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Entrepreneur Office Hours - Issue #38
How a little math can go a long way toward fundraising success. Plus, are the 7 deadly sins the secret to startup success?
As someone who majored in English, I’ve never considered math one of my strong subjects. In fact, since we’re all friends here, I’ll just go ahead and admit: I HATE MATH! I was terrible at it in high school, and I did everything I could to (successfully) avoid it in college. Heck, these days, the most complex math I ever have to do is calculate a tip, and I’m perfectly fine with that.
Despite my general loathing of all numerical-related subjects, I’m particularly proud of an article you’ll find in this week’s issue where I explain an important fundraising concept using — you guessed it — mathematics. Let’s all pause while a take a moment to pat myself on the back…
[… congratulations Aaron… you earned it!]
Alright. Done with that. Back to telling you what else you’ll find in this issue.
On Web Masters, you’ll hear a fun interview with Stefanie Syman, founder of FEED Magazine, one of the first online daily publications. In another article I spend some time thinking about how the seven deadly sins are actually the secret to great customer acquisition. In yet another article, I explore the importance of having multiple revenue streams. And, finally, in the Q&A, you’ll find a question about pricing. Well… it might be about pricing. You’ll see what I mean when you get there.
Enjoy! (And share! with others!)
Lucky for me, entrepreneurs don’t need to know a lot of math, but they definitely need to know this.
The Writer Who Merged Tech and Culture
Publishing online is as easy as using a word processor. But publishing on the early Web -- and monetizing on it -- wasn't nearly as streamlined. On this episode of Web Masters, you'll meet Stefanie Syman, founder of FEED Magazine, one of the Internet's first popular digital publications, as she explains the challenges of early web publishing.
Listen to her story now on:
…or search “Web Masters” wherever you listen to your favorite podcasts.
Sure, the seven deadly sins might send you to hell in your personal life, but they can also help you reach startup heaven.
First Rule of Entrepreneurship: Always Have Multiple Revenue Streams
I was meeting with an entrepreneur who'd just had his entire business destroyed by a single change in YouTube's algorithm, and it reminded me of one of the most important and fundamental rules of entrepreneurial success. Are you following it?
Office Hours Q&A
I’ve been having a lot of trouble with getting people to pay. I’ll be in a sales call and the person is interested in buying, but when I tell them my price, it always seems way more than what they expected, and that pretty much ends the conversation.
Am I pricing myself to high? How do I figure out the right price point?
I’m going to assume the price you’re quoting potential customers is a price you’ve chosen for some logical business reason that relates to how much your product costs to produce and how much value you think you’re delivering. If not, then I suggest you lower your price until you find the highest possible price you can charge that people are willing to pay without causing you to lose money. That’s the easiest path forward.
However, if you need to charge the price you’re charging (i.e. because you have certain fixed costs, and the price you’re charging is what prevents you from losing money on every deal) then this isn’t a pricing issue. It’s either a pipeline problem or a market opportunity problem.
If it’s a problem with your sales pipeline, it means whatever marketing strategies you’re currently using aren’t attracting the right people. You need to do two things. First, you need to adjust your marketing strategies so they’re attracting higher quality sales leads. Second, you need to make sure you’ve got a better lead qualification process in place.
By the way, in case you’re not familiar with the term “lead qualification,” it’s a process where you vet leads before trying to sell to them. Depending on what you’re selling, this could be as simple as tossing any leads with email addresses that aren’t proper business email addresses (e.g. emails that end in @gmail or @yahoo). Or it could be as complex as having a 10-15 minute “qualification” call where a sales development rep (SDR) in your company chats with every lead to make sure they all have the potential of being good customers (e.g. being able to afford your product) before a sales pitch ever happens.
Hopefully your issue is just a pipeline problem and you’re getting the wrong leads into your sales funnel. That’s correctable with a different marketing strategy. However, if you can’t lower your price, if you’re sure you’re talking with the right potential customers, and customers with more money don’t exist (or customers aren’t willing to spend more money), then you’ve got a market opportunity problem.
In other words, you haven’t identified a problem you can solve in a cost effective way. That’s a much harder problem to correct because… well… you can’t force the market to change. If you genuinely believe the problem is worth solving, then you need to figure out a cheaper way to solve it so you can charge less money. If you can’t, then you probably need to accept that the problem isn’t solvable with current technological solutions and consider pursuing a different venture.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!