“Real world MBA: 20 entrepreneurial lessons” is an article is adapted from a talk given by Lextech CEO and chief geek Alex Bratton at an event hosted by Choose DuPage’s Rev3 Innovation Center at Northern Illinois University. This is part three of a four part series. Read part one and part two here.
The final entrepreneurial pillar is selling. Obvious, right? But how are you selling? I’ve founded 12 different businesses. By the time I got to the sixth company, I realized that I needed to know how to sell the products I’m going to make before I launch the business. For example, if you’re working on a better mouse trap, you need to know how you’re going to sell it before you start production.
You must know how you’re taking your product to market before you make it. Otherwise, you’re way too late. There are probably organizations that are already selling to your target audience. Go build a relationship with them now. Find out if they see the same problems you do. If you see an organization in the same industry with products or services that are complementary to yours —selling to the same target audience—figure out a way to partner with them and leverage their existing sales force as resellers.
For example, if your product is a mouse trap, it would make sense to partner with an organization that produces and is successfully selling mouse trap bait and have them offer your product as a value add to theirs. You will probably need to pay them 8-10 percent commission on those sales, but it doesn’t matter. If they’re going to become your sales force, it’s worth it. If you plan to build a direct sales force, you’ve got to understand your potential profit margins. You can’t fund a direct sales force for a product that only results in a $10 profit unless the reach of your product is vast and it will sell in large volumes.
Figure out your sales channels first. Otherwise, you end up with a better mousetrap and no idea how to take it to market. Sales is everything because without cash-flow, you have no company. Get your products and sales channels in order, and that will give you momentum on which to build.