It’s Monday — that means it’s time to open up the mailbox and answer YOUR questions!
This might get painful…
Most aspiring entrepreneurs have very little grasp on the realities of business.
And the further disconnected they are from understanding business, the less likely it is that they will succeed. Even if they have a perfect product or service idea that could be truly beneficial to a huge target market.
Today’s question reflects this.
And as I’ve promised to do, I’ll give my honest reaction to this — even if it’s not always what you want to hear.
Remember: every Monday is Mailbox Monday, where I answer YOUR questions. To ask your question about marketing, copywriting, sales, business-building, or more, simply click here.
Here’s today’s question…
—
Roy,
I have a patentable product idea, which I decided not to mention here to protect the idea, with an estimated 200-million person market worldwide.
Unsaturatable, meaning it could continue for centuries. Because it is directly proportional to population growth with the other two specific problems occurring with population and health problems.
But since I think the other half have no access to marketing or internet. I supposed it is only 100-million per year estimated market at 100% marketing efficiency.
But I could sell it for $7 without competition if it is worldwide patented. With only $2 of cost of production each unit. ROI is $5 per unit multiplied by 100 million buyers is equal to $500 million. Minus $5 million shipping cost and other $10 million marketing expenses per year. Equals to $485 million per year.
The situation is I have no money for now. I wanted to get funding by selling ebooks. And at the same time wanted to learn copywriting to have an experience in marketing.
I don’t plan to sell equity in exchange of fundings because I want to be a sole owner of the company which is greedy. Although I think I can give 5% equity to the marketing agency I can get.
What do you think is better to do?
Sam
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There are so many problems here…
Sometimes these are painful to answer. Because I do really have care and compassion for my readers, even if I feel like they’re in so deep they can’t even see it.
I’ve found at least seven major issues in this question, that I’ll address here. Before being more direct in my answer to the question posed.
Because if you don’t have a realistic grasp on the realities of the business you’re trying to build, you’ll NEVER succeed.
So, for Sam’s sake, and because this is what I’d hope for if our roles were reversed, I’m going to give some accurate thinking here, even if it falls under the category of “harsh reality.”
I had to edit this significantly for spelling and readability…
There have been countless entrepreneurs who’ve succeeded without perfect grammar, or who were horrible writers. Whether it’s because English is their second language, or they have dyslexia, or whatever. Great spelling and readability aren’t required for business success. And being a good grammarian can make you a teacher’s salary, but it doesn’t qualify you to build a business.
However, clear communication is an advantage in business.
You will benefit from being able to communicate clearly, and in a compelling way.
Further, the attention to detail that is required for clear writing and clear communication does give you some advantages that sloppiness doesn’t.
I don’t want to overemphasize this though, so let’s move on to more important matters…
Assuming no competition…
Patents are a joke. They are not truly an advantage. If there is truly a $700-million-per-year market in solving this problem, someone with more resources and intelligence at their disposal than you or I will find a way around any patent.
You may create a great product. And that great product could gain a large share of that market. But you can never assume you’ll have no competition in a good market. Because problems (which is what markets are built around) can always be solved in multiple ways. And even if you can manage legal protection around your specific solution (harder to get and keep than you might think), there will always be someone who comes and changes just enough to get around the patent.
Every REAL market has competition. In fact, a good business person or marketer knows that that’s a good thing, for many reasons. It proves the market. It gives you a base of prospects to go after. And so on.
If this is a market with zero competition, it’s actually likely not to be a market at all.
Assuming 100% marketing efficiency…
This reflects a total lack of awareness about the challenges associated with marketing.
Even THE BEST marketers, at any kind of scale, are only getting a few percent conversion rates. Double-digit conversion rates typically are only to warm markets, or to markets that are so targeted that we’re not talking this kind of scale.
Much less assuming you’ll get 100% of the market to buy anything, from anybody.
Assuming $0.10 per sale all-in marketing costs…
You’re lucky to pay this much per click.
And if you do, this assumes 100% conversion rate, from the first click, with no additional marketing expenses. Which we just said is pretty much impossible at any kind of scale.
Assuming $0.05 per sale shipping costs…
What product actually ships and costs a nickel to ship, worldwide? Including packaging?
I can’t send you a postcard for that.
Assuming you can run a $700 million business at 69% profit…
If you were to ever get to even $1 million (much less $700 million), you’d quickly discover that maintaining a 69% profit margin is incredibly difficult. Especially if you’re shipping and warehousing physical products.
It’s just… No.
Short-sighted views on equity…
Unfortunately the perspective you’re taking on equity is called “cheap,” not “greedy.”
And while “cheap” can be beneficial in the realm of personal finance, it’s a bad absolute rule in terms of business-building.
Do all big businesses need investors to get big? No! Most definitely not! In fact, I tend to dislike the idea of bringing in investors. Because it complicates things in the worst of ways. I also think people tend not to be as efficient with their business decisions if they’re wasting other people’s money, instead of their own.
That said, I think this perspective is just another layer in the cake of bad thinking that you call a business idea. Except this cake isn’t sweet at all.
No reasonable marketing agency would take on your project, either. Because in order to build a marketing agency that can succeed taking a percentage of sales, you have to recognize bad clients, and you’d be a bad client based on everything I’ve seen here.
Selling ebooks or copywriting?
I don’t know. Do you have anything of value to put in those ebooks? An ebook alone isn’t valuable, and that’s a bad way to ask about what kind of business you should build.
A good business is a business that solves the problems of people who are willing to pay to have that problem solved.
An ebook business is only valuable if the contents are valuable.
A copywriting business is only valuable if you can solve the problem of getting more leads, customers, sales, and profits. Which does take a level of business awareness that you don’t yet have. It also takes at least reasonably good persuasive writing skills, which you don’t seem to have yet (at least in English). I know this seems harsh, but I’d be doing you a disservice to tell you otherwise.
My advice…
If this product is LEGITIMATELY as good as you say it is, go sell ONE of them.
Even if it costs you $10 to make and $10 to sell and generates $7 in revenue, for a $13 loss.
Go sell one. And then, sell another. And another, and another. (Do it at farmers markets, county fairs, in independent retail stores, to friends — wherever you can.)
And while you’re doing that, do whatever job it is you’re doing now to pay the bills.
Go start selling them, and developing stories of people who’ve had this problem solved (whatever it is) using your product.
When you get to enough volume, get a few dozen or a few hundred made cheaper, so maybe you have some margin in the sale.
Then, go sell some even more, to really get an idea of how to present it in the most compelling way.
Then, keep doing that, over and over again.
And if you can’t do it with this product, that means either the product isn’t what you thought, or the market isn’t what you thought, or you aren’t what you thought.
But don’t get discouraged.
Failure is only failure if you give up — it’s the way to success if you learn from every failure.
If you can’t sell this product, find another, and follow the process above.
If you can, figure out how to sell more. Then, figure out what other problems you can solve for these people. Then, figure out how to build the systems of a business to scale marketing, fulfillment, and innovation. Then, figure out how to use those systems to create even more businesses. (These are the stages of a business in Ready, Fire, Aim — which I consider to be required reading for entrepreneurs.)
A million dreamers meet failure with the kind of lofty schemes cooked up in this email. Your chances of success on these assumptions are probably even lower than winning the lottery. Unless you can accept the hard work of selling one, then another, and another, and scaling with hard work and much lower margins than you project in your made-up business plan.
Successful entrepreneurs tend to follow the process above: selling it, serving the customer, scaling everything, and repeating. Often under great duress in the early stages.
It will be 10X harder than you expect (if not more). But if you truly succeed, you’ll get 10X the fulfillment you expected for having pulled it off. And no, I’m not talking about money. But if you do pull it off to even 1/10th of your expectations, you’ll have as much money as you ever need.
I’m sure this isn’t what you wanted to hear, but I do hope it was helpful.
Yours for bigger breakthroughs,
Roy Furr
