Every week, businessman and former dragon Serge Beauchemin receives dozens of questions from entrepreneurs. That’s why he decided to launch the platform alias entrepreneur·e, which allows him to answer as many of those questions as possible. Here, Beauchemin answers the five questions he is asked most often.
Preparation is the key. First, you have to know what your funding needs are. Do you need a loan or equity? Do you only need funds, or a strategic investor as well? Would a temporary loan suit your needs? Then, you have to ask yourself why you’re seeking money and how much. And what exactly are the terms you’re prepared to put on the table?
Next, you need to sit down with your investor or lender and try to understand what their needs and objectives are. You have to understand, for instance, that a lender and an investor aren’t looking for exactly the same thing. An investor usually wants a return on equity over the long term, whereas a lender wants to make a profit using short-term guaranties. You then need to treat your investor or lender as your client.
It’s important to understand that this is actually the second stage of investment. The first stage is investing your own money and asking the people around you to contribute.
In my opinion, the only person who can tell you if your idea is a good one is neither an advisor nor a financier, but a potential customer.
So I suggest presenting your offer to customers and making sales, or at least obtaining commitments from them. The sooner you bring your offer to market, the sooner you’ll be able to prove that you have a good idea.
There are two main strategies: one for people selling products, and another for professionals offering services.
For entrepreneurs looking to market a product, the first step is to create some buzz around that product. In this case, social media can be very useful, because advertising costs on social networks are still very affordable for most start-ups. When you’re working with a small budget, you have to be original and find creative ways to get your brand out there so that it starts being recognized.
The second step is making sure the consumer can experience the product; you want them to be able to test it, touch it, see it or taste it. To do this, you can participate in trade shows or establish a presence in places where people buy alternatives to your product.
These days, crowdfunding sites like Kickstarter, Ulule, Indiegogo, La ruche and Haricot offer a way to display your wares. Customers can’t touch them, but they can see them in action, and this experience is very important.
Entrepreneurs who are entering the service industry will need to use relationship marketing to gain visibility. This process is usually a longer one, because developing strong relationships is more difficult than simply putting a product on the market. This rarely happens in a week, let alone a year.
It’s important to understand that a professional-services company doesn’t get known through advertising, but rather through the customer relationship, which is easier to build in person. So entrepreneurs need to get out of the office, go meet potential customers and offer their services to people who have a problem – and then propose a solution.
Of course, social networks also allow you to build relationships. Many entrepreneurs use them to do content marketing, i.e. by posting articles or videos that demonstrate their expertise. This helps them to establish credibility and generate word-of-mouth.
To surround yourself with the right people, you need to know yourself very well so that you can pinpoint your strengths and weaknesses.
Entrepreneurs often tend to recruit people who are a lot like themselves; instead, you need to find people who will fill your gaps. For instance, if I’m an extrovert and I want to develop an application, I may need to surround myself with more introverted, analytical types – people with more technical skills for programming and so on.
It’s essential to identify the whole range of skills required to get the job done efficiently, and then identify the people who have that skill set.
The correct way to establish the price of your product or service is to evaluate what the market offers in terms of alternatives for your potential customers, and what they are willing to pay to meet their needs.
You need to establish a clear picture of what the rest of the market you’re competing in is offering, and then decide where you want to position yourself. In general, people will tend to position themselves in the middle of the pack, but in my opinion, it’s better to stand out through a pricing strategy, either as the most expensive or the cheapest.
That pricing strategy also needs to be coherent. I often see people who offer “superior quality at an affordable price,” but consumers aren’t fooled – they expect the price to generally reflect the quality.
Get other valuable tips from Serge Beauchemin, with some 150 capsules on the platform alias entrepreneur·e. Note that the content on the alias website is available in French only.
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