I’ve made plenty of mistakes in my business career. Some mistakes were hard to avoid, but one of the biggest and most expensive ones could have been dodged by simply doing a little homework.

I fell victim to a trap that plenty of entrepreneurs fall into every day — I fell in love with a product idea.

Back in the late 2000s, my team and I came up with what we thought was a great idea for a product. Tons of businesses would need it and it was almost guaranteed to be a huge hit!

But, we neglected to do our market research. We ended up with a product that was searching for a market instead of figuring out who our ideal customer was and building a product specifically for them.

Here’s what I learned from this experience, and what you can do to avoid the mistakes that I made by conducting market research.

What is market research?

Market research is the process of gathering information about your potential customers. It helps you define your buyer personas, target market, and understand the viability of your business by answering questions like — Who are they? What are their buying and shopping habits? How many of them are there? 

By exploring your ideal customer’s problems, desires, and current solutions, you can build your product, service, and broader strategy to better serve them.

Why do market research?

When you’re starting a business, getting to know your customers is one of the most important things you need to do. If you don’t understand your customer, you don’t know how you can help solve their problems. You don’t know what kind of marketing messages and advertising will work. You don’t know if your product or service is actually something your customers will spend money on.

Conducting market research provides answers to those unknown elements. It will greatly reduce risk as you start your business. It will help you understand your competitive position and the strengths and weaknesses of your competitors. And it will improve your marketing and sales process.

Is marketing research necessary for your business?

You may still be wondering, “does my business really need to conduct market research?” Answer the following questions to find out:

• Are you serving a primarily local market?
• Does the category of business you are starting already exist?
• Do you have a plan for differentiating yourself from your competition?
• Do people spend enough on your type of business to support both you and your competition?
• Do you already know your industry extremely well from prior work experience?

If you answer yes to at least three of these questions, then you can probably get away with less market research. Just know that if you are well-versed in your industry, business-type and competition, that things will always change. It’s wise to be actively researching or establish regular market research sessions to be sure you’re staying ahead of the curve.

How to do market research

Diving into conducting market research can seem daunting at first, but it doesn’t have to be as long as you know what you’re looking for. We’ll get into the types of market research you can leverage in just a bit, but for now start with this step-by-step process.

1. Start by identifying your target market

Imagine that someone walks into your business, or picks up the phone and calls you. It’s your perfect customer: someone who has the problem that you solve and is willing to spend money on your solution. Now imagine the details about this person. Who are they? Can you describe them?

Ideal customers and common traits

This “ideal customer” is your target market. Now, your business might have several target markets, but it will usually serve you best to keep your list of target markets to two or three.

Each of your target markets should share common traits. These might be demographic traits such as age group, gender groups, income levels, or locations. They might be what are called psychographic traits, which are groups of people that like the same things or have similar interests. Or, your target market might be a certain type of employee at another company, such as a CTO or head of marketing.

Most often, target markets are blends of demographic and psychographic groups. For example, you might be developing a new type of shoe targeted at female triathletes. Or you might be opening a hair salon targeting urban, hipster men.

Market segmentation

Creating multiple target markets for your company is doing what’s called “market segmentation.” This sounds complex, but all you’re doing is dividing your target markets up into different groups that you hope to sell to. Each market segment might have different characteristics and might buy your product or service for different reasons.

You might end up coming up with different marketing campaigns for different market segments or even customizing your product or service for each segment.

2. Talk to your potential customers

Once you have identified your target market, or at least made a good guess at who your target market is, you need to take the most important step in this entire market research process. You need to get up from your desk, get out from behind your computer, and go outside. That’s right, you need to go and actually talk to people in your potential target markets. This is called primary market research.

Yes, you can do online surveys and other research, but that’s no substitute for actually talking to potential customers. You’ll gain more insight into your customers just by seeing their work or home environments, and get a better understanding of how they make buying decisions by actually talking with them than any survey will ever tell you.

Do this one thing, and you’ll be miles ahead of your competition. Why? Because most people skip this step. It’s intimidating to talk to strangers. What if they don’t want to buy what you plan on making?

So, don’t be like most entrepreneurs (including me!) and skip this critical step. It can mean the difference between success and failure. Getting this step done early will help you refine your business model and make a clear impact on your future success.

3. Find out if your market is big enough

Once you have identified your target market and validated it by talking to them in person, you need to do research to figure out if your target market is big enough to sustain your business. If there aren’t enough potential customers to sustain your business and your competitors, then you need to consider changing your product or service offering.

For example, if your target market only has a few thousand potential customers, you either need to sell to them frequently or sell at a fairly high price to create a sustainable, profitable business.

To figure out if your market is big enough, you need to do some research. Use the attributes you defined in the target market step and then figure out how many people meet your demographic, psychographic, or location criteria. I’ve got some links to resources that will help you figure this out at the end of this article.

If you are targeting an existing market with established competitors, you do what’s called industry research. For example, perhaps you are building a new company in the market for sports drinks or the market for cell phones. In cases like this, understanding how much people buy of the currently existing offerings will give you the best sense of potential market size.

In this case, you want to look for industry reports and read trade publications for your industry. These publications often summarize the market size.

4. Document your findings

The final (and easiest) step in the market research process is to document your findings. How formal your documentation is will really depend on how you plan on using it.

If you only need to share your findings with your business partners and others in your business, then you can probably communicate fairly informally. However, if you’re looking for investors for your business, you may need to write a more formal market analysis and do a market forecast.

Presenting your market research

The single piece of documentation that every business should create is a buyer persona. A persona is a description of a person that hits on all of the key aspects of your target market. And, just like you might have several target markets for your business, you might have several different buyer personas.

Creating a buyer persona converts your target marketing information from dry research into a living, breathing person. For LivePlan, we’ve created a persona named Garrett who drives much of our product development. Garrett embodies the attributes of our ideal customer.

When we think about creating a new marketing campaign or developing a new feature for our products, we ask, “Would Garrett like this?” You can read all about the process we used to create Garrett in this article.

What are the methods of market research?

Even with a market research process in place, it can be difficult to know exactly what market research methods you should leverage. There are plenty of ways together information, but they can be boiled down to two core types of market research. Primary research and secondary research.

What is primary research?

Primary research is the collection of first-hand information from the customers within your market. This cuts out the middleman and ensures that the results you are gathering are straight from your potential customers. As I mentioned before, this is the type of research you should leverage when validating your business idea, and it can be broken down into two result categories — exploratory and specific.

Exploratory primary research involves non-quantifiable customer feedback. You’re not looking to measure these results, but gauge interest or an emotional response through open-ended questions or review options. This type of information can provide greater context for specific data points and results.

Now that data is found by conducting specific primary research. This is where you ask very specific questions that can be quantified later on to help you determine the value of a product or service, the direction you need to take, or even the response of your customer base. It’s this type of research that can help you explore specific issues or opportunities your business has, and come back with numerical (purchases, revenue, estimated sales, etc.) insights to drive and support your decisions.

What is secondary research?

Secondary research covers every other piece of data you have available. This includes resources such as:

• Public sources: Typically free and highly-accessible information gathered through government sponsored research projects. 
• Commercial sources: Research studies conducted by private organizations regarding the state of specific markets, industries or innovations. 
• Internal sources: Data you have collected through everyday business operations. Everything from financial statements to Analytics reports can qualify.

What’s better primary or secondary research?

Neither primary nor secondary research is better than the other. They simply have different use cases. You want to leverage a healthy mix of primary and secondary research for an effective market analysis and should use them together to understand the full story of your place in the market. 

When you’re first starting out, focus on conducting primary research to make sure you are getting the necessary information to validate your business. Compare those findings to secondary resources such as industry benchmarks, market reports, and any internal data you’ve already collected. From there, you’ll likely leverage secondary research more consistently, but it’s wise to run primary research initiatives from time to time, especially when approaching a strategic decision.

Types of market research

So what type of market research can you conduct? Here are a few useful options.

Interviews

I mentioned this before but the best thing you can do is get out and talk to your potential or current customers, virtually or in-person. Be sure that you have a refined set of closed and open-ended questions ready and be sure to consider the interviewee’s tone, body language, and interest alongside their actual answers.

Focus groups

Similar to interviews, focus groups can provide direct feedback from your customer mix. Rather than receiving answers or reactions in a bubble, you get to see how customers may act when influenced by others in the market. You can simply ask questions, run product tests or have them watch a demo.

Pricing

You may include questions about pricing when conducting interviews or focus groups, but you can also specifically develop research around pricing. This can be anything from A/B testing different pricing options on your website, offering discounts to exclusive segments, or running ad campaigns with different pricing positions. The goal is to understand what your customers are willing to pay and understand what they consider to be a fair price.

Awareness

This type of research is about understanding if your target market knows about your brand and how much they happen to know. What do they associate with your brand? What competitors come to mind first?

It’s a great way to understand your current market penetration and who your competitors really are. You can integrate this type of questioning within your other tests, or run surveys attached to an incentive to get this kind of data.

Customer interest

As part of your initial validation process, you should try to understand current customer interest, ie. are customers willing to buy your product or service. You can simply ask questions and look for yes or no, but it may be wise to run a limited-time sale or pre-sale to actually line up initial revenue for your business. You can offer the chance to purchase during your interviews or focus groups, as well as run pre-orders through a simple landing page or by measuring engagement with a paid ad campaign.

Customer satisfaction

This research will help you understand current customer loyalty and what it will take to get customers to come back. Again, you can do this research within focus groups or interviews, but you can also just test loyalty programs, limited-time promotions, customer service initiatives, and other ways to improve customer loyalty. 

How do you find market research data?

Finding market research data really depends on the market you are targeting and the industry you are in. Here are a few of my favorite sources for market research:

• U.S. Census: If you’re opening a business in the U.S., the U.S. Census site is a goldmine of information. Check out the Census Business Builder to get not only population data but data on how much people spend in a given area on your type of business.
• Bureau of Labor Statistics: Another U.S.-centric resource, but a fantastic site for information on specific industries: hiring and expense trends as well as industry sizes. If your target market is other businesses, this is a good place to look for data.
• Consumer Expenditure Survey: If you want to know what people spend their money on, this is your source.
• MyBestSegments: This tool from Claritas is a great resource for finding out what demographic and psychographic groups live in a given zip code or where the highest concentration of a given segment lives. While the most detailed data is not free, you can get a lot of great insights from the free version.
• SBDCNet Business Snapshots: You’ll find a great collection of industry profiles that describe how industries are growing and changing, who their customers are, and what typical startup costs are. You should also check out their list of market research resources, sorted by industry.
• ZoomProspector: This tool can help you find the ideal location for your business, or find new locations similar to where you already are for expansion and growth.

Make market research a consistent part of your business

Effective market research can help you avoid costly mistakes early on in the life of your business. But it should remain a core practice that you regularly implement when approaching crucial business decisions, growth opportunities, or just reaffirm your understanding of the market. 

Have you done primary research? Do you have a great market research resource? Tell me about it on Twitter @noahparsons.

Editor’s note: This article was originally published in 2015 and updated for 2021.

If your business is up and running, you’re probably starting to think about how to grow your revenue and build a successful and sustainable enterprise for the long-term.

If your business has an online component, and almost every business does, optimizing the path to a purchase conversion and building a strategy for customer retention is essential. You’re looking at allocating budget, time, and resources to conduct tests on everything you can to figure out what works best.

But in order to optimize the customer journey, you must start by looking at every interaction your company has with your customers from start to finish.

But if your business is new, it can be difficult to run quality tests because you’re still growing your customer base. This problem is the lack of user data. When you’re testing on smaller numbers of users, it can be tough to gain the type of meaningful insights you need to make decisions that lead to growth.

It’s the ultimate catch-22: How do you prioritize research when you have insufficient numerical data? And yet, research is vital to facilitate growth through enhanced customer experience.

The age-old debate on qualitative and quantitative research now ensues. Which of the two should be given priority? In this article, I will share some insights into how you can overcome a lack of user data to improve and test the customer journey.

Quantitative versus qualitative research

There are two main methodologies used to gain insight into business performance: quantitative and qualitative research.

Quantitative research is concerned with the numerical data. The insights and data that this type of market research stems from methods like big surveys and A/B user testing. It’s common for startups to focus mainly on quantitative research. As a result, they waste resources on data that is somewhat indicative, but by no means bulletproof. But you just can’t rely on it to inform strategy if the user base you’re testing on is too small.

In contrast, qualitative research is often neglected by startups. Perhaps they are influenced by one of the major criticisms leveled at this research method: that it is too subjective. Surely the cold, hard data provided by quantitative research is a better foundation for your business than, for example, a case study based on just one individual user of your product? But don’t forget that the aim of the research is to understand customer experience—and a customer’s response to your brand, whether to purchase or walk away, is shaped by their own subjective opinions.

Qualitative research, then, with its focus on customer experience, is just as crucial to business success as quantitative research. It’s a big opportunity for startups. 

Use methods that work with a small sample size

Take usability tests, for example—you might assume you need a large number of users to obtain useful results. However, a Nielsen/Norman Group research report showed that the best results actually come from testing a limited number of users. The report states that a sample size of five users is sufficient to attain diversity in terms of user behavior and insight. Test more than five five users, writes Jakob Nielsen, and “you are wasting your time by observing the same findings repeatedly but not learning much new”.

Diversity of users, not the number of users, can be more informative

Therefore, a startup can still conduct effective research into customer experience, despite a small number of users. The Nielsen/Norman Group report goes on to explain that it is diversity—not size—that will provide feedback to improve your customer journey. Conducting three studies on five users was found to be more productive than conducting one big study with 15 or more users.

As well as being more cost-effective, carrying out three smaller studies allows you to test different aspects of, for example, the design of a website, providing more information to fix problems at an early stage of development.

In summary, this research method allows you to:

1. Distribute budget
2. Gather more data for analysis
3. Improve usability and not just document weaknesses

Directing your research budget into multiple small qualitative research studies can produce valuable results.

These tests will then enable you to evaluate findings and test again until you find a formula that works. Qualitative research can provide the key to really get under the customer’s skin, understand their experience, and develop a product they will love.

Customer journey mapping

We’ve established that you don’t need a huge customer base to carry out productive research. But where should you start? Let’s consider one of the most important methods of market research for a startup: building a customer journey map.

The customer journey map pinpoints each interaction between the potential customer and your company: from initial awareness of your brand to the final purchase decision (and beyond). At its most basic, it’s useful to break down the map into three key funnel stages:

Awareness stage

The prospect discovers your brand! Their goal is not to find products or services yet. Instead, they are researching information about a problem or a need they have, trying to understand what they want.

Consideration stage

The prospect is clearly aware of their need/problem and its potential solution. They are committed to finding the product or service that will meet their need—and your brand could be one of many they consider.

Decision stage

The prospect identifies the best solution to their problem, and they must decide which vendors can provide this. Based on the information they collect, they will make a final purchase decision. If they choose to make a purchase, you have achieved a conversion.

The conversion happens toward the end of the customer journey, but it’s the result of all the customer’s accumulated interactions, which have worked together to influence their decision. Therefore, it’s vital to map each stage in order to optimize the experience at every touchpoint.

Asking questions about the customer journey

In order to improve the customer experience at each stage of their journey, you can evaluate its performance.

As the prospect interacted with your brand, what went right and what went wrong?

• Awareness stage: What was the customer looking for when they discovered your brand? How did they find you—e.g. search engine results or a social ad? Did they quickly realize your USP?
• Consideration stage: How did the customer compare your brand with its competitors? Was the website easy to navigate? Did the customer clearly understand your pricing and terms?
• Decision stage: What tipped the balance in your favor? How was the customer’s experience of communicating with the sales and support team?

There are many more questions to ask at each stage. These are just a few that will help you understand lost prospects and successful customers better.

It’s important to consider the feelings, emotions, and personal goals—and how these changed at different stages of the journey. Also, how and why did these changes occur? Are there factors within your control that can influence these shifts? The more you can predict these and the corresponding actions, the better you craft the customer experience to optimize performance.

This is “soft” qualitative research, but it’s nonetheless meaningful.

The purpose of a customer journey map is to reveal the bigger picture: not just how you want your brand to be perceived but how it actually is experienced by the customer.

Research methods for customer experience

For a business to succeed, you must highlight your brand’s unique value proposition. However, your offer must match customer needs at each stage. Evaluating customer experience provides the information necessary to understand and meet these needs.

Don’t hold back from asking your customers about their views and experiences. Even with limited users, qualitative insight will help you shape the experience. However, people mustn’t be made to feel like “points on a map.” Don’t mention the customer journey explicitly in your communication; rather, ask considered questions that will generate truly heartfelt insights.

Start with direct interviewing prospects and customers. Personalized emails and/or online surveys are also a good option. This information is genuinely valuable to your startup’s development, so consider this research as an investment. Compensate participants accordingly with product discounts or compelling rewards.

Be honest, open, and raw. Above all, remember that people respond if they feel valued.

Summary

As a startup with a small number of users and a limited depth of user data, qualitative research is invaluable for analyzing customer experience. Tests can be conducted effectively with small sample groups who provide useful first-hand information.

Once you’ve evaluated every stage of the customer journey, you’ll have a full picture of the customer pain points associated with each stage. Plot these into the map and plan how your startup will remove obstacles and facilitate a smoother progression.

Ultimately, the end goal is to build empathy for the customer. This will help your team stay focused on your quest to build a great user experience.

Without empathy and understanding, your marketing efforts will be futile. Emotion is at the core of your relationship with customers. Putting yourself in their shoes during the experience will help gain a wider understanding of what drives decisions. Understanding motivations and frictions will help you transform interested prospects into loyal long-term customers.

One of the most powerful tools of small business marketing strategy is defining and addressing your target market—the audience that you think is most likely to buy your product or service. The key to identifying this customer base is market segmentation, or figuring out the demographics of your specific market.

Common sense makes it seem obvious from afar. You can’t (and shouldn’t) try to sell your product to everyone in the world. You’d waste a lot of money and resources very quickly.

But how do you figure out who your target audience is? Who or what should it be? How would you know? Here are five tips to help you figure it out.

1. Don’t try to please everybody

Strategy is focus. Say you’re planning to start a restaurant; which of these three options is easier?

1. Pleasing customers 40 to 75 years old, wealthy, much more concerned with healthy eating than cheap eating, appreciating seafood and poultry, liking a quiet atmosphere.
2. Pleasing customers 15 to 30 years old, with limited budgets, who like a loud place with low prices and fast food.
3. Pleasing everybody.

I really hope you chose one of the first two, and not the third. This is the essence of target marketing—divide and conquer. Different groups of people have different pain points and different desires. Most of the time, efforts to please everyone end up pleasing no one.

2. Learn market segmentation

It’s about segments, like pie segments or orange segments—except that in this case, it’s segments of a total market, or TAM.

In my “divide and conquer” example above in the first point, the specific age ranges, wealth, and atmosphere preferences describe particular market segments.

In the illustration here below, U.S. census data divides the population into demographic segments. Demographics are the old standards like age, gender, and so on.

U.S. census data divides into demographic segments.

You’ve seen market segmentations referred to frequently in business articles, interviews, and discussions. People will appeal to certain age groups, genders, income levels, and so forth. Divide and conquer is a simple concept; market segmentation is how you make it practical for your business.

Let’s say you think your target market is age 40 to 75 years old, wealthy, and interested in healthy eating. How do you validate your assumption that that demographic will be your ideal target customers? That’s where market research comes it. Talking to customers and potential customers is one of the best ways to do this kind of research, but there are many approaches.

3. Use segmentation creatively

Don’t limit your target market strategy for market segmentation by age, gender, and economic level.

For example, when I was consulting for Apple Computer, we divided the market into user groups:

• Home
• School
• Small business
• Large business
• Government

I also liked a shopping center segmentation that divided its market into so-called psychographic market segmentation:

• Kids and cul-de-sacs were affluent upscale suburban families, “a noisy medley of bikes, dogs, carpools, rock music, and sports.”
• Winner’s circle were wealthy suburban executives, “well-educated, mobile executives and professionals with teen-aged families. Big producers, prolific spenders, and global travelers.”
• Gen X and babies were upper-middle income, young, white-collar suburbanites.
• Country squires were wealthy elite ex-urbanites, “where the wealthy have escaped urban stress to live in rustic luxury. Affluence, big bucks in the boondocks.”

I knew a business that segmented its business customers into decision-process types as well:

• Decision by committee
• Decision by functional manager
• Decision by owner

And I call this final example, for lack of a formal definition, strategic intersection.

In the diagram here, the social media services that Have Presence offers are targeted to small business owners who:

1. Want outside help with their social media; and
2. Value business social media; and
3. Have a budget to pay for the service.

Any of these creative segmentations can help you set a target market, and can also be a jumping off point for putting together a user or buyer persona—another useful tool for understanding your target audience and developing better marketing messaging.

4. Consider your own unique identity too

Your business probably reflects who you are and what you like to do, as well as what you do best. Marketing to people you like as the target market is an advantage. If you like the feel of small business better than the big corporate giants, then you’re probably better off setting the small business as a target market.

As Palo Alto Software, the host of Bplans, grew up and grew our business plan software, its founder (that would be me) was more comfortable with the do-it-yourself entrepreneur and business owner than the high-end consultants, so we ended up targeting the do-it-yourselfers in business.

So, somebody who loves fine food, tastefully prepared and served, is probably more comfortable with an upscale target market than with price-sensitive young families.

5. Define your target market early and revise as needed

Do it well as soon as you can, and keep reviewing and refreshing as you go along. You shouldn’t think of your target market as set in stone. As you learn more about your customers, how you define your target market will probably change.

The right target market increases your chances of success because you can communicate better with a well-defined group, and that holds expenses down and makes results better. If you’re learning about defining your target market because you’re writing a business plan, or if you’re looking for ways to improve your marketing messaging and strategies, check out these resources on target marketing and doing market research.

Sales—the one word that most employees fear, but the only word that co-founders think about. It’s safe to say that if any startup could master the art of sales, then cash flow and most other problems in business would be minimal.

This is an in-depth article that will give you a full blueprint as to how we were able to grow our unlimited graphic design service, Penji to our first 100 customers.

It’s not a glamorous strategy that has an overwhelming amount of confetti, unicorns, and rainbows; it’s hard work and a lot of it. It’s hours of fine tuning and thinking. But at the end of the day, it’s a strategy that has worked well for us.

Set goals

To grow a company, you need to stick with the fundamentals, and the fundamentals start with setting goals for yourself and your company. At Penji, we have the luxury of having a staff of 23. (If you’re a solopreneur, you might have to be crafty to turn this idea into your own.) Goal setting can get tedious and sometimes it’s difficult to make sure that everyone in the company knows exactly what they need to do to continue to move the company forward.

Initially, we used a combination of different project management platforms like Wunderlist, Trello, and even Google Sheets. None of them worked well for us. And so, we decided to create our own custom goal-setting platform.

The objective of the platform is:

• To allow the entire team to submit their daily goals
• Understanding what your team is focusing on
• To award points for completing any and all tasks
• To hold our team accountable daily, weekly, and monthly

Let’s say you don’t have the proper resources to create your own goal setting software; that’s cool.

Here is how you can do it yourself using any task management software mentioned above:

1. Create a point system that rewards completion of each task (we recommend to organize tasks in increments of 15, 30, 60, and 90 minutes)
2. Allow team members to set weekly and daily goals
   1. DO NOT set monthly goals for each person—only set goals for daily and weekly
3. Tally points and reward team members that complete all tasks in a day
4. As the head of the company, be sure you review each team members goals, ask questions if you’re confused, and add onto your team members tasks if you believe they can accomplish a particular goal on a daily or weekly basis

Hold your team accountable

You’re probably wondering, why is the next topic about accountability? Well, you are only as strong as those around you. As a leader of any company, it’s critical that your team understand what is expected of them and they know the goals of the company.

Once your team has set their goals and is used to the idea of setting daily and weekly goals, it’s now time to find out how they are doing and what they can be doing better to continue to make sales for the company.

At Penji, every single employee, regardless of their position, has a sales function. It may not be a direct sales (cold calling, cold emailing, or similar), but they are all able to do basic sales functions.

This may include:

• Sharing a social media post
• Writing a blog
• Taking pictures for future ads
• Coming up with ideas for content
• Recording videos
• Being a part of our weekly Facebook live sessions
• And more!

There may be times where some team members are not hitting their goals. It happens—even co-founders have this issue. This calls for a conversation. This is by far the most difficult part, because it welcomes the opportunity for feedback.

If a team member has not met their goals, here are some preliminary questions for you to ask:

• What was your setback with not completing your goals?
• Why weren’t you able to complete your tasks?
• Is there anything you wish you could have done differently this week?

The conversations may be hard to swallow in the beginning, but it’s necessary to continue adding to your customer base.

The Penji team.

Create an unscalable sales process at first

We need to emphasize how important the words, “at first” are. This has been our greatest success to date and also our Achilles heel. Here’s why:

At first, when we started our sales process, the main objective was to get a sale any way possible.

We used marketing tactics like:

• Surveys: We surveyed over 125 people who became our initial customer base.
• Events: We hosted local events to grab emails and raise awareness about our business.
• Social media and emails: This ultimately led to a Facebook messenger conversation or a phone call. We only met with about 5 percent of our network.
• Advertising using social media ads: We used Google Adwords and Facebook/Instagram ads.
• Video content: We created content on both Youtube and Facebook Live.
• We participated in podcasts
• We sent cold emails: This was a critical piece of our early sales, but it’s hard to scale because most emails need a phone call.
• Cold calls: We made cold calls—and it was hard to make this work for a SaaS company.

Although we do still use just about every single one of those sales strategies, I can say that we experienced several setbacks once we achieved our first 100 customers.

Creating an unscalable process allowed us to soar to new heights, but for a brief period, we plateaued due to pure exhaustion of the executive team and our internal networks. All these tactics required a lot of continuous, manual effort.

Become a data-driven company

If we had to do it over again, we would become an even more data-driven company. In the beginning, we told ourselves that we would be a company that takes data and numbers into account for decision-making. Although we did maintain our data, we fell short as far as tracking our numbers consistently.

The understand your sales, you need to find out a few things about your customers:

• Why are they buying?
• How are they finding you?
  • Search engines, social media, email, blogs, events, and so on.
• How long are they staying?

What worked well for us was using a detailed Google Sheet. Although to some technology experts, an old school sheet isn’t ideal, it worked well for us in the beginning.

The Google Sheet had the following measurements that tracked customer success and outreach:

1. Customer success

• Customer information
• Date joined
• Where they found us
• Coupon code used

For customer success, the Google sheet that we used was a great way to visualize where every customer was coming from. We knew which marketing tactics were and were not working. It allowed us to make smarter decisions for the future of our business.

2. Outreach

• Publication contact information
• Last three topics discussed on the website

With our outreach strategies, things became more complex. A lot of people that we pitched either did not respond or the contact information we found was outdated and did not work. We used a color system to track who reached out to whom. We also tracked how many people each team member was able to find and contact on a weekly basis.

Maintain consistency

Like everything else in business, you must maintain a consistent sales effort. Figure out what works best for your company and keep doing it over and over again. Once you figure it out, make sure you find a way to make it your own.

I cannot stress this enough: When you’re creating a company, don’t be tempted to steal ideas or be overly influenced by those who are more successful. Find a way to make everything that you do 100 percent authentic to your company culture. Penji does a good job by showing off our quirky attitude; at our core, we are a group of nerds that love video games, anime, and food. We show that off through our social channels and also in our marketing.

To close, it’s important that when you get a customer that your product or service offering is top notch. It will take time to become great, but by following these steps, you will not only be able to create a sales driven company, but also a company culture that is fun and motivating.

This article is part of our Business Startup Guide—a curated list of our articles that will get you up and running in no time!

If you build it, they will come.

That’s what I believed when I was first starting out. I assumed that if I opened a business, customers would just show up—no major marketing effort required. Other entrepreneurs take the complete opposite approach and treat marketing as if it’s the 1916 Battle of the Somme: they throw all of their resources in the general direction of their intended audience and hope something hits its mark.

The “if you build it they will come” approach is pretty risky. Just because it worked in Field of Dreams doesn’t mean there’s any reason at all to think that your ideal customers—the ones who both need your product or service and will pay for it—are just going to magically find you and start showing up in droves with their dollars. There’s a greater chance that Kevin Costner will show up at your door in a baseball uniform later today.

“Don’t trust Kevin Costner for marketing advice” is probably a good rule of thumb.

Hear more about finding your target market with Peter and Jonathan on the twelfth episode of The Bcast, the official Bplans podcast:

Click here to subscribe to The Bcast on iTunes »

What is target marketing?

Target marketing is researching and understanding your prospective customers’ interests, hobbies, and needs so that you can focus your message and your marketing budget on the specific segment of the market that is most likely to purchase your product or service.

Identifying your target market: Who, what, why, how

Identifying your target market is part of business planning—notice that it’s planning as an ongoing action not just writing a plan as a one-time event. Gathering information about your target market, like business planning, shouldn’t be an exercise you do once and then never revisit. For as long as you are in business, you’ll always need to be thinking about how to better understand your ideal prospective customers.

One of your first steps in starting a business (or growing one) is identifying your market— the subset of the population who need and will pay for what you’re selling. Think of it this way: if your business idea is to revolutionize fashionable hiking shoes made from ethically sourced materials, it can be tempting to think that your target market is everyone with feet.

But realistically, the people most likely to purchase your shoes probably share some similar characteristics: they’re fashion-conscious but prioritize comfort over style. They would rather buy something that lasts for 700 miles than 200, even if it costs more.  

You can make some hypotheses, like that because of your price point, college students are less likely to buy them than people in their mid-thirties, or that people who live in areas where hiking and nature are easy to access are more likely to buy than people in dense urban areas.  Part of target marketing is identifying who your ideal customers are, and then testing your assumptions about them to make sure you’re not barking up the wrong tree.

You’ll want to be able to identify who your ideal customer is, where they live (or buy), what motivates them to make choices, and how they behave, or the steps they take in making a purchase.

Who: Demographics

Who needs your product or service? Include basic demographic details such as age, gender, family size, educational level, and occupation.

“Our target customer is male-identifying, age between 28 and 45 with a relatively small family—a partner and 0-1 children. He works a white collar job and makes slightly more than the average median income.”

Where: Geographics

Where are your customers? These are the places your customers can be found (i.e., their zip code), and be sure to learn details like the size of the area, its population density, and its climate.

“We think that our customers are more likely to live in suburban areas—zip codes with slightly above average median incomes, in areas with a relatively mild climate all year long, like San Diego.

Why: Psychographics

Why do your customers make the choices they make? This is personality and lifestyle information that will help you figure out your customers’ buying patterns. For example, if you know why your customers buy your product, you can figure out how much of your product they need and how often they need to buy it. Also consider what benefits you can provide over your competitors, and how loyal your customers are to you or your competitor (and why).

“We think that our customers probably buy one new pair of hiking shoes each year. They’re relatively loyal when they find a brand that works, but we think our socially conscious mission and the fact that no one else is manufacturing shoes like ours in the US will resonate with them.”

How: Behaviors

How do your customers behave? All customers are buying products to fulfill a need, but how do they regard that need? How do they regard your product? How much information do they have on this need or how your product fulfills it, and what are their information sources?

“Our customers are generally not big impulse buyers. They want information on how products are made before they buy them, and they’re likely to do several online searches before they buy.”

All the examples above represent assumptions—things that you think are true about your ideal customers. But your work isn’t done. Now you need to do the work of figuring out whether your assumptions are correct, and revise them if they’re not. Finding out your wrong at this stage is actually something to get excited about, so don’t let your ego get in the way. You’re better off finding out that you need to shift your ideas (and your resources) toward another demographic than proceed with assumptions are incorrect or untested.

Researching your target market

New technologies can make nailing down your demographics and psychographics much easier (and cheaper) than in the past.

Start with social. If you run social media profiles for your business, most social sites provide a free demographic breakdown of your followers in the backend analytics area.

Leverage email addresses. If you have your customers’ email addresses, services like TowerData can pull detailed demographic information for you.

Use Census information. If you have your customers’ zip codes, there is a ton of free information available to you from the U.S. Census Bureau—it might not drill down to your exact customers’ households, but it’s free and it’s a very good starting point.

If you’re already up and running, leverage your own sales data. Data from your payment processor or inventory history could also be helpful. What are your customers buying, and when? How much is the average purchase in your store? What time of day is the busiest? When do purchases spike, and when do they fall, and can you develop any hypotheses to explain the fluctuations?

Ask your customers. You can also use email, phone, or in-person customer surveys. You don’t necessarily need large numbers of participants to learn more about your customer base—you might be surprised how much you’ll take away from just 5-10 good conversations. If you’re worried about being able to recruit survey participants, offer a free gift or store credit.

At the bare minimum, these are the things you should know about your target customers:

• What is their gender? Yes, this is the 21st century, but gender identity still makes a difference when it comes to patterns in purchasing decisions for a variety of complex reasons.
• How old are they? “18 to 49” won’t fly anymore. The majority of millennials and boomers have feet, but what they choose to put on them, and how they make purchases pretty different.
• What are their interests or hobbies? Finding out what people are into will help you connect with them. Even if they don’t buy from you, you’ve made a new friend. Everyone needs friends.
• Where do they live? Is geography a limiting factor for your customers (or for you)? Are they able to get to you easily? Is there plenty of parking? Public transportation? Can you deliver? I once purchased a coffee shop tucked in a strip mall between an antique store and a Gold’s Gym. On the upside, most of my 12 or so regular customers were either super fit or could fix an old watch.
• How do they make a living? Knowing what your primary customers do can help you adjust your hours to fit their needs, or help you devise special offers. People like to feel special.
• How much money do they make? Whether you’re selling gold-plated sailboats or glow sticks in bulk, it’s a good idea to know how much—or how little—your customers are willing to spend.
• Do they own their own homes or do they rent? Depending on the answer and what you sell, you may need to tweak your messaging to resonate with your audience.

The key here is to collect information, and then compare it to the assumptions you’ve made about your customers. What’s surprising? What strikes you as an untapped opportunity? Did you hear the same or similar complaints/suggestions from multiple people?

This may also be a good time to create a buyer persona for your business, and/or to conduct a SWOT analysis of your business, so you can develop a fully fleshed-out business strategy.

How businesses can use target marketing

Whether you’re still in the process of starting your business, looking for an innovative opportunity to grow your business, or want to protect the business you’ve already built, target marketing is an important tool.

Beat your competition in niche markets

If you’re opening a bookstore or selling sporting goods, you’ve got some big-time competition. Mega-retailers like Amazon and REI aren’t just going to give up a piece of their pie to a scrappy upstart. Lucky for you, we’re living in the days of the niche market! You can use target marketing to carve out your own space in the marketplace.

Case study: The wireless industry

The wireless industry is a great example of small businesses succeeding with niche markets and target marketing. The biggest wireless providers—AT&T, Verizon, Sprint—are focused on the biggest markets, and they have shareholders to answer to every quarter; despite being multi-billion-dollar companies, they don’t have the resources (and it isn’t in their best interest) to staff their support centers with multilingual employees or to offer the most competitive rates on cell phone plans.

So you know what they do instead? They run wholesale divisions that sell small businesses the rights to their wireless networks, and those small businesses then run after the niche markets whose interests and needs are ignored by the big wireless companies.

SIM Shalom targets Israeli-American immigrants by offering Hebrew-language support and cheap calls between the U.S. and Israel.

Kajeet targets parents who want to offer restricted phone lines to their young kids, offering the ability to turn off the phone’s network during certain periods of the day (like school hours, or bedtime) and to block certain phone numbers or websites, as well as the ability to activate GPS notifications so that parents know when their child has arrived at after-school activities.

Consumer Cellular targets senior citizens with simpler plans, a curated selection of phone options, a focus on affordability and reliability, and a partnership with the AARP.

GIV Mobile targets community-minded individuals who are looking for ways to “give back” by offering to donate 8 percent of a user’s monthly bill to a charity of their choice.

Virgin Mobile is after young adults with “back to school” marketing campaigns, pay-as-you-go plans with no credit required, casual website and marketing copy, and a focus on trends.

Identifying and focusing on target markets is what defines each of these businesses. Each one knows that their particular offering isn’t for everyone. They’re not just trying to market to everyone who needs or wants a cell phone. They’ve identified specific audiences with particular needs that aren’t being addressed by the biggest players in the marketplace.

Today, finding out what your competitors are (and aren’t) doing can be as easy as running a Yelp search. Studying your competitors’ customer feedback can help you identify blind spots in their businesses that you can exploit for your own gain.

Build a loyal customer base

Remember, identifying your target market isn’t something you do once and then check off a box. Up and running businesses should create systems to regularly ask your current customers feedback on what they like (and don’t like) about doing business with you.

The great thing about getting to know your customers is that not only will you be able to track down new customers just like them, but your tried-and-true customers will become more loyal—and spend more money

Case study: Sephora

One example that comes to mind is Sephora, a makeup and skincare retailer. My wife shops there for her makeup and skincare almost exclusively—why?

When I asked her, she didn’t say that she shops at Sephora every time she needs makeup and skincare products because they’re the only place that sells particular items (they aren’t), or because they have the best selection (they don’t), or because they offer free shipping (only on orders greater than $50, apparently).

The answer was that she gets “really good” free samples with her order and that she accumulates reward points with every purchase for even bigger and better free samples later. Even better, the selection of free samples is always changing, and she gets to choose the samples she wants from a wide selection of options.

By handing out free samples and—even she admitted—pretty-close-to-worthless reward points, Sephora’s gained an extremely loyal customer.

Would this strategy work for everyone? No way. But it works really, really well on a 30-something woman who wants to feel like her favorite mascara/eye cream/perfume is worth the hefty price tag.

Clearly, Sephora’s tapped into the psychographics of their target customer base. How can you do that for your own customer base? Research the types of loyalty deals your competitors even highly successful businesses outside of your industry are offering. Incorporate the research that you gathered on your target market to figure out what your customers are going to find most valuable.

Your knowledge of their hobbies, living situation, and typical job will help you craft loyalty programs that will resonate. Don’t forget to ask your customers what they think as you test out different programs. That direct feedback is the most valuable research that you can gather and will help you build a loyal customer base.

Getting to know your customers, and giving them what they want, is a surefire way to build a loyal customer base—the kind that gives your business 5-star reviews online, and that tells all their friends about how much they love you. (You know, the kind of customers you want.)

In conclusion

The only thing I learned from my do-nothing plan was to never take marketing advice from a disembodied voice in a Kevin Costner film. Had I done any research at all, I would have known that’s not even the real quote.* Doing nothing won’t help your business, and it will almost certainly hurt it in the long run. The everything-but-the-kitchen-sink marketing plan where you throw resources into marketing to everyone with a pulse usually ends in similar disappointment: a lot of zeros on the bank statement, and all in the wrong places.

Target marketing is going to require some upfront work, but the rewards are huge and well worth the effort.

*The correct quote is, “If you build it, he will come.” Which is, in fact, more representative of the number of customers I attracted with my old marketing plan. 

One of the most important steps you can take before you start your business is doing market research. Skip this step, and you risk offering a product or service that is incorrectly priced, marketed to the wrong audience, or worse—that nobody really wants.

While vital, conducting market research can feel like a huge undertaking. So, here are our favorite resources to help make the process easier—and less intimidating!

Market research resources

Want to learn more about market research and find out how to conduct market research for your business? Start with these core articles.

Practical Market Research Resources for Entrepreneurs

If you’re new to the topic of market research, read this article first. It will walk you through the basics, covering what exactly market research is (it’s okay if you’re still a little unclear on that!), the different types of market research, and useful resources you can use to start the research process.

You’ll want to refer back to this guide often as you work through the process of learning about market research, so bookmark this one to keep it handy.

How to Do Market Research

Now that you’ve learned a little bit about what market research is and where you can find the necessary information, our how-to guide will help you implement what you’ve learned.

This article walks you through the steps of actually completing market research, so that you’ll be ready to start the process for your own business.

Know Your Industry Before You Start Your Business

Market research can be broadly broken up into two categories—research you do directly yourself (also known as primary market research), and research you can find that is already published (secondary market research).

Secondary market research generally focuses on a broader look at your industry. In this article, we’ve explained the importance of conducting an industry analysis as part of your market research and business planning process, and the various areas your analysis should touch on.

TAM, SAM, and SOM—Huh?

There’s nothing worse than trying to complete a new endeavor, only to find yourself confronted with endless jargon that you can’t understand.

If you’ve been confused by references to your TAM, SAM, and SOM, this quick, explanatory guide will go over what these mean in the context of your market research.

Bplans Free Industry Reports

If you’re ready to get started, check out our industry reports here on Bplans.

You’ll find free basic industry information here, and if you are interested you can pay for a full, detailed report. Even if you opt for the free version, it’s still a good place to start gathering information.

Target marketing resources

If you’re looking to delve a little deeper and find out more about your customer base, take a look at our resources on target marketing. Target marketing is a little more advanced than basic market research, as you’re shifting your focus onto marketing activities.

However, to determine your strategy, you need to paint a clear picture of your target market, which involves—you guessed it—market research!

What Is Target Marketing?

If you’re new to the concept of target marketing, read this article first. You’ll learn what target marketing entails, why it matters, how to identify your target market, and how to use target marketing to grow your business.

Target Marketing 101 [Infographic]

If you’re a visual person, you’ll love our target marketing infographic. Check this one out if you’re after a quick rundown on the basics of target marketing.

How to Define Your Target Market

Here, we take a more detailed look at the process of determining what your target market is. Use the five tips listed here to hone in on your target market, and make your target marketing more focused and precise.

Is there an aspect of market research you’d like us to cover that we haven’t already? Share this article on Facebook or Twitter and let us know, or reach out to me directly @BrianaMorgaine!

Last week, I had the privilege of hosting a one-hour Q&A session with Ann Rea, a successful artist and entrepreneur who is devoted to destroying the myth of the “starving artist.”

Our audience members submitted so many great questions that had to do with how to turn a creative passion into a profitable business. Other questions from our session included:

• What’s the best way to decide what to work on first if you have multiple interests?
• How do you price your products?
• Who should I market to first?
• I’m a songwriter but have not recorded, where do I even begin?

There were plenty more questions during the webinar, and you can watch the recorded video above or read the transcript below. To learn more about Ann, visit her website: ArtistsWhoThrive.com

Read the transcript:

Jonathan: Thank you for joining us today at this Bplan’s webinar. My name is Jonathan Michael. I’m the Community Manager for Bplans.com. We’re so excited to have you here today with us for our question-and-answer session with Ann Rea. Ann Rea is on a personal mission to destroy the myths of the starving artist. She and her inspired business approach had been featured on HDTV, the Good Life Project with Jonathan Fields, in Fortune, and the Wine Enthusiast magazines, and profiled in the book Career Renegade. She is a popular instructor on Creative Live. Her artistic talent is commended by American art icon Wayne Thiebaud. She has a growing list of collectors across North America and Europe. Thank you for being here, and welcome.

Ann: Oh, thank you very much, Jonathan. I appreciate the opportunity. This is going to be fun. We surveyed a number of you and gathered wonderful questions, and a lot of them are commonly asked questions. That’s what we’re going to focus on today. Jonathan is going to feed me a question, and I’m going to do my very best to answer it for you. I’m a painter. Let me just tell you this is really applicable to any creator, who is building a business.

I’ve worked with other painters. I’ve also worked with illustrators. I’ve worked with musicians, jewelry designers. It’s interesting enough when I do speak engagements like massage therapist show up. I think if you think identity as a creator, and feeling a little bit of disconnect with the business side, I am here to translate between the two worlds.

Jonathan: Awesome. Thank you so much for being here. Just for everybody who is in attendance today, we do have some questions that people have already submitted when they registered for the webinar. If you’d like to ask a question, all of our attendees are currently muted. The way you’re going to ask questions is you will notice a questions tab with the webinar application. You can write in your questions and click “Submit.” What I’ll do is I’ll moderate those questions, and find great ones to pass forward to Ann. Keep your questions coming all throughout today. I’ll do my best to get them all in. All right, we’re ready to start?

Ann: I’m ready.

Jonathan: Okay, let’s kick it off. Ann, the first question that I wanted to ask you today is how do you further your art career?

Ann: Great question. First thing I do is question the question.

Jonathan: Okay.

Ann: Okay, because I don’t believe artists have a career. They don’t have a career. They have a business. Why do I say that? This is an important thing to understand. It’s a matter of perspective and mindset. The practical manner is this, if you had a career, you’d have a job, which means you get a W-2, you have a retirement plan, [inaudible 00:03:09] parking space. You don’t get a job as a fine artist or as most creators are writing…Even if you were a creator, and you have a job, it’s usually a short-term gain.

If you run things like a job, like if you have a career, you are not going to do what you need to do to build the business and to make yourself marketable. That’s the first thing. It’s really understanding the difference between the two. We’ve been told that we have careers. We present resumes and exhibition list. It’s really not relevant to a business. Really the best place to start is to write a business plan. Honestly, that’s what I did. That’s how I did it.

Jonathan: Okay. When you’re writing that business plans, lot of questions that came through today how to do with, how do I define my market, my niche, who do I market to? Bill Hunt brought that question.

Ann: Great. Great question. Yeah, a lot of artists will start with the question with how do I define my niche, my market niche, or how do I find collectors, how do I find caterings or customer? You really can’t answer that question until you’ve answered other questions. I’m going to break this down for you. The first question you really have to have a solid answer for is, what is your creative purpose? What’s your “Why?” Simon Sinek wrote this book, Knowing your why or something. The problem is we don’t often know how to get it our why. You really do have to know why do you paint, why are you a photographer?

Why are…It’s like…You go back, and that’s the answer. That’s the questions you usually answer like why I do this thing making music, this thing making painting, this thing making jewelry? You got to step back further from that.

Artists are thought leaders. First and foremost, you have to know who you are and what you stand for. Who you are and what you stand for? That’s the first thing you really have to know. Why is that relevant therapy find your niche? Because depending on who you are and who you stand for, and also what you stand against, that will determine who is going to be your target market. Who is going to vibe after you? Who is going to resonate with you? In answer to that question, you really have to know your “Why.” You have to know who you are and what you stand for. Then secondly, you have to know what problem is there in the world that you believe is really wroth solving.

Now, that is the essence of every business. Every business solves the problem or alleviates the pain, and make no mistake, artists do the same thing, if they’re effective, if they’re actually sustainable. Then once you know your why, once you know your what, then you’ve got to answer your how. Your how is what’s referred to as your unique value proposition. How are you going to solve that problem? Then that’s how you’re going to eat. That’s where you’re going to determine how you’re going to use your art to solve that problem. Last but not least, who has that problem? Who are you going to serve? That’s your target market. There’s a process to this, but most people, most artists will start with the question, the third question, which is what is my unique value proposition, or they’ll start with the last question, which is who is my target market?

Jonathan: Yeah.

Ann: Really you have to follow this process. This is why planning is so important. It’s essential.

Jonathan: Okay. From your experience as a successful artist, can you talk about how you answered those questions for yourself as an example so that we can see what that looks like?

Ann: Yeah, I mean it’s a long-winded story. I’ll try to keep it really short and sweet. My back story is that I went to art school, and I graduated. I worked in design for a little while. Then I quit making art for over a decade. I didn’t draw anything. I didn’t paint anything. During that time, I developed some pretty severe anxiety, and depression, and insomnia. I went back to art as a means to quell my own anxiety. I had no intension of selling anything. Never mind. I wasn’t even going to show anybody anything.

For me, what I realized it’s just a universal lesson that came from those painful times in my life is that most of the joy that we experience is by being in the moment, by savoring the moment. What did happen was that as I started…I’d actually engage in what’s an act of meditation while I was painting. What was interesting is when I did eventually start to show my work and sell my work, my collectors would say the same thing over and over again. What they would say is when I look at your paintings, I feel like happy and I feel very calm; happy and calm. Now, there’s a whole lot of people out there who need happy and calm. It’s a big problem if they don’t have it. You’d see how these things are start to winding together we know…We know who I am. You know who I am now, right. You’d probably know what I stand for. Happy and calm is really important to me, because I didn’t experience it for a good chunk of my life.

Jonathan: Yeah. That’s excellent. Thank you for that example. Absolutely that’s a great story too. It’s great to hear from where you’re coming from. Tabitha cook brought up a question. You’ve got these talents you have and you’re trying to get it to be a profitable business and even just become a business. What’s the best way to decide what to work on first, especially if you have multiple interests?

Ann: Well, again I may go back to what I said before. You have to first understand…First of all, Tabitha you won’t have this question. You don’t have this confusion of where to start with, if you understand your why. You understand who you are and what you stand for. If you understand you’re what. If you understand what mission you’re on because if you understand what problem you’re trying to solve, then you will reach for the talents and the resources that are going to more likely help you solve that problem.

That’s how you did…That’s how you will focus. That’s how you will absolutely gain focus. When you gain focus you will gain confidence. I know that a lot of creative people listen, who I speak to not certainly not everyone struggles with focus and confidence. The two are linked. You’re not going to start with confidence. Confidence is going to come by focusing and taking action. Then you’re going to earn confidence. I didn’t start of confidence. Remember I had anxiety attacks for good chuck of my life, probably a mess. It is possible. It is possible. That’s my answer to that question. Go back to that time to time again. You’ll notice pattern here.

Jonathan: Okay, great thank you. We have a question from Samantha. She wanted to know how do you know how to price a piece of art or the work that you’re producing?

Ann: Well, that’s a great question. It’s really hard to give any specific answers to you because I don’t know what it is. I don’t know who your market is. I don’t know if your market’s over saturated. I don’t know how you reach your market. I don’t know what your sales goes are like. You could have something priced fairly and you could have great marketing but you’re…You can’t close the sale. The guidance I give in a general way around this is when people sell a house, before they sell the house they’re getting an appraisal.

They look at similar houses in the same neighborhood with the same number of bedrooms. Maybe [inaudible 00:11:44] house has a pool and the other house that sold recently also have a pool. That’s a good…Really just doing an analysis of the competitive landscape. That’s the best place to start. That’s where you’d start. Then what you do is you invent ways to add more and more value, and then you can add more and more [inaudible 00:12:07]. Well, you can make the sale is easier or you can actually charge more.

Jonathan: Okay.

Ann: I hope that helps. Hard to give a real specific answer to general, I’d say it’s like an appraisal when you go to sell your house. Just go look around for similar work, quality and…That’s the best way.

Jonathan: Yeah. You mentioned that the need to plan and create a business plan to do that strategic thinking ahead of time. There’s been a couple of questions that I wanted to ask you regarding that, which is how do you create a business plan or how do you build the plan especially, when your sales for your art are either commissioned or they happens sporadically. It’s not anything that happens on a consistent weekly basis. How do you build the plan around that?

Ann: You absolutely can build the plan around that. Just because you sell something via commission versus ready-made, it doesn’t matter. If it’s happening sporadically, that’s a really good indication that you need a plan because you can have…You can build…You can write a plan and take focused action so that it’s happening consistently in your [technical error]. You need a plan…You absolutely need a plan and a goal too. Let me just back up with…My business plan was completely half-baked, I’m going to tell you right now. I didn’t know what I was doing. I didn’t. Perfectly happy to tell you I didn’t know what I was doing. Here’s what I did, no I wanted; I knew that I wanted to make a $100,000 within the first year. Then I backed in right from there. I was like, “Okay. Well, how the hell can I do that?” I’m just swore on LivePlan, sorry about that.

Jonathan: We could add later.

Ann: That was like…Then truly was my first requirement because I just moved to San Francisco. It’s hell of expensive here. It’s more expensive now. Then I…That was the goal…Everything had to work towards this end goal. That’s how I did it. I think that’s a good place to do it. Like to determine how much money do you want to make at a minimum and work backwards.

Jonathan: All right. Thanks for that answer. Yeah, let me pull up another question here. Doug Belding had an interesting question. He asked what tactics in today’s market place can get a new artist entrepreneur to be a stand out aside from their body of work.

Ann: I’m not sure you really understand that question which says stand out?

Jonathan: Is there something that you need to do, because maybe your art or you want your art to speak for itself, but I’m wondering …

Ann: Okay. Hold on. Hold on. Okay. I want to start right there. Art speaking for themselves, what the hell does that mean? I am so tired of using meaninglessly…Meaningless and foggy terms that we through around and assume everyone knows what the hell you are talking about. Speak for itself, what does that mean? Nothing…What does that mean, speak for itself? Look here is the thing, selling art sucks, let me tell you all right now, it sucks. It does, you don’t want to sell art because you are not talented enough and I am not talented enough, really I am dead serious. What you want to do is you want to create value of above and beyond your art itself, and that’s what you want to sell, what’s what you want to lead with.

If you want to sell art for art sake, you need to find yourself a gallery, and good luck doing that by the way, people are getting paid by the way. If you don’t want to bother with any of this, then it just want to make, what you want to make, when you want to make it, how you want to make it with no thought or consideration to what value it provides for a target market, then you got to find yourself representative and I…God bless you, I hope you do, I don’t think you will.

Jonathan: Okay. Those are some tough words, now…

Ann: The reason I am so passionate and tough about this, Jonathan, is because artist are injured by living under an illusion that somehow magically discovered one day, that’s a lie. That’s a big, big lie, it looks like, I mean think people think I got discovered, trust me no one discovered me. I worked my ass off, and it was very deliberate and I was very strategic and I was very clear that it wasn’t about me and it wasn’t about my career process or my artist statement. It was about how I serve the target market and that’s how I got paid and that’s the only way you will get paid in this life. I can make this argument by looking at artist throughout history but truly I am being, these are like…It’s like tough love, it’s so if you are living under the illusion that somehow you get discovered, please don’t believe it, it’s not true, even if…I actually have the art…Actually have the contract for American Idol.

Jonathan: Really.

Ann: Oh, yeah I do. I’m supposed to have it, it’s illegal for me to have it, but I have got it. It’s intend…It’s basically you have to sign away everything and it’s a denture servitude. Actually, a friend is a very talented vocalist and he showed it to me and I am like…He said, “They called me back for the audition.” I am like, “You can’t go. This is verbal.” Like all his modeling money, you could have to give it to them you can’t…It didn’t work, it was ridiculous. That’s what discover…That’s what getting discovered looks like signing over your life. These are not scenario.

Jonathan: Okay. If it’s not this illusion that your art has to speak for itself and things like that, correct me if I am wrong but I don’t think that you are saying that as an artist you can get away without having a unique voice and a unique style is that right?

Ann: Absolutely must…Absolutely, yes but that is not enough. Let me give you an analogy. Jonathan just pretend you are interviewing me for a job, okay.

Jonathan: Okay.

Ann: Just pretend. I am not wearing this on t-shirt, I am actually all dressed for the job right, I have a very nice briefcase, I look like a great candidate, just pretend right. I still have to got to answer your questions.

Jonathan: Right.

Ann: If I said you are mute…if I said you are mute, that would be speaking for myself, would you hire me just based on me sitting here, looking like I am ready for the job without ever, without me ever speaking.

Jonathan: No I would definitely want to see what you know and what you have done.

Ann: Right, if I could indeed add value to your organization.

Jonathan: Right.

Ann: If I would be able to solve the problem that you have on your team or alleviate…Problem or alleviate a pain that you have been coping with in your organization right…You have to be able to speak to that very directly and convincingly…Apart.

Jonathan: We are clear you need a style, you need a unique voice, you’ve got…That has to be displayed in the work that you produce but then beyond the work that you produce you as a person communicating. What it is? The problem that you are solving and things like that especially with the new medium out there, being able to get your voice out and present them more to people. How much does that play into it of putting yourself in the forefront?

Ann: It’s huge, it’s like every business, it’s not…Selling art is a business, it’s a big, big business and it’s not…It doesn’t…It has a same requirement for success like any other business whether you are…If you are plumber, if you are a tree trimmer, it’s all you still have to…Here is a…You still have to master, you have to master your craft or master your trade or master your expertise. No matter what business you are in, that is the minimum price of admission. Of course you do. Of course you need to understand your craft, your trade, your expertise or product line; absolutely. After that, the engines that are going to drive the business are going to be sales and marketing and there is no business on earth that doesn’t have to master sales and marketing. You want to sell, you have to understand sales and marketing.

Jonathan: Okay, I am going to come back to Doug’s question on this because perhaps maybe this is what he was trying to get at is okay I have got the work that I have created and I want to take that next step of going out into the market place but I know that there is some things that I need to do to put myself front and center, do you have a couple of tactics that you would suggest of where an artist can go to put themselves out there.

Ann: Well when you say put yourself out there. That itself is another one of those foggy terms that confuse people, put myself out there, get exposure, art speak for itself like those are all like creepy, hard to understand phrases. I am going to bring it back, I am going to bring it back and say what’s this gentleman name, who have bravely asked the question?

Jonathan: Doug, although I am probably butchering the question.

Ann: Doug. Doug, I would say what’s your “Why,” who are you and what…Who are you and what you stand for right, look let me give you a real life example, it’s called LivePlan right.

Jonathan: Right.

Ann: Do you think that art establishment a group of gallery organization is going to wind here for me? Do you think they would ever put me on a damn webinar, I mean ever in a million years? No. They wouldn’t because I stand against the scarcity and permission based art establishment. I know who I am and I know who I stand for and I know what I stand against. I am going to repel those folks. That’s fine. See, you got to know who you are and what you stand for Doug that’s the first thing and that’s the really important thing. It’s more important in the case of a creative and that means graphic designers, illustrators, jewelry designers, they really have to know who they are and what they stand for because their product, their art is a reflection of themselves, okay.

It’s much more important, Jonathan, I don’t feel like the CEO of your company. They really need to know as much I mean they do have to understand their values, but they don’t really have to know as much, they can still sell the software without having a really strong sense of self right. That’s the first thing, Doug. Then secondly, okay, then now that you know who you are and what you stand for what problem is there in the world that is worth solving, what mission are you on? Let me give you an example, I will give you an example of one of my artist’s clients, because I think I am…We’ll be explaining this in a way that’s too abstract. I am going to give you a very practical and relatable example.

Jonathan: Okay.

Ann: It’s a young woman in Memphis, Tennessee, who is a children’s portrait painter. When she first came to me she was called herself a portrait painter. I said, “Well, what kind of portraits do you paint?” She said, “Well, I paint portraits of adults and children,” I said, “Hold on. Okay, let’s niche this down. Do you like painting portraits of children?” Yes.

Now why did I asked her that, I asked her that because what I was thinking is, if little Johnny gets a portrait, little James going to need a portrait right, so that’s going to immediately pour opportunity for another for more work right. Well, if you just keep Jonathan now, he is probably not going to get another portrait done, he is probably going to be done. That was my thinking there. It’s more strategic. When we delve into case in a world and found out who she really was and what she stood for, she realized that.

She looked at the most painful times in her life and the most joyful times in her life, and she realized through examining those points of view that when she was a child, when she felt really loved and really cared for was when her parents were just delivering unconditional love, when she felt, really, really disfranchised and a lot of pain. She wasn’t part of the click. She wasn’t one of the inn girls. We daunted on her…It was really important…It was really important to her a mission she decided to go on was to come up with a way to value children for who they are, to value, just value their individual worth for who they are just who they are.

What does that portrait do? It values you for who you are. Her mission…She doesn’t just paint the portrait, she actually gets down on her knees. She plays with these kids. She really understands who they are, their personalities, their interest. They have their little…These are little beings who actually have distinct personalities. She reflects that in the portrait. When she talks about her…She never has to sell her portraits because I told, selling art sucks remember? I told you that.

Jonathan: Right.

Ann: What she does, she just talks about her mission, which is true. Yeah, she just says I am really…She talks about a mission, she the one really just on her children for who they are and celebrate their worth. She talks about, how she arrived at that and by the time she is done talking about that, people are freaking…She has got eating all of her hands because they are so inspiring by this mission. It’s authentic. There is nothing about it that is copy written in advance or somehow strategy this is truly who she is. That’s the example of how you sell art without selling art.

Jonathan: Okay.

Ann: She sold a lot of it.

Jonathan: That’s great, from your experience and maybe you want to answer the question in general to…The question that I am having from all of this is okay so I have got my art, I got it ready to go, what’s my next step, who am I talking to next.

Ann: You got the cart before the horse, Jonathan. You got your art and you are thinking that’s your starting place. You have a body of work and what’s my next step. What I am saying is you…You have the carpet for the horse, you are in the middle. You need to backup two steps. Let’s go back to Kate as an example. She knows who her ideal customer’s avatar is, if you are not familiar with that term, that’s like the persona of her favorite buyer, a collector. She knows that her values match her customer’s values. She talks about her values. She got like family values. In that value of family, a value of family is very important to her particular target market.

She talks about that. If you are starting with your art, you are like you…You just your choice is tied together. You have to backup and know who you are, what you stand for and who you, who…What problem you can solve and whose got that problem, we look at Kate, right. Those mothers who commission these portraits, their biggest worry is that they are going to somehow screw their kids up. Truly she circumvent them, and their most concern that they are not going to love their children well enough, and they are not being patient, they are not being loving enough mothers because they are so hairy at doing things. Having a portrait of their child is a way to really honor and celebrate that child and express love and appreciation for that child, that’s how Kate solves the problem…That’s their inner angst that they are very, very concerned about that.

Jonathan: Okay, let’s talk about reach though. She had her target market defined. How did she reach them, was it online sales or she gong to…Fairs and events, and setting up her boots. What does that look like?

Ann: Great question. Number one source of business is referrals, which is usually the case, but we all got to start somewhere, right, so you start with…I’m not going to tell you where to start because my suggestion is you start…You start with the fastest path of cash. A lot of artists that I’ve talked to, say that people have expressed interest in a commission but they didn’t want to do it, because they didn’t know how to handle it. Go do it. Do it and mess it up. Just go do it and so that’s the first thing Jonathan it’s like if there’s someone that’s already expressed interest in your art and you hadn’t followed it up and I’m not kidding when I say that. Then make a list of those people who have expressed interest and start with them.

Jonathan: Okay.

Ann: Or maybe if someone said to you…I love what you’re doing and I know so and so would love what you’re doing. I’d like to introduce you at some point. Well, follow up with that person and make that introduction happen. That’s like the easiest quickest way to start.

Jonathan: Okay.

Ann: With your existing network and opportunities that you are having back in your head commit them to writing. Make yourself a list and prioritize them like who is the hottest lead here on this list, who is it and…Who is warm and who is cold. That’s number one. Just start with where you are today…That’s only that…That’s a really important and powerful concept to remember. You’re exactly where you’re supposed to be just start with where you are today and don’t measure yourself against someone else don’t…You’re just going to be a massive case of anxiety and angst and everyone starts somewhere. I started somewhere. I started nowhere. I was nowhere, so please remember that, okay?

Jonathan: Yes.

Ann: Then look at your existing network obviously online we got so much potential to connect to people but the problem that happens is you’ve got all this wonderful social media channels and ways to engage. You need to have something to say that’s compelling.

Jonathan: Right.

Ann: Right? It’s like going to a cocktail party and not having anything to say. You don’t know how to engage in a conversation. You don’t really know how to introduce yourself. You don’t know how to ask questions or take turns in conversation. Obviously social media is a really great way…Having an online presence, but people…I don’t know…People buy art mostly in person, especially if it’s expensive, if they’re going to buy off your websites usually going to be a second purchase. It cannot be a…Depending on…This depends very much on price point and the product. Don’t get all upset…If you’re selling on online, good for you…It depends like…I’m talking about expensive stuff it’s going to require some hand holding. The more expensive it is its going to require hand holding and sharing the same air.

Jonathan: Okay.

Ann: That means going to events or hosting events yourself…Talk shows or open studio events. I’d invite people to my place here at the beach when I started out. Served them cocktails and [inaudible 00:33:25] and most people didn’t buy a damn thing, but a few did and it was worth it.

Jonathan: Okay. Lynn had a question and it dovetails into a question that Jaden has as well. Lynn wanted to know how do you handle the businessy stuff like building a sales funnel, selling, managing clients? Then Jaden’s question is, do you recommend getting the manager to kind of handle some of that stuff for you, make those connections? What are your thoughts on that?

Ann: Well, let’s keep it real. You’re never going to afford a manager until you get a certain point of success.

Jonathan: Okay.

Ann: Let’s just keep this real. There’s no like long line a manager is waiting for a jobs to work for artists who aren’t making enough money to pay them. You got to…You got to be become success on your own first, then you can hire a manager. Yes, so you can’t really…You can’t start with a manager. There’s no manager. I don’t know where they are, but I’d love one. I don’t know…That’s a false…It’s one of those false notions, right, like get a manager. You’ve got…The first thing that’s…The first thing a manager may let’s say work on a percentage or a gallery is going to ask you is, “How much have you sold?” How much is…Or they’re not going to take you on. Sorry, you’re going to have to master this and guess what it’s actually fun and interesting. Now the other question was about how I managed the business side?

Jonathan: Yeah, like did you have to do it all from the scratch on your own? Did you get help from people? What did it look like?

Ann: Well, so wherever I could get help I got help and especially yeah definitely, so one of the ways that you can get help is through like Elance and oDesk. Right? It’s pretty cheap. Another way is you can get help like trading for services, bartering, I’m not going to get into the tax implications of that, but I did a lot. I did trades a lot when I first started. I traded for hair salon services, I traded for acupuncture, I traded for massage, I traded for so…I traded anything I damn well could trade for. I traded for graphic design, website design…People who would like really loved my art but wouldn’t normally buy it were…Because they didn’t usually buy art they were great…They were great prospects for giving a trade.

I did it dollar for dollar trade, and I kept it all in writing because I didn’t want to lose my friendships in a relationships with these people. I wanted the boundaries to be very clear. That’s another way that you can do it. Here’s a thing you don’t have to do everything at once. All right, just take it one step at a time. The one thing that’s a big hazard is feeling overwhelmed. If you got plan however, especially a living plan you can take things you can chunk things out and do things in a logical sequence. It’s very difficult to do that if you don’t have it written down and you don’t have…You’re not keeping up with it, very, very difficult. I don’t think you can do it actually.

Jonathan: Okay. When you …

Ann: Timing is important.

Jonathan: When you were building your business plan…Now, this ties into a question from Sarah, is there a business plan outline that you think fits well for artists…Where did you land on your search?

Ann: Well, I have a plan and I’ve a one-page plan. It’s not as anywhere as in-depth as life plans. I don’t know if I can mention that or not, but I feel if it’s proper then you can send out the link, but you’re all welcome to that. That is a good place to…It’s actually artists who strive to launch the plan, but you can’t stop there. That’s just to get things out. You have to go to the next level and that’s where you have to keep iterating that plan, and that’s just the bare bones of it. That’s why a product like live plans keeps you engaged in planning. It’s not the plan, okay, it’s actually not the plan, it’s the planning. Does that make sense?

Jonathan: Yeah, I think it does.

Ann: Do you think it matters? Of course you do.

Jonathan: I think it does, but let’s explain that to all.

Ann: [Crosstalk 00:38:07]. You got to start every week by looking at your plan. It’s like a…You say a plan is not a road map it’s a compass. Let’s just look at this analogy, right?

Jonathan: Yeah.

Ann: Lets say I want to go from San Francisco to New York City and I have never taken this journey before in my life right and that’s like wanting to go from 0 to a $100,000 in one year. How the hell am I going to do that, right?

Jonathan: Yeah.

Ann: Well, what’s going to happen is I’m going to make progress…Let’s say, I get across Nevada or I will…Now I may have to look at my map again to see if I’m pointing the right direction and I still point to east towards New York or am I going towards Alaska now right so you have to look at your plan and see where you’re positioned in the map. You also have to take this…One thing about planning is you look at your situation as it is today…What are those six things I need to do today, right.

Then you also want to be able to take a step back and look at your plan and your position on that plan or on that map from like a 30,000 mile view to see where you’re tracking. We got to zoom in and out. That’s my best analogy I can give you, but it’s really important. Bottom line is this…When you think about the act of writing something or trying to articulate something…When we write we find out what we know and what we don’t know. That’s important too, but not being able to answer questions is…It’s great news. Right, I don’t know what my target market is. Great, so then you can ask the question, “Well, then how do I find out?”

Jonathan: Okay.

Ann: You’re not going to have all the answers at once, but planning will help you provide those answers over time and those answers will also change over time.

Jonathan: Okay.

Ann: It’s really important.

Jonathan: Yeah, that’s great. Thank you.

Ann: If anyone off here isn’t …

Jonathan: That is okay. We have a question from Marilyn John, she wanted to know how do you stay motivated when you’re art is good and maybe you’ve had people compliment that its good, but it’s not selling. What keeps you motivated in that situation?

Ann: Yeah, you take some compliment and deposit them in a bank, Marilyn, I know that. I know that feeling. I’m going to address this. Okay because this gives artistes a lot of consternation. They get gushing compliments from people and then those people don’t buy and then the artist feels like…Their family thinks somehow okay. Let me give an analogy…A lot of people here at San Francisco drive those Tesla cars and I think they’re really beautiful and I think that they’re…I like that they’re so well-engineered, but no matter how much money I had I am never going to…I am never going to spend a $100,000 on a car, because if you live in San Francisco you’re bumpers going to get dented. I just wouldn’t do it. Right, so I admire that car.

I think it’s a beautiful car. I respect the engineering, but I’m not going to buy it. I’m never going to buy it…Those are those people who give you the compliments but don’t buy your stuff. Just take the compliments as an assurance that you’re doing something right.

Jonathan: Right.

Ann: You just never found your target market and you probably haven’t found your…If you have found your target market you’re not addressing their pinpoint. Let me just say, Keith Bradley the portrait painter who I referred to earlier, a lot of those people didn’t know that they needed their children’s portrait painted. They never felt it and it never occurred to them, but when she presented it as hey, this is a way to actually celebrate your child’s individuality. Take pride in it and acknowledge them, like…It’s a junior portrait.

Jonathan: Yeah, that brings to a question from Sabrina Booth, I’m glad she brought this up because it kind of ties into what you were saying earlier with thinking through that people that you’ve already talked to, who have shown some interest in your work. How do you take an enquiry and then convert it to an actual sale?

Ann: Well, that’s a big question. I wish I could talk to her directly, like what really delve into the question so I can ask questions about the questions to make sure I understand it.

Jonathan: Sure.

Ann: Because I apologize everyone and maybe answering the question and it’s not affectively answering what you typed in, but…That’s such a big question because how do I sell something. It really…The question is how do I sell something and that’s as big of a question as how do I market something. Right, I can’t really answer without knowing the specifics, but I will tell you this…As in the general world people buy, generate most of your business. Because they already trust you, right, so you already got number one…You’ve already got that box checked if you got a referral.

Really, anything I would say about selling and this is as a general notion is this just really having a conversation…A guided conversation. You want to find out if you could help them or not and this is why understanding what you’re solving is so critical. If you can’t help them then you let them know you can’t help them and then you end that conversation before you waste time…Your time and their time.

Its just really that’s a very, very different philosophical approach than using test closes and closing the deal, so its about having guided conversations and then I also will add you got to ask. Just come right on say, is this something you’re…Can you picture this on your wall? Do you like wearing this…Do you like the way that bracelet feels? Do you want to take it home with you? Would you…I offer free delivery…Would you…If you’re interested in buying this today, I can offer free delivery and installation. You sense it there’s not interest which you almost have to make them mental note, when you’re just starting to sell to remember to ask for the sale.

Jonathan: Yeah, I think that’s a good point. Can I tie into something that I want to ask you about to is maybe what’s holding back somebody back from doing that is the fear of either rejection or the fear that they don’t know how if they can represent themselves well. How do you handle fear? How do you get past it? What’s worked for you?

Ann: Fear …

Jonathan: What was that? What do you say?

Ann: Fear is always going to be there. It’s always going to be there and you can’t ever get rid of it, so don’t fight it, just say hello to it. Say, “Hey, [inaudible 00:45:52] fear. I feel like I’m sweating, I can feel it. I feel the hair is raising on the back of my neck.” Feel it. You’re going to feel fear. It’s okay. It doesn’t prevent you from saying, “Are you interested in buying this?” You can just…I think spear of fear just causes more damn fear. It’s actually anxiety. That’s actually would cause…I’m very familiar with it.

Jonathan: Yeah.

Ann: You have to just feel the fear and do it anyway, and it’s very…It is more fearful for an artist to ask for the sale because it’s personal. I’m telling you, if you will take, if you will start selling art, I mean it, start selling your art and look for ways to solve the problem, you’re not going to have a problem to find, you’re not going to have a problem asking whether or not you can solve the problem. You’re not going have a problem with that. You’re going to want to do that because you’re actually going yourselves someone’s problem.

Jonathan: I think what might be helpful to is to recognize that you’re going to make mistakes that does happen. You might mess it up. [Crosstalk 00:46:57]. You might feel like you lost that sale, but that shouldn’t stop you from asking and you’ll find that as you continue to ask you’ll get better. Is that right?

Ann: Yes, there’s a phrase…I don’t know who came up with this phrase, but when it comes to like sales and losing sales, you’re going to lose more sales and you’re going to have it closed by a huge percentage, and the phrase goes, “Some will, some won’t, so what next?” There’s really a provision to take. It’s okay. There it’s okay. It’s a number’s gain, and it’s not personal. I mean, when the last time you went to a shoe store and you didn’t buy those shoes, wasn’t a personal rejection as the sales person know it all. You just didn’t want the shoes. They didn’t fit you.

They weren’t you’re style; you didn’t feel like shopping that day. It really is that you don’t lose sight of this. We have this illusion that the art is an extension of ourselves. Our relationship to our art that’s true. When the buyer comes around, it’s just a product that they do want to buy or they don’t want to buy. It’s not personal if they reject it, if they don’t want to buy it.

Jonathan: That’s interesting. I haven’t thought of that before, but that makes a lot of sense. It helps from an owner’s point of view to recognize that, and stop seeing it is a personal rejection which might take a little bit of time to realize that. It sounds like it’s worth it.

Ann: If you get into this place for you really understand what problem you’re solving because just they wanted to happen…You’ll be selling…Remember when I said you don’t want to sell art, selling art sucks. You want to create value above and beyond the art and sell that. If you’re focused on that, you’re not actually selling your art anymore. The example with Kate Bradway, she’s not actually selling portraits of children, but she’s actually selling it’s an opportunity to a parent, usually it’s a mother to celebrate and to knowledge their child’s individuality, and they’re worth of their individuality. It’s an opportunity to love that child for who they’re, just as they are. That’s a powerful promise. Product promise isn’t it?

Jonathan: Yeah.

Ann: A lot more probable and engaging they’re trying to sell portrait.

Jonathan: Got it.

Ann: It is in fact that’s what actually happens and it’s…These portraits get unveiled of these children and the parents often like tears, well, she loves it when the dad’s cry in particular, really …

Jonathan: That’s great.

Ann: I want to emphasize, you have to be authentic because people will smell it. This system really be authentic. If it is it, it will work.

Jonathan: Tony asks a question that I think ties well into this. He said, “Is art is abstract?”

Ann: Okay.

Jonathan: He’s having trouble knowing how to communicate? How that solves a problem? Maybe you can speak to that.

Ann: Glad you asked, Tony. Love it. Okay, so let me give you another example of someone who’s selling art, but not selling art, okay? This artist I worked with, her name is Jenny Nikki, let me explain who she is and what she stands for first of all. Her why? When Jenny Nikki was in her early thirties, she was married, had two children and she was given a diagnosis of cancer and given 50-50 chance to live. Okay. As you can well imagine she was very scared, and her heart was bursting because she didn’t know if she was going to be around for her children, so on the way that she responded to this stress by the way she’s an abstract painter. That’s why I’m talking about Jenny Nikki.

Jonathan: Okay.

Ann: She went into her studio and she started painting, abstract paintings to her children. Basically, she’s “I wanted to make stuff, so I can leave something behind because I really know I was going to be around.” I thought, “I don’t know what to do, I don’t know how to act, so this is what I’ll do,” and that’s what…I said, “Oh that’s interesting. It sounds like you were basically reading a legacy of love to your children.” She said, “Oh my God, that’s exactly what I was doing. I said, “Well, what will be interesting Jenny?” She said, “Why are you doing that?” She said, “Because I realized that I needed to tell them that I love them and show them that I love them. I need to show them that I love them in case I didn’t make it.” By the way, she’s like five years cleaned. She’s very healthy.

Jonathan: That’s nice to hear.

Ann: Yeah, she’s doing great, so I just thought, “Ooh, this is awesome. I got idea.” Then what happened next was I said, “Oh, my Gosh, Jenny, so many people have this problem. The problem is they don’t people and realize that they love them, and why they love them.” Talk about pain, that’s a fake big pain as humans have, right?

Jonathan: Yeah.

Ann: What if you actually sat with someone, and you ask them like she did this. She did this with the groom and is his bride-to-be. She sat with him and said, “Tell me the reasons you love her.” He wrote a list with Jenny. He started crying which is great because it’s I have this phrase, “Watch him cry, make a buy” which means touch their heart. They will just…That’s what art does. It touches your heart. He went through this process with her and then she took those words and she was all blubbery too. It’s fantastic. Then, she created this painting. It was an abstract painting that was inspired by this love list. Then what happened was the wedding party actually paid the commission, and Jenny came to the wedding reception unveiled the painting. The bride starts crying. The groom starts crying. Everybody in the reception starts crying. Jenny gets much referrals.

Jonathan: Yeah, okay.

Ann: Jenny gets you where this is. This is really is…This is made of…This is Jenny’s real circumstance. She knows who she is. Jennie knows what’s important in her life. That’s what’s important. You find out what’s important when you face death. She knows who she is and what she stands for. Does she resonate with everyone? No. Does her abstract style and abstract painting resonate with everyone? No. Doesn’t matter. She knows how to connect with retarded market though. She knows how to help them. She can solve a problem. She can alleviate pain. She doesn’t have to sell any more damn abstract paintings, which is no fun. There’s too many abstract paintings. You’re not talented enough. I’m not talented enough.

Jonathan: When we talk about this, it’s like so far we’ve used painting an artist sells the example which makes a whole lot of sense because you’re …

Ann: I know.

Jonathan: You know a lot of artists, but…[Crosstalk 00:54:26]. Exactly. Do you have examples for how musicians who’ve done this? How photographers have done this?

Ann: Yes. I only know example of a musician, okay? Musician who is…He was in Whitney Houston’s first music video. He grew up in the Baptist church in a thoughtful tradition just like Whitney did. He tried for many, many years to make it, to get signed by a label and blah, blah, blah, things you do, right? Hold on. You’re a Gospel…I’ll explain to you what you’re doing. I said, “You are Gospel singer.” He’s like, “Oh, I can’t use the word Gospel, it’s not marketable.” I’m like, “Well, first of all Mister, you don’t really you haven’t been a master of marketing yet. Let’s just go back and believe where they’re and where we stand for,” because that’s why your strength lies, your authentic self.

What happened was fast forward. I was just trying what he is doing now. He went back to the Gospel tradition, and we created this concept of something that’s called “Voice Church.” It’s a reflection of a term called “House Church” and in the Christian community in the South; they gather and have church in people’s houses. What he does is he goes to people’s houses and he actually conducts a gospel sing along. In that tradition, you actually sit or stand in a circle and it’s called a response. Everyone can sing. You don’t have to know the words.

He calls, and then people say in response and people have a flipping blast, it’s like karaoke, where you don’t have to get drunk. It’s like karaoke. You don’t have to believe in Jesus or God. Everyone’s welcome. Everybody comes from every whether they have religious orientation or not, it doesn’t matter. It’s a way to gather people and they feel so joyful, and they feel so distressed after doing one of these same circles. You see what probably solving, he also give you a damn excuse to have a very compelling and memorable party.

Jonathan: yeah.

Ann: At the minimum, that’s a minimum value proposition. People are so happy and they’re lit up at the end of this. He is going back to who he is and what he stands for. He knows that people are very afraid of singing. There’s an African proverb winch he has on his website, “If you could speak, you could sing.” Most people when you ask that if they could sing, most go “Oh, I can’t sing. I sound like hell.” He gets over all that in the singing circles. There’s also a huge barrier for a lot of people. That’s an example of musicians.

I can’t give you like…If you type into the chat box I’m a musician how can I make a good living? It’s a hell. I can answer you without digging in deeper. You can ask some of these questions to yourself. Look for what characteristics, what experience, what skills, what resources do you have above and beyond your art. That’s where I encourage you all to look, but for real I would less than an hour from my country. That’s like people are bunch of very affluent tourists, so write down the road there, so that’s why so they’re all panting veneers.

Jonathan: Okay.

Ann: That’s a great information.

Jonathan: That helps, that definitely helps.

Ann: That’s fantastic for sales, not every circumstance, but many.

Jonathan: Yeah, I guess that you’ve taken one thing away from today’s webinar. It’s that alcohol helps sales. No, I’m just kidding.

Ann: Auctions at art gallery receptions. They’re serving and it’s like always serve it.

Jonathan: Take down, okay.

Ann: People connect with their emotions and their impulses when their…I’m not suggesting you all become…You create a bunch of losers. I’m just saying, it is an actual strategy that is used for. Let’s not pretend that is used.

Jonathan: Well, that’s about the time that we have for questions. Thank you everyone for submitting your questions and

Ann: Yeah, thank you.

Jonathan: Thank you for your time. I wanted to follow up just real quick you’re a course instructor, you do have this course about making money and making art.

Ann: Eight courses.

Jonathan: You have eight courses, so I’m going to do, I’m going to paste the link in here into the chat window for everybody. I mean, just do that real quick. Okay, so that’s the link and you wanted to offer 10% off for the course if people include this with LivePlan. [Crosstalk 00:59:34].

Ann: If you copy Jonathan’s T-shirt…Let me just back up. I actually teach something called, “The MAKING Art Making MONEY Semester.” Enrollment is not open right now, but there is I’m accepting applications the next “MAKING Art Making MONEY Semester” and you can go to this link, and apply.

Jonathan: Okay.

Ann: Yeah, there’s an apply link, but if you can navigate towards that I think. Well, actually you can anyway. If you put in, there’s a place at the very bottom of the applications as, “Where did you hear of us the very first time?” If it was “LivePlan” just type in Jonathan’s T-shirt “LivePlan,” and you will receive a promo code that will extend a 10% off, and that’s in neighborhood of $200.

Jonathan: Awesome.

Ann: Get your take. It’s actually valuable, and that’s just because you all showed up. See what happens when you show up.

Jonathan: Yeah, thank you. Just as a note because a few people have asked in about seven days or so, I mean, I sent a follow-up email to everybody who attended, everybody who registered for the webinar, is going to include a recording of this conversation that we had, and I’ll definitely include the link to Ann’s course with the discount, so you can get that there as well. Yeah, once again, Ann, thank you for joining us today. Thank you for all of your great answers. Thank you everyone for coming and submitting such great questions.

This is one of the primary reasons that I spend a lot of time reading. In order to learn what to do and what not to do as a marketer, I’ve taken things a step further and found myself turning to Tom Fishburne’s playful cartoons for the necessary wisdom.

One of the reasons I enjoy his work so much is that in each cartoon, he playfully captures something strange and often unnecessary that we as marketers, business owners and consumers are doing. I turn to Tom’s cartoons to laugh as much as I do to learn.

This is why I’ve selected three cartoons that I feel are particularly relevant to anyone thinking about starting a business, or who is currently in the early stages of running a business. I hope that these three ‘stories’ will guide you to make the best decisions possible and to avoid making mistakes that others have made.

If it’s not working, change something

Why learn everything the hard way when you can turn to others in your industry or others that face the same challenges, and meet the problem head on before it’s too late?

As a business owner, it’s your job to keep watch over your company’s health. As such, you should regularly be asking, “Is what I’m doing working?”

You should be asking this regardless of whether you operate an architectural firm, a waste management facility, or a cafe—and especially if you’re not seeing results. If the latter is true, you need to make a choice: you either pivot, or you persevere.

The term “pivot”—as it relates to business—was coined by Eric Ries in his book “The Lean Startup.”

“All a pivot is is a change in strategy without a change in vision. Whenever entrepreneurs see a new way to achieve their vision—a way to be more successful—they have to remain nimble enough to take it.” – Eric Ries

Once you’ve built something, measured its effectiveness, and then established that it is or isn’t working, that’s when you need to make the choice. Pivot or persevere. Which one?

On the one hand, success can take time. In fact, Hershey chocolates would not be here today had their founder, Milton Hershey, not persevered. Milton’s first three attempts to start and run a candy-making company failed. It was only his fourth attempt and the addition of a unique caramel recipe, that helped the “Lancaster Caramel Company” take off. After selling the company in 1900 for $1 million, he started the Hershey Company, which brought milk chocolate to the masses.

But, what do you do when things clearly aren’t going anywhere?

In this instance, perseverance may well be the worst idea. When Groupon first launched in 2007, they were an activism platform called The Point. They had created a network designed to help people get together to solve a problem. The real problem, however, was that their platform didn’t get much traction.

In an effort to try something new, the founders launched a simple WordPress site, uploaded a number of coupons for the Pizzeria in their building, and then emailed them to people. Even though just 20 people redeemed the discount pizza coupon, the founders realized the significance of having made people take action. So, instead of sticking with the old model, they pivoted. Today, they are worth approximately $4.5 billion!

Your target audience is not everyone

As we’ve said above, if it’s not working, you need to change something. In that same vein, I thought I’d give you a heads up: it’s not going to work if you don’t start out right to begin with. This is one lesson I did learn the hard way.  One of the most important things to get right before you start a business, and to keep in mind as you run your business and create new products or services, is that you need to define your target market. And, you need to be specific.

For the last 10 years I’ve been learning to make jewelry. Part of what I enjoy about this hobby is the challenge involved in figuring out how to market and sell it.

While I haven’t turned my jewelry hobby into an actual business yet, I’ve used this hobby and my desire to do something with it eventually, as a platform on which I can build my business skills.

Four years ago, when I actually started selling my jewelry in shops, I knew very little about starting a business or about writing a business plan. To bridge this gap in my knowledge I decided to participate in Bath Spa University’s annual business planning competition.

The competition was only open to university students. Fortunately, at the time, I was studying for my Creative Writing MA, so I was eligible to participate.

In order to prep us for writing a business plan, the University hosted a series of business planning workshops: startup basics, pricing and financial records, working with clients, and presenting with confidence.

I set to work. Executive Summary—leave until the end. Company Overview—fun stuff to write. Products and Services—right on. I’d been making them anyway, hadn’t I?

Then I hit the target market section.

Define your target audience. Include details such as age, demographic, gender, etc. Go into as much detail as possible. Where do these people shop? What job do they have? What things interest them?

Well, I thought, I was making “cute” jewelry so my target audience was obviously women. And, realistically, I didn’t have enough experience actually selling my jewelry, so the fact that older people tended to buy it at the time, was neither here nor there (as I saw it then). I decided to include everyone between the age of 15 and 50 with an interest in international cultures.

Looking back, I’m mortified by my naivety. The judges told me that they enjoyed my presentation and that the jewelry was beautiful, but that they didn’t think it would sell. At least not in the UK, not unless I joined forces with African charities or adjusted my plan in some other small way. At the end of my pitch they asked me again, “Who is buying it now?” I stammered through an excuse. The truth was—I hadn’t been selling long enough to answer this and I didn’t think there was a precedent for the things I made. So, as I saw it, there was no market research to go off of. I was perfectly justified in not having a target market.

Wrong. There is always a way to identify your target market and to assess whether or not you actually have one. In fact, if you don’t know your target market, the lean startup methodology is strongly recommended. This way, you will have time to learn what your customers want and still be nimble enough to make changes.

The reality is, I didn’t actually pick a target audience. I just hoped that my “little men” would be cute enough and different enough to appeal to the judges on a purely emotional level. The thing is, they weren’t out “shopping.” They were there to judge my business plan and the viability of my business model.

The same thing will happen to you if you walk into a bank with your business plan, or if you hand it over to an investor. If your target audience is just about everyone, I’m willing to bet they won’t invest. And, if you’ve been vague in other areas, the same.

Rosanna Mead, the girl that won the competition that year, had something I didn’t—a very specific target audience and a brilliant idea. Her idea was to bring musicians into care homes and hospitals to play music to those with dementia. Can you get any more niche? She is now a corporate partner with the UK’s Alzheimer’s Society and runs her business, Musica (the very same one she pitched), nationwide.

Obviously I’m slightly envious of her success, but I’m also happy for her. It’s inspiring to see that I was at least “beat” by someone who is now using her business to do good.

The lesson? Know your target audience. If you don’t, take the time to learn it or to figure it out. This is just one of the reasons we advocate a “plan as you go” approach to business planning.

You don’t need to justify EVERY decision

Beyond defining your target market and being open to the idea of change, one more lesson it’s worth keeping in mind as you run your business is that it’s not necessary to justify every decision you make.

Over the years, I’ve worked for people and for companies that have required lengthy justification before allowing me to do something. I’ve also worked for companies that have trusted me and given me free reign to explore the ideas I thought relevant.

The difference between these two approaches is immense.

In my experience, companies that put a premium on hiring intelligent people and letting them do their job as they see fit—rather than on creating policies to control their people—tend to have happier, more devoted, and more creative employees.

This makes sense, given that creativity requires an environment that encourages individuals to explore and experiment.

At Palo Alto Software, my team works in exactly the type of open-minded fashion most employees long for. We do plan, report on, and follow a general content strategy, but we’re free to experiment both inside and outside of this strategy. Our COO uses the gentle guiding notion of “ask for forgiveness, not for permission.”

Not only does this allow us to get on with our jobs without badgering him too much, but it lets us explore new ideas that could, in the long run, be beneficial to the company.

As marketers and writers, we’re “creatives,” and, for creatives, freedom is pretty important. If we had to justify everything we did, there would be no room to allow these new ideas, sometimes only vaguely related to our strategy, to develop as they often do, over time and as a growing hunch.

In fact, if managers and companies that let employees explore did not exist, the World Wide Web as we know it today also might not exist! It was only thanks to the freedom Swiss particle physics lab CERN allowed Tim Berners-Lee, that he was able, over the course of a decade, to work on his side project. Today, we refer to it as the internet. Back then, it was simply a network of minds and hypertext enthusiasts that helped him polish and build on his idea.

“Inventing the World Wide Web involved my growing realization that there was a power in arranging ideas in an unconstrained, weblike way. And that awareness came to me through precisely that kind of process…It was a process of accretion, not the linear solving of one problem after another.” – Tim Berners-Lee

The company that requires justification for everything, on the other hand, is operating on a basis of fear. To their mind, if you do something that isn’t related to billable hours, or that doesn’t immediately positively affect revenue, you’re using valuable resources, they’re losing billable hours, and their reputation (as they see it) is at stake!

Great ideas don’t often come about as a consequence of a regimented working environment. If you want to be great or you want your employees to be innovative, you need to learn to let go and trust. You need to set aside a budget for experimentation.

The moral of the art…

Yes, you might not pick the right target audience to begin with, but at least if you pick a target audience and get it wrong, you can adapt as you go. And, if you are open to experimentation, change and the occasional random decision, you’re going to find it easier to come up with creative solutions to problems and you’re going to have happier employees.

Share your own story with Bplans: how did you learn to manage your business better? What advice can you give others going into a similar industry? We would love to hear from you. Leave a comment below or email us your story.

All cartoons are used with permission from the artist, Tom Fishburne. 

I’ve coached many companies over the years, as well as judged several business plan competitions, and I’m always surprised by how most business owners can’t confidently tell you their total market potential. They tell me things like, “My market is everyone who eats dessert,” or, “Everyone in my community who drives a car,” or, “Anyone in the world who uses social networks.”

You may think these are your markets, but you need to drill-down and get more realistic and specific about the true size of your market, or lenders and investors will question your credibility.

That leads us to TAM, SAM, and SOM—Total Addressable Market, Segmented Addressable Market, and Segmented Obtainable Market, respectively. Here, I’ll just be covering TAM—how to calculate it, what it’s used for, and why it’s important—but all three numbers can be helpful to reference while you’re writing your business plan.

That said, it’s important to note that a formal TAM and market analysis is not always necessary for a small business. Sometimes new business owners get hung up on detailed market analyses and market research, but it might not be the right way to spend their precious time while they’re getting their businesses off the ground. Unless you’re seeking outside funding, your marketing lead is pursuing new markets and wants to dig deeper, or it’s required as part of an academic exercise, you can probably skip assembling a detailed market analysis.

Even multi-billion-dollar corporations don’t sell to “everyone”

Ask yourself: Can Nike say that everyone in the world with feet would be a target for their products? Before answering, let’s first look at the four questions below that are required when defining your TAM:

1. Who has the need for my products or services, the financial ability to purchase my products, and the ability to find my products?

2. How many of these people or businesses exist today?

3. How much money does each person or business currently spend every year solving the problem that my product or service also solves?

4. Who else do I share this market with?

Considering these four questions, and especially the first, now answer the question about Nike’s TAM.

The answer would be an easy “no.” Regardless of how ubiquitous the Nike brand may be, not everyone in the world with feet has heard of Nike, has the ability to afford a pair of Nike shoes, has the need or desire to wear athletic shoes, and has the access necessary to purchase their shoes.

This is why you should never say, “Everyone who…” when identifying your total addressable market. It’s a rare case when that phrase would be true (unless of course, you drill down into specifics after that statement).

A small business example

Let’s use a hair salon in a small city (population: 120,000 people).

First, a few things to know about this hair salon:

• It’s providing high-end salon services
• Average haircut and style is $65
• Majority of clients are women between the ages of 25 and 55

Image from LivePlan “Pitch” section for a beauty salon.

Let’s do the math:

(35,000 x $450) = $15,750,000

This means that this hair salon in this city has a total addressable market size of $15.75M and 35K potential prospects.

This salon also needs to keep in mind that there are three other salons in their community that are seeking to serve this same market, because that means that their TAM will be shared with their competitors.

How to use your TAM

It’s important to know that most businesses shoot to capture around 1% of their TAM in their first two to three years of operations (although the percentage varies a bit by industry)—this is what we refer to as Segmented Obtainable Market (SOM). Therefore, this salon should strive to reach around 350 (1% of 35,000) of these women in the first two to three years of operation.

This salon owner now needs to ask if capturing 1% of their TAM in the first few years is (a) a reality for them, and (b) profitable for them. From there, they can create a marketing plan that helps them reach this market (also known as customer acquisition strategy). For example, the salon owner will most likely target their “ages 25 to 34” market differently from their “ages 35 to 55” market—these two markets should be segmented separately and targeted with different marketing campaigns.

Another good reason to calculate TAM is that it will help you when you’re developing your revenue forecast. I’ve seen plans that say they will achieve $2M in sales in their second year of operations, yet they don’t have the capacity internally to deliver $2M worth of products or services in that timeframe. If they’d calculated their TAM (and their SAM and SOM), they would have had a better sense of their realistic market potential, and they would have either a) been able to plan for it and ramp up their internal capacity to meet that market’s demand, or b) been able to analyze their capacity and determine that their calculated SOM was just not realistic for them at that time. Either way, their revenue forecast would have made a better impression on investors.

Revenue forecasting with your TAM

Let’s do a high-level forecast for this salon based on the assumptions above:

Sales and revenue forecast, assuming that the salon captures under 1% of its TAM (350 customers) in its first two years.

This means the salon’s sales goal by the end of year two is $157,500. This salon owner now needs to create an expense budget and see if the business will be a profitable endeavor. The owner may find that is costs $165,000 to run this business for two years; in that case, the salon would not be a profitable endeavor.

If you aren’t sure of your business’s exact expenses yet, industry benchmarks can be a useful guide for evaluating whether profitability may be realistic for your market and business type. This is especially helpful to business owners who are still in the planning stage.

Image from LivePlan business plan for a beauty salon.

The average gross margin (sales revenue minus sales-related expenses) for a beauty salon business in the U.S. is 81%, with an average net profit margin (i.e., the percent of sales revenue that is profits, after non-sales-related expenses like taxes and loan payments have been accounted for) of 8%.

The salon owner could use their forecasted sales revenue and the industry benchmark data to calculate their expected net profit—in this case, $4,860 for year one and $7,740 for year two.

All of the numbers you use in your business plan will work together to tell the full story of your business and the opportunity in your market that you are going to try to capitalize on. As you can see here, your TAM is going to be a pretty important one.

Have you done the math to determine your Total Addressable Market? If not, why? Share your thoughts in the comments below. 

The smartest marketing minds on the planet have boiled these factors down to this simple, but incredibly powerful, formula: The right message, to the right market, at the right time.

The problem is, most businesses send out a message that’s only relevant to the company owner—that is, to people who are not in the market for their product or service, at a time when they are probably not interested in buying!

We often hear people say “I meant to get around to doing some marketing, but I just didn’t have time, so we just put something out there.” Or, worse, “I got a great deal on this program but I didn’t realize 90 percent of it went to people who don’t buy what I sell.”

Many small business owners spend money on “image” advertising, with no direct response offers included at all. There is no “next step” called for, and thus, no way to measure the effectiveness of the ad. Advertising just your brand is great if you’ve got a million-dollar budget like Nike or Coke, but it’s marketing suicide for the rest of us!

The objective of your marketing efforts is to generate leads—finding people you can follow-up with. When you convey the right message, to the right market, at the right time, you get leads. Social marketing tools in particular, can really help you do this inexpensively and effectively.

Here’s how: You want to attract people who are interested in what you’ve got to sell so you create a dozen powerful, benefit-filled headlines offering to provide free reports or “how-to” documents (or even a dozen different titles for the same document), e.g. “Free report—What you should know before hiring a contractor.” Or, “Get the facts: Learn how to work with a contractor before you renovate.” Offer them on Twitter.com and see which headline generates the most response. Expand the program by posting the same short message on your company’s Facebook.com “fan page” and your LinkedIn.com profile (you have these, right?). Use the same approach to learn what generates the most interest in a free webinar (that you could offer).

Create a series of three-minute videos introducing yourself and offering something—a free guide, a seminar etc. See which one gets the most response and build on that knowledge.