This is Part 4 of UmmahHub’s series on Being Your Own Boss that reveals the keys to help you become a successful entrepreneur and be the best you can be in business and in life, In sha Allah.
In part 3, we ventured into writing your business plan, by answering a set of questions. In this part, we will go forth by discussing the next step.
When starting your business, you most likely will have these top 3 as priorities: finding capital, building a product and getting customers.
After you develop a business plan, traditional business theory will tell you that you must find capital first, build a product and then try to sell to your customers.
Using the ‘Lean Startup Methodology” in Part 3 of our article series, we mentioned that our goal is to launch as fast as possible and reiterate our product offering based on our customer feedback.
We will briefly touch on ways to find capital and build a product but emphasize on the last point, getting customers, which is essentially the most important point in this series and in your business at large, In sha Allah.
As a Muslim entrepreneur, finding capital is definitely one of the most difficult parts of launching your business. As Muslims we follow a strict moral and ethical code of conduct in business that doesn’t allow interest-based loans. Things shorten the pool of potential financial sources for those with an idea but limited amount of funds. If you are running a service-based business, you may not need much capital to get started. You can cut costs by working from home and doing everything by yourself in the beginning to reduce overhead. But it may be that your products needs to be developed and prototyped. In that case, here are a few suggestions on where to look:
Bootstrapping is pulling money from personal and creative resources. Any money you have saved up from jobs, sell any extra items in your home that you don’t need anymore, and perhaps offer side jobs while still working your job to start your business.
2. Seed round
This is an early investment meant to support the business until it can generate cash on its own. You can get started by asking your family and friends for the initial capital. This is probably the fastest and quickest way to get started without your own funds.
In the last few years, a new source of funding has come about where you can post your business or product online and get strangers from around the world who believe in your project to fund your business. It’s completely halal, you don’t have to give up a percentage of your business and all that is required is that you create a campaign on crowdfunding websites such as Indiegogo, Kickstarter, or Islamic versions such as UmmahHub or Launch Good to raise the money you need.
4. Finding an angel investor
Angel investors help fund small startups and entrepreneurs and are willing to take high-risk bet on a company. Such investors are much more willing to take a loss than a traditional venture capitalist who works at a firm and are more interested in investing in you, the entrepreneur, more than the idea. Therefore, you need to convince them that you are the best person to take on the company and build it out.
Building or creating your product
“The goal of a startup is to find the sweet-spot where minimum product and viable product meet — get people to fall in love with you. Over time, you listen to your customers, make improvements and raise the bar on what viable means — making it more expensive for competitors to jump in.” – John Radoff
Adopting the ‘Lean Startup” methodology to developing the product, we want to build a minimal product – enough that you can ship as fast as possible to your customers who will pay you as quick as possible for the product. The goal is to create something they will be happy to pay you for, remembering that you will continuously improve the product as time goes on. What you create first doesn’t have to be perfect, whether that is your first product or a website advertising your services.
Step 1: Create a product details document
This is a document that has all the features and a road map for what each key function of your product is. Be sure to include every feature of your product.
Step 2: Know your customers
Start a customer development interview process. Before you spend any time building your product, you need to learn about your customers more. Look back at your business plan, and re-read your customer profile. Once you have a good understanding of who they are, try to locate individuals who fit your criteria and description for customer development interviews. Customer development is a key part of the “Lean Startup”. These are one-on-one discussions or interviews with individuals in your target customer base to get an idea of where their pains are.
The key is to talk to people about what they are working on and let them tell you what their pains are. When they do, mention your product concept as a potential solution and let them tell you if it’s useful.
Step 3: Test your idea
While you are talking to your customers, it’s important to put your product or service out there and make it easy for people to find it. You will test your idea by referring all those who you interact with back to this page either to sign up for more information by giving you their email so that you can further contact them or by allowing them to pre-buy your product.
This is known as testing and a cheap, and easy way to find out if there is demand for you product before you even fully complete it. Testing your idea means seeing if there is traction and if people want to engage with you.
Here’s what you need to do to test your product:
- Set up a website and fill in the content with details of your product
- Put up a landing page to either collect emails or to collect pre-sale payments on your product
- Direct all the people you speak to during your customer development phase and in the next phase ‘prospecting customers’ back to your landing page
- Start advertising your product web page either through word of mouth or social media or also by advertising your product in leading newspapers and magazines that your target customers read.
Prospecting or finding customers
The number one reason why people fail in business is due to the lack of customers. The thing that leads to success in your business is getting customers. It’s commonplace for entrepreneurs to focus on getting the technicalities of your business set up, but don’t let it misguide you.
When you understand what you are offering and know there is a need for it, it’s more than possible to get customers. However, it’s important not to bypass registering your business, choosing the right structure, raising capital or finding the right team. We recommend that you look into your state or federal laws to make sure you are adhering to the laws of the country you reside in. Rather, our recommendation is that you focus on getting customers while working on all of the formalities.
Prospecting customers: Start talking to people!
The general rule is that 1/10 people will want your product or service. The simple act of speaking to as many people as possible to create a pool of qualified customers is called “prospecting”.
Ways to find customers
Attend industry events, networking events, do research on forums, visit online websites that you feel your product is of benefit to and start contacting people via phone or email.
Start honest and transparent conversations with people looking to genuinely help them find solutions for their needs. The more places you go and the more people you speak to, the higher the chances of finding qualified customers. You cannot outsource this product or sale.
The 3-question key to finding customers
You must identify:
1. Who your customers are
2. Where your customers are
3. Why they should buy from you
Pro-tip: Every ‘No’ is closer to a ‘Yes’. Remember, sales is a skill that can be developed. There is no classroom experience that teaches everybody how to get a customer.
- Service-based business
If you are a realtor, you will have to find 100 potential customers who are interesting in buying and selling property. Only 10 will actually be interested in your services. Where and who might your customers be? They can be at auctions or are newlywed couples, long-term renters who may want to buy a home soon, people in a divorce or who need to move quickly out of their home. Show them why and how you can do your job better than anyone else. Offer a guarantee and deliver above and beyond.
- Product-based business
If you have a product, such as a book or clothing, create a marketing sheet with all potential channels that you can go and sell your products to interested buyers. If you have a clothing line, what types of individuals would buy your clothes? Are there boutique shops that will carry your clothes? Are there online shops you can collaborate with?
Pro-tip: Only offer people what they need and not what they may or may not want.
Launching your business means prioritizing finding customers while building up your actual business base. The reason why businesses fail is due to lack of customers and lack of sufficient conversation with them. Mainstream business theory will teach you to spend money and time building a product; but to avoid building something that no one wants, you need to put a lot of effort in talking to as many prospective customers as possible, identifying what their problem is, where they are and how your product can help them.
The key is following the lean startup methodology in building your business. Soon enough, many people will know about you and you will find yourself having a booming business in sha Allah.
We hope this has helped boost your business ideas for raising capital and achieving customer satisfaction as well. How is your business plan coming along so far? Let us know in the comments section below!