Shark Tank Jump Start Your Business: How to Launch and Grow a Business from Concept to Cash (7 page)
Authors: Michael Parrish DuDell
Make it easy to remember:
It may sound obvious, but plenty of companies forget how important a memorable name can be. No matter your business, you’ll likely enter a marketplace that is rife with competition. Creating a name that’s easy to remember can provide a competitive advantage that may otherwise be difficult to attain. Example: Painted Pretzel,
Shark Tank
Season 3.
Avoid local names:
While entrepreneurs should serve their community, giving your company a local name isn’t advised. If you own a hardware store in Tampa, for instance, it wouldn’t be wise to name your business Tampa Bay Hardware. There’s always the potential your business may grow, and using a local name can cause complications down the line. If Tampa Bay Hardware opened a store in Miami, for example, they would either have to call the store Miami Hardware, which would damage the overall brand identity, or use the original name,
which might be confusing to Miami residents. Unless you have absolutely no plans whatsoever to grow the business outside your immediate area, it’s best to avoid using a local name.
Keep it simple:
If your business has more than six or seven syllables or words, you may want to go back to the drawing board. Your name doesn’t have to be complicated to be memorable. Example: eCreamery,
Shark Tank
Season 4.
Stay away from strange spelling and made-up words:
Names like Kwik and Kourteous House Repairs and EZ Dry Cleaning may sound clever, but strange spellings or made-up words can actually end up doing your company a great disservice. Since many people use search engines to find businesses, especially local businesses, having a complicated name that’s difficult to spell may end up costing you customers.
Put yourself in your customer’s shoes:
It’s easy to get distracted by a name that has great significance to you but no one else. Don’t forget to consider your customer when brainstorming. Of course your company’s name should be meaningful to you, but it’s even more important that it has a clear meaning to your customer. Example: Game Face,
Shark Tank
Season 4.
Test it out:
Once you’ve come up with a few different options, test them out on potential customers and colleagues. Your family and friends may also be able to offer some valuable feedback, but keep in mind that they may not approach the task with the objectivity and honesty you need. Be sure to test your ideas with a wide spectrum of people who accurately represent your target market, and incorporate any useful feedback.
Once you’ve decided on a few potential options, the next step is to check the U.S. Patent Office’s website to see if any of your potential names are legally available.
With hundreds of thousands of trademarks registered each year
, some of your ideas may already be in use. You’ll read more about patents, trademarks, and copyrights in Chapter Six.
| “Not only is a good name catchy and memorable, it should help people understand what your business does. Today’s world is all about the Google search. If your name reflects your products or services, you’ll have a much better chance of being found, so it’s important to choose wisely.” |
Finally, you’ll want to search online to see which domain names are available. It’s very likely the .com suffix for your company name will already be taken, so you may need to get creative with your domain name. Make sure you don’t get
too
creative though. You’ll eventually market your business online, and you’ll want to have a domain that’s similar to your company’s name. This would also be a good time to secure your username on Twitter and Facebook. You’ll need those sooner than you think.
A great name is crucial to your business, so don’t feel like you need to rush the process. Whether it’s on the treadmill or in the office, budget a little time each day to brainstorm. Compile a list of competitors’ names, search industry-related media, or find your own unique ways to spark inspiration. Whatever your process may be, don’t forget that a great name has the potential to increase credibility, communicate a mission, and attract customers. And what could be better than that?
Here’s a test: in sixty seconds or less explain why your consumer should patronize your business, as opposed to your competitors’. What is the
specific
value you’re offering and how does it differ from what’s already in the marketplace?
How did you do? Did you pass the test? If so, congratulations. You have a basic understanding of your unique value proposition. If not, now is the time to figure it out.
A value proposition is a business statement that explains why a consumer should buy your product or service. And with a rapidly expanding marketplace, having a compelling value proposition is essential.
Your value proposition should be simple to understand and explain to others. In fact, the easier it is to remember, the more likely it is that your customers will share it with others.
If crafted well, your value proposition should accomplish five things:
• Differentiate the business
• Grow sales
• Create organic buzz
• Inspire consumer connection
• Demonstrate relevancy in the market
To get you thinking in the right direction, here’s an example of a value proposition for a new sports drink called XYZ Beverage:
“Using only natural and organic ingredients that people can actually pronounce, XYZ Beverage offers all the electrolytes and potassium of a leading sports drink without all the sugar and sodium. Our philosophy is simple: give athletes more of the stuff they want and less of the stuff they don’t. Simple, healthy, and delicious—now that’s something worth working for.”
In only three sentences, the XYZ Beverage Company both demonstrated their value and differentiated themselves from the competition. Let’s examine their value proposition line by line.
Using only natural and organic ingredients that people can actually pronounce, XYZ Beverage offers all the electrolytes and potassium of a leading sports drink without all the sugar and sodium.
Sports drinks are notorious for being filled with sugar, sodium, and other foreign ingredients. From the very beginning XYZ Beverage is proving they’re different from the rest by being transparent and honest about their ingredients.
Our philosophy is simple: give athletes more of the stuff they want and less of the stuff they don’t.
By including their philosophy in their value proposition, they’re humanizing their business and subtly showing that their company is centered on values and beliefs.
Simple, healthy, and delicious—now that’s something worth working for.
Athletes, their target market, are by nature goal-oriented. By using the verbiage “that’s something worth working for,” they’re establishing a connection with their consumer. They’re saying, “Hey look! We’re just like you.”
Spend some time creating your value proposition, and don’t be afraid to reach out to customers, friends, family, and coworkers. Find out what sorts of things they’re looking for in a product or service like yours. It’s likely you’ll discover a few things you have never considered.
GETTING DOWN TO BUSINESS
It isn’t just about what you do; it’s about why you do it. In fact, your company’s mission can become your most powerful differentiator.
Take Donny McCall, for instance, who appeared on Season 3 of
Shark Tank
. His product Invis-a-Rack quickly and effortlessly turns an everyday pickup truck into a cargo management system by providing a functional ladder rack that can be collapsed down into the bed rail casings. When McCall pitched to the Sharks, he voiced a steadfast commitment to continue making his product in the United States. Concerned as he was about the loss of manufacturing jobs in America, keeping production domestic was more than just a desire for McCall; it was part of his company’s mission. Although it ended up costing him a deal with the Sharks, Donny and his company received a surge of positive support and feedback. Eventually, thanks in part to his mission, Donny signed a deal with Iowa-based truck accessory giant Dee Zee. Today, his product is stronger than ever, and he’s fulfilled his commitment to keep manufacturing in the United States. Mission matters.
With the abundance of tasks a new business owner faces, it’s easy to forget just how valuable a strong mission can be, but it’s an element you simply cannot afford to overlook. What does your company stand for? Who are you trying to serve? What drives you each and every day?
The first step in developing a strong mission is to create a mission statement, a short summary that explains both what you do and why you do it. What’s more, it highlights your company’s commitments to its customers and partners. Here are a few things to consider when writing your mission statement:
Keep it brief:
Remember, it’s a statement. One to three well-crafted sentences is all it should take to express your mission in an honest, compelling, and thoughtful way.
Avoid superlatives:
It’s natural to want to share just how fantastic your business is with the world. But save that for the press release. A mission statement should be a summary of your mission, not of your excellence.
Borrow inspiration:
If you’re having trouble getting started, read the mission statements of companies you love. If they’ve won you over, it’s likely they have a strong mission. Try to pinpoint why their statements resonate and use those findings as inspiration for your own.
Ask around:
Don’t be afraid to test your mission statement.
Sometimes stepping back and allowing others to weigh in can provide a level of perspective you can’t achieve on your own.
| “You have to know your personal mission and your mission as a company. If you don’t, you leave it up to others to interpret. Mission was core when I started FUBU: for us, by us. We wanted to dress the consumer that was being neglected. It wasn’t about a color; it was about a generation. Our mission was clear.” |
Once you’ve created your mission statement, make sure it’s fully accessible to your customers and team. It won’t serve your business if it’s tucked out of sight. Put it on your website, hang it in your store, and make it a central part of your company’s culture.
If a mission statement provides a high-level overview of your company’s philosophy, then core values are the guiding principles that help you achieve it. These simple but powerful bylaws usually come straight from the founder and influence everything from management style to which vendors a company chooses to work with. By spotlighting your company’s beliefs, your core values will serve a fundamental role in all aspects of your business.
While it’s helpful for your customers to be aware of your core values, it’s absolutely critical that your team—from sales and accounting to HR and operations—understands these values and infuses them in every action they take.
Keep in mind that while building core values should be in the back of your mind from the start, it’s likely they’ll develop slowly over time. The truth is, outside of your initial idea for a business, you probably don’t know a lot about your new venture. That’s natural at this stage in the game. Don’t ignore core values, but don’t force them either.
When you are thinking about your core values, here are six central areas you may wish to focus on:
Employees:
What role do you envision your employees playing in your business? Will you invest in their personal growth
and development outside the office? Is empowerment an important part of your philosophy? Even if you don’t currently have a team, take a minute to think about these questions.
Customers:
How do you treat your customers? What should they expect from you? What should you expect from them? Building a strong and loyal customer base is every entrepreneur’s dream. Spend some time imagining what that relationship looks like.
Vendors:
How do you choose your vendors? Who’s your ideal vendor? Why should your customer trust your vendors? Whether you like it or not, the suppliers, distributors, and other vendors you choose to work with are an extension of your business. Don’t forget to acknowledge that relationship.
Product or service:
How do you ensure a high-quality product or service? How much time and energy goes into each of your offerings? How vital is your product and service to the success of your business? Core values should express your commitment to building a superior product or service with transparency and authenticity.
Culture:
Does your culture breed excitement and innovation? Do your employees look forward to coming to work on Monday mornings? Have you spent time and care creating a first-class work environment? How does culture affect the day-to-day operations of your business?
Impact:
How does your company make a difference? Do you regularly support charitable causes or organizations? Do you champion a social mission? One of the best ways to have an impact in the
market
is to understand how your business can have an impact in the
world
.
Core values are another one of those small details that can easily be ignored or forgotten. But as a business owner, it’s up to you to make sure they get the attention they deserve. Spend
as much time as you need crafting them, and when you’re ready, share them proudly with your employees, customers, and partners. You never know, your core values may just end up being the legacy you leave behind.
| “You learn core values along the way by doing. With my own business, for example, if you had asked me what my core values were within the first two years, I would have had no idea. But within a few years, I’d learned that our business is all about a collaborative effort and having fun. And that leads to innovation. The more fun we had, the more we were willing to innovate.” |
If you’re a regular
Shark Tank
viewer, you may know more about business models than you think, particularly which ones work and which ones do not.
In its most basic form, a business model is how a company makes money. More specifically, it describes how an organization creates, delivers, and captures value.
Business models can range in detail and complexity, but a study done by the Massachusetts Institute of Technology Sloan School of Management in 2004 discovered that almost every model falls under one of four main archetypes:
Creator:
A creator “buys raw materials or components from suppliers and then transforms or assembles them to create a product sold to buyers.” Pretty much any manufacturing operation would fall under this category. EXAMPLE: Daymond John’s company FUBU.
Distributor:
A distributor “buys a product and resells essentially the same product to someone else.” While a distributor may add additional value somewhere throughout the distribution cycle, essentially he is selling a product that already exists. EXAMPLE: Any of the products Lori Greiner sells on QVC.
Landlord:
The landlord “sells the right to use, but not own, an asset for a specified period of time.” Any rental business operates under this archetype. EXAMPLE: Mark Cuban’s company Magnolia Pictures, which gives movie theaters limited rights to show their films.
Broker:
The broker “facilitates sales by matching potential buyers and sellers.” The broker doesn’t actually own anything, rather she facilitates a transaction. EXAMPLE: Barbara Corcoran’s former company The Corcoran Group.
Now that you understand the four basic archetypes, it’s time to start thinking about developing your own business model.
A 2001 study published by Accenture—a highly regarded global consulting firm—examined business models from seventy different companies. The good news (and perhaps also the bad news) is that their study confirmed there isn’t one surefire model guaranteed to bring in cash. From timing to technology, many factors play a role in the success of a business model. They did however uncover three characteristics that were prevalent in every good model.
First,
a solid business model offers unique value
. While this could include the invention of a new product or service, it doesn’t have to. Providing unique value can be about providing a new or different feature that delights the consumer.
Next,
the business model must be difficult to imitate
. When a company finds a creative way to stand out, it creates barriers to entry that prevent other businesses from competing.
| “Having the ability to be brutally honest with yourself is the greatest challenge you face when creating a business model. Too often we oversell ourselves on the quality of the idea, service, or product. We don’t provide an honest assessment of how we fit in the market, why customers will buy from us, and at what price. It’s a reason many entrepreneurs fail.” |
And finally,
a strong business model should be grounded in reality
. Although they may not admit it, many companies lack awareness about where and how they make their money. This is particularly true in larger organizations. A good business model is grounded in reality and takes into account accurate information about cost, revenue, and consumer behavior.
When creating your business model, don’t forget to fully examine your market size, consumer segment, and competition. The more data you can gather, the better your model will be. When you find a model that works, by all means stick to it! But keep in mind that business models aren’t static; they often evolve and shift as your company does the same.
Let’s say you’re on vacation and want to buy a bottle of water. Now, you could purchase one at the local drugstore for $1, or at the coffee shop for $3, or the theme park for $5. You’re welcome to take the bottle of water that’s sitting in your hotel room, but that will cost you $7, or you could wait until you go to that fancy restaurant for dinner and order a bottle of sparkling water for $12. No matter how much you decide to shell out, you’re basically getting the same product: water,
aqua, H20. So why does the cost vary so dramatically? Because each establishment has developed its own pricing strategy based on a detailed set of criteria.
