How to develop a product, a business plan, the business itself, and raise money for the product in three years? You may think I’m crazy, but this is entirely doable.
I’m a believer of trial and error on someone else’s dime. The reason people get jobs is to avoid the risks associated with owning a business. You may think you have the idea and are ready, but if you can practice patience and delay your gratification, you will find a quicker and easier way to successful product development, fantastic sales, and most importantly, an easier life ride. You need a plan in order to achieve this.
Here are 5 steps to starting a product-based business:
- Secure a job in an area you will enjoy that brings the biggest profit for your effort. If you want to create a product, then get a job in product development for a big company where you can make lots of connections and learn about the business. Work there for 3 years. The first year is your learning year; you are in education for your own business. There is a tradeoff – the company gets your time and hard work, and you get to learn on their dime.
Spend one-year learning everything you can about product development; where suppliers are located and how to find them, who the suppliers are, and who the creators are. Get to know people who are the best at what they do. Stay away from negative people who don’t like their jobs, and avoid gossips. Don’t get caught up in the negatives; merely notate them for what not to do when you have your own product.
- After one year of learning everything you need to, make sure you have a binder with all the steps necessary to produce a product and manage its development, as well as a list of suppliers you will need to create it. Now that you’re properly knowledgeable about the process, start asking your management for permission to attend some company trade shows, and go out on your own to industry events and networking events. Continue to do fantastic work at your job, but it’s time to add extra evening hours to include social mingling and making the connections you’ll need. Some of those connections will be warehouses and sellers for your products, dropshippers, social media influencers, and other sales people.
Read my post about networking to help with ideas on meeting people. A book that’s fantastic for networking is Never Eat Alone. I’m always on the lookout for the people he calls ‘Super Connectors’ – these people are always on my radar. Life is so much easier when you know people who can introduce you to the best people in every industry you need.
- You have been working for two years at your job and have learned a lot. You’ve attended at least three events a week, and you’ve had coffee or lunch with at least two people a week for a year. You may be tired, but you’ve also had a lot of fun, and you now know if you’re going to quit or pivot and move to something else. If you’re going to quit and do something else, then go back to step one. It’s completely normal, don’t be hard on yourself! It’s better to figure that out now and have 6 months of disappointment than to figure out it’s not a fit 5 years from now after spending all your savings, spinning wheels, and wasting time on something you don’t enjoy. If you are still ready to keep going, then it’s business plan time. Read about how to write a business plan and 5 Steps to a Business Plan .
It’s time to be very critical. Maybe you’ve had your product in mind for years and you’re honing and tweaking the idea. Or maybe you don’t have the faintest idea what you’d like to create. If you don’t have a product in mind yet, don’t worry. Read Hardcore Inventing and start attending some inventing groups for inspiration. Think about what you can make, what’s needed, and how it could be produced. Spend time on this to make sure that you have fully determined all the aspects, bad and good. If you have a product in mind already, then get critical about it. What are the worst-case scenarios, and can you handle them? Are you ok with your first product not working out, and can you find the courage to try again? You need to consider these questions and determine all of your answers before moving forward with your own product.
- It’s your third year and you have a business plan, a product in mind, and a whole year of networking under your belt. Now is the time to start saving your money and attending investing, angel investing and startup events. Don’t tell them you are interested in launching a product; you are an investor learning how they invest. Don’t invest in anything, don’t spend your money, just observe, ask questions, learn. What you’re doing at this stage is meeting the people you might want to partner with on your product. It’s going to take a while to meet the right match, but when you do, it will click.
This phase is also where you will find a fantastic mentor, so keep watch for a person at least twenty years older than you who is successful. Ask lots of fun questions and make real, genuine friends. It’s also time to start saving every dollar you make; utilize a budget and a financial plan to reduce all non-essential spending. You have one year to meet that financial backer and make all you can to invest in your product. If you’re single, stop all dating. If you’re married, then let your partner know that this year is going to make it easier for the future and show them the business plan, not the product, not the details, just a vague idea. If they want to see more tell them you will show them when it’s all done. Be encouraging for them so they can do the same for you.
You need to also maintain your day job. By now, you’re likely well known at the company and have a good reputation. Maintain all those expectations for those 8-10 hours a day you are paid to work. During breakfast, lunch, and dinner you need to schedule meetings with friends you met at investing and angel investor events. This is going to be challenging because you are also still attending industry events at least twice a month. Do not do more than you can handle, but 14-16-hour days are required to make the next year happen. Rest and recreate on the weekends, but Monday through Friday is all about work.
- After a year of saving money and attending investing events, you should have an idea of four to ten people who would invest in your product. These are people you know quite well and trust. You also have a book of people who will make your product, market and sell your product. You have met dropshippers and other online sellers and have an idea of a few people you can trust. You have an investing mentor and some great mentors in the product development industry. You know people in the industry to whom your product will be introduced. You have saved money and are ready to leave your job.
You will clear everything off your work computer that you’re going to need over a one month period. Don’t steal anything from your employer, but take your training notes, supplier lists and contacts. Do not take any intellectual property. If you can’t use personal email, then you may be tracked if you use a flash drive, so pictures on your personal mobile device will be best. Do this when people can’t watch so that there is no impression that you’re stealing. Be ethical in what you take, don’t do anything that others would consider stealing.
Now, give your two weeks notice and let your colleagues know that you’re taking another position, but want to take a few weeks off before starting. After those two weeks are up, if you don’t have a non-compete clause or any legal agreement that prohibits you from making your own product, then it’s time to meet with all your top connections to get started. You are ready to set up one-on-one coffees and lunch meetings to discuss the “how” and get help from your mentor if you don’t have a full plan outlined.
The only people who need to know you are ready are investors. Be careful not to share too much because until you have an agreement with a product development company you need to be cautious. Don’t trust anyone who might steal your idea; by now you probably have a pretty good idea who those people are. Over the course of a month slowly share the business idea, but not the product idea – keep that to yourself. You’ll want to share what problem it solves, who the customers are, what the market size is, what the profitability is, but not the product. When you have manufacturing ready and a product, then you can share that information. This should all take about six months to put in place, so make sure you have savings or another source of income for at least that long.
Quick tips I’d add;
- Never ever let any of your colleagues know you’re leaving the company to start a product, never! They won’t get it, and will only make things harder.
- Never let anyone at your networking events know you want to start your own company until you have resigned from the company you are working at and are starting your business. Read your employee documents very well, make sure if you have a non-compete to wait the amount of time you are required to start your product. Pay attention to all details and be stealthy because you never know.
- Keep your business ideas to yourself. There is no need to share with anyone until you have it in motion. Your friends and family don’t need to know – the only person you should share with is your spouse (but if your spouse has a big mouth, or isn’t supportive then don’t tell them either). You have to keep this to yourself. I understand it’s hard, but you can’t trust anyone with your idea. Now that you know people in the industry, any of them can steal your intellectual propery and go make it faster than you can.
Be wise, be careful, and have fun. Subscribe for more business, sales and investing posts. Have a lovely day!
