Shark Tank Jump Start Your Business: How to Launch and Grow a Business from Concept to Cash (6 page)
Authors: Michael Parrish DuDell
BIG IDEA: A device that helps novice guitar players learn to play chords
INVESTOR: Robert Herjavec
Since Travis Perry can remember, he’s been crazy about the guitar. Learning to play at only eight years old, he knew from an early age that music would forever be a staple in his life. In 1980, at just eighteen years old, Travis got his first job, teaching guitar at a small music shop in Dothan, Alabama. But after only a few months, he offered his resignation.
“I went to the owner and told him I had to quit,” says Travis. “I thought I must have really stunk as a guitar teacher, because half of my students were quitting.”
To Travis’s surprise, the owner revealed that on average 70 percent of students give up during the first six to eight weeks. In fact, it even has a name: the two-month hump. Travis’s dropout rate wasn’t bad at all; it was outstanding. “I knew then that our system of teaching guitar was broken.”
Determined to create a solution, Travis came up with the idea for ChordBuddy, a small device that fits on the neck of a guitar and helps the novice musician make chords.
“This way, you can get the rhythms down,” says Travis. “That’s where the music is.”
But Travis’s idea remained only an idea, and he eventually moved to Nashville to pursue his dream of becoming a professional musician.
Thirty years later, after a rewarding career in the music industry, Travis Perry returned to his home state of Alabama to start a real estate business. But when the industry tanked, so too did his company. The first-time business owner found himself out of work and financially devastated
“I thought I was going to lose my house,” reveals Travis. “I had literally started looking for sites I could park my camper. It had gotten that bad.”
Desperate to stay afloat, Travis returned to his first love: teaching guitar. Although it had been almost three decades since he set foot in the classroom, he discovered that not much had changed. The “two-month hump” was still very much alive and well.
One afternoon while struggling to teach his daughter Bradi how to play, Travis shared his longtime dream of creating ChordBuddy. Not only did she love the idea, she offered him a challenge. “If you create it,” Bradi said, “I promise I’ll learn how to play.”
Seventeen prototypes and $1 million later, the music lover turned his dream into a reality. The ChordBuddy was officially born.
Interested in growing the brand and building the business, Travis went on
Shark Tank
and landed a deal with Robert Herjavec. Almost overnight, the ChordBuddy took off. But Travis knew the hard work wasn’t over; it had just begun.
“You’re never really over the hill,” says Travis. “A lot of people view
Shark Tank
as the be all and end all, but I viewed it as a stepping-stone. I knew the spike would eventually go away, and I’d have to keep selling.”
More than a year after Travis’s episode aired, his business is still booming. With a new ChordBuddy Junior set to hit shelves by the end of 2013 and other exciting products on the way, Travis continues to share his love of the guitar with the world.
“It’s amazing what ten minutes and forty two seconds in front of ten million people can do. It changed my life forever.”
To find out more about ChordBuddy, visit ChordBuddy.com or follow them on Twitter @ChordBuddy.
REAL-WORLD WISDOM
: “Always make sure you have a solid game plan and great advisors. Each part of the business-building process is expensive, so you don’t want to run and gun it. It’s important to always be as prepared as possible.”
I never wanted to start my own business; I never wanted to be an entrepreneur. I just wanted to be happy and work for someone else. In fact, I only started my first company because I was fired from my job and couldn’t find another one in time to pay the mortgage.
At the time, I was running a high-tech company and had just gotten married. When I returned from my honeymoon, the venture capitalist who’d funded the company had packed up all my things. I was fired, he told me, and his son was now going to be the president. Plus, he said that if I didn’t stay on and run the sales department, he was going to claim I defrauded the company and sue me for $5 million. I left anyway.
When I got home and told my wife, she immediately started crying. Just then, we heard a knock on the door—it was the bailiff serving us with a writ for $5 million. I had never been fired; I had never been sued; and I had only been married for one day. It was awful. But I’ll tell you what, that’s the beauty of life. You have to look for the opportunities that let you do great things. And that’s what it was: an opportunity. I could
have either felt really miserable for myself or I could have shaken myself off and kept going. I chose to keep going.
I decided to start my first business, but not only that, I taught myself law too. I didn’t have the money to hire a lawyer, and I didn’t want to give the guy who fired me the satisfaction of knowing I was burning money on legal fees. So I worked on the business all day and taught myself law in the evening. I defended myself and took it all the way to the highest level court. It’s amazing what you can learn when you have to learn it.
What I love about being on
Shark Tank
is that I get to meet a lot of people who share my belief—people who have a dream and who are waking up each day and trying to do better for themselves. You know, the world rewards substance.
Shark Tank
has really reaffirmed that idea for me.
FINDING YOUR CUSTOMERS
After assessing your entrepreneurial potential and evaluating your business idea, you probably have a good sense of what you’re trying to create. But one fundamental question still remains: Who exactly are you selling
to
? Who makes up your target market?
A target market is the specific group of customers that your business aims to attract. Understanding yours will serve you throughout the business-building process.
Naturally, many new business owners are hungry for customers and will seek out just about anyone willing to buy their products or services. Although this strategy may sound intuitive, trying to appeal to an unfocused group of people can be ineffective. Instead, targeting your product or service to a niche audience will help build a more relevant, compelling, and sustainable business.
Let’s say, for instance, that you’ve created a new natural and organic cosmetics line. Your initial instinct may be to target anyone who purchases makeup. But in reality that may not be the smartest move. The cosmetics space is oversaturated and dominated by large corporations with an abundance of
resources. Selling your product to “women who wear makeup” would be like opening a restaurant for people who eat food. It’s difficult to compete if you’re competing with everyone.
Rather than aiming for any woman who buys makeup, it would be far more effective to focus on health-conscious women aged twenty-five to thirty-five who make more than $50,000 a year and live in major metropolitan areas. Yes, you’ve eliminated a large portion of the market, but now you can position your product in a way that deeply resonates with your ideal customer—instead of only being slightly relevant to everyone.
When defining your target market, there are five things to examine: demographic information, geographic location, wants and needs, hobbies and activities, and overall market size.
Demographic information:
Identifying the age, gender, ethnicity, income level, and family status of your consumer is the first step to defining your target market. A product that appeals to an twenty-one-year-old white male making $22,000 a year and living at home will likely be quite different than one that appeals to a forty-five-year-old Hispanic female with two children making $150,000 a year. What demographic is the best fit for your business? This question is the starting point to better understanding your target market.
Geographic location:
If your consumer lives in a rural area in the Deep South, she will probably have different needs than her urban-dwelling Northern counterpart. Likewise, a person who resides in the suburbs, rather than say a bustling city environment, may buy products through different channels. The only way to sell to your consumers is to know where to look for them.
Wants and needs:
What does your consumer want and need? Those, by the way, are two very different things. Is he looking
to upgrade his lifestyle? Is she trying to save for her child’s college? Understanding what exactly your consumers are looking for will help you better identify their buying habits and position your business accordingly.
Hobbies and activities:
Where do your customers hang out? What do they do for fun? Would they rather go to yoga on Saturday afternoon or spend the day at the local sports bar watching the game? Are they involved in their community, or do they prefer to keep to themselves? Try to get as specific as possible.
Market size:
Roughly how large is the target market you’re going after? If you’re trying to sell to plumbers who live in Milwaukee with a net worth of more than $250,000, your model and strategy will look very different than if you’re trying to target plumbers who live in Wisconsin with a net worth of more than $25,000. Do a little digging and try to acquire some basic information on the size of your market.
Finding your audience can be challenging, and sometimes there’s no better way than to hit the streets and begin talking to everyone, at least that was ReadeREST founder Rick Hopper’s strategy.
“I spent the first few months trying to figure out who my customers were,” says Rick. “I got a trade show booth and set it up at every kind of show you could imagine: gun shows, craft shows, car shows. I tried to do at least three or four shows a month and get in front of as many people as I could. I knew it was the only way I’d discover my target market.”
Defining a market can make many first-time entrepreneurs uncomfortable. But remember: just because you’re targeting one type of consumer, doesn’t mean you can’t or won’t appeal to others. You’re simply focusing your efforts to have the maximum impact in the marketplace. What’s more, your target
market will likely change and grow with your business. Think of it as a formula. Until you get it just right, you’ll want to regularly tinker with the variables.
| “When you sell a product or service, you’re making a promise to your audience. If you don’t understand your audience, you’ll never be able to keep that promise and you’ll ultimately let them down.” |
Once you start acquiring this type of data, you may find it necessary to go back and refine your offerings. That’s a good thing. Don’t be afraid to use the facts you uncover to build a more targeted and effective business. That’s what this kind of research is for.
There are hundreds of different kinds of breakfast cereal sold in the United States, from sugary and unhealthy to wholesome and hearty. While many of these brands are owned by a handful of companies, that’s still a lot of competition. It would be natural then for the first-time business owner to presume it’s a wise idea to stay out of the cereal business. But that assumption may not necessarily be correct.
It’s safe to bet that a family purchases more than one brand of cereal per household. Assuming each member of the family tries a few new brands every year, your cereal may actually stand a fighting chance—that is, if you find a way to make it onto grocery store shelves.
Competition should be welcomed, not feared. In fact, being
first to market is rarely a good thing. When you’re first, you often must take on the responsibility of educating the consumer, which can be a costly and time-consuming task. If you’ve invented the first time machine, for instance, you must prove the value not only of your product, but of the entire product category as well. In other words, before you can sell a single time machine, you must teach your customers why they need the device in the first place. That’s a lot of work just to sell one lousy time machine. Competition not only saves you from this resource-draining task, it proves there’s already a demand for your product or service.
Because the average American family buys cereal, you can assume that pretty much everyone understands the value of the product. Therefore, if you create the next great cereal, you need only convince consumers that
your
cereal is the best. And that process starts by researching the key players in your industry.
In the past, finding your competitors wasn’t always an easy task. Thanks to technology, however, the world is far more transparent than ever before. When trying to assess your competitive landscape, you’ll want to come up with a strategy that combines both online and offline efforts. Below are a few quick ways to get started:
Harness the power of Google:
Of course the obvious first step is to search for your competition on the Internet. That’s a given. But outside of just your basic search, Google has a variety of tools that can help add additional value to your quest. By setting Google Alerts to receive news about your competitors and topics related to your business, you can stay up-to-date on the latest happenings in your industry. With Google Analytics, you can track your website’s traffic, including where visitors came from and where they went when they
left. Not only are these tools extremely helpful, they’re also free and easy to access.
To set up Google Alerts, visit Google.com/Alerts. From there, simply type in any word you wish to be notified about. If you own a cupcake bakery, for example, like Wicked Good Cupcakes founder Tracey Noonan does, you may wish to select keywords like “cupcake” or “Boston bakery.” Once you’ve chosen the appropriate words, simply select which type of content you’d like to receive notification of and how often you’d like to receive it. That’s all it takes! Once the alert has been created, you’ll begin getting regular notifications in your inbox. Setting up Google Analytics is a bit more complicated and requires syncing your Google account with your website. To get step-by-step instructions on this process, visit Google.com/Analytics
Explore social media:
Social media can be a powerful marketing tool. It can also be a great way to keep an eye on your competitor. You needn’t be a technology expert to see what other companies are doing on Twitter, Facebook, and LinkedIn. Spend a few minutes each day exploring these sites. You’d be shocked at what 140 characters can reveal.
Attend trade shows and conferences:
One of the best ways to stay updated on the latest innovations and advances in your industry is to attend trade shows and conferences. These events are great not only for networking, but also for keeping tabs on your competitors. Steep ticket prices may prevent you from attending every trade show or conference, but it’s worth budgeting a little money each year for these types of events. Don’t forget, they’re tax-deductible.
Chat with customers:
Some of the best intel can be found from those closest to you. There’s a good chance your current or prospective customers have interacted with your competitors
at some point over the years. While you should never put them in an uncomfortable position, asking the occasional pointed question isn’t inappropriate. Be smart about it though. Your business relies on these relationships, and you don’t want to do anything that jeopardizes them.
| “You have to be willing to work hard. There are no shortcuts to running a business. Every business has competition and your competitors are always looking for ways to beat you to the punch. You have to find ways to make your company stronger every day.” |
Visit your competitors:
Depending on your specific type of business, you may be able to actually pay your competitors a visit. This is limited mainly to companies that have retail locations open to consumers. If you own a spa, for instance, it wouldn’t hurt to book an afternoon of services with another spa in town. This is often the best way to gain insight into things like customer service and company culture.
Don’t be discouraged if you discover you have more competition than you initially thought. Competition not only forces you to work harder and be more creative, it dramatically expedites the innovation process. Instead of using your competition as a reason
not
to start your business, let it push you that much further.
Naming your company is one of the most important decisions you’ll make in the start-up phase. Not only does the
name you choose influence everything from your trademark to your Web properties, but it also plays an integral role in your brand.
A superior name should leave a lasting impression and communicate the very essence of your company. It should be distinct enough to make an impact, but broad enough to allow for some degree of flexibility. Moreover, a great name shouldn’t just be catchy and memorable, it should be an extension of your story—a reflection of your products and services.
Perhaps the greatest challenge in the naming process is a lack of definitive rules. For every expert opinion you find on the subject, there are a slew of groundbreaking companies that have gone against the grain and created something exceptional. There are however a few general guidelines to consider as you begin the brainstorming process:
