Crowdfunding websites like Kickstarter, GoFundMe and Indiegogo are a little overblown these days, but the idea at their core is a question all businesses need to address:
Are people willing to pay for my product or business?
I’ve seen so many entrepreneurs spend years investing in products and businesses that have no place in the market.
Last week, we talked about making sure your business provides an actual, measurable benefit by asking, “Can I?” and then, “Will I?” and finally, the most important, “Should I?”
“Should I?” is an important question to ask yourself, but it’s even more important to ask others. I can’t begin to count the number of times I’ve asked, “Should I?” only to have potential customers answer, “No, but here is a similar thing you should do.”
That marketplace feedback is crucial in making sure you don’t waste your time starting a business that sucks.
Before you tune me out for crass language, understand I’m talking about the sort of sucking attributed to vampires.
Small businesses are the lifeblood of every community. As a business owner, your job is to support your community, not the other way around. Sucky businesses drain that lifeblood from the community by asking for support without returning an equal or greater benefit.
If potential clients stop asking me for help, it means I’m either not communicating my benefit well enough or my services are no longer needed. Since I’m advertising my services to the best of my ability, the only option in this scenario would be my services are no longer needed.
When you learn your business is no longer needed, the first response should not be looking for support. It should be to pivot into another business model or product line that will serve more people.
I had a friend who used Kickstarter to launch a new product line five or six years ago, when the crowdfunding website was still relatively new. As the deadline approached and the potential for funding dwindled, I asked my friend why he still looked so confident.
“My mom is going to make up the difference,” he said.
That’s not the point of crowdfunding.
Crowdfunding not only helps you launch, but it gives you a viability model. If no one is going to pay for your product or business to exist, chances are, no one is going to help you stay in business. Chances are, your business sucks.
If you’re a business owner, you should build your business on a strong foundation, not a temporary crutch.
Early civilizations existed around tribes of people who worked together to hunt, gather and farm. The collection of food and establishment of shelter were the biggest concerns of the day. As man became more civilized, these tasks became easier, and enterprising individuals used their increased free time to meet new demands.
Maybe someone needed extra flour. An enterprising individual could spend extra time at the grindstone or save their allotment for a later trade.
The idea of business was founded on the servicing of someone’s need, not on the servicing of someone’s desire to sell.
General stores didn’t open up in gold rush mining towns because miners were looking for someone to support, they opened because miners needed someone to order new equipment and ship in food while they were busy working.
Demand and Supply
We talk about supply and demand all through business and marketing strategy. Supply must adjust to meet demand. As a small-business owner, it’s sometimes helpful for me to think of this by swapping the paradigm to demand and supply. It helps put my business in perspective.
If we think about demand first, supply will be easier and often more successful.
So what happens when there isn’t demand? Simple! Generate demand.
Soap isn’t essential when we use water to clean ourselves. For the most part, water gets the job done. But, as soon as someone shows up cleaner and smelling better, the demand for soap has been generated.
In 2006, there was no demand for a phone that took pictures, played music, organized emails and doubled as a guitar tuner. No one needed those things because they didn’t know it could exist. Apple educated us by generating buzz, and the buzz turned into a sincere desire for the product.
Now that business and social interaction happen at the speed of a smartphone, they are very much in demand. There are people who might actually need an iPhone.
Maybe you’ve upped your marketing efforts, tried to generate demand and still no one wants to fund your app that will be the “Uber” of bespoke tote bags.
This usually means the market doesn’t need a bespoke tote bag app. Maybe your app is too specific since almost any custom design store will let you customize a tote bag. Or maybe every potential customer already got a tote bag by renewing their NPR support pledge.
It’s time to use your app development knowledge and passion for customization to find a business that doesn’t suck—to find a better way to serve people.
Try Not to Suck
Remember, sucky businesses suck the lifeblood from the community by asking for support without returning value. Businesses are supposed to support their communities, not the other way around.