The first stage of Business is CREATION.
There are 6 steps to pass during this stage to be successful.
Without success on this first stage, you will not be able to move on to the second stage: CONCENTRATION, the stage where you create and increase profit before going in MOMENTUM.
First, how do you know you’re successful in the Creation stage?
You know you are successful in this phase when you are making your first sales at the price you want.
That means you found a match between your ideal clients and your offer. That means your concept is of interest to the market.
The big question that you need to answer positively at this stage is: Can your business support your lifestyle?
Let’s dive into what are the 5 key steps to be successful during the Creation stage of your business:
1. Do you know how much you need to support your lifestyle?
Many entrepreneurs are not aware of how much do they need to make in their business to support their life. If you come from a corporate job like I was when I started my business, you may not know the different expenses linked to having a business.
When you’re making $10.000 in sales, you’re definitely not bringing home $10.000.
There are taxes, merchant account fees, website expenses, and so many more little items that you need to take into consideration.
Another mistake a lot of entrepreneurs do, is that they price how much they need per month based on what they need on a regular month.
They don’t take into account that maybe they want to have 4-8 weeks of vacation per year, that they want to travel abroad for at least one trip per year, or that they will need to hire a designer or a web developer to help them with the tasks they aren’t good at.
You need to calculate precisely both what your personal expenses are and what your business revenue could be in order to know how much you should charge for your services so that you can support your lifestyle.
2. Do you attract enough quality clients?
Once you know how much you should charge for your services, you need to attract quality clients to you. Whether you use organic or paid traffic, the key is to attract enough.
If you know that you need to sign-up 3 new clients each month, do you know how many you need to attract per month?
The other key element in this question is Quality.
If you’re attracting 1,000 people but they are not quality prospects, that means that no one will buy from you. That’s why some entrepreneurs come to me with thousands of people on their list but no one buying from them.
If this is your case, you need to make sure you’re attracting quality prospects. That means you need to have the perfect match between who you’re attracting and what your offer is.
Example: If I’m selling ice-cream, I’m not going to have a lot of clients if I attract people who live in Alaska or Norway. I’ll have a much more qualified client if I have someone who lives in Arizona or Spain.
3. Do you convert enough clients?
Now that you’ve attracted hundreds of quality prospects, not everyone will become a client of yours. And it’s ok. You just need to know the percentage of those prospects who will turn into clients in order to be correct in your calculation.
Depending on the price point of your offer, you will have a different benchmark for the conversion rate.
When you’re just starting, the best business model is to sell high-end offers in order to generate cash flow in your business and avoid debt.
High-end offers require a sales call for multiple reasons explained in this free training.
If you have had many prospects coming to you and not buying from you then clearly you have a problem of conversion. By fixing this, you will be able to drastically increase your number of clients without having to put more effort into attracting more prospects.
4. Do you deliver results?
One key element of having returning business and organic traffic through word of mouth is to deliver on the results you promise.
Your clients hire you for specific results they want to achieve. Are they achieving these results by working with you?
What reviews do they give you? Make sure you ask for testimonials so that you can include them as social proofs in your communication with other people.
5. Do your clients pay you on time and do the work?
Another big problem I see a lot of new entrepreneurs have is that their clients do not honor their commitments. they are not paying them on time, or not paying them at all. Or they are not doing the work that is necessary on their part in order to achieve the results they want.
If there is no payment, there is no sale. There is no profit. And from the tax perspective, you don’t have a business, you have a hobby.
In order to be paid on time and have clients who do the work, you need to have strong boundaries in place. A written contract is very useful to clearly layout the way you work with a new client. You can refer to it at any point when you feel your client is not following through with his commitments to you.
Once you’re able to answer these 5 questions successfully, you’re ready to go to the next phase where you focus on generating more profit in your business: the CONCENTRATION phase. This is the phase where you make sure you have a healthy profit margin and attract a consistent stream of clients in order to avoid the feast-and-famine cycles so many entrepreneurs are stuck in.