You’ve done well. That business concept you doodled on a napkin is now a real life business. You have employees and customers—and the hopes and dreams that come with them. Chances are, however, that your pockets aren’t overflowing with the cash you think is required to take your startup to the next level.
So how does an entrepreneur build a sustainable company with little money? The answer consists of three made-up words I like to call “tribeworthiness,” “retirementworthiness,” and “schmarketing.” Here’s what each of them means:
Tribeworthiness (a.k.a. customer identification)
Think of a tribe as an existing group or clique of people that happen to double as your target market; thye could be people who play a sport, participate in a club or subscribe to a certain lifestyle. Three great (and very distinctive) examples of tribes are Crossfitters, knitters and Trekkies. The social infrastructure of these groups already exist, they each have a large membership base, they have their own aspirational role models and their members share similar lifestyles.
Your product or service achieves “tribeworthiness” if it is needed and wanted by the tribe, and your company can authentically align values with the group. Targeting an existing tribe (e.g. Trekkies) rather than a general demographic group (e.g. baby boomers) improves your marketing return on investment. The instinct of many entrepreneurs is to sell to everybody and figure out their target market based on who is actually buying. It is far more effective, however, to connect to a tribe and build off an existing base of connected, socially aware prospects.
One quick way to becoming tribeworthy is to answer one simple question: “How is the world left better because of my company?” If you have no clear-cut answer, you may want to go back to the drawing board. Truly sustainable companies solve problems for their customer base and contribute value to their stakeholders; their products are needed and wanted and fill a white space in the marketplace.
Retirementworthiness (a.k.a. the business model)
“Retirementworthiness” is the extent to which your company makes you money while you are on a beach in Hawaii, sipping on Mai Tais. If you left your company unattended for a few months, will you still be making money? If the answer is no, your company is not retirement-worthy.
A retirement-worthy company is one that creates passive, residual and perpetual income. Many product companies struggle with this concept because they need sales of actual product to make money. Retirement-worthy business models would consist of the warranties, service contracts, memberships, interest charges and customer programs that generate income post-sale. That way, money comes in even when products don’t go out.
Schmarketing (a.k.a. smart marketing)
Small business owners often have no marketing budget because they consider marketing a cost centre. If you change the way you look at your marketing and see it as a profit centre, your budget becomes limitless. “Schmarketing” is tribe-centric, for-profit marketing. What kinds of events, contests, trainings, conferences, pop-up stores or seminars can you run that connect you to your tribe while generating profit?
One example of for-profit marketing is a medical technology-training course held by a schmarketing-savvy technology company that allows attendees to earn credits towards their medical certifications. The event breaks even and exposes the company to many new prospects.
Another element of schmarketing is co-branding. There are many companies that sell non-competitive products and services to your tribe. Identify them and look for co-marketing opportunities that do not cost you money but can get you access to new prospects. Leverage your current resources (existing staff, product inventory, expertise, etc.) to support these marketing activities. You expand your reach and access with no pennies spent.
So many startups do not invest in business development and sales. My perspective is simple: not much beats a great sales team. Sell, sell, sell. Want a sustainable company? Invest in business development and sales people. This may sound elementary but so many companies invest heavily in product development and nothing in what actually generates them revenues. Schmarketing is about proactive revenue generation.
Move your success from that napkin into your hands and then beyond. No need to wait for an investor to fund your revenue creation—a little innovation in your business model, marketing, and customer identification can quickly propel you to bigger, more sustainable results.
Darrell Kopke is the founder of institute B, a Vancouver-based accelerator for entrepreneurial businesses that put profit and societal value on equal footing. Formerly general manager (and the sixth employee) ¨at lululemon athletica, Kopke currently is part-owner of several growth companies and a board member with The Gratitude AEffect Foundation, a Vancouver-based charity devoted to ending homelessness. He founded iB in 2010.
More by Darrell Kopke:
- A Neo-Shaman’s Gift to Corporate Culture
- Why Going Public Can Kill Your Company
- Why Founders Suck as CEOs
- Have You Found Your Mission?
- The Most Useful Skill Any Entrepreneur Can Learn