Don't Officially Launch Your Startup Until You Make $20K In Sales
Don’t Officially Launch Your Startup Until You Make $20K In Sales
The 3 phases to testing and launching your startup.
A lot of startups work backwards when it comes to testing their business idea. They do all the official stuff — incorporate, hire a designer to build their website, buy inventory, look into trademarking, and more.
Here’s the thing though — if you’re not a tech platform building your product from scratch, you don’t need a website and you don’t need a ton of inventory to test sellability / product-market fit. It’s actually the worst way to burn through your cash before receiving the proof that your business is viable.
So many entrepreneurs obsess over the “officialness” of their business that they forget to question if these steps are even necessary to test their proof of concept.
You’ll just end up with a graveyard of social media pages, inventory, a fancy website, and more if you do all the “official” stuff before you can prove that you have a viable, profitable business on your hands.
Because what’s the point of setting up shop if no one wants to buy from it?
I encourage a lot of entrepreneurs to test their product’s sellability first before anything else. Heck, you don’t even need inventory or a website to do this.
Here’s the process I recommend for those startups out there that are on the market to test sellability.
Businesses that sell handmade products, online courses, drop-ship products, or can manufacture within 48 hours are a great fit for this. If you’re a SaaS or tech product, this approach will be a bit more challenging but isn’t impossible with a bit of creativity.
Sellability Phase
You may be wondering, how can I test the sellability of my product/ service without a website?
Simple — replace your website with a different sales floor.
You can set up a temporary sales floor on a landing page, accept orders via Instagram DM, and more. All you really need is a Paypal account to receive money and you’re all set to go.
If you’re worried that people won’t buy your product or service because you don’t have the veneer of an official business, think again.
There are 7-figure businesses that only have a landing page functioning as their sales page and their Instagram and email marketing as their sole marketing channels. I’ve seen businesses across all industries do this — from coaching, jewelry, cookie shops, to custom cars.
They make up for the lack of “official” touchpoints by ramping up their authority and legitimacy through other channels and content.
You can also test the sellability of your product/service by selling at in-person events. If you’re able to set up a booth at a market, festival, or other events that will have foot traffic from your target audience, it’s a great opportunity to test the sellability of your products without setting up a bunch of real estate online.
These business models should show you that all you need is an audience and a good sales plan to make money. All the official stuff can come later once you’ve proved that you can make consistent sales and build an audience that doesn’t include just your friends and family.
Once you’ve hit about $20K in sales (that aren’t from your friends and family) within a year of testing, that’s when you have enough proof that this is a viable business worth pursuing.
Launch Phase
The launch phase is the get your sh*t together phase.
Now that you have sufficient proof that your business is viable, this is when you do all the official stuff like set up a website, order more substantial inventory to sell, create marketing and sales systems, start tracking KPIs, and brush up the back end of the business.
The launch phase is also a great time to hire a coach or to enroll in a course to learn how to properly set up your business and accelerate your growth through fine-tuned strategy.
You can either figure out all the messy setup and sales stuff yourself, or you can receive the knowledge from someone who has already spent years figuring it out and fast forward to the good stuff.
During this time, your business should also go full force with figuring out how to stabilize and control its revenue on a recurring basis.
Can you repeat what you did during the test phase and create predictable revenue on a monthly or quarterly basis? This is the key differentiator every legitimate business has.
Scale Phase
You arrive on the scale phase once you’ve figured out the formula unique to your business to create predictable revenue on a monthly or quarterly basis.
Once you’ve figured out this formula, you should be aggressively audience building, running a consistent marketing and sales plan, and operationally be comfortable with your business.
During the start of this phase, you want to have revenue numbers that come in around 4x your testing phase sales numbers and see it continuously grow with the injection of more effort, time, and investment put back into the business.
I love writing thoughtful, personal Friday morning emails called The Crux to help entrepreneurs turn their startup chase into a victory lap. Join here to get my best musings in your inbox.