EP38 – Product Creation Part 2: Building a Smart Business

To watch the video recording of this episode, click here

This week brings the conclusion to our two-part episode on content creation. You will recall that last week we talked about the role of failure and the power of getting to work, as well as the importance of subdividing your product into multiple smaller products or other parts of your sales funnel.

Now we will delve a little deeper into the subject matter and discuss how you should plan ahead to ensure your business is built to grow, and how you must commit to your product once you have created it.

Additionally, I had an epiphany during the recording of this episode that many of our listeners will be interested in software creation. We will touch on that topic, drawing from my greatest business failure and the lesson I learned from it.

And let’s not forget our book and app of the week, which was neglected last week due to the two-part nature of the episode.

Planning for Growth

Let’s begin by acknowledging one of the biggest mistakes beginning entrepreneurs make.

Imagine this scenario: you create a unique, useful product. You go through all the steps of building your sales funnel and acquiring leads. You begin selling your product. You put years of hard work into increasing your sales and building your business.

Then you discover you’ve hit a wall. There are only so many hours in the week you can work, and no one else can do the work because you are such an integral part of it.

It turns out your business model is flawed. Why? Because it isn’t scalable.

In order to avoid falling into this trap, you have to build a business model that delivers predictable income or is passive.

Here’s a good example: Carter’s sister is a photographer who wants to go full-time. But there are only so many times in a year people will want their photos taken.

It would be very difficult to scale her photography business, not to mention the fact that it would probably ruin her social life. Instead, she could create an instructional series of books or videos for photographers, or sell a package for families in which they get new photos twice a year.

Carter and I would not have thought this way three or four years ago, but we have since learned how to plan out a scalable business model.

Run the Numbers and Be Realistic

Just because you have an idea for a good product and a scalable business model, it doesn’t mean you should get started before you crunch your numbers.

Before embarking on your business venture, sit down and seriously consider your costs and projected income. Figure out the best-case scenario, worst-case scenario, and likely scenario, and then cut those figures in half.

Be realistic with yourself! Never pad the numbers just because you think your business venture is a great idea and you really want to do it. Find someone who will give you honest feedback and carefully consider their perspective.

Above all, know your numbers. The numbers don’t lie.

When I first started out as an entrepreneur, all this talk of numbers sounded very intimidating. But once you do a little research, (it could be as simple as running a search in Google and reading a wiki article) then you will have the knowledge you need, and it won’t seem so scary anymore.

Because, really, it isn’t so scary. The apprehension of tackling something you’re unfamiliar with always seems trivial after the fact.

Committing to Your Product

Once you have planned your scalable business model, run the numbers, green-lighted the approach and created your product, you still must do the most important thing of all: you must focus on your product and not abandon it.

After you create your product, it will inevitably become uninteresting to you. It may be six months later, or maybe eight months, or even as few as four months. At some point the passion and excitement will wear off.

Believe it or not, it has already happened to me with this podcast.  I expected a bigger reaction than I have received, and I know this is because I didn’t put enough work into it.

But I am still recording new episodes because I know it’s something I want to do, something I enjoy doing, and something I believe in. I will continue to do it even though the “honeymoon period” has ended.

Once you create your product, it becomes your livelihood. Don’t fall into the trap of pursuing another product once the excitement about your first one has worn off. I’ve done this many times, and I’m sure I left a lot of cash on the table.

First, make sure what you are pursuing is worth pursuing. Then, put in the work and don’t quit once it isn’t exciting anymore.

Two Ideas for Products I Will Not Create

I have recently thought up two products I would like to create, but I know I must follow my own advice and focus my efforts on the products I already have.

Still, it’s fun to share my ideas.

My first idea is software to rival Infusionsoft, which is one of my biggest expenses each month. The only thing their software does is let me send emails for marketing and sales. I know I could build a comparable email delivery service, use it for free, and even sell it.

My other idea is a scarcity product for countdown timers. These are the bane of my existence in terms of getting them integrated into my email sequence. There is no perfect product out there for countdowns, and I’m sure I could create one that would suit my needs and others’.

But I am not going to create either of these products because I know it would only be a distraction. However, if you are interested in making one of them, send me an email. I would be happy to help!

My Software Creation Horror Story

When I was working for the first company I co-created, EcoSim Software, my partner and I spent two years developing our core product. During these two years, I spent every spare moment programming the software.

My rough estimate is that I spent 3,224 hours, or the equivalent of working full-time for over 1.5 years, creating the software.

A big reason the development took so long is because I put every conceivable feature into the product, many of which we didn’t end up using. And after that lengthy development cycle, we only sold the software to one customer.

That’s right. One.

We made a total of $1,600 from the product. Dividing the income between myself and my partner, that means I worked for two years earning 34 cents per hour.

Looking back, all the signs of failure were there: the market size was small, and the price of the product would have had to be astronomical for us to make a profit.

We were too optimistic when we ran our numbers, and subsequently we failed spectacularly. But I learned a great deal from this failure, so I don’t regret that it happened.

When creating software, avoid going crazy with unnecessary features like I did. Always consider your long-term costs, staff necessities, and the scalability of your business.

As with any product, research your competition before you start building the software. Try searching the product forums of rival software to see what people like, what they don’t like, and what they want to see more of.

Above all else, listen to my past failures! I’m telling you about them because I want to help you succeed. Don’t spend two years developing software no one will buy. Give yourself the best chance to succeed right off the bat.

Book and Apps of the Week

Book: The Checklist Manifesto by Atul Gawande. Carter is only halfway through this book, but it has been recommended to him more times than he can count.

It’s all about the idea of taking complex processes and breaking them down into a simple checklist format. This way you can replicate the processes, and more importantly, you can ensure you don’t forget any steps.

The book draws from a lot of evidence within the medical field, illustrating that even super smart people accidentally skip small steps. But tiny mistakes can create drastic effects, which is exactly what the checklist is intended to prevent.

App #1: Tying in nicely with our book of the week, Checklist.com allows you to create and share a checklist that can be run through any number of times.

I like to use this for my contract employees. When I have a task I need them to do that I already know how to do, I just create a checklist for them to follow so they don’t forget any steps. And its free!

App #2: Mailbird is an email client that puts all of your accounts in one place. Email has been a source of pain for me for a long time because I have about 10 different accounts, and managing them is a nightmare.

With Mailbird, managing my email has become so easy. It’s a huge time saver, and you can try it for free for 30 days. After that, you pay only $6 per year.

 

And so we come to the end of our two-part episode on product creation. We really hope you learned something useful and will not make the same mistakes we did.

If you did learn something, leave us a comment! We really love it when we hear from our listeners.

As always, head over to UnitedBusinessLeaders.com or MCarterJohnson.com to look into Carter’s business or his personal blog. Take care, and we’ll see you here next week.

 

LINKS

The Checklist Manifesto by Atul Gawande

Checklist.com

Mailbird App

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