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Melbourne, Australia

How to build a multi-million dollar business

March 29, 2017

You're told to fail fast

 

Do things that don’t scale

 

It is true, to an extent. But our aim isn't to fail.

 

It is to make the cost of failure cheaper. This is so that decisions are quicker and you can find the type of product market fit that leads to rapid and sustainable growth.

 

But before you decide that you've had a terrible idea, just because your google ad campaign didn't get any clicks. Consider that you may be on to something and you have to give it a chance. You don't have to give up so easily. Experimentation can continue, iterating on your idea and trying new ways of testing it are just as important.

 

Rarely do products grow exponentially and consistently.

 

Growth goes up as well as down at times and you need to really watch your data and trust your judgement.

 

It matters, what you feel matters.

 

Sometimes, the numbers tell you it is a bad idea, but a week later, they’re back up.

 

No two growth curves will look exactly the same. 

 

It is hard!

 

Patience and self-belief are key.

 

Openness about your products' viability is obviously essential too, but let us not lose ourself and our own impact on our business and products. If every inventor gave up the first time they shared their idea and didn't get understanding, we'd still be living in caves.

 

Sometimes, we are not only selling a new product, we’re selling a new category - where we have to educate users about something they didn’t know they needed. If you're first to market with a new idea, there is a lot of ground work to do.

 

 

 

If you're on to something, you'll see some rapid early growth. It is exciting, you can't stop watching google analytics live. Maybe you have a launch party and a press release and raise some capital.

However, just as things go up, so do they come down and suddenly you find yourself inexplicably falling into the trough of sorrow, things have dipped and you don’t know why.

 

It’s tempting to throw out the idea and start again. Perhaps you need to pivot?

 

Well, not really. If you’ve found organic growth and had limited environmental changes, maybe you’re on to something.
 Don't make drastic changes, they need to be small, controlled and measurable or you won't know what is working and what isn't.

 

If and when you recover and move through to growth, you'll need to start

doing lots of new activities. Suddenly your processes will begin to break and you'll be moving so fast it's easier to throw people at them than change them. Before you know it, you'll be calling things 'legacy' and it'll be hard to build new features.

 

So how can you plan for success without over capitalising too early?

 

Welcome to Product Management

These are not revolutionary concepts, in fact, you probably studied them in your marketing degree or business course. But we’ve forgotten the importance of looking ahead, planning and creating a strategy for longevity for our business,

 

Lean or agile, without a vision and strategy are just process tools. They won’t transform your business, only treat the symptoms of a poorly shared vision.

 

Product Management is the practice of managing a product through its lifecycle, maximising growth, delivering customer outcomes and aligning internal teams around a shared view of success for sustainable growth.

 

Product Managers concern themselves with not only the birth of their product but also the death.

 

 

 

A Product lifecycle can be very fast, over and out in just a day like an event or stretch over 100’s of years, like newspapers which have had to move along this path, sometimes coming right back to the beginning numerous times.

 

Product Market Fit

Here you’ll be working out how to get customers, how much they cost and what they’ll pay.

 

There are plenty of talks and books about how to test ideas, from lean canvas to boot camps and accelerators. It’s all about reducing the cost of making a decision and to do that, you need to do things manually, that don’t scale.

 

Lets pretend you supply fresh mangos and have found a great supply that you harvest by hand, to a captive market. Costs are high because mangos perish quickly, you can’t carry too much stock. How could you expect to scale, without high wastage costs in transportation and storage and the limitation of you doing the harvesting and selling? Do you just hire a bunch more people and add costs to your business, repeating manual processes?

 
And it isn’t just about sales, you need data
  • How many people look at the mangos? [Unique Visits]

  • For how long and how often? [Sessions]

  • How many pick them up? [Clicks]

  • Why don’t they buy them? [Ask!]

  • How many mangos have you sold? [Sales]

  • What time of the day/day of the week/mth sells best? [Seasonality]

You need to look for trends, that can help you make better decisions. In this example, you may be able to add staff at weekends rather than buy a machine, until you reach critical mass.

 
Scalability

Now you can sell in other markets and to other customers, things start to pick up. They want more mangos on a weekend, but not during the week. What now?

You need to improve processes, automate where you can and make it cheaper to supply the product.

  • Improvements: refrigeration, less time in transit, protective packaging 

  • Staff improvements: cheaper resources, new suppliers, digital ordering

  • Compliance: Food handling certificates in place

Growth

Things are going well and you can move into the next phase of growth. How can everyone enjoy your mangos, any day of the week?

 

How can you utilise your wastage and maximise profits?

Spending more on marketing, creating offers, bundles, introducing surge pricing and so on can help you acquire more customers.

Perhaps now it is time to think about diversification into new product lines: frozen mango, mango juice, dried mango snacks or expansion into new territories, new customer types. But remember, these will begin as experiments and kick off their own new product lifecycle to manage.

 
People

What is good for today may not be good for tomorrow

The types of staff at each stage in the cycle you’ll need are different. From the start-up risk takers to the compliance and process addicts you’ll need later. Don’t hang on to them for too long, let them grow with the business by all means, but keep refreshing and maximising.

 

 

 

[Graceful] Exit

Head for the sunset!

It is very tempting to start propping things up with extra spend on resources and marketing at this point, but margins get smaller and smaller. It is best to plan how it will wind up and maximise profit. 

  1. Buy/sell the business up or down the value chain

  2. Minimise cost and maximise revenue

  3. No new features due to huge operational overheads of national fruit supply business

If you have been working on your portfolio with regular controlled experiments into new categories, territories and product lines, you should have a rising star on its way up to take its place.

This article was based on a talk given at ConnectExpo 30th March 2017.

and originally published on LinkedIn

 

 

 

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