Today I had a great conversation with a good friend of mine…
I see this guy as sort of a mentor in many respects, real good dude and he’s got a ton of interesting insights on business and life. He’s experienced a lot- everything from launching several software/IT businesses (he sold one of them for 8 figures) to going through a divorce, battles with the IRS and even a bankruptcy.
He’s one of those guys that every time you talk with him you wind up learning something about business or life.
Today I asked him about the business model that he follows for just about every business that he’s launched (all of his businesses are software related) and this is what he said…
1. He starts off by picking a very narrow and specific niche to serve…
Before he launches a business he always knows very specifically what market he’s going to serve (side note; most of his businesses have been in the B2B space).
This is critical because each industry has its own community. Within each community everyone pretty much knows each other. Think about it they all go to the same conventions, talk the same lingo, work with the same suppliers and vendors, read the same publications, etc.
Because of this close knit community dynamic it’s so much easier to leverage the best form of marketing that exists ie.-word of mouth.
Once he picks a niche he moves on to step #2…
2. Offer a free assessment to your target market
When establishing a relationship with his target market he always leads with value FIRST. Offering a free assessment gives him the ability to develop a relationship with various decision makers but it also gives him the opportunity to go in and learn all about his target market’s problems.
Once you understand your market’s problems you then have the ability to offer solutions to those problems that pretty much sell themselves.
Problems in a business usually wind up in lost revenue. Surprisingly enough most business owners are not highly motivated to increase revenue by spending money. (Especially if it’s your idea to have them spend that money).
However, if you show them how they’re losing money they will go through hell and high water to stop the loss (in the sales world this is known as loss aversion).
When you can show someone that they have a problem and demonstrate what it’s costing them to have that problem it’s difficult for someone to tell you “no”, especially if they plan on staying in business…haha.
Positioning an offer in this fashion is now seen as more of an investment than an expense. Same offer but different positioning, business owners don’t like expenses but don’t mind making investments.
3. Get your first client and service the hell out of ’em.
He says that once he finds his first client he over delivers on everything and once he’s done he delivers some more.
He’s not just interested in getting a client, he wants a raving fan.
It’s pretty obvious, once you do a great job for your first client they’re going to talk. And since your client is part of that small little community that we talked about earlier, word’s gonna travel fast that you’re the person to go see if anyone need’s “X”.
Once you become the “go to” for an industry the rest is history.
4. He befriends as many salespeople, vendors and suppliers in his target industry as possible.
Any industry he’s ever gone into he always makes it a point to develop relationships with the people who sell to that industry.
Befriending people that have relationships with your target industry is like building a team of affiliates. These are people who’ve already developed relationships with your prospects and stay in frequent communication with them.
If you show these potential partners a way that they can personally benefit from working with you by recommending your product/service it becomes a win-win relationship that allows you to grow your business much faster and efficiently than you could by selling on your own.
Another benefit to developing relationships with the salespeople in your target market is that you can potentially make them offers to join your company. These people make great potential employees- they’re already trained on your market and have established relationships that they can bring along with them when they join your company.
That’s how he launches every company…
Some of his businesses have flopped and some have done extremely well but he knows what all seasoned entrepreneurs understand…
You only need to be right once to set yourself up for life.
I asked him if he ever gets tired of the ups and downs that come along with getting to the big payday…
He said, “Not at all, I love the “game”. Having lots money is fun but I get more enjoyment from trying to get an idea to work. I’m the kind of person that always needs to be working towards a goal to be happy. I don’t think I’ll ever get to a point where I’m satisfied, I’m always looking for a new game to play.”