Business Planning

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What to Sell

Business Planning Your Business Concept What to Sell

What kind of business are you going to start?

  1. Setting your vision: Deciding what kind of company you want to start is arguably the most important business decision you’ll make, and will impact:
    1. Your happiness 12 hours a day: As a new business owner you’ll spend 12+ hours a day on your business, so you better enjoy the work
    2. The people you’ll spend time with: You’re going to spend a lot of time with your customers and employees so make sure you like the other people in the industry you choose
    3. The potential upside: Some products and services pay better than others
    4. Your chances of success: Some market are more competitive than others
  2. What you can do v. what you want to do: Some people want to start businesses outside their experience. For example if your background is in construction but you really want to start a cyber security company. This sounds great in theory but almost never works in practice (see my rant below for more on this). Instead we HIGHLY recommend that you start a business providing a product or service that you have a lot of experience with and then adding additional products or services once you’ve got the ball rolling.
  3. What you could provide: In this class we are going to identify products and services that you have significant experience with and that you could sell to the government
    1. Over the next few classes we will analyze the market for each product and service to see if they could be the foundation for your company
    2. We want to get down to one offering but for now feel free to brainstorm lots of options, analyzing options is quick so there’s no real harm having a long list right now

Why is past experience so important

  1. The government puts a premium on previous work experience: The government believes that the best indicator that a contractor can do a job is whether they have successfully done similar work in the past, so many government solicitations have past performance requirements (e.g. a solicitation might require that bidders have previously completed three similar projects)
  2. As a new business your company has no previous work experience: New businesses don’t have examples of their previous work, that’s why you are new…
  3. So you will need to use your personal work experience: In the absence of company past performance the government may allow you to list similar projects that you did as an employee of another company. So if you try to provide a product or service that you have no experience doing:
    1. You wont be able to meet the past performance requirements and you will be locked out of most solicitations
    2. Most prime contractors wont subcontract work to you if you have no past experience doing that kind of work

Finding your first product or service offering

  1. Initial Principle Offering (IPO): Our goal is to identify the primary thing your company will offer (at least initially), and we call that your IPO
  2. Start wide: This exercise will help you identify all the things you’ve done in your past that you could turn into your company’s IPO
  3. Filtering: Over the remaining exercises in this class you will analyze each to the things you could do to identify the one product or service that gives you the best chance of success and this will become your IPO
  4. Primary doesn’t mean exclusive: Just because you have an IPO doesn’t mean that you’ll ignore good opportunities outside your IPO. If a prime or customer wants you to do work outside your IPO then go for it, but when it comes to proactive marketing, sales, and customer/partner outreach we think that focus is important, and having an IPO will help you focus.

Example:

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Video Transcript(s):

So what kind of company do you want to build? IT services? training? construction? Or do you want to sell a product?

This may sound obvious but it’s an incredibly important question. I mean, if you spend the next twenty years building an IT services firm you’re going to have a very different professional life than if you start a construction company,

  • Your financial opportunities’ll be different
  • Your customers and coworkers’ll be different
  • Your joys and frustrations’ll be different
  • Everything

So this is a massive question, and a very personal one, and while we can’t help you figure out what’s going to make you happy we can help you figure out what your options are and the financial implications of each

Now, you may think you know what kind of company you want to start, but we still encourage you to do this exercise, it’s quick and it might surface something you hadn’t thought of.

And basically you’re going to list all your old jobs, and the things you did at those jobs to see what in there you could offer to customers.

And we recommend limiting yourself to things you’ve done in the past because referencing your old work experience is critical to winning your first few contracts, and if you’re struggling to come up with ideas, go talk to your local SBDC or SCORE counselor or reach out to some old coworkers and ask them what they thought you were good at.

So in this exercise you’ll create a list of options, and over the next few exercises we’ll filter that list to identify one or two products or services that could be your initial primary offering, or IPO. And your IPO is going to be the main thing your company does, at least initially.

You may do other things, but choosing the right IPO is critical, because it’s the thing that gives you the best chance of winning your first few contracts, and once you have a beachhead of success in the federal market everything else becomes so much easier.

So a couple notes on what makes for a good IPO

  • First, there has to be a market for it.  If no one buys that product or service then it’s a bad IPO
  • Second, credibility is critical.  So you might not like providing a particular product or service, but remember, your IPO is just there to get you your first couple contracts, so  if you have a ton of experience doing something then it might be a good IPO and you can always pivot to things you’re more passionate once you’ve got the ball rolling.
  • Third, you may end up chasing contracts outside your IPO and there’s nothing wrong with that, but in our experience bidding work outside your IPO is like buying lottery tickets, sure you might win, but lottery tickets aren’t a financial strategy.

Now turning your experiences into products and services that you can offer can be tricky, so if you're not sure what to do watch the example video below. And  by the end of this exercise you’ll have a list of products and services you could sell to clients and over the next couple exercises we’ll see which of them could be a good initial primary offering.