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Chicken and the egg: Raising cash for your startup

You have a great idea and you’re going to bring a new product or service to maChicken and egg: Raising funds for your startuprket. It’s an exciting time as you imagine the changes your idea could bring. You’re embarking on changing a corner of the world in some way and impacting people’s lives — how they work, travel, communicate, think, feel or act.

Now the tricky bit — cash. Am I right? However great your idea is, or lean your startup is, you need money. You just can’t get avoid the need for funding. Welcome to the startup’s chicken-and-egg dilemma: your product is awesome* (*let’s assume this is true) and will generate cash, but you can’t develop, market and deliver your product until you have — you guessed it — cash.

There are certainly numerous ways to fund your dream — here are some possibilities to generate cash or support for your startup:

  • Bootstrapping (which typically involves giving up anything in your life that costs money: food, rent, fun)
  • Friends and family (also known as unaccredited investors)
  • Equity investment: Accredited investors such as business angels or venture capitalists – this includes convertible debt options
  • Debt investments or loans: Bank loans, private loans, microloans, credit cards
  • Government sources: Economic development initiatives, U.S. Chamber of Commerce programs
  • Support organizations: Business incubators, business accelerators
  • Crowdfunding: These could be rewards-, equity-, donation- or lending-based.

Of course there are advantages and disadvantages to each of these options. For some of these funding sources, the upside includes mentorship, access to resources, introductions, networking and collaboration. Potential downsides include loss of equity and control, accrued debt and interest fees.

One area that many startups seem to avoid in the early-stage build phase is sales. Cold, hard sales — where you tell people about the benefits of your product and ask them for cash — would not only help fund your growth but would also create a customer base of fans that could support you in ways that go beyond the financial.

Even if you are working from an incubator or have access to initial funds, you need to learn — and feel comfortable enough — to sell your product.

If you’re dragging your sales heels, then why not join one of our free two-hour workshops – The Build Phase – Increasing Sales (Fast) as a Tech Startup – which are being hosted in Boston, Cambridge, Austin, San Francisco and New York. Check out our workshops page for all upcoming workshops and to register.

Resolved to sell more this year? Then sell more!

Last year we were working on a project for a startup where the company needed to increase revenue (as is the general goal of business), but the team didn’t want to sell.

I’d like to say that this situation is a rarity – talented individuals with a great product and a reluctance to sell. And by selling I don’t mean writing blogs, posting to social media, or adding content to LinkedIn. I mean selling – speaking directly to individuals and companies that you can help, telling them how you could be of value and asking them if they want to work with you.

I find it heartbreaking that many startups (and let’s be totally honest, this isn’t strictly an issue inherent to startups) are in this situation. They have poured their heart, soul, sweat, possibly tears, certainly finances and time into developing a new product or service. They’ve done this because they want to have an impact, to make a difference in the world and because they believe in their product, in their vision.

Then … they don’t want to sell.

Instead, they spend time on social media, developing content, adding new channels, fine-tuning landing pages. Don’t get me wrong, marketing is important. But when you’re a startup and you need sales, you need to go and sell.

Why do people avoid sales? I struggle to answer this question sometimes – I’ve seen startups fail because the founder doesn’t want to pick up a phone or do anything that they would be construed as being sales-related. I can only conclude that it’s for any of these possible reasons:

–        A low (and to be honest, incorrect) perception of the sales process – thinking it’s something that is slimy, unwanted or ‘below’ your role as a founding team member

– Lack of belief in your product or service

– Lack of belief in yourself

– A deep-rooted fear of rejection. I think this is the reason in many cases – it can be hard to share your product or service, and then to have people say ‘no’

– Distractions within the business. I’ve witnessed this first hand, where a small founding team moves on to develop a new product or capability without really ensuring an already-developed product is up-and-selling

–  A misunderstanding of the sales process – how to position, communicate and connect with prospects and how to ask for a sale

– A poor product or service (in which case, sales is unlikely to help you in the long term)

In short, if you want to sell more, go and sell. Not sure where to start? – Then sign up for our comprehensive six-month sales coaching and accountability program: Sales Mastery for Startups.

 

Technology vendors: Be honest (realistic) about what you do…

In technology, with all its acronyms, blurring of lines and the need for influencers, commentators, buyers and vendors themselves to define new markets, there can easily be overlaps from one technology to another. Yet sometimes vendors overstep those lines and claim spuriously to do what their competitor does.

I’ve seen this a number of times in an enterprise sales situation – a vendor is defensive of a potentially competitive vendor coming into a project so they ‘overstate’ what their own technology can do. It’s not always blatant – in my experience they typically and truly intend – whether through through customization or development – to deliver what they have promised. But often claims are deliberately left hanging out there, to their advantage, and longer-term potential detriment.

In consumer technology there is far more of a ‘does what it says on the tin’ attitude, largely because of the need for simplicity driven by the target market, price-point and competition. Buying something for a few hundred dollars to perform a specific task is much simpler than trying to implement and integrate complex enterprise technology. The inherent complexity of enterprise technologies often makes it difficult for vendors to describe succinctly what they do. But some tech vendors certainly don’t help themselves, either. So if you’re a technology vendor and you’re currently reworking your messaging, please be deliberate, considered and honest.

It’s also important to consider how you categorize your product or service – what do you call it? What do your customers think they’ve bought? I’ve certainly written a number of enterprise case studies where a CIO or IT director describes the product/service they’ve implemented and they really aren’t using the same words as the vendor that sold the solution.

So – take a moment and think about why your company exists, what it does and what you should call it – as honestly and as realistically as possible.

1. Why does your company exist — what is its vision and purpose?
2. What problems do you solve?
3. Who do you solve these problems for?
4. Describe in the simplest terms possible what your technology does for them
5. Do you have customers that are already using this technology to solve such problems?
6. Ask a good proportion of your customers (don’t just ask one or two):
– What is the problem you had before you worked with us?
– Did we solve this problem?
– Can you describe how we solved it?
– How would you describe our technology, product or service — what is it? (and no prompting them with your own self-created market or terminology!)
7. Ask each of your employees, business partners, suppliers, and other people you trust to complete the following statements on paper:
(Your company name) makes/develops /sells _______________ to
_______________ which helps them _______________.
8. Which technology sectors/descriptions are frequently confused with your own technology but do NOT do the same things that you do?
9. And conversely, which technology areas do you overlap with?
10. Want to know more? Email me or send us an email to worksheets@prompt-pr.comand ask for our tech enterprise messaging template.

No marketing tactic is an island

This week I received a question which I’ve heard several times before, so I thought I would share my answer here.

The question was from an upcoming rewards-based crowdfunding campaign and was:“Can you help us calculate the percentage of crowdfunding contributors we can generate across media relations, outbound marketing, social media and partner marketing?”

The short answer is no. The medium-length answer is that it’s tricky to compartmentalize sources of supporters, backers or prospects. Think of something you recently purchased or committed to — a technology gadget, an accessory for your home, or a cause you recently supported. Can you honestly think of ONE thing that you saw, heard or read that led you to that decision? It’s a rare situation that even as consumers we can discern single marketing moments where we are influenced.

The long answer is that each of these channels support one another; they all work together to communicate your vision, share your authority and to demonstrate your impact; and you need to cover each base. You could just work on media relations, but if you aren’t actively engaged and sharing that media coverage over social media, then you would miss out on increasing your market scope, to share this coverage and to determine your tribe’s interest and likes from their online responses and engagement. And if you had no email marketing, you would miss out on opportunities to build relationships, to communicate on a more detailed and intimate level. You could just do email marketing, but without media you would miss out on the third-party endorsements and a broader reach. And without combining well-considered social media into that campaign, you wouldn’t reach new people. You get the idea. It’s a blend of activities — carefully coordinated, planned and working to increase the vision, authority and impact of your campaign.

In the advertising world, there’s the factor of ‘effective frequency,’ i.e. the number of times an individual needs to be exposed to a message before effective communication is achieved. You want someone to see you on social media, then to pick up a magazine and read about your campaign, then to get an update from a business partner that also mentions you. I’ll give you a few examples of how we use cross-tactics in our campaigns and crowdfunding experience:

Media relations (when it’s done right) creates visibility, shares authority and demonstrates impact to your target audiences. Then you’re going to share these results: over social media, in your outbound marketing, in inbound list-building activities, in your events, online. Part of the power of media relations is that a journalist or editor, an influencer or commentator, provides a third-party endorsement to your campaign.

Social media is an amazing opportunity to engage with relevant influencers and individuals while sharing your organization’s views, personality and beliefs. Sharing media results, linking social media content to really compelling content marketing strategies to drive sign-ups and to build your list can be a very strong tactic. Involving partners in social media can be a very rewarding exercise, for both parties.

List-building — which I feel is the core of a great campaign — is supported by all of this, and is not a stand-alone activity. The team at Prompt has just  released its list-building methodology, Tribalist. This program shares how to build a list for crowdfunding campaigns, step by step. List-building is one of the many moving-marketing-parts of a successful crowdfunding effort. But I think it remains a misunderstood discipline — and it can have an enormous impact.

See? They’re all linked. And that’s just a few of many examples.

At the end of the day, I know that marketing and PR spend is core to an organization’s growth. So I’d even challenge the questions listed at the beginning — and would flip them to consider the impact on business objectives and reach. In which case my follow-up questions would be:

How much is each new prospect worth to your campaign? How much is each cold lead potentially worth? What is the potential lifetime value of a new supporter to your business?
If you could halve the decision time it takes a supporter or backer to buy from you, what would that mean to your business?
What are your financial goals for your campaign? What financial resources do you have available to support this?
And my final one: What happens to your business if your crowdfunding campaign fails?

If you are planning to crowdfund and are serious about increasing your list-building practices, then check out Prompt’s Tribalist, our step-by-step program on how to identify your tribe and create a list to support your crowdfunding campaign.

Avoiding launch jitters

Product launch jitters - Hazel Butters Launching a product or service can be a very vulnerable experience.

If you’ve thought of something new, interesting and exciting — a product, service or application that you believe will change the way people work, communicate or see the world. You’ve lost sleep, may have bootstrapped and walked a financial tightrope, worn out family and friends while nurturing your idea to reality. You’ve dreamt about it, built it, developed it.

Now you have to tell other people about it.

This is where launch jitters come into play. It’s so hard telling people about your idea, sharing your idea. It’s a very personal thing, and to make turn your concept into a success, you have to share your thoughts and views with other people.

Launch jitters manifest themselves in different ways. There’s what I call ‘launch stage fright’ which stems from hesitation and a genuine fear to share the story. I mean scared to get out there and tell people face-to-face — at meetings, at bus stops, over the phone, shouting from the rooftops…

Sometimes this stage fright is accompanied by ‘skewed launch perception’. It could well be a brilliant idea, but how do you share your long-term vision? There are very few overnight sensations (some would argue that there are none), so it’s vital to be persistent and believe in your product beyond day one, week one and month one of the announcement. You have to be in it for the PR long haul.

So here’s my advice for getting over any launch jitters:

• Follow a well-mapped out plan. Your go-to-market strategy should include all the sales and marketing elements that you need, with plenty of built-in opportunities to measure, revise and revisit. The long haul, remember?

• Get your messaging right before launch. It’s very hard to backtrack and attempt to rename something, even if you think no-one has taken any notice first time around

• Don’t get ‘over-corporate’. Yes, there are product categories, magic quadrants, and a heap of ‘leading provider of’ stories out there, but you simply cannot beat communicating at a personal level about the launch

• Budget properly. Unless you’ve created wireless electricity for the masses, cloned Justin Bieber, or come up with a carbon capture solution that fits in a handbag and costs less than $10, you’re going to need more bucks in your PR line after that first press release

• Be passionate. This is your vision and it’s your job to share the reason, opportunity and uniqueness of it. Be genuine and passionate. After all, this is part of your life’s story.