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.

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. 

en·tre·pre·neur

ˌäntrəprəˈnər/

noun

1. a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.
2. 
   
3. synonyms: businessman/businesswoman, enterpriser, speculator, tycoon, magnate
4. 
   
5. 
   
6. 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. http://geraudstaton.com

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. 

President vs. CEO: Choose Your Title Correctly

by Geraud Staton

I haven't reviewed your company. I don't know how many employees you have. I don't know what you do with yourself all day. But I can tell you this: odds are good that you do NOT need to be called the "CEO."

What Does the CEO Do?
The CEO is responsible for quite a bit within your company. And no matter if you have a 1000-person company or a 3-person company, these tasks need to be done if you want to continue being a company in the next few years. In essence, your job is to see into the future.

1. Look at the Physical
You are operating your business in a warehouse, a storefront, or out of your bedroom. How long will that suffice? Where should you be if your company is to grow? What facility do you need next year? The year after? Five years from now? It's your job to answer those questions and to ensure that your company is ready when the time comes.

2. Look to your People
Your customers are why you get up every morning. You are helping hundreds or thousands of people. You want to help millions of people. Will your customer be the same 5 years from now as they are right now? What changes? What do you need to change in order to reach them?

But your customers aren't the only people you care about. What about your employees? How many of them will you need in order to keep helping your customers? What skills will they need to have? When do you need them? It's your job to be ready for them.

3. Look at your Technology
One day your laptop will become obsolete. So will your phone. So will the tool you're using for your company. The question is: did you see it coming? And if you did, did you prepare for it? It's your job to see it coming.

4. Look at your Money
You need to know where you're going to be, who you're going to hire, who you're going to serve, and what technology you need in order to continue your mission. All of that is going to cost your company money. And it's your job to know how you're going to get that money. Will you borrow it, or find investors? Will you earn it through your current operations or will you look at other revenue sources?

As CEO, you live in the future. But, let me repeat this because it it important. You SHOULD be doing these tasks regardless of how large or small your company is. But, as CEO, this is the bulk of your job. You have the time and income to do so. That means that someone else is doing the every day work that keeps your company running while you get to live in the future.

Some people's favorite president. Check him out at Soul Pancake

What Does the President Do?
To put it simply, your President's job is to lead your company and its employees toward the company goals. The President is the commander of the troops, and the cheerleader, and the dispatcher. The President of your company needs to keep his or her finger on the pulse of the entire company, and if that person were to leave it is possible that everything would grind to a halt!

If you are the one ensuring your company's daily survival, you are more likely to be President than CEO. You are living in the here and now. You know what is happening in every department and with every employee. Again, you SHOULD be taking some time, at least quarterly, to do the job of the CEO, but maybe you aren't at a place where you can do this every day, or even every week.

And that's ok.

By working your business, growing respectfully, and being certain to take time out to put on the CEO hat, you will eventually get to a point where you actually need someone to handle CEO duties regularly. That's the goal. Once that happens, feel free to promote yourself. Or, hire someone from the outside to be your company's CEO.

The important thing to remember is that you are doing what's important for your company and for you customers.