I aspired to financial independence long before the gig economy took off. I launched my first website back in the year 2000, when the dotcom boom caught my imagination. And have continued ever since, launching 7 such ventures in the last 20 years.
Today, I run two successful online ventures, with a focus on affiliate marketing, that have given me insights into what makes a successful business. I learnt the hard way, and would like to share with you some of the learnings I acquired in the process.
Tip #1: Solve a problem
Consumers aren’t looking to purchase your product, or service. Instead, they’re looking to solve a problem. Social scientists like Abraham Maslow have hypothesized that humans are driven by a hierarchy of needs.
In his 1943 classic titled “Theory of Human Motivation”, Maslow explains that humans seek to satisfy basic needs, like food, shelter and warmth, before pursuing higher ones. In these times of high energy prices and of supply shortages, elementary needs are making an unexpected comeback.
Higher needs include social belonging, esteem and finally self-actualisation needs. For example, a family holiday or a getaway with a close group of friends could help fulfill social belonging needs of trust and intimacy. A luxury product, or simply a social media post on TikTok or Instagram could help meet needs of esteem and attention. Finally, a yoga class or spiritual retreat could help fulfill self-actualisation needs.
Tip #2: Add genuine value to the market
Importantly, customers will only purchase your product or service if it adds genuine value. This means that you need to understand your value proposition, and how it compares to the competition.
Some companies created entirely new business models that went on to revolutionize the way we work and play. Tesla was the first to believe in, and pursue, the mass production of electric vehicles. It innovated in other ways, by creating home energy systems with solar panels and rechargeable batteries. By the time manufacturers of traditional ICE cars pivoted towards EVs, Tesla was years ahead of the competition, with a lead in the manufacture of electric cars and self-driving technology.
Others, like Apple, beat their competition by creating a superior product. When Apple launched the iPhone in June 2007, it was a relative late-comer to the model phone industry. At the time, Nokia and BlackBerry were the leading manufacturers of retail and business handsets. Apple took both markets by storm by learning from its competitors’ mistakes and creating a beautifully crafted product with an app-ecosystem. Apple’s App Store turned the iPhone into much more than a phone, a first at the time.
Tip #3: Size the opportunity upfront
You’ll also need to estimate the size of your addressable market, to determine whether this will be worth your time. This is an important step, no matter how big or small you ultimately aim to grow your business. If your idea is too niche, you may struggle to generate recurring cash flow.
Now that Internet penetration is widespread, you could use keyword research tools to see how many people search for words related to your product or service on Google. If you’re planning on selling through Amazon, you’ll find other keyword research tools with a focus on Amazon and even the Kindle platform.
Let’s say you’re thinking of selling organic baby clothes online. You’d start your keyword research by brainstorming top-level keywords (such as “organic baby clothes” and “organic baby clothing”), and running these through the AdWords Keyword Planner in one or more chosen countries. This tool will return monthly search volumes, a measure of how competitive each keyword is, as well as more keyword ideas for you to work on.
Amazon keyword research tools work along similar lines. They’ll return monthly search volumes, as well as information about how competitive each Amazon category is. You could use these insights to find a less competitive category with search volumes large enough to sustain your business. This is an important stage that will help you assess whether or not your idea is a viable business opportunity.
Tip #4: Have a marketing strategy
If you’re planning on selling a product or service online, through your own website or Amazon, it’s important that you have a view over how you will market yourself. If time allows, you could even start promoting your upcoming product or service in the weeks leading up to the launch.
If you’re planning on selling through your own website, you’ll need to familiarize yourself with buzzwords like SEO, PPC and Social Media. Social Media Optimization (SEO) is the art of ranking your website high in Google’s organic search results. You’ll need to ensure your website is discoverable, relevant and perceived as authoritative by Google and other search engines.
Pay Per Click (PPC) refers to paid search and display advertising campaigns that can run search engines. For example, you could create an advertising campaign to show your ads when people search for “organic baby clothes” on Google, or watch relevant content on YouTube. Paid advertising campaigns come at a cost, but are a great way to drive traffic instantly to your website. In contrast, SEO campaigns can take months to deliver results.
You could also look to create viral content around your brand for TikTok, Instagram or Facebook. Videos that strike a chord with viewers could reach hundreds of thousands of viewers and turn your brand into an overnight success. If you go down this route, create content that’s authentic, relatable and sparks a reaction from your audience. It’s also a good idea to let others embed your content in their videos, to help spread the word.
Finally, I also wanted to call out how important word-of-mouth advertising is. It goes without saying that people trust recommendations from friends and family more than traditional forms of advertising. If your product or service resonates with users, they will instinctively recommend your brand to others. However, you could encourage them to do so, by creating a referral programme that rewards them and the friends they invite for signing up. This could significantly reduce your customer acquisition costs.
Tip #5: Focus on profitability from the very beginning
According to statistics published by the Bureau of Labor Statistics, approximately 1 in 10 small businesses fail within the first year. By the end of the second year, 1 in 4 businesses will have failed. And by the end of the fifth year, approximately half will have failed.
So make sure you only invest money that you can afford to lose. Never mortgage your house, or take-on credit card debt, to fund your business. If your venture is unsuccessful, you’ll want to have enough financial headroom to pick up where you left. This also means planning for failure, even before you launch.
With this in mind, it’s important to start small, and aim to launch your first product or service as early as possible, before committing substantial sums of money. This is known as a Minimum Viable Product, or MVP. You could think of your MVP as the first iteration of your product or service. It’s far from the finished product you may have in mind, but it should deliver on your brand’s promise. An MVP will allow you to gather invaluable customer feedback early on in your journey, and could avoid expensive mistakes.
Until now, we haven’t touched on price or your input costs. But profitability is key to running a sustainable business. Your costs may be either fixed if you have to commit to purchases upfront, and/or variable. You should aim to minimize fixed costs to the fullest possible extent in the early days of your business because they require larger sales volumes to breakeven. The best businesses are self-funded, to the extent that sales revenue more than covers costs. This will allow you to reinvest profits into your business, to drive future sales.
Final thoughts
Along the way, you’ll experience moments of self doubt. Your friends or family may also have misgivings about your venture. However, you’ll be in a good place to push forward and focus on the end goal if you’ve done your homework and are confident in your brand’s appeal, market size and profitability.
All too often, in the early days of my entrepreneurial ventures, I was tempted to throw in the towel, in part because I was disappointed with early results. If you’re ambitious and in hurry, you could experience this too.
Yet, focus and tenacity are the keys to success that will help you overcome moments of self-doubt that will inevitably arise along the way.
