How big should your business be to make a good living? How many customers should you have before you can quit your full-time job?
For centuries, entrepreneurs wanted to create something that could be sold to the maximum number of people. This kind of thinking is outdated because no one has an unlimited amount of money, energy, or time to market to every person in the world, so you need a more effective strategy.
Here are four strategies that won't be endorsed by business schools anytime soon. These will help you narrow your focus and increase your efficiency at the same time.
The easiest way to succeed in business is to create a minimum viable product for a minimum viable audience willing to pay for it.
Instead of searching for the biggest possible audience, you need to maximize your impact by crafting your message to attract your minimum viable audience. Seth Godin often talks about this strategy:
“Stakeout the smallest market you can imagine. The smallest market that can sustain you, the smallest market you can adequately serve.”
This strategy is about thinking bigger by thinking smaller. It is about understanding your customer’s biggest pain and deliver a solution for them. David M Hobson, Head of Marketing at Foundr, states: “The first step in building your marketing strategy is to know who it is you’re marketing to and what their core drivers are.”
It is clear that your first business decision is to find a large enough audience that can sustain your business, but small enough that you can serve with excellence. I can hear your inner voice saying, I do not want to serve a small audience. I want to serve as many people as possible. I’m asking you to start small and scale later.
When you target everyone, you please none. It is easier to build a business when you have a few people who care a lot about your business instead of having many people who don’t care much. Create remarkable products for your minimum, viable audience by understanding your ideal customer’s behavior, values, attitude, and lifestyle.
The internet changed marketing, but most business owners have not changed yet. They still want to market their products to everyone. Chris Anderson wrote a book called The Long Tail to illustrates that businesses can gain more by selling less. This strategy allows you to make money by selling low volumes of hard-to-find items to people searching for it. If a business wants to design a product to solve a particular problem, people will be willing to pay for it.
You do not need to sell to the masses. You can create a niche product that has a steady demand. Evernote solved a specific problem and attracted people who want to keep their notes organized and willing to pay a small fee for the service. In short, you do not need to be popular with everyone to make money, but you have to offer a valuable service.
Rhapsody, the online music-streaming service, generates 45% of its revenue from tracks that aren’t sold in traditional music stores. They are selling this genre for a particular niche market. This is what Chris Anderson called the long tail, unknown and unpopular products can be sold to a tiny number of people who are willing to pay for them, and the internet makes it easier to find these customers.
Kevin Kelly, the co-founder of Wired magazine, wrote a great article titled 1,000 True Fans. He argues:
“A creator, such as an artist, musician, photographer, craftsperson, performer, or author — in other words, anyone producing works of art — needs to acquire only 1,000 True Fans to make a living.”
Kelly defined a true fan as anyone willing to purchase anything that you produce.
If you are a musician who attracts 1,000 customers, and each customer spends $100 annually, you will earn $100,000 at the end of the year. If you want to double your income, you can double the number of your customers or increase your prices. Examples of platforms that use this model are Kickstarter, Patreon, Twitch, Roblox, and Substack.
Tech blogger Ben Thompson used this model to build the membership program of his website. His membership costs $100 per year. It provides a lot of value for a small segment of the market. The key point is that you don't need 100,000 customers. You can build your business using the 1,000 true fans concept.
Brian Chesky, the founder of Airbnb, the largest online market to list and rent vacation homes, reflected on his business model,
“It’s better to have 100 people [who] love you than finding a million who just sort of like you. Build your business one person at a time. Just focus on 100 people.”
Chesky built his business one person at a time, one city at a time. He understood that he needed a minimum viable audience to make his business flourish. He focused on making the maximum impact on a minimum number of customers before he scaled his company.
If you have 100 customers and want to earn $100,000, you will have to charge each customer $83 per month. Businesses that used this model, Kajabi, Podia, Teachable and Mighty Networks.
The Internet makes it easier for you to build a profitable business for your minimum, viable audience. Just customize your offer and solve a particular problem, and people will pay for it.
I’m going to share some questions that will help you narrow your focus and identity your minimum viable audience.
Who are my ideal customers?
Where do they live?
How much money do they make?
What products are they using right now?
Where do they work?
How old are they?
What is their gender?
It does not matter who your ideal customer might be. You have to make sure that your services and products are accessible, reliable, and easy to use. Create something so valuable that people are willing to pay for it.
I would suggest that you name your perfect customer and have a picture of them that you look at daily.
Name: Bob X
Profession: Business owner
Goals: Expand and hire employees within six months
Books: Leadership and business books
Magazine: Success Magazine
Shopping: Online shopper
Challenges: Not focusing on the right things
Pages Followed: Gary V, Seth Godin, etc.
Pain Point: Significance
Can you come up with your ideal customer avatar?
We created a FREE 7-Day Design Your Ideal Day Challenge to help you create a better life and a better YOU. You might be asking yourself now, “Is that possible?” We challenge you to sign up now and find out.