There are a just a few insights into the nature of REAL businesses vs. BULL CRAP internet business ideas I’d like to share with you today…
1. REAL BUSINESSES SELL LOTS OF PRODUCTS (AND SERVICES) AND RUN VOLUME ON UNDER-OPTIMIZED FRONT ENDS. (Bull-crap internet businesses, on the other hand, spend all their resources waiting to perfectly optimize their front end. This is based on the very faulty belief that a well optimized front end will make the whole business profitable in the long turn.)
This one’s a little tough to grasp, because intuitively we all know optimization is a good thing. I mean, I’ve spent the last several years studying and teaching RESEARCH AND CONVERSION, all in the name of optimization, and I’ve been trying to hammer home the notion there’s no such thing as a traffic problem, only a conversion problem.
It’s all true.
But what’s equally true is, it can take a LOT of time, money, and labor to optimize your front end…
And once you’ve got a customer who trusts you, that customer is likely to be interested in buying LOTS of products and services from you…IF you’ve got them available to purchase! (One of the most common complaints from MY customers, for example, is “I wish you had more for me to buy, Glenn.”)
Once a REAL business has a semi-manageable front end, they turn their focus to creating a multitude of back end products. A WHOLE CATALOG of things to sell. They say “good enough is good enough” (to quote someone we all know) and just run with the damn front end conversions…
SHOULD they keep optimizing the front end? Sure….
But it’s often easier, faster, and more economical to add visitor value by pumping out back end products and services…
And the overall profits in the business get maximized not so much by the efficiency of front end acquisition, but by the VOLUME of customers acquired who then go on to buy lots of back ends.
Short story? Once you’ve got the ability to build a list of buyers, build baby, build! (And add LOTS of products and services). You can fix the front end ROI later.
Another way to look at this is, what if you had to make a business work with crappy front end conversions? It’s a good exercise to model out in a spreadsheet for your business because several of the 8 figure businesses I’ve run into recently are built on really crappy front end conversion numbers! (Seriously… even some really famous ones you’d recognize in a heartbeat if confidentiality didn’t prevent me from revealing them are running 0.5% front-end conversion or worse)
2. REAL BUSINESSES HAVE LONGER TIME HORIZONS. (Bull-crap internet marketing businesses, on the other hand, start out with the question “how can I make money quickly without a lot of work”)
It’s become fashionable to make fun of the “Wall Street” business model. You know the one I mean… let’s go raise $50,000,000 and burn through it at a million a month while we talk about lots of ideas and make lots of spreadsheets. We’ll get profitable in 3 to 5 years…
So in many ways it’s only natural for the pendulum to have swung the other way…
We internet marketers HAD to say “that’s silly and wasteful, you should hold yourself to profitable results MUCH sooner, perhaps immediately”…
But you know what? Thinking you’ve got to be profitable immediately is probably the best way to fail!
- It prevents you from doing the 20 or 30 market tests you may need before you can achieve escape velocity. (Because you’ll deem the business a failure way before then)…
- It prevents you from seeking funding when necessary, so you really CAN have time to study the market, craft the best offer, and see it to fruition and profitability…
- It prevents you from recognizing your true successes, which prevents you from building upon and strengthening them..
- And it creates an overall sense of panic and “unworthiness” in your organizational culture…especially in the founders.
In my experience the sweet spot is in-between. REAL businesses make a realistic plan for achieving profitability in 12 to 18 months. Sometimes it takes them longer to achieve that profitability but it’s clearly worthwhile to keep going because the path is so well laid out and progress in that direction is obvious.
Real businesses also figure out how to FUND this time horizon so that the members of the business are financially calm and focused on achieving it.
Food for thought, right?
3. REAL BUSINESS PEOPLE WORK LIKE *$#*&%!! MANIACS (AND THEY LOVE IT!). Bull crap internet-marketing people work as little as they can get away with, and only do so in order to be able to not work later on.
My apologies… it’s pretty rare for me to curse, but I wanted to underscore the point!
If you’re in the right business, you’ll know it because you won’t want to stop working…
Instead of looking at your workload and saying “I have to do this work today”, you look at it with a kind of perverse excitement and say “Oh good, I get to work on this today”…
Not every moment of every day…
But there’s a general feeling of passion, interest, and excitement for the business…
The essence of your being gets poured into it. You burn the ships at the shore and fully commit to conquering the territory…
You feel in your heart it’s not a matter of IF the business succeeds but WHEN it will…
And because of this you’d rather be working on the business than almost anything else…
In your “free” time your head is constantly running with thoughts, images, and feelings about the business…
You feel thrilled with the littlest successes, and heartbroken with the smallest defeats…
Much the way a mother might about their child. (The best description of having a child I’ve ever heard was “It’s like having your heart outside of you”)
What does this all mean for YOU?
1. Do the math. Set up a spreadsheet with at least a half dozen products and services in the mix, and see if you can make it work with a low front end conversion.
2. Once you’ve achieved escape velocity and you have a catalog of products, buy as many customers as you can as fast as you can (provided your business systems can withstand the load.) The cost of advertising almost always rises over time, so get them in your funnel while it’s most profitable to do so.
3. Keep developing your conversion and optimization skills, but recognize these are NOT the only skills required to build a real business, and that because optimization is a resource-intensive activity, keep thinking about whether optimizing a particular front end (especially) is the “highest and best use” of your available time, capital, and labor.
4. If you can’t see your way to becoming passionate about your business so you’ll actually WANT to work like a “*&$#*!! maniac”, think about how the business would have to be transformed to make this possible, or how to safely transition to something where that motivation would exist. Because SOMEONE’s going to have to provide that driving force or else, in my experience, escape velocity eludes you.
Onwards!
Dr. G 🙂
PS – In a mood today I guess!
PPS – I’ll be opening my business coaching practice for perhaps the LAST time on January 1st, 2016…for one day only. (It’s been closed to NEW clients for almost three full years.) If you’ve got any interest in working with me personally, now’s the time to sign on. Read the letter and get on the priority notifications list please.