Going from $ 0 to $ X in Revenue for Your Industrial Business
A tale of chewing on broken glass (and liking it).
The idea of going from zero to $ X in revenue is a fundamental phase for every start up. $ X depends on each business and it is whatever demonstrates clear product market fit. For many industrial companies, this number is in the tens of thousands of dollars or even at least $ 1 million. That might seem daunting but I think it is a good rule of thumb.
It says a lot about product market fit, your stamina as a founder and how well you can execute in the early days of your company.
It also tells you if it makes sense for you to continue to invest the needed time and money to grow and scale your business beyond $ X in revenue.
The challenge for industrial companies is unique in many ways because of the various barriers between you and your customers. So often, we have to navigate the difficulties of becoming an approved vendor and being set up in the customer's accounting system, even for the first sale. Buyers don't always want to go to the trouble of setting up a new vendor or take the risk of buying from a start up.
Navigating this first hurdle is a difficult and necessary part of the $ 0 to X journey.
The Minimum Viable Product:
You have to develop a deep understanding of customer problems to build something they value enough to pay you. There is only one way to get an understanding of what customers value: to be in front of them...in the line of fire...yourself. This is the fundamental job of a founder.
It takes a lot of open mindedness and humility to have these conversations. This journey can be tough and frustrating filled with ambiguity, dead ends and sharp turns until you discover the thing that produces a "yes" from your customers. It's not always what you might think at the beginning of the journey. Developing this kind of understanding can be more challenging for technical people like engineers who can get very focused on the functionality of a product vs. all the things like service that come along with a product.
This is the classic Minimum Viable Product (MVP) challenge that every early stage company faces.
For industrial products companies, it's especially difficult because you have to build something real vs. just creating a test website or writing a few lines of code.
In my experience, it's very hard to get a sophisticated industrial buyer to consider something unless they see it working in some form. If you don't have some kind of a prototype, it is going to be hard to get your company off the ground.
In rare cases, the founder might have considerable credibility in a certain field that allows them to skip the prototype phase. In my prior life, I ran a company that sold hundreds of millions of gallons of fuel. I bet I could convince someone I could do it again on a powerpoint but that's a very narrow example. I am running a company now that is manufacturing US based battery systems. We couldn't skip the prototype step because I don't have a long history of making batteries (despite my superpower as an engineer!).
It's not just the product that has to reach MVP status. So does your messaging, marketing and positioning. The best framework I've seen for this is by Ryan Holliday (author of the Obstacle is the Way). He suggests completing the following sentence:
Our product/service (what it is) is for (who is it for) because (the reason why it is important - the value it creates). It's a sobering test of differentiated value.
This is a sentence you have to continually complete until it stops changing with each iteration. Try completing this sentence now before doing anything else. Keep re-writing it using the language customers are using so it mirrors how they describe their business problems.
Selling the first $ 1: Start with your personal network
The people that know you and have worked with you before are the people who trust you the most. Start with literally making a list of everyone you know that might be interested in your product and start calling them. Keep calling until you can get in front of enough of them with your prototype to get some feedback. Practice your pitch, listen to their questions and keep refining your approach until you can almost complete each other's sentences.
The first customer is extremely valuable and you have to do everything you can to win them and get them to pay you.
Giving something away is risky because you can convince yourself you've created value. One way of giving something away is the "try it first and pay us later if it works" approach. This way, you can de-risk the decision as long as you have the working capital to support this approach.
Finally, you can't have more than one product or ideal customer profile at this point. Your channel to market is brute force effort through one channel to market (e.g. calls, social, text, standing on a street corner, etc). Alex Hormozi suggests the "1:1:1 rule": 1 product, 1 customer avatar or profile, 1 channel to market until you get to your X.
After the first $ 1:
Once you've won your first paying customer, go to work executing the first win at the high level. Throughout the delivery, write down everything you can do to improve the next delivery. Make these improvements as fast as you can. Our approach is to do a "what did we learn, what can we improve" list at the end of every week. This means improving everything from our introduction email to sales pitch to proposal to delivery. Everything has to be improved relentlessly with almost religious zeal. If this approach isn't deeply important to you, you are not ready for this journey. It is craftsman's work.
Don't worry about systems or efficiency. Those things come later. The first customer is all about an all out effort to deliver and to learn.
Your first customer should be your next sales person so getting some kind of endorsement from them is vital. This might be an overt endorsement or it might be permission to use pictures, descriptions in a one pager you can send to your potential # 2 customer.
If you're doing it right, the second delivery should be significantly better than the first one. The third one should be a lot better too. After that, each successful delivery will have fewer improvements until you're locked into a product that sells itself (which should be your goal).
Keep going until you hit $ X and now you are scale ready.