Don’t monetise too early? Isn’t business all about making money? Am I insane or what?
Yes, yes and probably yes! 🙂
There’s one point of view that says when you start a business, you should always know how you are going to make money out of it. I agree with that and I also think there is a counter argument worth considering.
Ok. Here’s my point. When you are planning to launch a new venture whether social or for profit, don’t make plans about how you will monetise it and set them in stone too early.
The reason is this: When you are launching something new, you are working with a lot of unknowns – even if it is in an industry that you already know. What you don’t know however, is how customers will respond to your product or service. This kind of feedback can totally change your whole business idea and/or model.
Our role as entrepreneurs is to be open to feedback from the market and from our customers. In the early stage of starting a business, it can be invaluable to spend time exploring your market and discovering what makes it work before you decide what people need and build something to meet that need. In other words, you start with the market rather than the idea. If you don’t go through this exploration process, your solutions will come from your preconceived, limited idea of what people want, which may or may not be accurate.
The other problem about making decisions on monetising too early is that often the business becomes about how much money you can make rather than how you can change the world a bit or help your customers. Yes, the money is important, but when it becomes the focus of a business instead of focusing on what you can do to help people, the business starts to become dysfunctional in my view. Note, that it’s not either or, but rather than we need to keep money and people in the right balance.
Allow yourself some time to open up to all the opportunities in your chosen market. Connect with others in that market. Talk to your potential customers – or better yet, listen to them. This way, you allow synergy to work for you. Opportunities you could never have manufactured open up and you have the opportunity to create something that is bigger than yourself.
This is not to say that you shouldn’t have ideas about how to monetise – that can be a problem too. But allow thorough research and interaction with your market to inform your decisions before you finalise them.
Action: Reflect on these strategic questions about your monetisation strategy
Take out a notebook or a piece of paper and jot down some thoughts about these questions:
- Do you really know your market or are you making assumptions about your market?
- Have you connected to and spoken to others in your industry? Who could you have a conversation with who could help you to understand it better?
- Have you spoken to potential (or actual) customers to understand their needs, how they think and how they would like to interact with your business?
- What opportunities are on your horizon that are related (or unrelated) to your startup as it currently stands? Can you connect them to enlarge your scope?
- Try to come up with as many ways of monetising your market as you can. As you continue to explore and understand your customers needs, one or two of them will make more sense than others.
I think you should make sure you have a quality product/service to offer before trying to make money. With my whole web design/development services, I had been in the game for nearly 3 years (3 years of me being serious about it – not counting the years of me messing around). and am just now starting to monetize. Wait until you have a following and quality, and then start moving in. It’s the only way it’ll work. If you’re passionate about it, it won’t seem that long, anyways.
Spot on about offering your customers quality. I think it helps to be really sure you understand the market and what it wants before you monetise. That way you are not wasting time and money on something that is not a good product/market fit. Doesn’t have to take 3 years though, you can do it in a few months if you engage with potential customers intensively. We are all on our own timetables however and juggling different things, so take the time you need.
This is a great article – and distinguishes true entrepreneurs from business owners – how many people you can help should always be above how much you can make. The money will come when you help people.
I guess it kinda depends upon your cashflow and cash reserves and whether you need to generate an income sooner or later. Its nice to have alternative cash flow to allow you to learn without the pressure of making money. With one of my websites I started out with an idea along with a plan to generate income however discussions with my target market have lead to the original idea being scrapped and an entirely new model and brand in the process of being developed. What will the final version look like? I will know when it happens as it will be the version that generates cashflow.