Starting a company is something that anyone can do with a laptop and an internet connection.
Nonetheless, many newborn entrepreneurs fail to understand what entrepreneurship entails.
In this article, we are going to discuss a simple 5-step process to understand the business logic that should be pursued when starting a digital business.
Beware! These steps account for very little financial cost, but take a long time to be executed correctly: nothing in life comes for free.
Here are the five steps to building a digital business according to 440industries:
1. Learn to follow, if you want to lead
2. Foster a community
3. Engage your audience and develop a product
4. Test your product via crowdfunding
5. Market like there is no tomorrow
Building a digital business is about building your own brand. Building a brand requires market knowledge and field expertise. This is why your first goal should be collecting information about your industry, and understanding who are the voices that people listen to.
Microblogging is, in fact, one of the most effective forms of influencer marketing, capable of pushing customers down the sales funnel, thanks to an individual’s authority. Studying influencers is essential to understanding your business and achieve the following goals:
Influencers may look like strangers at first, but may later become part of your own community. Not far from now, it’s likely that they will follow you, but first, you need to follow them.
Our advice is to start by creating a meaningful, honest conversation. Share their content, comment, like, subscribe, interact and make yourself noticed. If you start delivering value to their platforms, you are likely to create a personal relationship.
Let’s see a few extra tips:
The bigger the community, the more options you will have available to develop your business. After following, interacting and engaging with online users you will have developed your own ideas and opinions. This is an essential step towards creating your own voice and identifying what problem you want to solve for your customers. Here’s our advice:
This is where you can start building your own web presence via Youtube, Facebook, Instagram and so forth. Start lean, don’t invest, you have no need for it.
At this stage, all you need is already provided to you for free. You need to focus only on providing value by fostering interactions and meaningful conversations.
Beware! Creating a blog, or a vlog, requires consistency and attention to detail, so by all means, by the time you reach this stage you can consider your business, at least a part-time job.
How long does it take? Years. No kidding.
How long before moving to the next step? As long as you can afford it.
Moving ahead, let’s consider this. The reason you want to build a product or provide a service is that you need to monetise your work. But here lie two challenges, the first is to develop a product people will be interested in, the second is actually getting them to pay for it. These are two separate challenges which will be addressed in step 3 and step 4.
If you’ve done all the hard work so far, you will have a clear idea of your field of operation. You are slowly but steadily growing your audience by providing insightful, interesting, entertaining, content. All of this, in marketer’s jargon, is called top-of-funnel interactions. You are putting your name out there, you are creating awareness but you are not selling anything yet. This is how it needs to be for now, because it’s too soon to close a deal.
The free and freemium revenue models – now widespread on the internet – make it hard for people to sell profitably online, especially in the context of digital products. Consumers are now flooded with sales communications and promotions, making it very challenging even to collect emails through lead magnets. Marketing and promotional efforts are mostly perceived as distracting interruptions.
Whether we like it or not this is a challenge we all must face. We need to find out what kind of products or services would be helpful to our niche and what problem we can solve for them. The more painful the problem, the more likely we are to succeed if we solve it well.
If you have created a community, you have a unique and valuable asset: a well-profiled audience. The community around you is going to be more likely to respond to questionnaires, interviews, or even opt-in to surveys.
At 440 Industries we address product development on the grounds of consumer behaviour, and in this article, we go a little more in-depth on how that happens: Why Jobs to Be Done Theory Matters for your Business.
This is the stage in your relationship with your audience where you move down the funnel and collect qualified leads. This is a mid-funnel operation where we find out more about our target audience.
A useful way to develop an email list is by creating a risk-reward proposition, whereby you offer something valuable (technically called a lead magnet) in exchange for something free (your email, answers to a survey, a phone number etc.)
The information you collect is now primary research – or collected with a specific purpose in mind – allowing you to understand a problem and figure out how to solve it for your followers.
Is your service a consulting session? Good!
Is your offer a physical product? Better, it’s more easily scalable.
Is it a digital product? Jackpot, digital products have great profit margins.
With high-quality data, you’ll be better able to understand what kind of help your audience needs and how to make money while you help them.
This is when having attended a marketing course in college comes useful. You need to develop your own marketing mix with the 7Ps of Marketing (Product, Price, Place, Promotion, Physical Evidence, People) and create a prototype, or a minimum viable product to show how you deliver value. Don’t shoot for the Moon, just develop the cheapest, quickest proof of concept you can create.
Step 4 is where most people would stop and call it a day. But that’s wrong. At this stage, you may come up with a product that people may be interested in, but we still need to answer a very important question:
Are your potential customers willing to pay for your product?
This is what we need to find out, otherwise, all we’ve done is a very expensive brand-awareness operation. Looking at the bright side, this is when you get to start collecting money through crowdfunding.
Starting a crowdfunding campaign at this stage is the perfect strategy to assess how much your audience is willing to support you in the creation of a product, or how much they would be willing to spend to purchase it.
Managing a crowdfunding campaign is a full-time job. Make sure you reflect on this statement before you go into it. Moreover, take into consideration that on average crowdfunding project collect between 5.000 to 10.000 euros in funding and this is not likely to make you rich.
In our model, however, we will use crowdfunding instrumentally for market research and test whether people are willing to spend money to buy your product or service. Aside from the money itself, these are some of the additional benefits you will get through crowdfunding.
If you do crowdfunding only for the money, you are better off going to a bank, as you are much more likely to find the resources you need, with much less effort.
The resources you will collect will finance the production or growth of your project and will put you in the perfect spot to attract further more consistent funding. After having completed this stage, you will also be able to speak to potential professional investors and provide a persuasive argument.
Your business now features:
An interested and purchase-ready audience.
A real, and market-tested product.
A wide community for indirect monetisation (for instance through advertising).
Maybe, this is where you would have started if you did not come across this article. After reading this, before spending your fist euro, in advertising, you have a much better understanding of your market, you have developed a degree of authority, and the proof of your expertise can be easily found and tested.
Digital marketing strategies would account for yet another long-form post, nonetheless, so many resources are available online, that it will take you very little time to get started with digital marketing.
Just one word of advice: in digital marketing, no right answer stays right for very long. Always test your assumptions, test your strategy, test your message, test your claim. A/B testing is your best friend and a cautious financial ‘advisor’.
Also, make sure you play by the rules. Don’t rely on black-hat strategies, as by now you should have realised that you’re in for the long haul, and any get-rich-quick scheme will only corrupt the foundations of your organisation. If you lose your credibility you lose your business.
That’s all folks!
These were the 5 steps we recommend to grow a successful digital business. Don’t get fooled, it’s hard, risky and frustrating. Entrepreneurship provides access to a wide spectrum of human emotions and pushes each of us to test our limits and beliefs. It’s a journey that changes all of us and must be approached with clarity and awareness.
If you’d like to learn more about digital marketing strategy, find below some useful sources to become an expert!