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From Startup to Scale-Up: The Path to Profitability

Starting a business is exciting, and writing a solid business plan for your startup is crucial. You can also spend a lot of time developing and refining your product or service offerings. But do you know where you should really focus most of your attention? Making money or finding potential customers.

If you can show that you have a business case and that customers are willing to pay for your product or service, everything else is secondary. This is especially true if you are looking for venture capital or investors. Why is a proven business case so important? I've written and read countless business plans, developed numerous products or services, and created even more logos, websites, and brand identities. It's great to do, but if no one wants to be your customer, it's all theory that doesn't work in practice.

This doesn’t mean that the rest is unimportant, quite the opposite, but feasibility and success don’t depend on how well your plan is written, how your logo looks, or how great your product works. You want to set up a startup that is profitable, and you really only need your sales pitch for that.

How Can You Sell Something That Doesn't Exist Yet?

Example 1: Suppose you want to open a bakery or a clothing store. Do you need to have already baked bread or have clothes on display before you can sell them? No! You can ask people in your environment if they want to buy gift vouchers, maybe with a 10% discount later on.

Example 2: Suppose you want to build a mediation platform that connects supply and demand between the best coaches and retreats to individuals and companies looking for them. Even here, without the platform existing, you can already charge coaches and retreats to be featured once the platform is ready. You can also find companies and individuals in your network who would be willing to place a pre-sale for a small discount.

Of course, it sells easier if you already have a prototype or a nice sketch of that clothing store or bakery, but it is not always necessary.

Steve Jobs and Steve Wozniak, the founders of Apple, received an order for 50 computers from a local computer store called The Byte Shop, even before they had built them. This happened after Jobs showed a prototype of the Apple I. They used this order to secure funding for the production of the motherboards, which allowed them to actually build and deliver the computers. The rest is history.

Why Sell First and Build a Business Case?

When you start a business, you are called a startup in the early phase. That is actually a phase you want to get through as quickly as possible. The next phase is a scale-up. A scale-up means that you have learned from your mistakes and know how to make money with what you do.

By focusing most of your time on selling your service or product, you get feedback from your (potential) customers, and that feedback makes your business, product, or service better. Additionally, you get to know your target audience's needs better. You learn what language resonates with them and what they want to hear, which is handy when you start advertising later on.

Another advantage is that if you can get paid for your services or products, people with venture capital are more likely to support you. If they have to do so based solely on a beautiful website or business plan, most are inclined not to participate.

How to Find Your First Customers as a Startup

Your first customers should ideally come from your inner circle. That is, your immediate family, friends, or acquaintances. Because if they don't want to buy from you, why would a stranger?

Now, it could be that your inner circle has no need for your product or service. Suppose you want to sell tricycles for children, and no one has children; that makes sense. But then they probably know someone in their inner circle who might need it.

If they want to recommend your product or service to their inner circle, this is also a great sign because it means they really believe in it. If they don't, it's a sign that you need to reconsider whether your startup is on the right track.

Balancing Sales and Your Business Plan

A man from Amsterdam requested a mentoring session for his startup, and within 5 minutes, it was clear that he had absolutely no time to find his first customers. He had been busy for months finishing a study, his site was just done, the content agency needed direction, the logo needed some tweaks, and maybe the service pages needed rewriting. He was unsure if they matched the target audience, and he wasn't even sure if it was the right audience.

It's quite a workload! :)

Of course, all these things he was working on are important, but with 99% of his focus on these aspects and maybe 1% on finding customers, it would be wiser in his case to spend at least 90% of his time on finding customers and, with their feedback in hand, work on everything else he had been busy with.

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