Step 1: Choose Your Product Type
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There are lots of ways your business could earn revenue. In this step, we're going to explore the methods we recommend most so you can choose one.
As you learn about the different revenue options, consider how well each would fit your capabilities and your customer's needs. Remember that your business can use multiple revenue channels in the future, but for now your goal is to pick one that can prove your topic/audience/problem/solution hypothesis.
The 4 Product Channels
Here are the four channels we recommend most:
1. Selling Information
Information includes training, books and speaking. By providing information for sale, you're really aiming to educate, inspire or entertain your customers, and to transform their lives in some way.
The work of creating information products is twofold: first, you have to possess the expertise necessary to share with your customers, and second, you have to package that expertise in the form of written, audio, video or live content.
Information is great because you can usually create it once, and sell it many times. The skills you need to create a decent information product can be learned or bought fairly easily. Information products are also great because they can often be developed faster than a physical or digital product.
2. Selling Things & Tools
Things and tools include physical and digital products. Physical and digital products are quite different in terms of development and logistics, but they are both meant to serve as tools or things people use to make their lives better. This is in contrast to information, which is often used by your customers to learn how to do something themselves.
Physical products have the additional hurdle of sourcing, production, warehousing and shipping. If you choose physical products, make sure you understand how these issues will be handled, and whether a more convenient option like drop shipping could work in your situation.
3. Selling Services
Services include freelancing, consulting, coaching, and any other sort of "done for you" offering. Services can be a great way to earn revenue in your business quickly, because you typically need fewer customers than with products, and because there is little development time needed before you can offer your services.
Services can also be a great first step because they're also essentially a form of paid market research and product development. By working one on one with customers, you'll learn about opportunities to create products or information that can serve your customers in different ways.
4. Selling Access to Your Audience
For the last revenue channel in our short list, you won't be creating anything for sale to your audience. Instead, you'll be selling access to your audience to advertisers or affiliate marketers. If you have built a large, engaged audience around a specific topic, you might be able to sell ads or make affiliate offers to earn revenue. This is especially true these days about podcasting.
To make the "access" channel your primary revenue channel, you'll need a fairly good sized audience (think in the range of 10s of thousands of downloads per episode or email subscribers, depending on your topic).
A Note on Validation
The biggest risk you face as an entrepreneur is in creating something no one wants. The longer you spend on a product (and the more money you put into it), the greater the risk.
I really want to make sure you heard that: The biggest risk you face as an entrepreneur is in creating something no one wants.
Lots of entrepreneurs obsess over the idea of "validating" a product to reduce this risk. This means gaining some assurance that people will actually want the thing you're planning to build, before you actually build it.
It's impossible to 100% validate your idea and remove all of the risk in creating something people don't actually want. But we can do two things to try to validate our business ideas:
- talk to customers before and while you create the product, and
- put a minimal version of your product in customers' hands as soon as possible, to get direct feedback and find out if they'll be willing to pay.
That's why we're coaching through audience and product in this roadmap, because the more time you spend getting to know your target audience, the better you'll understand the problems people face, the more likely you'll create something they'll actually want.
Your first step is to ask your potential customers exactly what they want. You're going to put together a brief, simple survey to see which of your ideas is most desirable.
For example, when Corbett started working on our 30-day "Just Ship It" challenge, he surveyed the readers of The Sparkline to find out which kind of challenge people would be most excited about.
Even if you already have a favorite product idea in mind, we recommend doing this survey to confirm. You might save yourself from putting effort into a product that isn't as popular as you had hoped.
Note: we recommend also collecting first names and email addresses in your survey, so you can contact people during your product launch.
If you have a blog, write a blog post like the example above. This is the first step in building buzz about your upcoming product.
If you don't have a blog, you could post to Facebook or Twitter if you have accounts there. You could ask friends with blogs to help out by sharing with their audiences. Or, you may have to email people you know directly, who you think are in your target audience.
The goal is to get enough people to complete the survey to give you data to act on. You should aim for at least 100 responses, but do the best you can.
Talking Directly to Customers
In addition to your survey, we also want you to talk to a handful of potential customers directly to gather some details about specifically what they would want to see in a product. You can do this after you get survey results, to focus on the most popular choice.
The goal here is to talk to 3-5 people in your target audience (people who completed the survey would be a good start). Schedule 20-minute Skype calls to ask them about their history with your chosen topic, what they've struggled with, how they think your product could help, what format they prefer, and other open-ended questions.
Other Research Methods
Here are a couple of other places you can look for product ideas:
1) It may be helpful to do some more research on your competition to find out how they earn revenue. You might learn about some options you didn't know were possible. Spending an afternoon researching the competition is smart; just don't let it drag on for days or weeks. You have work to do.
2) Read comments on other blogs, podcasts and videos, and posts within forums on your topic. What people say in comments can be gold. If you're short on people to talk to, look for evidence in comments and forums.
Choose One Primary Revenue Channel
Once you've completed your customer research, it's time to choose a primary revenue channel. The initial goal for this channel will be to earn enough revenue to prove to you that your business idea is real and worth building. To do that, you'll have to build a "minimum viable" product – one that solves just enough of your customers' problem to convince them it's worth paying for.
Now, choose a specific type of offering within your primary revenue channel. For example, if you've chosen "information" as your primary channel, you also need to identify the specific type of information you'll offer: an online course, an ebook, speaking, a paid email newsletter, etc.
Heads up! We know this is a difficult decision. You probably feel like you don't have enough information to go on right now. Remember, building a business is a big experiment based on a combination of intuition and educated guesses. Resist the urge to find the perfect answer! As always, progress is your goal, not perfection.