does. Ask me to repeat it and you'll get a lot of confused looks from me. But, if you show me your product and how it's supposed to work, you will have my full attention.

There are four types of prototypes. 

1. Functional Prototype
This is a model of a product that works, even if it doesn't actually look quite like the finished product. If you're making a stapler that also shoots paper footballs, you may not have the actual football shooter part done. But you can show what the stapler is supposed to do by creating a crude electronic attachment, much larger than the finished product will be. 

You can show this to a client and now your client knows what you are working on and can see how much fun it would be, even if it's not as easy to hold yet. It gets people excited and they know what's coming and may even be able to help you refine the process.

2. The Mock Up
Unlike the functional prototype, this model may not work at all. But it will look identical to the finished product. This is often used for aesthetic products. If you want to create a pistol that looks like one you saw Buck Rogers use when you were a kid, you may not make the gun itself, but rather an actual model so that it feels and looks just like the one you plan to build. 

In some cases, it may not be the exact size of the intended product, but it should be to scale. Car manufacturers and home designs would fit into this category. 

3. The Design Prototype
Maybe you don't have access to a 3D Printer. Maybe you carving skills aren't up to snuff. Maybe you're allergic to moulding clay. That doesn't mean that you can't show the world what your product looks like. It just means you need to slip into the two dimensional world. This prototype, often called a spec. Unlike a true prototype, the design prototype would be used for complicated products.

Usually, the design prototype is used in conjunction with either a mock up or a functional prototype. But, in cases where you either don't have the ability or don't have the time for a 3D model, this is a fine alternative. Just be sure the design shows exactly how the product will look and what it will do. And then, make plans to create a 3D version as soon as you can.

This works better than just telling me about the suit.
Check out more at Gizmodo

4. Video Prototype
This is how one can show a service. One could describe the customer experience from beginning to end, either verbally or on paper, but it would most likely not spark the imagination or create the interest that a video prototype would. If you are offering a unique landscaping service, show us how it works. Show us what you do that makes you better than your competition. Show us the before and after images. Show us what we can expect from your service, beginning to end.

This doesn't have to be limited to the service industry. Particularly if you have a large product. If you're building hand-made, one-of-a-kind canoes, you may not be able to bring one to a presentation. But you can bring a video of the process of creating it. You can show us how well it floats or turns or flips or whatever canoes should be able to do. 

A prototype will make your product or service more memorable for your potential clients, potential investors and even your parents when you try to explain to them what it is you plan on doing for a living. Show and Tell is always better when there is something to look at. You remember the kid who forgot bring her Show and Tell assignment in and just stood up there telling the class about her "thing"? Do you remember what she was talking about?

No. Of course you don't. And no one will remember what you're talking about either.

Thursday, January 22, 2015

6 Ways to Evaluate a New Market

By Geraud Staton

Congratulations! You have decided to get off your duff and put your product or service out there into the world. Good for you! That step alone has put you further than almost everyone you know. You are an entrepreneur, in it's most basic sense. 

  1. a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

  2. synonyms: businessman/businesswoman, enterpriser, speculator, tycoon, magnate

  3. This is your new reality. Unfortunately, there is still some work to do. Just because you have a product or service to put out there doesn't mean that the world wants it. 

First, a word of caution: take this lightly. Don't let anyone tell you your dream isn't worth it. That includes your friends, family and even professionals like me. If you created a revolutionary stethoscope that you think the world must have, then you better do whatever it takes to give it to the world! 

But, to ease your pain, and to perhaps give you a little more of a solid foundation, here are six things to look for when you have a new product. 

1. How many people are buying the type of products you want to sell? 
People hate market research. I hated market research for a long time. But, it is vital to one's business. If you hate it, hire someone else to do it. Just get it done.

What you want to know is: how many people buy things like what you're selling. This is not the time to get all proud and yell, "No one is making anything like what I'm making!" If you have a new stethoscope, then look at the existing stethoscope market. How many are getting bought? Scale of 1 to 10, where is your product? If you are selling a new tooth brush, nearly everyone buys that. That's a 10. If you are selling books about how to sew your own tuxedo out of recycled rubber tires you probably are only at a 1.

2. How much can you sell it for?
I just heard your blood pressure shoot up. Don't worry! I'm not asking you to price your product yet. I'm only asking you to take a guess as to the price of the type of product you sell. Athletic shoes are $50-200. Tooth brushes are $3-10. 

A 10 in this area is probably a weapon's satellite with lasers or something. A 1 is something small, like butterscotch candies. Yummy.

3. How much will it cost you to get a client?
This is important! If you are selling a weapon's satellite you not only have to build it, which will be expensive, but you are going to have to do a lot of work to sell one. Testing and events and the procuring of contracts. This is massive. If you sell art, maybe you just need to put something on your Facebook page.

That's weapon's satellite is a 1 in this case. It's costly to sell. A 10, on the other hand, is something like a baby-sitting service where you need no overhead and marketing can be word-of-mouth.

4. How many people are doing the same thing?
There are, supposedly, no new ideas under the sun. But, just how many people are doing what you do? How much competition do you actually have?

Let's say you want to sell ink pens. If you sell a pen that writes blue, but you think that it's the ink that really matters. So, your pens have a special blue ink that really writes smoothly and it's organic and it's made from easily acquired materials like grass and blue daisies. As cool as this might be, it's still only about a 3 in the originality department. There are plenty of blue pens that write smoothly.

But, if you sell a pen that also squirts floral scent into the air while you write, you are probably at a 7 or 8. I have never heard of a pen that squirts the smell of lavender while I write with it. There you go. One idea for free. Be sure to send me one when you create it!

5. How soon can you put this out into the world?
This one is easy. You have an idea. You want the world to have it. How long will it take you? I am an oil painter. I can put a painting into the world in about a week. If I want to write a new book, it might take me months, not including the time I have to look for a publisher. If I want to put a cancer drug out into the world, that will take years! 

How soon can you do what you do? If you can do it within a couple minutes, then you're at a 10. If it will take you 5 or 10 years then you are at a 1.

6. Can you keep making money at it once you've sold it?
Anyone who knows me is aware that I am an oil painter. I have been a painter for many years. For a long time I worked in portraiture exclusively. Let's just say that once I sold a painting to a client, I never saw them again. They may have sent me referrals, which is great, but not many people want two portraits of themselves!

Then, I decided to paint whatever the hell I wanted and if people wanted to buy them, great! This moved me further along in regards to this line of questioning. People might only purchase a single portrait, but I have many clients who own multiple works of art by me. I even have a few collectors. This is much better. 

Check out my work, if you'd like.

I have even dabbled in the print market. This would be the best by far! Now only can I sell a painting or two to the same client, but I can also sell them multiples as gifts. And it gets even better if I sold my work on mugs and t-shirts and calendars. Someone could have their entire apartment furnished with Geraud Staton artwork!

If you sell portraits, odds are good you sell one item and then need to produce another one in order to make any more money. This puts you at a 1. Almost all service businesses are in this category. If you sell a fancy pen that smells like lavender, and also have a dozen other scents, and you also sell the scent refills AND the ink refills, then you are probably at a 9 or 10. 

Your Score:
Your score is arbitrary. I will not tell you that you must have a score of at least 50 out of 60 in order to be a success. There are plenty of successes who were at 10! But, the higher you are up this ladder, the more ease you will have in selling your product. If there are ways that you can improve in a particular area before you release your product, even better. 

But, also, don't spend too much time on this. I'm a firm believer in the "fail fast, fail often, fail cheaply" school of business. Put it out there and don't spend 3 years developing  THE PERFECT pen that smells like lavender. Someone else will beat you to the market. Then, you'll have wasted a ton of money and a lot of your time.

Besides, I really want that pen ASAP. 

Friday, January 16, 2015

How to Interview Potential Employees

by Jenny Tracy

Many of us have been interviewed before; we have rehearsed our elevator pitch and practiced answering the basic interview question, but as an entrepreneur you will need to practice another aspect of interviewing, flipping the role and being the interviewer. Whether you are the owner of a small one-person start up with the goal of growing, the founder of a striving business that needs more employees, or an employee in a managerial or supervisor position within a company that is hiring, you will need to review and know the basics of interviewing.

Here is a cheat sheet for interviewing potential employees:

Be clear and be prompt. Be clear and concise when scheduling the date, time, and location for the interview, and respond as promptly as possible to inquiries and e-mails from the candidates. Taking too long to respond reflects poorly upon your business. If you are having difficulties finding a time or place that works for both you and the interviewee, consider interviewing over the phone or web camera, these are great alternatives that accommodates both parties.

Be on time and be courteous. If you are meeting at a neutral location, aim to arrive 15-20 minutes before the scheduled interview time; definitely don’t be late. If you are meeting at your business or office, be ready when they arrive. Be courteous: Shake their hand and introduce yourself, then offer the candidate a glass of water or coffee, and thank them for meeting with you.

Dress for the part. Today is not the day to wear your most casual outfit. The candidate will be dressed for an interview, and you should be too. If you ever find yourself in an outfit predicament, opt to over dress rather than underdress. A business suit is almost always acceptable interview attire.  

Be prepared. Read through the candidate’s resume before they arrive and refresh yourself on the position you are interviewing for. Be prepared with job-specific questions; it helps to have a page printed out with the questions you would like to ask. It is appropriate to ask 8-15 questions in an interview; any more seems like a bombardment, and any less seems like a waste of the candidates’ time. Here is an article of the 10 best interview questions to ask. If you need more options or question ideas, this article provides 100 common interview questions. Forbes contributor, Louis Efron, suggests that you ask every candidate this question: “When in your life have you been so passionately focused on an activity that you lost track of time and what were you doing?”

Questions you CANNOT ask. There are certain questions that you cannot legally ask during an interview. This is a list of the illegal questions that you may not use and some alternative ways that you can legally rephrase the questions.

Use the STAR method. This is a common method for effectively answering behavioral questions. Before asking behavioral questions, ask the candidate to answer the questions using the STAR method. STAR stands for- Situation (Explain the background and set the scene), Task (What is the Target), Action (What they did), Result (The outcome, what happened). The STAR method ensures that they answer in a way that allows you to follow along and understand their response.

Take Notes. Taking note of the candidates’ responses to your questions is especially helpful when you are interviewing more than one candidate. It will allow you re-read the responses when analyzing the candidates and making your hiring decisions.

Be understanding. Understand that interviewing can be stressful for candidates. To help calm their nerves, express to them that they can take their time answering questions and that they may ask you to repeat or further explain any question throughout the interview.

SHHH! The candidate should speak 70-80% of the time. Don’t make the interview about you, spend majority of the time listening to the candidate to get to know them better and to see if they are a good candidate for the open position.

Do you have any questions that you would like to ask me? Allow the candidate to turn the table and ask you any questions they may have. Although it may be tempting to answer the questions in a casual and laidback manner, remember to stay professional during this final step of the interview; it is often the most memorable part for the interviewee.

After reading this cheat sheet you should now have the knowledge and information necessary to interview candidates that can help your business grow and prosper.

Any other tips? We'd love to hear them

Thursday, January 8, 2015

Value Creation is NOT a thing of the past

by Geraud Staton

This is not my first business venture. Nor is it my only current business. I know many other business owners. I have graduated with honours from Business School. I have read some amazing business-related books such as Tipping Point, or The 4-Hour Work Week. But there seems to be a new movement out there that says that all of the old stuff doesn't work anymore. Traditional marketing is a thing of the past. Business building can no longer be done the way it once was.

I do not disagree with these things. We are evolving, and so is the way we do business. But a lot of this is specifically for multi-million dollar businesses. For guy that owns a book store, or the woman who sells paintings, or the family that runs the absolutely amazing cheese shop, sometimes the old ways are the best ways.

The Purple Cow is an amazing thing. But sometimes, you just need to add value to your customer's life. It's as simple as that. If you can make my life easier, help me get to my goals, or allow me to help someone I love, then you have done something that I value and I am more likely to buy your product or use your service.

The Segway is a popular example of this in action. When it was put into the market the company announced that it was going to sell 50,000 of these things in the first year. In fact, it took them 5 years to even sell 23,000 of them! The Segway doesn't really add value to anyone's life. Especially for the $5000 price tag.

You can't forget marketing business finances and your sales team. But they don't matter unless your product or service actually DOES something for your customers. And the more it does, the more likely they are to buy it.

What does your product do for me?

Figure that out. And then, make it do more!

Monday, January 5, 2015

Just Do It, Already!

by Geraud Staton

It's the time of New Year's Resolutions. It's also Monday, so any new programs are likely to get started today. You're going to talk these big plans up. You're going to brag about your soon-to-have accomplishments to your friends and co-workers. And you SHOULD. Nothing helps you get to your goals like sharing them and having others hold you accountable.

But you can talk all day, plan all day, wish all day. But in the end, so what??? In the words of Yoda, "Do or do not. There is no try."

Want words from someone that isn't a fictional character? How about this:

You can always tell what any individual WANTS MOST by what he (or she) DOES. The man who thinks he wants a thing or wishes he wanted it talks about getting it, envies those who have it and plans to start doing something about it. But the man who really WANTS a thing GOES AFTER it, sacrifices his leisure, his pleasures and sometimes love itself—and GETS it.

How many times have you heard someone say, "I would do anything to lose this last 5 pounds," only to run through the drive-thru a few hours later for a combo meal? Have you sworn that you want to get out of debt more than anything in the world, only to go out with your pals a couple nights later and spend $50 on drinks and wings while that debt you supposedly hate is still sitting there?

Hey, there is no problem with this, as long as you know it's true. Maybe the thing you want most in this world is a poor man's leisure. Maybe you don't really care about that debt, or the health, or helping the homeless or giving your kid the best possible education. It's not that you don't care at all. It's just not the thing you care about most in this world. And that's ok.

But I suspect that those people who are reading this don't feel that way. Perhaps you've been suckered into the "Complaint Society" and just want to gripe like the rest of the world. Or, maybe you are trying to keep up with your neighbor or you're trying to keep your spouse entertained. The world is full of things that will keep you from the path you've chosen.

But imagine how entertained your spouse will be if you actual acquire that financial freedom in a few years. Yes, you will have sacrificed a few movie nights or a shopping spree or that trip to Italy this year, but in exchange you have a lifetime of movie nights, shopping sprees and trips to wherever you want to go! Get healthy and your quality of life goes up dramatically. Put that money away for your kid's college fund and watch her alter the world for millions of people.

Talk about it all you want. Tell the world your plans. Yell it from the mountains!

Then, at the very least, sacrifice your leisure for it.

Quote from "How to Analyze People on Sight" by Ralph Paine Benedict and Elsie Lincoln Benedict