The income statement is one of three financial statements that you need to become familiar with (the other two are balance sheet and cash flow statement). Understanding an income statement is essential in order to analyze the profitability and future growth of your business however reading an income statement can be intimidating to many people. Especially, if you’re at the early stage of starting your first business. To make the process slightly easier for you, here are 6 tips you should consider while looking over any income statement. It may not be as difficult or as confusing as you think it is.
1. Every income statement follows a simple formula
There is one formula that every single income statements follows:
Revenue- Expenses= Profit.
2. Income statements cover a period of time
The income statement will inform you of the amount your business has made over some time. usually, The statement will represent how much was made over a month, a quarter or a year. The “year-to-date” reflects business activity since January 1 to the present date (usually end of month).
3. Multiple names for one item cause complexity
Don’t let the financial jargon throw you off. Confusion can stem from the vocabulary used in in statements. People can use different terms to describe the same things. For instance, the words “sales” and “income” can be used interchangeably, as opposed to revenue. The term “profit” can be used instead of “net income”. “Expenses” are sometimes called “net income”.
4. The breakdown
Often times, expenses are split into multiple parts. Furthermore, profit is calculated at interim levels. For example, expenses will often be broken down into revenues, cost of goods sold, gross margin, selling, general and administrative (SG&A), and profit. Cost of goods sold are costs directly related to the products sold. Materials bought to make a product fits within this category. SG&A are costs not directly related to the making of the sold good. For example, salaries and office supplies are calculated for this.
5. Gross margin percent should be relatively constant
Gross margin is revenues less cost of goods sold. Also referred to as gross profit, gross margin is the money you receive from the products and services you sell, minus what it cost you to deliver them. It is essential because that the cost of goods sold move with revenue. The gross margin percentage is your gross margin divided by revenue. It should remain relatively constant over time. Any dramatic change with this regard should be seen as a red flag.
6. Dollars spent on SG&A should be relatively constant
Any significant and abrupt change in SG&A should be considered as alarming. It should remain constant overtime, and all dramatic and unjustifiable change should be looked into.
Understanding how to read an income statement is important, as it summarizes the overall financial health of your business. Not only is it simple once broken down, there are also many tools available online for you to deepen your knowledge on the matter.
Over the past 18 years PME has helped guide many diverse businesses to success. Often, entrepreneurs come to us with just an outline of what they aim to achieve. With added assistance from our program leaders, mentors, and committee members, we are able to turn this vision into reality. Here are just a few notable mentions of companies that have been able to turn ideas into lucrative business opportunities with help from PME.
Not only do they have millions of downloads for their games, they have become members of the PME committee. The mission of Budge Studios is to thrill, educate, and entertain children around the world through creative and innovative apps. They have won numerous notable awards for their accomplishments. This includes the Google Play ‘Best of 2016’ App Selection Award for their app, My Little Pony: Harmony Quest. Additionally, they won the Apple Store Best of 2016 for Miss Hollywood Vacation Canada. Budge Studios may be in the business of creating games but their business strategy and objective is rigid and direct. It’s all about being family friendly and universally playable.
Naked and Famous Denim
Naked and Famous Jeans has come a long way since we first met Brandon Svarc. Simply put, the company focuses on one thing only. As they so eloquently state: “No marketing, no washes, no pre-distressing, no nonsense. Just excellent denim at a reasonable price.” Naked and Famous Jeans uses Japanese selvedge denim which is woven slowly and painstakingly on old shuttle looms. Svarc travels to Japan numerous times a year to find new fabrics, and denim mills. Nicknamed the Willy Wonka of denim, he has been interviewed by popular publications such as GQ to share knowledge about his expertise. With all their products made and sewn in Canada,their sole purpose is to sell the highest level of quality to their end-user.
CoPower is where impact investment meets Wall Street. We met founders David Berliner, Larry Markowitz and Raphael Bouskila in 2013. Since then, CoPower has continued to strive and make the world a greener and more sustainable place. CoPower’s team works with clean energy firms to identify clean energy and energy efficient projects that generate steady and predictable revenue streams. CoPower is all about impact investing. For those of you who are unsure of what this is, impact investing is a strategy that involves the investing in companies and projects with the intention of generating measurable, positive, and environmental benefits alongside financial returns.
Not only are Navi and Daniel kick-ass entrepreneurs, but did you know they had the biggest kickstarter campaign in Canadian history? Revols has come a long way since its founding in 2014. Navi and Daniel were endlessly frustrated with finding the perfect pair of earphones. While they understood that ears are as unique as fingerprints, all custom-fit earphones came with a high price-point and long wait times. The dynamic duo decided to take matters into their own hands and create Revols: a pair of wireless customized earphones that provide the same comfort and sound benefits as traditional custom-fits, at a fraction of the cost and time.
All in all, PME has had some pretty driven, and ambitious entrepreneurs come through its doors. This is just a glimpse of many of our success stories. We provide them with the most essential tools entrepreneurs need in order to succeed.
Rosh Hashanah is a time for reflecting on the past, and anticipating what is to come. As this year is ProMontreal Entrepreneurs (PME)’s 18th anniversary, this Rosh Hashana is rather special. PME has come a long way since 1999. What started off as a small initiative to support Montreal-based businesses, has become a community movement that has much to be proud of. Over the years, the PME program has helped countless people scale their businesses, receive business training and coaching and connect to investors and mentors. Through our PME fund, we have helped propel and create over 71 startups that have created over 800 jobs and have an estimated value of over 45 million dollars.
Without question, making PME a success takes a village. Thankfully for us, the village behind our success is one of support and unity. As a matter of fact, one of our greatest assets is our PME committee, comprised of a dedicated group of community leaders working to help our entrepreneurs reach higher levels of success. Along with our group of accomplished and knowledgeable mentors, the committee assists our entrepreneurs in solving the short term and long-term problems of their businesses. The bond built between all parties affiliated with PME reinforces the values of education and community.
Though the past 18 years have given us much to be proud of, we equally look forward to new beginnings. As PME expands and branches out into new endeavors, this will be another year of new challenges and accomplishments. In order to further reinforce PME’s mission of helping young entrepreneurs, we hope to develop new ways of collaborating with diverse entrepreneurs by helping them ignite their business ideas.
All in all, while we will continue to bring life into business in this coming year, we wish all members of the Jewish community a shana tova!
In its short history, Israel has managed to become one of the world’s few startup capitals. It has become the startup nation with the third most companies listed on NASDAQ. Given Israel’s population of 9 million, various internal and external conflicts, and lack of natural resources, it has accomplished what most would consider to be impossible. Tel Aviv has built a reputation that reflects more than its beautiful beaches. Just go visit Taglit’s Innovation Center to see exactly what we are talking about.
The Innovation Center at the heart of Tel Aviv aims to display new advancements of Israeli Start-Ups in different fields. In collaboration with the Tel Aviv Stock Exchange, Taglit-Birthright built the “State of Mind” Innovation Center. It provides an opportunity to talk about the fact that this sliver of land has over 4,000 operating startups. Visitors can learn about Israel as an international leader in technology, engineering, and philanthropy. More specifically, ground-breaking inventions for agriculture, medicine, transportation, security, and outer space are displayed. What is unique about the Innovation Center is that it emboldens user interaction. The center puts up touch screens, tutorials and prototypes, allowing for visitors to explore and understand various innovations. This way people can understand exactly why the country is deserving of its “Startup Nation” title.
Each Taglit-Birthright group that visits the Innovation Center begins by exploring the interactive exhibition, and continues with a meet-up with a Ieading Israeli entrepreneur. Here are the names of just a few start-ups displayed at the Innovation Center that is destined to make revolutionary impact.
Electroad: This technology uses energy from the road to power electric vehicles using that road. Copper chains are inserted into grooves in the asphalt, then connected to a power converter on the side of the road that links to the city’s electric grid. This will revolutionize transport.
Pillcam: A tiny camera in a capsule. After the patient swallows the capsule, the camera can reveal any abnormalities and supplies essential medical diagnosis. A tiny wireless camera contained in an easy-to-swallow and disposable capsule about the size of a vitamin pill transmits images as it travels through the human body. This inventions makes excruciating exams, such as colonoscopies, much more endurable.
Skyfi: It is the world’s most advanced nanosatellite with larger cover area and bandwidth. This allows for better connection between more people, allowing us to become part of a global village. Basically, this is a much cheaper way of spreading internet globally.
Each startup begins with a need. Taglit Birthright had an unmet need to show groups the innovation side of Israel; and thus the center was born. The center was originally intended for Taglit participants, but curiosity and interest arose quickly. Now the center also hosts governmental and business delegations from all over the world, a variety of private and group tourist organizations, and all kinds of people who want a glimpse into the Israeli innovation scene.
Former Prime Minister Golda Meir famously said the God had made a mistake in sending the Jews to the only country in the Middle East with no oil. While it is true that oil may have made things easier, lack thereof has, without a doubt, forced Israel to find new and innovative ways to survive and transcend all expectations.
As Jeff Bezos so eloquently said, “Your brand is what people say about you when you’re not in the room.” The statement seems straightforward. But the process of building your brand is the difficult part. As an entrepreneur, you should commit to building a brand identity that resonates with your target market. So many people forget that businesses, especially those that are B2C, must have and portray a brand identity that will be the foundation of all future marketing initiatives. There are essentially 3 ways to build a brand: creating brand elements, secondary associations and marketing programs. However, before you start pouring your heart into your marketing strategy, take a moment and devise a market research plan. Investing in thorough market research is the only way to brand successfully.
How does an entrepreneur build a brand that will resonate with my customers? Though large corporations have more resources to create and develop a brand identity and conduct appropriate research, the process is practically the same. There are 6 steps to the marketing research process (click on the hyperlink for more details). (1) Defining the objective and problem (2) Determining research design (3) Designing and preparing the research instruments (4) Sampling and collecting data (5) Analyzing data and (6) Visualizing and communicating results. Though this seems complex, the hassle is definitely worth the effort. Following these steps, by conducting quantitative and qualitative research, will let you get to know your customers and their expectations of you. This implies conducting surveys, looking into credible secondary data, running focus groups, conducting interviews, testing for brand recognition, testing for recall, and associations. The goal is to know your customer enough to develop a brand identity that will appeal to them, compared to that of the competition.
If you don’t present your brand identity to the right people in the right manner, you missed the opportunity to acquire them. This will be time consuming and costly to reverse the associations people have already made with your brand. This is not to say that you can’t change your brand identity in the future. To the contrary, many successful companies have had to make brand-related changes in order to remain relevant over time. For instance, Victoria’s Secret was rebranded countless times before their angel wings took over retail, Apple nearly went bankrupt before becoming a staple in tech, and UPS used to be big and boring before it became personal and innovative. But, changing your brand image is costly and takes time. Keep in mind that you are a start-up, and will likely have a limited budget. Doing it right early on, will save you money, time and stress.
Whether you are an established business or start-up, there really only is one way to start off the branding process, and that is through market research and knowing exactly who you are targeting. We can’t stress this enough. Get to really know your customer early on. Drafting a brand narrative is strongly recommended. The objective of marketing is to create a lasting relationship, called customer retention, with the customer after the actual transaction has been made . You will only be able to do this once you’ve identified your customer’s problem, their expectations, and built a brand identity that they value.
Finding an investor is challenging. So it is understandable that when you are ready to start accepting term sheets that you would be tempting to accept your first offer after having reached out to countless investors. Though lack of financing can cause you to overemphasize the pros of accepting an investment offer, remember that there is much more at stake when dealing with an investor than your finances. Sometimes simply saying ‘no’ or ‘you are no the right fit’ is the smartest move. In order to evaluate compatibility with your potential investor, there are two things you should focus on:
- The Term Sheet
It’s not just about how much money you get, but about how much you are willing to give up for it. Your term sheet is an agreement that establishes the terms and conditions at the base of an investment. It addresses information pertaining to the identification of parties involved, initial purchase price, contingencies that may constitute changes in your agreement, time frames for decision making, equity, etc. It is your responsibility to know and understand its content. In most cases your term sheet is the starting point for negotiations. Investors, backed with their professional experience and legal team, will draft term sheets in favor of their interests. Be ready to come to the negotiating table equally prepared. If you do not see eye-to-eye on an important matter, it may be best to walk away from the offer.
- What your investor can offer you
Money will help businesses grow. However, it should not be the only thing that the investor has to offer. The reputation of the venture firms is often taken into consideration. Having a credible investor attached to a startup can assist with credibility, which can be helpful in forming business partnerships and hiring new employees.Many investors wind up taking board seats, so for these roles it can be helpful to find someone with industry experience or an expertise in scaling startups. Investors can help with problem-solving and can also make introductions. A good investor should be available to communicate with you, offer expertise, and give you honest feedback on your operations when needed. You should also look to see if said investor has a contact pool that you may be able to leverage in the future.
Declining an investment offer doesn’t mean you are closing the door to a particular relationship. Explain your business needs are for the time being, and express to an interested investor that you look forward to doing business with them in the future. Refusing to accept an investment offer does not have to be a negative experience. Show gratitude, explain your reasoning, and exchange pleasantries on your way out. You never know when you may cross paths in the future.
Si en tant que propriétaire de petite entreprise, vous envisagez de commencer un blogue, arrêtez de considérer la question et commencez à écrire. Plus d’excuses! «Je ne suis pas un bon écrivain» «Je n’ai pas d’idées originales» ou «Je n’ai pas le temps» ne sont pas de bonnes raisons; d’autant plus que les avantages d’un blogue dépassent de loin les inconvénients. Si l’on considère que d’ici 2020, les clients gèreront 85 % de leurs relations sans parler à un être humain, et que les blogues sont classés comme la 5e des sources les plus fiables d’informations en ligne. Ce que coûte vraiment un blogue vous est le temps.
Si vous faites partie de la minorité qui n’a pas encore joint le mouvement, voici 4 raisons pour lesquelles nous croyons que vous ne devriez pas attendre plus longtemps :
Il est généralement très peu coûteux de créer un blogue et de le tenir à jour. Les blogues peuvent être intégrés à votre site Web déjà existant, ou être créés indépendamment. Peu importe, c’est un mode de commercialisation parmi les moins coûteux pour les entrepreneurs. Il y a aussi de nombreux hébergements WordPress bon marché et fiables parmi lesquels vous pouvez choisir.
Génère du trafic vers votre site
L’ajout d’un blogue à votre site Web peut considérablement augmenter la circulation très ciblée de votre site. Les recherches démontrent que les entreprises qui bloguent reçoivent 97 % plus de liens vers leur site Web. Afficher des nouvelles convaincantes et perspicaces dans votre blogue, tout en utilisant stratégiquement des mots clés pour optimiser les moteurs de recherche, grâce à des publications en temps opportun, vous aidera à construire un public fidèle.
Positionnez votre marque en tant que chef de file éclairé
Les blogueurs accomplis sont des experts en stratégie de marque. Les blogues offrent aux entreprises l’occasion de discuter de questions importantes dans le secteur de leur industrie. Par ailleurs, les blogues permettent aux entreprises de montrer à leurs consommateurs qu’ils font plus que simplement vendre des produits ou offrir un service. L’utilisation de cette sorte de plateforme vise à attirer les lecteurs qui ne cherchent pas nécessairement à acheter quelque chose. Il y a de fortes chances que ces lecteurs reviennent dans le futur, quand ils seront effectivement à la recherche d’un produit. De nos jours, les consommateurs ne font pas qu’investir dans des produits, ils investissent dans tout ce qu’une entreprise représente. Les blogues constituent la meilleure façon de manifester que vous représentez le style de vie que vos consommateurs souhaitent connaître.
Établir des relations avec vos clients
Les blogues permettent d’offrir une touche personnelle. Cet aspect informel vous permet de créer une relation amicale de confiance avec votre public. L’ajout d’une section pour les commentaires, ou d’option de répondre à vos messages peut contribuer à susciter un dialogue intéressant. Idéalement, ces relations publiques positives permettront d’enrichir votre image de marque en vous présentant comme une entreprise qui se soucie de ses clients. Si vous créez régulièrement du contenu perspicace pour votre marché cible, vous pourrez vous établir comme source d’information importante.
Maintenir un blogue a aidé de nombreux entrepreneurs à faire passer leurs activités de la misère à la richesse. Dooce et Shoemoney en sont d’excellents exemples. Si ces raisons ne suffisent pas à vous convaincre qu’écrire un blogue est essentiel, posez-vous une question simple : Qu’ai-je à perdre en démarrant un blogue? Exactement. Rien que du temps bien dépensé. Essayez!
Au cours des dernières années, les plateformes de financement participatif, comme Kickstarter et Indiegogo, sont devenues dominantes. Il y a plusieurs raisons pour lesquelles les jeunes entrepreneurs peuvent se tourner vers les campagnes de financement participatif, incluant, en autres, le désir de ne pas s’endetter, valider l’adéquation produit / marché, ou tout simplement créer une visibilité de sa marque. Ces campagnes de financement offrent de nombreux avantages tels que l’externalisation ouverte et des possibilités de prévente, sans compter qu’il n’y a généralement aucuns frais pour démarrer une campagne. Cette approche peut sembler très excitante, mais c’est plus difficile que ça en a l’air. Pour chaque campagne Kickstarter réussie, deux échouent, et environ 9 campagnes Indiegogo sur 10 ne parviennent pas à atteindre leurs objectifs. Voici quelques raisons pour lesquelles les experts croient que tant de campagnes de financement participatif échouent.
- Des entreprises ne parviennent pas à établir une crédibilité
Il existe tellement de projets et d’initiatives sur les plateformes de campagnes de financement participatif que vous devez trouver des façons de vous démarquer de la masse. Plusieurs de ces campagnes ont acquis une réputation de promesses non tenues. Des problèmes de crédibilité hautement médiatisés vont bien au-delà des questions sur les produits ou sur la chaîne d’approvisionnement. La société Revols, financée par PME, a réussi à éviter ces problèmes grâce à une campagne Kickstarter très réussie qui a recueilli 2,5 millions de dollars en un mois. Leur vidéo Kickstarter présentait leurs partenaires crédibles, le soutien d’experts de l’industrie, et une adhésion spécifique à leur nom. Ils ont également embauché une agence de relations publiques afin de s’assurer de propager l’image désirée avant le lancement. Deux semaines avant de lancer leur campagne, Revols a visité des organes d’informations reconnus de différentes villes nord-américaines avec des démonstrations de leur produit. Tout comme Revols, quand il est question de relations publiques, vous devez bien maîtriser votre jeu.
La vidéo est trop longue
Une vidéo qui est trop longue n’est pas susceptible d’être partagée sur les plateformes de médias sociaux. Limitez la longueur de votre vidéo à 1 à 3 minutes — ainsi, il y a plus de chance que les gens la partagent dans leurs réseaux. Mais, même si on laisse le partage de côté, il faut admettre que les gens sont très occupés et qu’ils ont une capacité d’attention limitée — ils veulent regarder quelque chose qui est court et informatif.
- La vidéo ne raconte pas une histoire
Mieux que tout autre moyen, les vidéos offrent la possibilité de raconter des histoires. Votre vidéo doit avoir une trame qui suscite des émotions chez le spectateur. Si votre vidéo manque de sincérité, non seulement aurez-vous du mal à obtenir des investissements, mais les gens auront peu tendance à retenir votre marque.
- La façon dont les fonds seront utilisés n’est pas claire
Si vous connaissez exactement la façon dont vous utiliserez l’argent, vos bailleurs de fonds devraient la connaître aussi. Les investisseurs veulent connaître comment leur argent vous aidera. Des déclarations vagues comme «contribuez à la croissance de notre entreprise» ou «nous avons besoin de votre aide pour grandir» ne démontrent aucun plan stratégique pour l’avenir. Comme nous l’avons mentionné ci-dessus, le manque de précision ne fait que renforcer votre manque de crédibilité.
- Aucun test
Par test, nous faisons référence à deux choses. Tester le produit et tester votre page Kickstarter avant le lancement. Avant d’investir, les gens veulent savoir que votre produit a été testé et qu’il a reçu des critiques positives des utilisateurs et des experts de l’industrie. Les investisseurs et les bailleurs de fonds veulent être certains que leur argent est investi dans un produit attesté de qualité. Tester votre page Kickstarter signifie l’envoyer à des amis, la famille, des mentors et des personnes de confiance afin d’obtenir des commentaires sur la présentation et le contenu. Développer le capital social avant et pendant votre lancement offre des avantages considérables.
- Vos objectifs sont irréalistes
En partant, ne vous fixez pas comme objectif d’obtenir des millions de dollars. Même Revols avait pour seule ambition de récolter 100 000 dollars avant d’atteindre la barre de 2,5 millions. Vous devez planifier et fixer un calendrier pour les investissements que vous espérez recevoir. Il est toujours préférable d’être prudent dans vos estimations. Vos objectifs doivent être SMART, en d’autres termes, spécifiques, mesurables, atteignables, réalistes et temporels.
Voilà donc quelques-unes des principales raisons pour lesquelles les campagnes de financement participatif échouent. Une planification appropriée qui évite ces erreurs vous offrira déjà plus de chances de vous démarquer de la masse. Même si vous ne réalisez pas votre objectif, vous devriez tout de même être en mesure de quitter la plateforme plus fort que vous ne l’étiez à votre arrivée. Vous devriez avoir plus de sympathisants, une liste de courriels plus longue, et surtout, une meilleure idée de ce que vos clients veulent.
Finding the right investor for your business, let alone any investor, is a difficult task. You have to know where to look, who to network with, and the kind of resources your business needs. The last thing you want is an investor who can only provide financial support. You will likely speak to over a dozen of investors before finding the right one for you. It will be a tiring process, but meticulousness is necessary if compatibility is what you’re looking for. Here are 4 tips on how to find investors for your business when the time is right.
- Get an introduction from a mutual acquaintance
Asking members of your professional and social networks if they know any investors should be your first step. Entrepreneurs will have an easier time to get a meeting with an investor when introduced by a mutual acquaintance that the investor trusts. It is important you network constantly and consistently. Networking, whether in a social or professional setting brings about many advantages. The more good relationships you build, the better your chances of being introduced to an investor that is willing to give you his time. Remember that when networking you are not just gaining exposure, you are building connections with the networks of others as well. If someone they know has a need that matches your business, or vice versa, and you’ve made a good impression, chances are you will get a referral.
- Research where they’re going to be
If you have particular investors in mind, research where they are going to be. Many investors spend time at speaker series and conferences open to the public. In order to get the attention of your prospects make sure to attend these events, and have your elevator pitch ready. You might just have a small window of opportunity to speak to them, so make sure you provide them with just enough information to spark their interest, and provide them with your business card. Make sure to get permission to contact your prospect in order to continue the discussion further.
- Understand your KPIs and market
Your KPIs and market will help you determine exactly what kind of investment your business needs. This is what will lead you to the finding the right investor for your business. Understanding your KPIs will showcase precisely where your business is lagging and where it is prospering. You will therefore be able to identify your selling points to your investor. Additionally, understanding your market will indicate the kind of experience you need your investor to have. Which companies have they invested in? What industries are they most interested in? how does their investment track record look? What do they provide the companies they invest in?
- Research credible online communities
LinkedIn is a great online platform to find investors. It is, however, not the only one. There are many social networks that connect you directly with investors from other countries. These investors are usually interested in contributing to the global business environment. Such platforms include Crunchbase, AngelList, Xing, Plaxo, Startup Nation, and Meetup. While it will take much more work and precautions to assess compatibility with an investor you met this way, it should not prevent you from expanding your search to online resources.
Finding investors for your business will be a difficult task. Especially at the beginning stages of business development when your business hasn’t gained much traction yet. Just keep in mind that your relationship with your investor is worth more than a business transaction. Therefore, make sure you know exactly where you are looking and what you are looking for.
Your business’s MVP is more than just your minimum viable product. Sport teams aren’t the only ones with a most valuable player. As an entrepreneur in the product development stage, your minimum viable product is without a doubt your most valuable player. A team’s most valuable player teaches, remains focused, sets reasonable goals, is a representation of security, and gets the job done. All of these are also embodiment of a quality minimum viable product. Saying that your minimum product is also your most valuable may sound like a contradiction. Here are a few reasons why they are not mutually exclusive and what your MVP should accomplish.
- Fix the basic problem you are trying to solve:
This is your testing stage. It is the first step you must take in order to validate consumer need. What do your customers want? How will your product satisfy consumer needs before you decide to invest a significant amount of capital into your product development? Here is where you must balance your product efficiency and usability. At this stage you must aim to identify the core problem your product is going to solve. Products can have a varied set of interesting features, however, if you are unable to prioritize and rank your features based on importance you should probably take a few steps back and re-evaluate your strategy. Your MVP is supposed to be the most basic version of your final product. This will allow you to make the necessary modifications, if need be, based on the responses you will get. An MVP is about learning from your potential customers, not about impressing them. The goal here is to learn about your product and your customers’ expectations in order to prevent spending on unnecessary costs in following stages.
- Identify your Early Adopters
Your early adopters are your trend setters. Identifying the wants and needs of your early adopters during this testing stage is key. First of all, this will help you define your marketing strategy and sales process in the upcoming stages. Because early adopters are very knowledgeable on the industry you intend on entering, they are known to be credible sources of information to members of their network. By identifying who your early adopters are and how you will be able to satisfy their needs, you are bettering your chances at word-of-mouth advertising. Secondly, from the perspective of feedback, they are your most honest critic. They know of most products out there and are not interested in the popularity of your brand or impressing those in their surroundings by purchasing your brand. Early adopters want quality. Early adopters live for new and cutting-edge products. Learning about their expectations will allow to create a quality product and a compatible marketing plan.
- Figure the amount people are willing to pay for your product
Finding out the price customers are willing to pay for your product during the MVP stage will give you further indication on the positioning of your product in the market versus other competitors. This will also give you a better idea for your pricing strategy moving forward. If you are met with feedback that indicates a higher willingness to pay for your MVP, you can explore the possibilities of a more expensive pricing strategy for example. Of course, such a decision also depends on how much it costs to make your MVP.
- Inform yourself on the positioning of your product
Simply put, positioning symbolizes the place your product holds in the mind of the consumer. If you intend to enter a market where you will be competing against numerous other similar products, it is crucial you occupy a unique and easily identifiable place in the consumer’s mind. Because your MVP is such a basic version of your final product, there is much flexibility with the route you can choose for branding. The goal here is to start developing your brand persona and identity based on the feedback you get from your testers. Of course, this in addition to marketing research will lay the foundation for your marketing strategy moving forward. For instance, based on the feedback you will be getting on your MVP, you will be able to identify your main product differentiators, your strengths, weaknesses, and base some of your market research on these components.
- Map out your following stages toward market
Learning from your MVP, means setting up metrics and different forms of measurement prior to testing. Your MVP findings will be your foundation in mapping out the following stages of your business activity. What you need to do is find tangible ways to record and monitor your feedback and research findings. There are some Pre-MVP considerations you should establish prior to testing. You can create a grading scale for answering each of the questions listed below. For instance, a low response would mean 0 points, medium; 5 points, and high level; 10 points. Lower points for questions would require further investigation justifying the unfavorable responses.
- Whether the problem you are trying to solve is really important to users
- Whether users are actively trying to solve this issue now with other services or self-made solutions
- Are they active during the interview
- Do they agree to come and discuss the solution with you when it’s ready
- Do they agree to refer other people to you
- Are they ready to pay for the solution right away
There are also many available online programs and application that will not only help you with the planning process of creating an MVP, but also provide you with useful KPI tools.
Your MVP is your most valuable player. Think about it. A general manager of a sport`s team first secures his star player, his MVP. The team’s MVP is the reliable player that can be counted on to lead the team, deliver the needed results, and perform. At this point the general manager starts to form the team around his MVP. Hence, your added product features. Without your MVP your product loses almost all of its value to its customers. Would you have bought tickets to a Chicago Bulls game if you knew Michael Jordan wasn`t playing? Probably not. At this stage, the goal is to learn. Sometimes this can mean going back to the drawing board. But, what this always means is that you are saving yourself time and money moving forward.