Over the course of my career, I’ve had the opportunity to work with dozens and dozens of startups. I love working with entrepreneurs. Well, in reality I have a love/hate relationship with them.
I love being surrounded by their optimism, confidence, and conviction. I love their creativity and resourcefulness. They’re just a very inspiring type of individual to be around.
At the same time, entrepreneurs have some interesting “quirks”. A healthy ego must complement their confidence. Their incessant drive means they want to run before they can or should walk. And, unfortunately, many of them don’t know much about marketing.
Some think they do, but most really don’t. Just to be sure nobody takes offense here, I’m actually glad when you don’t! It means there is ample opportunity for me to add value to your organization. And I really, really, (REALLY!), love helping entrepreneurs achieve their goals.
Some of the most important relationships an entrepreneur develops are with their mentors. This post is really meant for people who are coaching, guiding, and advising startup founders.
Based on my work over the last five years, the best piece of advice that a mentor can give an entrepreneur to set them up for success – for marketing specifically and just in general – is to tell them they need a business plan and two lead generation models.
BUSINESS MODEL MENTORING
Regardless of stage, every company should have a written business plan. It doesn’t need to be complicated. It just has to be written.
Start with purpose, vision, and mission. The document should cover what the company will do, how it will do it, who the customers are, what customers are currently doing to satisfy this need (i.e. competition), the risks the business will face, and financial models looking at a minimum of three years.
If you are working with a company that doesn’t have this, encourage them to take a week off and put something together.
If you’re working with an entrepreneur who is truly passionate about their business, they will probably hate the idea of hitting the pause button to write down what’s already in their head. But, they probably have unanswered questions. They may be using assumptions that need challenging – or at least acknowledgement.
A few months after they launch their business, things will be happening even faster than they are already. They will be grateful to have a plan they can refer back to – so they know what they’re doing and why.
Here are a few key questions they should be able to answer with a business plan:
- How much money will I be making in three years?
- How much do I have to sell to break even?
- When will I run out of money? (a.k.a. How long can I stay in business?)
- Do I need to raise money? If so, how will I use that money? How much do I need to raise?
THE BUSINESS PLAN AND MARKETING
Any half-decent marketing plan needs to be based on an understanding of what the business wants to accomplish. What goals has the entire organization set out to achieve? What performance targets have been promised to investors?
Without this connection, marketing could take the company in a direction it didn’t want to go. It could fail completely. Your founder could have some very uncomfortable conversations about why numbers weren’t hit, simply because people weren’t on the same (written!) page.
Even a relatively simple business plan should allow marketing objectives, strategy, and tactical decisions to be made in context. As the business unfolds, the impact and effectiveness of marketing initiatives in supporting overall business objectives can be evaluated.
LEAD GENERATION MENTORING
After your mentee has a written business plan in place, they need to build two lead generation models: top-down analysis and bottom-up.
While some may advocate for one approach over the other, we recommend that you try both and see if the numbers are different or the same. If they are different, how different? Which one seems more realistic for this particular business? You can learn from and adjust your plans according to the outputs from both models.
This seems to be a frequently missed step, even by companies that have put together a solid business plan. I have worked with companies that skipped this step and ended up with completely unrealistic marketing goals. After going through the model-building exercise together, we ended up revamping major sections of their financial projections.
I once had a client who realized that the client acquisition target they wanted to hit in Month 1 would take 7 years to pay back financially! This was obviously not the right framework for launching a sustainable business. After looking carefully at what their limited resources could be expected to achieve, we put together a much more realistic plan and a long-term, healthy financial model.
TOP-DOWN LEAD GENERATION ANALYSIS
The top-down approach starts with revenue goals. Calculate (or estimate) the number of customers that you will need to generate this volume of sales. Then, calculate how much it will cost to acquire that many customers.
For example, if an ecommerce startup that is reaching new potential customers via social needs 100 customers, how many people do they need to at least start filling a shopping cart? How many visitors do they need to come to their website? How many people does that mean they need to be seen by on Facebook? On Instagram? On LinkedIn? How much will that cost them in advertising?
Once you factor in all of the costs, does the company have enough cash flow to pay for everything? Do any of the assumptions in the financial model or in the business plan need to be reconfigured?
BOTTOMS-UP LEAD GENERATION ANALYSIS
Rather than starting with target revenue numbers, the bottoms-up approach starts with a number that the company is comfortable spending on marketing each month.
If the company can spend $2,000 each month on marketing, how much traffic will that send to your website? From that number of visitors, how many do you expect to convert into customers? What will their average purchase amount be? How much revenue will that give you each month?
Given that level of revenue, does the company have enough cash flow to cover its costs and begin to grow? If not, either the customer acquisition model needs to be improved or the business may need to secure some type of financing to sustain itself until sufficient sales growth is achieved.
OTHER MARKETING TIPS FOR STARTUP MENTORS
Here are a few other pieces of advice that entrepreneurs need to hear:
YOU NEED MORE THAN AN INTERN AND LESS THAN A CMO
Interns can be a great, eager-to-learn source of relatively inexpensive labor. But, would you let your mentee hire an intern to run the finance department? How about product development? Then why is marketing any different?
By all means hire interns, but make sure someone more knowledgeable is giving them regular guidance and a plan to follow.
At the other end of the spectrum is a Chief Marketing Officer. Many startups decide to hire a CMO fairly quickly, and in some industries this can be very important. However, most startups pivot several times, and branding and messaging needs to be flexible. Companies can learn a lot of lessons without needing a CMO right from the outset. Hiring a CMO at Series A or Series B is probably great timing for lots of startups.
Whether outsourcing marketing work or hiring a full-time employee, look for someone with enough experience to be strategic. They should be able to grasp the big picture of the company. The founder(s) should respect and listen to their feedback – and even pushback – but they ought not to be so senior that they won’t get their hands dirty.
REACH OUT & TALK TO CUSTOMERS DIRECTLY
The founding team needs to be talking to customers – continuously. Most teams conduct customer interviews before they launch, but the most successful founders I’ve seen are in regular communication with their leads and customers post-launch as well. They send personalized emails, offer to have one-on-one calls, and actively seek feedback.
The best teams build asking for feedback into their company processes. Of course, that assumes the company actually has processes and everyone isn’t just flying by the seat of their pants! Some thought, organization, and planning goes into really making this work.
Be hungry for criticism. Accept praise (and use it for testimonials and case studies!). Compare feedback against your business plan. Is what you are hearing from customers in line with your company’s mission and vision? Are you heading towards or away from your goal?
Many large corporations are slowly reshaping their organizations to be more customer-centric. They’ve realized that’s how they can make more money. In my opinion, startups have an amazing opportunity to be customer-centric from the start. Don’t waste this chance!
GIVE YOURSELF AT LEAST A SIX-MONTH RUNWAY TO “FIGURE OUT” MARKETING
I regularly talk with people who are either about to launch – or who have recently launched – a business. They ask me how soon they can expect to see results from their marketing efforts. When I tell them the planning phase alone should take one-to-two months, most entrepreneurs’ eyes glaze over. They look at me like I’m talking to an IBM or GE, not their agile startup.
Then, when we talk about SEO and social media and content marketing, I tell them that those tactics start making a real impact after four-to-six months. Most of them want to show me the door at that point! They think I’m some sort of crazy person, completely out of touch with startups.
I have watched so many entrepreneurs fail to take enough time to plan. They make bad decisions and they don’t have enough capital in the bank to make marketing work.
I have been told that something taking four-to-six months is unacceptable – that I need to make it to generate results faster. Unfortunately, some things just can’t be rushed. Not even if you spend 24 hours a day on it.
The only thing that might make marketing move more quickly (besides luck!) is money. To build an audience faster or drive more traffic to your website sooner, you need an advertising budget. Marketing is an area where spending too little means you’re simply wasting your money. The results just won’t provide the same return on the investment as they could if you had more resources at your disposal.
I regularly say that marketing is a series of experiments. By working with an experienced person, you should be able to sidestep some basic, avoidable mistakes but every company is going to have to test and validate their approach.
This includes their messaging, creative, content, conversion flows, automation, emails, communication channels, brand – and on and on it goes. Honestly, it doesn’t ever really stop! Even when you hire someone experienced, expecting results faster is a fool’s errand.
If your business needs these results to survive, you need to fix your capital problem before starting marketing. A lack of resources, not ineffective marketing, will run your company into the ground.
I really want to see you succeed. But, if you rush your decision making and have unrealistic expectations, I don’t care who you hire to run marketing, you will be disappointed and you will be the one at fault. Harsh, but true.
WHAT IS THE BEST MARKETING ADVICE YOU HAVE GIVEN AN ENTREPRENEUR?
I am a service provider who also mentors startups. I know how confusing life can be for entrepreneurs. Entrepreneurs frequently receive different, even contradictory advice. Although we may disagree on some things that entrepreneurs should or should not be doing, I hope you will join me in encouraging your startups to take these marketing suggestions to heart. It will save them so much time, money, and potentially their reputation – which is really the most important thing of all.
Please leave a comment below and share with us the best piece of marketing advice you share with your mentees!