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Kyle: If you have spent any time with us at all you’ll know that Harms and I use a framework called the BATON framework.
Very briefly it is business, audience, tribe, offer and network.
The first element of the framework that we teach and this is a framework for starting an online business, really any online business.
The first element is business because people often forget that an online business is still at its heart a business. It needs to make sense as a business and then we lay on top of that online tools and techniques but it still needs to be a business.
We have people approach us and work with people who may not have put down the groundwork to work out what the business is before they start an online business. That’s what we’re going to focus on in this guide.
It is extremely foundational; we’re going to go through what a business is and how you define your business for the greatest amount of success.
While it sounds extremely rudimentary it’s also fundamental for your latest success.
The later levels of the process you can tweak around you make changes, you can improve things, you can scrap ideas that aren’t working, you can make changes, but if the fundamental business at the heart isn’t working, or it is not a good business it doesn’t matter.
You can tweak whatever you want and it’s not going to make a difference if the underlying business does not stack up.
You can do as much polishing as you want to, as much improvement optimisation on your business but if the underlying business isn’t sound it doesn’t matter, it’s a waste of time and money.
We’re going through the process of how you make sure that your business idea, product idea, and your market all of these core elements are locked down so that you can then build your online business upon this solid foundation.
Harms: There’s also a topic that entrepreneurs out there, or people selling a tool and technique which will give you the magic appeal in order to provide you the success or the cash to create an online business.
Now they don’t like to talk about the subject and I’m not quite sure why that is.
But it is not discussed for various reasons but without this there’s nothing to build off which is why it’s the first element as part of the BATON system which we teach.
Warren Buffet spoke about the fact that there are some fantastic experts in the world like Sam Nunn. What they’ve been working on in the background projects which help support the world, the globe, the US against global pandemics, against nuclear warfare.
Things that are extremely high risk alongside people like Bill Gates who are talking about the subject as well, and they have done for many years.
However, Sam Nunn was talking about this, five, six, seven years ago and posted the lecture onto YouTube. He’s already laid out everything that we’re experiencing now with foresight. This is his job to protect the globe, US against things like this.
It didn’t even hit a thousand views at the time of Warren Buffett describing it.
That is no different to somebody talking about what we are speaking about the fundamental business concepts which allow you an online business success.
Whereas somebody talking about a Covid-19 conspiracy theory has hundreds and hundreds and hundreds of thousands of views.
That’s shiny, exciting that’s entertaining, but actually it’s built on a true foundation of what we’re speaking about in this guide and hopefully that gives you some context on how things as important as this are just not discussed, because they don’t seem to be exciting.
But somebody once told me that once your business is boring.
Once your business becomes a consistent routine like, then you’ve nailed it.
Kyle: That’s where the money is.
Harms: You’ve turned something into a boring cash machine, an ATM which is boring, you’ve created that.
It doesn’t play on our excitement. It doesn’t attract us to the shiny items but the moment you hit that you’ve now made it in the sense that you’ve got a successful business that is operating, it just may seem boring to everybody else.
Kyle what’s the goal of this guide?
Kyle: Now we’re not saying that your business is boring but when you get to that level where you’re out of the excitement of trying the new thing and working out what is going to be the next best thing and your business is chugging along, making money that means you’ve made it.
People who teach online business will do so in front of their sports car. Or they’ll be waving their phone around showing you their earnings and they will talk about the sexy part.
The, I don’t need to work to make money automatically. I follow this easy three step process and now I have a sports car and a beautiful girlfriend, boyfriend, and a massive house etc.
They’re selling the sizzle, not the steak, and a lot of the time these get rich quick schemes where a certain tool or technique is being sold and really the only person making money is the person teaching that tool or technique not the customers or students buying into that particular process.
We’re going to step back and look at online business as a subset of business as a whole, which means we’re going to spend this week laying down the foundations of what this business is.
The goal of the guide is we’re going to work out your particular business niche.
We’re going to have a written statement and it has to be written down.
A written statement of your niche and because we have this written statement down the next steps in building a business become a lot easier because you can keep referring back to that.
So when there’s a decision on should I be doing this option or this option it becomes a lot easier when we have this North Star that we can align to and say according to the statement I have of what my business is, what we do I know what to do.
It becomes a lot simpler, so it is worth taking the time to get the statement down.
Harms: That statement will be broken down.
We’re breaking it down to the high-level questions and diving deep into that question.
When determining your statement which helps you identify the niche area of focus that is going to be your focus for building and starting this particular idea and turning it into a business.
Then when we focus on a handful of questions. Those are questions which formed the category of who, what, how and why massively important.
Kyle: Most businesses do not have this, they will pick up clients and try anything that happens and they do not have this statement and if you have those elements locked down, it becomes a lot easier.
We’re also going to be adding on why, the why in this particular is why you?
Why your business?
What are you bringing to the table that means that you are the person who is helping yoga teachers to get more clients by bringing their business online?
Why are you the person going to be doing that?
What is your distinguishing factor?
It’s going to require reflection on your part, you are going to have to think unfortunately.
It would be nice if I could give you a checklist but you’re going to look at your existing business if you have one, or you need to look at your options for starting a business and really reflect about what makes sense.
Harms: Because you could have an existing business as it is but it’s just too wide, so we’re talking about becoming niche and having a niche statement, serving a niche client.
You may look back on your business and say actually when I started this, I did have a niche category and then I grew wide and now I no longer have an identity and sales are suffering because of that.
Maybe you strayed too far away from the North Star which has taken you away from the niche which is where it was way more profitable but also enjoyable, in line with what you are doing in terms of this is a business I can wake up and work on.
That’s just as important to help visualise and understand at this point, because once you start a business journey, once you start to create a company it’s going to be a large part of your life.
It’s also going to come with the emotional rollercoaster that is attached to a business, the time, sacrifices plus the positive results.
So if anybody has started a business you’ll already know this and appreciate this which is probably why you’re more hesitant to go to actually put yourself through this exercise again, or more hesitant to pivot because you’ve been through that process and you may say, actually, I’ve got something that’s working but not as well as I’d like to.
If I change it I’ve got to go back to that place where effort is required.
Whereas if you are starting a new business by following this process, you will save time and money, and that emotional energy which also affects people in your family.
All of that comes into play when building this business so that also gets factored in here, not specifically what you’re serving but think about it in terms of is this what I would like to be doing for the next six months, the next year?
That’s the key question, but only once you have this in place because right now we don’t know what you want to be doing.
It’s like do I want to have a business?
Yes, but what should that business be doing?
What niche should it serve?
How do I want to serve those customers?
Those are all unknown answers to then ask the final question is this something I want to commit time to?
Because there are lots of ways to make money online and lots and lots and lots and lots of ways.
Lots of marketplaces to enter, but it also will align with what you would like to do as well and this is a conversation of also chasing the cash versus chasing something that you enjoy, which comes along with remuneration as well.
Kyle: You can do both if you manage to nail the questions.
If you manage to find your niche where it’s profitable, you help a lot of people and you enjoy it, if you wake up with a spring in your step every morning to serve this niche, that is great.
Which connects to the people who do already have the business. I understand there will be hesitation, why would I want to go through this process?
When you have an existing business and existing product or service there is always going to be an emotional attachment, baggage attached to it which is why if you’re coming at this fresh you’re in a really good position.
You can go through the process without any of these additional emotional connections.
If you do have a business I would recommend applying the process we’re going to be going through either to a new business or a new project within your existing business.
This will allow you to focus on the process more without that additional extra baggage. You can absolutely do this with your core business, it’s just going to be a bit trickier.
This is going to be up to you if you can, though, come at it with an open mind, clean slate so either a new business or a new project within your existing business.
Then once you’ve done it with a clean new project maybe then you can start applying these tools to your wider business.
A final big advantage whether you don’t have an idea or a business at the moment or you do once you go through this process and you’ve done it a few times it becomes a very quick process.
Because you’ve experienced it.
You understand the steps, you understand the creative thought involved in it, plus the systematic thought which is using both sides of the hemisphere of the brain at this stage.
It just allows you to do it quicker and quicker and quicker.
If you are coming at this new and you didn’t have the framework you might latch onto one idea and then plug away at it for the next six months or year before realising actually, this isn’t going to work.
We tend to get attached to ideas, especially people who have not started a business before.
We’re going to show you a framework which allows you to take a business idea and quickly run it through a number of steps and at the end come out with no this isn’t going to work, or absolutely fantastic full steam ahead.
If you can do that with 10 ideas or one hundred ideas, then you’re going to come out with a lot more gold nuggets from the process.
Whereas if you focus on one idea and chug through it for the next six months and it doesn’t happen to be a good idea because the product doesn’t fit the market, or the market doesn’t exist.
Whatever the reason, then you’ve wasted a lot of time, so this is going to be a useful skill that you can apply to your businesses and help friends, acquaintances, and help people you work with their ideas as well.
Harms: It is actually coming at this from an open mind which says I’m not going to get attached to any of my ideas unless it has gone through a process like this.
Which means you don’t spend six months just thinking about the idea and telling your partner this is a great idea.
A year has gone down the line you haven’t tested whereas compare that to somebody who comes up with 10, 20 new ideas every single day, they quickly analyse them and then move on. I’m not going to get emotionally attached to any of these because they don’t work, they work and it’s not for me or something in between.
That’s where we want to get you to a place where you can identify a niche that you actually love, enjoy and would like to be a part of.
Kyle: If you are holding onto ideas that are precious, precious babies that’s something you will need to release because through this process you might realise a lot of these ideas don’t work for whatever reason.
Harms: Let’s start with the first important question, which is what is a business?
Kyle: This is a loaded term for people.
People think of business and immediately they’re thinking Saturday morning cartoon villain, a guy with a top hat like an evil corporation, chopping down trees. Getting up to all sorts of dreadful things.
A business can have a lot of negative connotations attached to it, especially for people who don’t own a business.
We need to get past that as those are value judgments when we think about businessmen or businesswomen the best definition of a business is from a book called the personal MBA by Josh Kaufman.
He wrote the book as the placement to getting an MBA because getting an MBA costs around $100,000.
He goes through all the concepts of what business is, all the different ideas and concepts that you would get in the MBA. I think he does a much better job of it. The first thing he does is define what a business is.
Harms: I went back after years of actually being part of business.
When I read that after being a business owner I was like, it just seems much clearer now after having that definition because it’s all a blur.
Kyle: We think of the building and the boss, headquarters, and HR. We have a weird vision on what a business is.
So roughly defined a business is a repeatable process that creates and delivers something of value, that’s number one. Number two other people want or need, number three at a price they are willing to pay. Number four in a way that satisfies the customers’ needs and expectations. Number five so the business brings in enough profit to make it worthwhile for the owners to continue operation.
He says at the core of every business is fundamentally a collection of five interdependent processes, each which flows into the next.
They come one after another and they are all connected.
One is value creation. Discover what people need or want.
Then creating it, two marketing, attracting attention and building demand for what you have created. Three sales, turning prospective customers into paying customers.
Four value delivery, giving your customers what you promised and ensuring they’re satisfied and five finances.
Bringing in enough money to keep going to make your efforts worthwhile.
The core of all of this is a business is something that creates a unit of value, that’s a product or service and it provides it to a market who wants that product or service.
If you do not have the value, i.e. a product or service. There’s nothing to sell. There is no value for you to provide that one product.
Two, there needs to be a market for this product.
It’s all well and good if you create something wonderful but nobody is interested and you’re the only person who is interested. That’s not a business that’s a hobby.
You need to create something of value that people are interested in not only interested in, they need to three be willing to pay you for it.
You might have created something that people are happy to take for free and that’s again not a business that’s a charity at that point, you’re giving something lots of people want it, but as soon as you say it’s £5 they’re like I don’t want it.
That’s three sales you need to be able to sell those people interested in your product and then four you need to actually follow-up on what it is you promised.
Your product needs to be valuable. You need to deliver it to the people and they’ve paid you for it. You need to make sure whatever they’ve paid for they’re happy with and it works, it delivers whatever value they expected.
If you missed this step you are a fraudster.
You’ve created a product, you have got people excited about it, they give you money for it, and then you do not deliver it.
You’ve sold them something which doesn’t exist.
Harms: That is also a big challenge that people face.
They get to step four and then they get the customer needs and expectations back and they are way off, misaligned completely.
This is what you were selling, this is what they got, whereas what Josh Kaufman says this is what you’re selling and this it what they get. It should be in perfect harmony.
Kyle: The final step is you’ve created something of value, you found people who are interested in what you created. You have sold it to them, they’re willing to pay you money.
You have also delivered the product and they like what you have delivered. They love the value.
The last part is finance.
Have you managed to sell it to them at a price that means you’ve made a profit?
You could have done all these things you’ve sold your product for £100 to thousands of people that are really happy, they love what you’ve done but it costs you £200 to make and deliver the product, that’s not a business.
You’ve just lost a lot of money and that’s the final step, it needs to make economic sense for you to continue operating.
It needs to be profitable after all costs, after your staffing, production, inventory, whatever you need to have enough money left for it to be worthwhile for you to keep growing.
Harms: It is something that is often again overlooked, it’s a fundamental practice which they don’t talk about, pricing in itself is a massive topic.
But to keep it simple the profit needs to be there in order to one, continue operating.
Operating can mean reinvestment, which is reapplication of those profits into a new project, into a new idea.
The profit is massively important in the business.
Kyle: It is for growth not just to pay yourself, it’s to be able to keep stepping up.
The BATON framework basically follows this. It is a little bit different, but we have business, audience, tribe, offer and network, so business aligns with the first two of Josh Kaufman’s business definitions.
We are creating and delivering something of value that’s a product that other people need or want.
That is the market. Product and market and then the rest of it ATON that aligns with marketing sales, value delivery and finance.
If we can find the product market fit for your niche, then we’re quid’s in.
Product market fit is fine. You can have a product let’s say I have made this telephone and it’s a good product, it works, having the product by itself is nothing unless I also have a market that is interested in whatever that product is.
You need both.
You cannot just have a product without a market.
Otherwise you’re going to end up with boxes and boxes of whatever your product is. Vice versa if there’s a big market but you don’t have a product, you are also not in the game.
Unless I have a product or service I am able to provide them, unless I have value to put into that market I’m not in business.
Harms: No amount of money, finance that you throw at a market that doesn’t exist.
You may have an idea you think is cracking, but if the market doesn’t exist, no amount of money, finance that you throw out will help override the process.
The concept of a product and a market fitted together. I don’t mean in the sense start-up start amount of funding, I don’t mean a bank loan. But this is at the fundamental level, which is 5,000 and 10,000, £50,000 savings and I’m going to throw it at this market in whatever form that is.
One of the most dangerous forms is advertising.
I’m going to advertise to this marketplace and they’re going to love my product.
Again when I say no amount of money it can mean small amounts or it could mean the giant amount. That leads us nicely onto what we are trying to do here?
We’re trying to find a niche that we can then market so that we have a niche idea, the product and we have the market that exists because we’ve qualified it.
We’ve tested to see if the market exists what we really want to be focusing on is actually finding your niche and you’re going to hear that term a lot with online business.
Remember the goal is to create a niche statement to serve a specific audience.
Nowadays the market is massive, it’s loud and noisy.
There are a lot of big players serving large parts of the market, but there are still lots of untapped niche parts of that market that exist. There’s a whole blue ocean versus red ocean philosophy here.
If we went for a large niche or a large market like health too big.
Nowadays you can’t go for something that large because of the Internet because of how media is now structured, everything’s been fragmented.
Kyle: Joe Wicks is a big name at the moment and even he has picked a niche and he’s narrowed it down to the quick meals that can be made in 15 minutes, mainly plant-based.
He does a lot of stuff with kids.
Previously in the 1980s or so before you could have one individual who would dominate all of the market, that is no longer the case anymore. Everything is so fragmented because we have so many different ways to consume media.
The last big show which everybody watched was friends on Fox, that was probably the last big show that everybody in the world watched. You can reference Friends and people get it.
That is no longer the case because TV is a good example fragmented into so many different channels now we have streaming services.
It is impossible for anyone to make that much impact.
The idea of mass media and mass markets has been demolished because now we have so many different options we can be consuming media and listening to experts and making purchases on so many different platforms that the idea of just being everything to everyone it doesn’t work, it no longer exists.
Harms: What we can do though is speak directly because we have access to them directly into people’s interests, which can be very specific. Going from Coca-Cola into now these niche fizzy drinks, soft drinks brands that pop-up which are boutique and would I rather pay extra for. For example Karma cola, it’s an organic cola versus the general coca cola as an example.
The idea was to appeal to people who like cola but they want organic, fair trade, they wanted it so it doesn’t have the dark enterprise identity that coca cola does, so they created a niche there.
Now is an amazing time to be able to do this because, let’s assume that the red ocean is what Coca-Cola used to be, or a company like that.
We’re identifying the blue ocean which means a market exists, the red ocean means there’s no market, but because the way the media has changed in the way we can now speak to people.
We can speak to their interest and they have a choice on what they now consume, purchase, interact with.
Whereas before we didn’t have a choice, it was very limited because of the distribution of media channels available.
Kyle: Now we have the tools at our disposal to reach out directly to our niche.
The main thing here is you need to change the way you think if your business statement in your head you’re like this is applicable to everybody, it is not.
That is not how the landscape works, you need to be able to niche down and find your people, people interested in you and will buy from you. This requires a massive mindset shift.
The main thing for you is we need to define this niche.
If you just say I do health that is too wide. We need a statement like, I help males aged between 40 and 55 to lose their beer gut that they’ve built up over years of working in the professional sector.
It needs to be extremely niche and narrow and we need to know who those people are we’re serving, but because of the Internet, we can directly target them.
We can directly talk to those particular people.
So while it sounds like we’re saying make your business smaller, we’re not, we’re saying make it more focused, find that niche and serve those people just blow their minds with the specificity of your product and you’ll find there will be more than enough within that niche.
Instead of going wide and selling to nobody we’re going to go micro niche and sell a lot to a small group and then we can grow from there.
Harms: In the early stages we want an audience size which is as small as possible but still viable, we’re talking about a size which is applicable that will still generate a profit and allow you to operate.
The smallest possible audience we can find is better as we can talk directly to them, you have this problem because you just left your career after 40 years and you’ve been sitting in the office chair in the City of London, and now you need to get back your skeletal structure.
I’m talking to your problem you have and I want to serve you. I don’t care about somebody outside of London.
I don’t care about somebody who’s been working in an office for two years, I’m interested in people who have worked in the office for 40 years as an example.
Smallest possible audience that we can serve and still be profitable.
Kyle: You can make a profitable business in some really weird niches.
There’s a website called niche hacks which I’d recommend you have a look at.
This guy goes through the data from various niches online and he finds them from a data driven point of view. But niche hacks go through lots of potential niches and draw out some very obscure examples.
One warning here, don’t go on there looking for a niche for you to follow.
Don’t just go on the site thinking I need a business; you need to be genuinely interested in it. Just because there is a market and because you can maybe put together a product doesn’t mean that you are the right person to serve this market.
So have a look around because it’s interesting to see some of the weird and extremely specific niches that exist which are profitable, but do not go there just to shop.
Harms: Also weird is just our opinion of that category but what is weird to us is not to somebody else.
It clearly has an audience size which is waiting to be served.
Kyle: When we talk about niche we’re talking about a section of a subsection of a section of a section, we’re going down into something extremely specific.
Concern number one is that the niche is too small.
If it is two people then yes too small, what we’re going to be showing you is how you size a niche, how you get to a sensible size.
However, even if your niche is a thousand people and they pay you £30 a month, that’s £30,000 a month. Even if it’s a very small group if you can provide enough value you can generate a lot of revenue.
I would say a lot of people worry that the niche is too small, whereas the real problem here is a niche being too big.
It is a much better problem to have, to be in a position where you dominate your niche making lots of sales, you’re making money, and you’ve saturated the market.
From there you have the cash and the clout and power to grow into other niches that’s much better than starting wide not selling anything, nobody recognising you for being an expert.
From there, there’s nothing you can do, you don’t have a business.
Harms: Because what happens when you go too wide and we’ve faced this within our agency, which is customer one wants this, customer two wants something slightly different.
Customer three wants something different, that’s a practical and logistical challenge as well because where do you draw your energy to?
Whereas if we niche down customers one, two three, four, five, six, seven, eight, nine, ten all want exactly the same thing, exactly the same expectations it becomes so much more simpler for you to build this.
Kyle: If you have an extremely precise definition of what it is you provide then people are much more likely to be satisfied with your service, whereas if you’re rummaging around trying to customise there is more likelihood that whatever you deliver won’t be up to par.
Harms: It becomes difficult to scale and get to that point where you can now enter a new niche, that seems like a distant idea but it’s so far away, you can’t get there because we are now so far off course to have got to a specific niche.
That’s concern number one, is my niche too small?
Concern number two is how will I know if it is the right niche?
I think it’s the right niche, but there has to be some information out there which can help me find this answer.
The market will determine this.
It means if we go to number three people will pay for it.
When somebody will pay you for it then we know there is a need here, this niche has a marketplace and then when multiple people pay for it now you know you’re onto something.
Now you know you’ve got the right niche.
Kyle: People will tell you they like what you’re doing, they will easily make those promises but it is not until they hand over the cash that it matters.
Sony famously did a focus group where they were showing people different Walkman’s and they had this bright yellow one. They had it on the table with all the other Walkman’s and they’d ask people what they thought about the yellow one.
Everyone was like it’s great, I’d look so cool with it and then at the end of the market research they said you can take any of the items you want for free and nobody took the yellow one.
People will tell you one thing and if you introduce money to the equation, it’s even more different.
It’s only when people hand over cash do you actually know it’s going to work.
From a practical point of view we’re going to be using the lean methodology which is basically we get the most basic version of the product ready as soon as possible and take it to market.
We ask for money based on this, a lot less money as it is not the final version.
This allows us to gauge whether the market is actually interested in what we are selling or not, and it allows us to do this without spending six months producing the final product and then taking it to market.
What we don’t want to do is take six months, 12 months to find out if this is the right niche.
We want to go through as many right niches as possible, we want to be testing many niches as possible within that six months versus testing one for the whole six months.
That’s the whole basis of the lean methodology.
Let’s detach ourselves emotionally from our ideas, but let’s quickly go through ideas that work, find a niche and that’s the process we want to run through.
Harms: The third concern is what if i am in the wrong niche?
What if I’ve taken a product to people and they are not interested, what then?
This is why we use minimum viability products; basic versions and we get them to market quickly because they are faster and cheaper.
If we did spend six months building a product then releasing it to market and everybody is not interested, we’ve wasted six months.
Whereas if we build a product in a week or two a really stripped-down basic version of the product we take it to people and they say, not interested we’ve only wasted a week or two.
We can do something in lean start up.
It’s called pivot; we take that information and we make a change.
Kyle: A lot of the time, you can retain a lot of core elements of the previous version.
Let’s say I’m doing backyard chickens. Nobody cares about backyard chickens. I’m not able to sell anything, I’ve made a guide, a nice PDF guide.
I might pivot to backyard bees; you’d pivot into a different market or you change your product.
You make these experiments small; you make them survivable so you’re not spending £10,000 developing the product only to find out that nobody wants it.
Instead you’re spending a bit of time, maybe a few hundred pounds tops trying it out.
Harms: That’s the three main concerns, we spoke about, is the niche too small?
How will I know if it’s the right niche?
And what if I’m stuck in the wrong niche?
Hopefully by answering that you’re now ready to work through this process and we’ve got a final word of warning which is a note on differentiating this process to a common title which floats about which is get rich quick.
Believing or thinking that a get rich quick tool or technique is going to be the answer here whereas actually no, let’s start with a principle which is identify my niche first then these tools and techniques can help. B
ecause what tools and techniques are people pushing out at the moment?
Kyle: The big one is fulfilled by Amazon FBA, affiliate marketing, Kindle publishing, drop shipping, social media marketing.
We get the question a lot which is which online business should I start?
Generally when people ask what they mean is, should I sell things on Amazon or should I do affiliate marketing or should I publish e-books?
Those aren’t businesses, those are tools and techniques which can be used by a business, but they are not in and of themselves businesses.
That’s the wrong question to be asking.
It’s not to say that these tools or techniques do not work, you just need to know how you use them in the context of what your actual business is.
There’s nothing wrong with fulfilled by Amazon itself; it just needs to exist within an actual business.
Harms: The tools and techniques help facilitate our business and once you know what the business is then of course, go ahead and master fulfilled by Amazon make sure you know it inside out.
But don’t feel like that is the answer, that’s the magic pill which creates your business that’s just something that helps facilitate the business.
Same as Kindle publishing or e-book publishing that is the way we get our business niche idea out and helps facilitate that process.
The fact that we publish on Kindle books is not the business itself that’s the key message.
So what’s the right question to be asking?
Kyle: The question is fine which business should I start online, it is just we need to know what a business is.
So when we’re looking at something like fulfilled by Amazon or drop shipping we know that is not actually a business, that’s just a methodology, a tool.
The question of what business should I start online is fine as long as we know what we mean by business.
So what value can I create?
Are there people interested enough to buy that value for me?
How will I be delivering that value and can I deliver that value and sell it for enough money so that there is a sustainable business?
These are the big questions and your answer might be backyard chickens, that’s going to be the answer to what business should I start online?
Your niche should be helping people to raise chickens in their backyard for eggs.
That’s the answer, not drop shipping or Kindle.
Harms: Fill your boots with the tools and techniques once you’ve nailed down this guide.
This is going to be fundamental to actually allowing those tools to feel like they were successful tools worth the investment, were worth the learning investment.
Or the fact you have to pay a facilitated amount to make it happen.
Plug a viable product, something that someone wants into that tool or technique and then you’ll start to see results.
That’s the key we work through this process.
You can use it again and again and again into the future, then we can start to use it as exciting experiments, rather than it’s going to take me a whole week to do this.
Once you nail this once it’s not going to take you a whole week it’s going to be extremely quick.
Kyle: It might seem like a lot of work to go through a whole week just to end up with one sentence, but that sentence is a statement of what your business is going to be so important.
If you can get that statement sentence by the end of this week your success is going to be a lot easier moving forward.
Even if it looks super simple if you put work into each of those elements, those parameters within this statement it’s going to be an extremely valuable asset going forward.
Work out who you will provide value to, three critical market checks you can do and more
Kyle: We’re going to be talking about who we are marketing to.
Another word for who, who it is you’re serving, selling to eventually, another word for this is market.
You might have heard this term; you might not necessarily really think about what market means, a market is literally where there is a buyer and the seller.
If I have a good or something of value I want to sell and I know someone is willing to buy it from me, that’s a market, even if it’s just two people that’s still a transaction between two people.
That’s a market.
We are looking for something a bit bigger than just two people, but we use this term market without necessarily thinking about what it is.
So it is handy to know that it consists of two different things.
Buyers and sellers or supply and demand.
You need to think of both sides of this coin when you’re thinking about the market, we’re not talking about a physical market we’re talking about online markets in this particular instance, and all it means is, there are buyers and there are sellers.
Harms: When we’re answering the question of who absolutely the fact that we are very much talking about is there a marketplace?
We need the market to exist, but we also need the market to be large enough to run a sustainable business which means it doesn’t have to be in the millions and millions and millions, hundreds of millions, but it also can’t be two, five, six, seven people.
We have to find a market place which is small enough to make our product profitable, our idea profitable once we’ve run it through the BATON system.
Kyle: I will call you out on the word small though, what it needs to be is a niche, it needs to be very specific. It needs to be very focused.
That may or may mean it is small, small and large are relative terms.
A small market online could still be a million people.
When we use words like big and small, we’re automatically anchoring it we’re referencing it to what we think is big or small.
A million people might be a massive market for some people, whereas if you’re in an even larger business a million people you might think, why would I bother with that? That’s tiny.
It needs to be large enough that we can run a sustainable business i.e. there is a certain volume of sales, a certain price so that there is enough money coming in the door for us to be able to reach our financial goals as business owners.
That’s true it needs to be that large, at least.
It needs to be niche enough or focused enough that we can actually make an impact and this may or may mean it’s small, it may be a thousand people and that might be enough for you to reach your particular business goals and your financial goals.
Or it may be niche, but still a million people or 10 million people, 10 million people compared to the world or everyone online is still quite small and as long as you’re focused and that’s a focused 10 million it’s still a niche.
Big and small are tricky terms.
Harms: They’re relative to what is your niche?
By going through this process you will then be able to identify what is small and large relative to that niche, but I think it starts with the niche which is focused on ideas and focusing on a specific problem that people have and solving the problem.
Kyle: Coming back to that market metaphor.
Imagine the Internet is one giant marketplace, or even if it’s a small marketplace it’s just focused on health, for example, imagine the health marketplace online.
Previously if you set up a market stall, a physical market stall in your town or your city there would only be a certain number of vendors.
There’s only space for a certain number of people now online there are potentially 50,000 other people selling exactly the same thing as you are on your market stall and even though there may be millions of customers, why are they going to come to you in particular?
That’s what niching is about so if we are all selling apples and I mean that the fruit not the computer, why are they going to be coming to your Apple Store, your market store rather than any of the other Apple or fruit and veg stalls in the marketplace?
That is what we’re going to be talking about in this guide and it’s working out how to choose a product, choose our marketplace and get the people to us.
Harms: Because by focusing on the niche we can cut through the noise otherwise we have to leverage all sorts of mechanisms to try to cut the noise when we need to speak to everyone.
One of those mechanisms is we need to spend a hell of a lot of money now we’re competing with some very large companies.
In order to cut through the noise we niche down and that’s an incredible way to focus because by doing that, there’s people out there who already have a problem that is not being served by enough providers, that allows you to access the niche.
Kyle: For example there are shoes, barefoot shoes which are ironically actually shoes so you’re not barefoot, but it’s replicating the feeling of wearing no shoes, they are very light, very thin, but it still means you’re not standing on glass, etcetera and damaging your feet.
Barefoot shoes would be a niche of the shoes market, which is a niche of the clothing market, but the majority of people on the planet have two feet so that means even as a niche barefoot shoes could still be in the millions and millions and millions.
So that’s an example of a niche which is going to be relevant to only a very tiny percentage of people who have feet on the planet, but because so many people have feet of the planet that small tiny percentage is going to be a very big number.
Harms: How does Vivo compete with Nike and Adidas or whatever large shoe company it is?
Well actually they niche down to people like me who are interested in shoes which are barefoot.
They do not compete by niching down and providing a product and solving the problem that I have but Nike doesn’t solve, they don’t solve in terms of how they represent the brand.
They are a mass market in sports, football, fashion etcetera so it is a great example.
Harms: Let me start it off with how we would approach this from a base level and you can look at the marketplace as a good starting point which aligns with what people like to provide again, not for everybody, but this is a good starting point which is the big three categories.
Number one health, number two is wealth and number three is relationships.
These are big macro categories which allow for an unlimited amount of niches which fall within that and that we can identify a marketplace within there.
Kyle why do you think these are the big three?
Kyle: These are considered from a marketing point of view the big three because they do encompass so much of basically humanity and human needs and requirements.
I think at a base level at a psychological level there’s a guy called Maslow, Abraham Maslow and he drew up Maslow’s hierarchy of needs.
At the bottom you have physiological needs like warmth, shelter, food, drink water and then from there, there are higher and higher needs.
Once you have got those sorted out then as a human you start to worry about safety needs, security, and safety.
It doesn’t have it here, but this in modern society is money. Money is what provides security so Maslow was writing more about human survival, a universal structure.
But now if we’re talking about it coming from a western point of view or eastern or basically a modern point of view we would put money down here in safety.
Then we have psychological needs like belonging, love, relationships, self-esteem, and self-actualisation.
What we are focusing on is down at the bottom here, physiological, safety and belonging.
This is basically where physiological health sits, safety is money and belonging and love is relationships. These are the big three markets we’re talking about the basic needs and psychological needs.
Obviously from there, there are bigger needs, but from a market point of view, we focus on the bottom. Health, money, relationships, so there is definitely a psychological connection.
Harms: The challenge we have is these are far too wide.
There are certain companies that can handle that wide area within these categories, but there’s nobody who really answers the one question for everything.
There are categories after categories, niche after niche and even if you’re thinking of how many niches can health be broken into, wealth and relationships?
I think a nice place to start to identify this is to go to Amazon and have a look at the book categories and find out how specific a category people actually talk into and it’s amazing.
You’ll open your eyes to areas within a relationship.
Areas within wealth, areas within health that are mind blowing.
There who may be people out there who are not aware of what forex trading is foreign exchange trading,
That’s an example of a wealth niche.
That could then be broken into algorithmic trading. It could be broken into daily trading, weekly, it could be starting a hedge forex hedge fund training. It could be providing forex training, so it starts to get very niche and nuance within that and that’s what we’re looking for.
We’re looking to serve a niche within one of these topics.
Within these three big areas because it is too wide Kyle, how do we narrow that down and start to do some checks on the marketplace?
Kyle: We’re going to do technical checks going through a process of basically seeing if it is a red light, amber light or green light and then going ahead on the greens.
But before we do that we’re going to do a bit of sense check, which is based on you, so it’s all well and good if you go out and you find the perfect niche, but if it’s not something that you know about, or it’s not something you’re passionate about, it’s going to be really hard for you further down the line to make an impact there.
So yes, we can start with health and wealth, relationships, these massive categories, but that would mean we’re having to go through this analysis process for thousands and thousands of niches to find the best niche.
Instead, we can start by referring to yourself and using that as a jumping off point.
Starting with your interests, your hobbies, your passions, things you’re good at and using those starting points and then we go through the analysis process of working out which of these might work.
Hopefully we can then find something that is aligned with what you’re good at, what you enjoy doing and there’s a market for, that’s the golden mean if you land between those three things, what you like, what you’re good at and what there is a market for, you’re gold.
We’re going to be talking more specifically about this, why you are the right person to serve this market.
Start with the reality of the situation in mind.
I might identify American football coaching and training shoes or whatever, as a good niche from a business point of view from a market point of view, but the fact that I’ve never played American football, I’m probably not ever going to play American football.
I don’t know anything about it means that that market is pretty much cut off from me, I can learn about it, but by doing that I’m making my life a lot harder for myself because I’ll be learning how to make a business, I’ll be struggling with starting my first online business and I’ll be having to learn about American football at the same time.
I have to become a master of this and a master in this, just make it easy on yourself.
Start with something you already know, something you’re good at and you enjoy doing and you’re going to like working with.
I think that’s the first step. This is even before we get to the technical checks.
Harms: The first step after that is to go to a brainstorming, download process, creative download where we want to now start documenting a bunch of niches that you do like, and maybe enjoy or you have an area of expertise in, as it will save you that learning curve as well and that’s important.
It doesn’t have to be the end product or service at this point in time.
This is just talking about areas you may be interested in. You may have looked in the past, you may have an internal itch which keeps talking to you about that particular idea.
Kyle: We are going to have three checks and at each stage we lose a few.
Let’s say we start with a hundred for example but you don’t need this many.
The first check might remove 50 of them immediately, the second check might remove another 25.
Then the third check will allow you to order what’s left and then maybe a few them fall at the waste side and you’re left with five at this point which are go, go, go.
Harms: Step one is done, we just download niche ideas if you want an example or want to get something to help you get niche hackers is a fantastic website for that, so that is the first step, which is a download of all your ideas and that’s it.
Don’t overthink it, don’t think is this a product or service? It’s going to take too long.
Harms: Let’s go to the first check which is a Google trend check. We’re taking the high-level items we’ve put into the hopper and we’re going to apply this check to those items.
Kyle: This is going to be the first check, superfast super simple because we might have tested this on a hundred different items and we’re using this to say yes or no fast.
Then with the next stage we spend a bit more time than on the third stage we spend even more time, but each stage we have less items to check.
Google trends allows us to see the traffic and the interest in particular topics and particular subjects over time on Google and that means because Google has been around since around 2004 we can see the interest in a particular topic over the last 16 years.
We can see things going up and down.
Now this doesn’t actually give us an absolute number, it doesn’t say okay, there were 60 million people interested in this topic.
What it gives us is this index from zero to 100 it gives us a relative gauge of interest, but right now we have nothing to compare it to.
What I’m going to do is I’m going to give you three or four benchmark niches we’re going to use that as a range in which we want our niche to land.
If it goes far too high that means the niche is too big and if it goes below this range it means the niche is too small.
I’m going to plug and a copy niche that I know works based on personal experiences and based on other people who are succeeding in these niches, and general quantitative research.
First one is to learn Chinese, speed reading, self-publishing and learn Java. Java is a programming language. I’m taking it to the past 12 months, so this gives me a much narrower range and I’m not looking at things that are going up or down over time.
Chinese had a massive jump in interest apparently in March this year, learning Chinese, which is interesting that must be coronavirus related. I’m going to get rid of Chinese for now, because that is no longer useful for me.
All three of these are roughly within the same range and the main thing is that I can now add an additional comparison, what that additional comparison will do is show me if a niche is way too big or way too small.
Let’s start with Pilates, the safe range has now disappeared it’s now flat along the bottom of the chart. We want the niche that we are aiming at to fall within this range.
Pilates has not, pilates is massive, it’s way too big. That tells me that the pilates is not worth targeting.
It would need to be a sub niche of pilates, it needs to be something small. It’s telling me Pilates for kids is too small.
That’s a tiny, tiny niche.
It is falling way outside of my safe range, whereas pilates was way too big, so that’s given me a lot of information if I’m interested in getting into something related to pilates.
I need to find something in the middle.
What we’re going to do for each of the ideas on your list we’re going to go through until we find niches that fall within this safe range.
I’d go through each and every single niche very quickly and it can take a few seconds to do each one.
You go through each niche you plug in the term if it falls within the safe range that has been created by speed reading, self-publishing and learn Java they’re the benchmarks I’m using, if it falls in that benchmark range you just put a tick next to it on your list.
If it’s way too big maybe you have a down arrow which means it’s become smaller and if it’s way too small like pilates for kids you put an up arrow which means if I was going to do this, it needs to be something bigger than this.
We will be mainly focusing on the ones that have ticks because that has passed the first stage of our test.
Harms: Now what do we do once we have those items?
We now save those items for the next stage now. Have an excel sheet or table and one column which says past Google trends, and a yes or no.
That allows you to filter immediately.
If you use a tabulated format you’ve also got the original list and you can see the progress made by using a typical filter search on the columns.
Harms: Once we have this we then want to put it into the second check which is just identifying if the market is accessible and this is a very basic sense check.
What we’re checking for is this market easy to find?
Is this item easy to find because there’s no reason to make this hard on yourself than starting a business already is.
The thing we want to know is does a market already exist and is that market accessible?
Accessible to us as business owners because marketing and creating accessibility from scratch is extremely difficult.
When we say is it accessible to us it’s also can we speak to the marketplace?
Is it easy to talk to the marketplace, or do I have to create another mechanism in order to access this marketplace?
We’re looking for tools in order to reach the marketplace and that’s best described as tools that already exist.
If the tools or the way to access the marketplace doesn’t exist, then that’s extremely difficult for us and that’s not the purpose of this whatsoever, we want to make things as easy as possible so we can start to make these tests and experiments as quickly as possible.
One tool we can use Facebook it’s very much an interest-based platform, which you can use and if we want to go deep into this and we want to know is it an interest.
Does it exist as an interest within Facebook insights or we could just do a search. Just search your term, are there Facebook pages that pop up on this topic?
Are there Facebook groups that pop up in this topic?
Are there personal brands or companies that represent this topic?
What is the size of those groups and fans in their Facebook pages?
If competition exists in the market space that’s what we want. We don’t want a marketplace that has nothing. That’s a big alarm bell and also a good indicator that it doesn’t exist.
Facebook is a great way to start searching as they have a lot of information about people’s interests and they allow us to access that by the Facebook audience tools.
What’s another way we can do this?
Kyle: Again, we’re just looking at ways that we will eventually be communicating and talking to our audience, so really any online platform where they hang out.
We need to know where they are, as a sense check though it’s going to be podcasts, are there any podcasts already talking to this group of people?
If it’s a large enough market there should already be podcasts if there aren’t, you could start your own one but it’s a bit of a warning bell that maybe this isn’t large enough if nobody is doing this already.
YouTube is the same look for decent size YouTube channels on YouTube obviously see how many followers they have. Seeing how many people watch the videos that’s another good indication.
A slightly more technical one but search on Google.
So this is Google search, search for your niche, and what we’re looking for is not pages about this.
What we are interested in is, are there paid adverts at the top of Google?
If people are paying Google to advertise in this niche that means there’s a market because Google ads are pretty expensive if there is no market, there is a very high return that you can make money with them but if there is no market and you’re not making sales then Google ads get very expensive extremely quickly.
If anyone’s advertising in this niche that is probably a good sign.
Harms: Remember with this we’re not doing competition research at the moment.
Instead we’re identifying if the market exists.
If there are podcasts on this niche topic, a Facebook group.
If there are Google ads being run on a specific niche then it’s telling us actually there’s people interested in this topic and that’s a big win for us.
If there is nothing it tells us that people are not interested in this topic and will make our decision easier to say that idea out there nobody is interested in it then it comes out of the funnel.
Kyle: We are using this to remove niches from the funnel basically so we don’t want you to go and do this research you are doing a check.
We are just doing a sense check; it should take a couple of minutes tops for each niche just to check if there is anything on Facebook yes or no.
Anything on podcasts on YouTube, is anyone running ads and then from that is going to be yes or no.
Then we’re moving on to the third stage of our checks.
The point here is I didn’t realise this in the early days of marketing which is if you think that your product idea is original but it’s backwards.
Harms: It’s totally the wrong way to do it.
I think this sense check acts as a big wake-up call.
We have to be ruthless with it because we don’t want to waste time, money, going to someone paying them thousands of pounds for a website on an idea that hasn’t been verified yet.
So certainly work through this process.
Onto the third method which is now a deeper process.
Kyle: Again you should have maybe 10% of the original group left over.
Remember you can always refill the hopper if you’ve run out that’s great, it doesn’t mean you’ve failed the process it means the ideas you put in, have failed through the checks and they weren’t worth wasting your time on.
You can just feed more ideas in; you should still have around 10% at this point depending what you put in at the top.
For each of these we are going to go into a deeper dive and we are basically going to check five different areas and we’re going to give it a yes or no on each.
What this will allow us to do is compare the different niches at the end of this so we might have one that passes all five that means it’s very attractive, whereas we have another one which we thought was pretty good, but only passed four in that case, you would go for the one that has five passes.
We are going to have a yes or no for five different questions.
At the end you’ll be able to rank them.
The first check of five is we are going to see whether it is an ever-green market.
They live all year-long and not fads we’re looking for something that people are interested in and they will continue to be interested in.
We’re going to be looking at one niche at a time now, so we don’t do any comparisons we’re just looking at one and we’re going to be looking at it over time to see what has happened to interest in that particular topic.
If the line is pretty flat that’s what we are looking for.
Flat means passed, if you see a pattern where it’s jumped up and then disappears it’s fad and it does not pass.
I’m going to do the second check which is also in google trends.
The second thing we’re looking for we want to see that it is stable or growing so this is a bit different to whether it is a blip.
We want to see stable or growing we do not want to see declining.
There are certain topics that have been losing interest over time.
Paleo diet this is not a fad it has continued for years. You see every January there is the peak so these are people trying to lose weight because they’re fat here basically, new year’s resolutions there is a massive peak.
You can also see there is a general downward drift over each of these so each one is getting a bit lower each time and this is not a very stable pattern.
You want something evergreen that is the first check.
The second check that we looked at is it stable or is it rising slightly?
If so, great yes it passes if it’s going down, down, probably not.
Harms: Have all your niches highlighted and then have these items we’re speaking about in terms of checks and these are more deeper checks so you’ve got a comparison.
The next factor to bear in mind is there is a possibility of this niche having a high-priced end product?
What this means is that there is escalation value, it means something is worthwhile.
In terms of a customer will pay a premium price for that product. We speak about the value ladder and it means that at some point on the customer’s journey they’re paying the premium price for that product.
To identify that there is no quick answer but it does require thought.
Think of something like can you offer some high-end coaching, high-end mentoring? Does your product have a premium add-on?
Kyle: Again, what is high-end will depend a bit on your business goals here but just use general concepts.
Harms: Again not trying to invent a product at this stage.
The next way in order to do a check is and is very popular on an online business and it actually allows an online business to stay sustainable in most parts, which is, is there an opportunity for a recurring revenue off the back of this niche idea?
This is the opposite of selling one item and getting paid for it.
This is selling a product, service, and getting it on a subscription basis.
Somebody pays you every month or week, or per product automatically.
An example of this in the physical world is netflix, gym memberships.
Kyle: With fidget spinners there are no subscriptions so that would get a big cross here and ideally we want recurring offers something that has some form of recurring revenue.
For backyard chickens it might be that we send you chicken feed once a month on a subscription.
If they are recurring products, subscriptions, if there are membership sites or paid group opportunities then yes, give it a tick.
The final one is a bit more technical.
We are looking for something called an affiliate product.
We are looking to be able to enter a market where we’re not alone there is already an existing ecosystem of other people selling products online products and physical products.
When you become somebody’s affiliate, you share the link or you share their product to your customers, the people you’re talking to.
If your customers then go and buy this other product you get a small percentage.
That’s nice additional revenue that is fantastic, but the main thing we’re looking for is the existence of this ecosystem, because that means there’s a market, there is a healthy amount of cooperation between the different people.
The different sellers in the market. It means you can leverage the affiliate programs of the other people and instead of them becoming your competitors you cooperate with them you make money, they make money both happy and it also means later, you’ll be able to offer your products, your services for other people to sell for you, so you will become the affiliate owner.
There’s a lot of different reasons but online if there’s an existence of affiliate products and affiliate services, that generally means it’s a nice, healthy, vibrant market in the online business world.
To check that put in your niche and the word affiliate in google and that will turn up the different affiliate programs or your niche plus affiliate program.
There are specific sites where you can find affiliate programs like commission junction, if there’s stuff there great, that’s a tick on your list. If no, then you put a cross.
Once we have gone through all of those five sense checks and the ways to compare each niche to each other we now score them out of five.
Harms: This allows you to quickly rank from one to five how great each niche is compared to another based on this criteria. Ideally we want one to three niches now.
Kyle: We already know that these niches are the right size because we checked on google trends.
We already know that these are accessible markets because we did a sense check on Facebook, google, all we’re doing now is saying okay these could all work let’s do these additional checks, so are they evergreen?
Are they growing or stable?
Is there a possibility of high-end products?
Is there a possibility for recurring products and are there affiliate products?
All we’re doing is asking these five questions of the niches that are already proven to be pretty stable.
Harms: Although you may be emotionally attached to a particular idea if that scored two and another idea scored four or five, we’ll tell you to go for the four or five, that’s a better ranking niche.
Although we know the other works it’s got more going for it to increase the probability of your business success once we start rolling out with that niche.
Kyle: If you’re really not interested in it, partner up with someone or give it to but don’t let this go to waste if you’ve found something valuable.
Harms: Don’t get scared now you’ve got the item now it’s time to take it to the next stage.
Remember at this stage we’re just looking at who we are going to serve and by that we mean what market place we’re going to serve.
We went through a process of stages, one being we started with a big creative download, a brainstorm list.
Secondly heading to google trends and test these ideas against the trends benchmarks which now allows us to filter down even more. Remove those outside the safe zone.
Now we want to check if they’re accessible.
This is a quick check for example, does this Facebook group or Facebook page exist on Facebook?
Does this search come up on YouTube?
Is there a YouTube channel associated with this? Are people advertising in this space?
If I type this into google is there a google as that pops up?
These kinds of quick sense checks are all we want to do here and we’re identifying the accessibility of the market.
Do we have a mechanism to speak into the market and does stuff exist?
Now the final step is we start to compare these niches against each other.
We have a five-step process for you to do that.
Finally we rank it.
The time invested here will save you a lot of time and money going forward as you’ve nailed down the niche in advance rather than just thinking this is a great idea, I’m going to spend money and time developing it, going to the marketplace to then feel disappointed.
Work out what value you will provide your new niche
Kyle: We are talking about business.
We are really drilling down to the foundations of online business by discussing what business actually is and what activities you need to be performing before you jump online and get excited.
We need to know what exactly our business is and this is a step not that many people take when they jump in.
I think for a lot of people they’ll come away thinking I’ve been doing it wrong all this time or they’ll get angry with us.
Either is fine it means you’re actually thinking about it.
Harms: We are talking about getting the basis of the foundation set critical, it’s essential.
Yes, it takes time, but it’s going to save us a lot of time and money in the future and going forward.
Now we know who we’re talking to, which marketplace we’re going to talk to.
The next big question is, what value do we now provide these people out there within this niche marketplace?
Niche is the important thing that you would have identified.
Kyle: Every single successful business out there, they are successful, they are still in business because they create something of value.
This is at its core what a business does, remember the five elements of business that Josh Kauffman outlined.
The first element in his five elements of business is value creation, a business needs to make something that is valuable, otherwise it’s not a business, it doesn’t really exist.
There is no business at all, and that’s what we’re going to be focusing on is what can you create that is valuable?
The physical or digital manifestation of this might be a product or service, but we’re peeling back the layers a bit more and talking about value.
What value is and how we recognise value and how we provide value?
Harms: The first question we can start with is what is valuable?
Okay, I appreciate what Josh Kauffman has said, we need to create something of value that’s one of the first stages within the five business elements he speaks about. Then we ask the question, what is valuable and the best way to determine that is who determines what is valuable?
Is it, Kyle? Is it Harms? Is it and the media and what they portray?
None of those people or factors determine what is valuable and what is not valuable, there’s only one person that determines what is valuable and that is the market.
Not you, not me, not Kyle, not our friend down the pub.
None of those people determine what is valuable. The only person that does and I’m giving them an identity is this abstract thing called the market.
Kyle: You are not the person who determines whether what you have created is valuable and we see this on Dragon’s Den again and again, when someone has created a product and they are utterly sold on the value of their own product.
They take it in front of an impartial panel for the first time and it doesn’t matter how much you love your product or you love your service and how much you think it’s valuable.
It’s really only the market’s opinion of your value that matters.
It is the market that determines whether what you have to offer is valuable or not.
Harms: So then how does value then determine if we are saying it’s the market, how does the market determine value?
Kyle: When we started this process we really dived first with the market.
We can’t start to determine what is valuable and what isn’t valuable unless we know who the market is.
We start with the market first.
We went to look for a market and then we’re going to be providing a product providing value into the market. A lot of materials in this example have gold and diamonds they might have some basic utility which determines value.
So gold yes is a really good electrical conductor we use in our electronics, diamonds are really hard so good for cutting stuff, but we have overlaid on top of that massive value on top of the base level value that comes with utility.
So now when we talk about the value of diamonds the fact that it’s useful for cutting is a very small part of value, instead it’s about wedding rings and that was from marketing.
That was a company called DeBeers who 150 years ago put out a really good marketing campaign about the importance of buying engagement rings worth two months of salary.
They set the value so lots of people now might assume diamonds are valuable, but that was created by an impression that we have with diamonds.
This is the same with any product out there and any surplus, so value is very much determined by what people are willing to pay for it and very much by the market.
We start with the market and we’re going to be looking at how we create value for that market.
Harms: If the market values what your product and service is, let’s give another example of putting this into perspective.
So who has a greater value on water?
Is it a person stranded in the desert and how much would they value a glass of water stranded in the desert, the Saharan desert. It’s hot, it’s dry, they have no water for a while.
How much are they willing to pay for water versus how much do we value water when it is running clean water from a tap at home?
We don’t think about it in that way.
If the water board suddenly said, we’re going to charge you the same as what we would charge somebody who is desperate for water in the Saharan desert there would be uproar.
Because we don’t value it, regardless of the importance and its utility and the importance of it theoretically, we should be paying more for this than we do for anything else.
But that’s not the case because a perspective has shifted.
What about price?
Because I’m chatting to a client and they’re debating how much value to put into a product they are creating based on the price it’s going to be sold at.
What’s the link between value and price?
Kyle: Often we use value and price interchangeably.
Even in the last five minutes we’ve made this mistake and in everyday life it’s the same thing, we talk about value in terms of pounds or dollars or euros or whatever your currency is.
It’s so easy to interchange value and price but they’re not the same thing.
We can use price as a rule of thumb because it is used interchangeably in common speech, but somebody in the Sahara desert is going to pay a lot more for a glass of water than somebody else here.
The value they have is very different.
One of the reasons why we do separate them is because we can do clever things with pricing strategies, we can make something appear more valuable by charging a higher price.
Which is why when we talk to clients we often say you’re under-pricing a product because sometimes, if a customer sees a product and it is half the price of the competitors out there the assumption will be, “oh, it’s half the value or half as good as a competitor’s product.”
Whereas maybe it’s just a cheaper price maybe it’s a really good deal but because customers and human beings in general we use price as a proxy, we use it as a rule of thumb for value we tend to automatically, psychologically value something higher if it has a higher price.
That’s why we need to be careful about talking about mixing the two up, we’re talking about value and not talking about creating a high price item, we’re creating a high value item.
That said they’re also interchangeable and Harms and I might make that mistake again just saying price.
Harms: But they’re not the same thing but they are connected.
Then how do we create something of value?
We know it needs to be something that the market wants, the market will determine what’s valuable so we’ve got that part.
We know it’s not me, Kyle, you or what we deem as valuable.
The market will determine what is valuable, so now we decide what is valuable?
We pulled a reference from Paul Graham for this part, which is make something people want. There’s nothing more valuable than an unmet need that is just becoming fixable.
If you find something broken that you can fix for a lot of people you found a gold mine.
So that’s it in a nutshell, how do we decide what is valuable?
If we summarise what he’s saying, it’s saying we create value by solving problems and he’s saying the more people’s problem that we can solve the more money we will make it turns into a goldmine.
The message from what Paul Graham is saying is we create value by solving problems.
That’s the key.
The best way to create value for a market is to solve problems.
Kyle: T Harv Ecker talks about how an entrepreneur, business owner is a problem solver.
That’s what you do and so that’s how you create a business to solve problems. His quote is, the way to make a lot of money is to solve problems for a lot of people.
So the more people you can help solve problems for the more people who have something broken you can fix in the words of Paul Graham the more successful your business will be.
To create something of value we need to know what the problems are and then we can set about fixing them.
This really requires a shift in your mindset about how you approach business, why you’re getting into business and how you operate on a day to day basis.
Harms: How do we shift that mindset and become a problem solver?
Because the reality is, and I don’t know if there’s a correlation between business failures, business change, etcetera but a lot of people get into business purely for themselves.
That’s a reality and we get that, you’ve got bills to pay, you’ve got a dream of financial independence.
You’ve got a dream of a really nice car, holiday home.
All of that will come from the fact that I want to create this business because it’s got something in it for me and a large part to do with that is often to do with the money involved and the money potentially that can be made and all of this is fine.
That’s probably needed as part of the motivation to go do it.
Money is a factor and that will be a reward as we solve the problems.
But the reality is the market couldn’t care less about what I would want as an outcome from this business.
A customer doesn’t purchase from me thinking I’m so happy I can send their kids to private school. The market doesn’t think like that.
Here’s the thing, it is not against you, it’s not for you, it’s just indifferent.
It’s not positive or negative, it’s neutral, it doesn’t care about your problems or your successes.
That’s the first thing to understand about becoming a problem solver is that it’s not about the problems you’ve got to solve internally, all that stuff that you may have as goals in your life, that’s great but the market doesn’t care.
That’s the first mindset shift to get on board with.
Once we know that and the end customer the market is indifferent to any of that, then we can now move on to the second part, which is actually solving their problems.
Kyle what’s your thoughts on now shifting over to that kind of mindset?
Kyle: Once we’ve managed to clear out our problems from the equation we have more space to think about the problems of our customers, the problems of the market.
We create value by solving problems.
Now we have space to take in the problems of the market and start working on solving those.
Ultimately this is how we’re going to build a business.
We will be solving their problems not our problems and this is a big difference.
There’s a nice side effect of doing this by solving the problems of other people you are creating value, by creating value you’re going to get paid for that which means your business is going to grow and your problems will be solved.
It’s a win-win but we have to start by solving their problems instead of focusing only on our problems.
Harms: The way to think about this in terms of the next step is the more people’s problems I can solve as a by-product, a side effect we’re going to make a lot of a cash, that’s a bonus, but let’s bring it back down to the core, which is I know need to solve their problems.
So what’s the next mindset shift required?
That comes from constantly just talking at somebody and flipping it on its head and listening first, then providing an answer and the best way to think about this, and if you’re in business currently, whether it’s a different generation or our generation.
This thing we call networking still exists or Zoom call or a group of people within that networking environment there’s always somebody whether it’s the lead speaker, but often I’ve experienced it with the interaction now you’re networking.
In this process, you’ll often hear somebody tell you what they do, how they can help you, here’s their website, follow them on social media and at no point do they start the conversation which is look, I appreciate you’re here do you have any problems?
Do you have any challenges going on at the moment that I may be able to help with?
Now a good mentor, someone we both mutually know called Mark helped get this into my head because when he runs networking meets the first thing he does before he starts reading off anything about him is he says, put your hands up if you have these common problems.
He’ll say raise your hand if you have this problem and start to put people in buckets and then can quickly identify where he needs to spend his time on in terms of his talk in terms of the advice he is giving, because actually most of the people have X problem.
They don’t have Y problem whereas most people walk into the room ready to talk about what they have to say, not answering the question people have.
So flipping this on it’s head and listening first and then answering is amazing and the amount of businesses or ideas you’ll be able to solve and start based on just that principle alone is going to be remarkable.
Now we’ve shifted from understanding that the market decides, we have to solve their problem not ours.
Harms: The third thing is the way we can do this is by listening first, then answering.
What is the final mindset shift that somebody can on board and again, this is not going to happen instantly.
It took me years to stop talking about myself and go to a networking meeting and say what’s going on?
How can I help you? What’s the challenge you’re facing? I may have faced them myself.
Once somebody gives you a problem that your service already aligns with, then it’s a lot easier to talk about the service that you provide, so listen first and then answer.
What’s the next mindset shift?
Kyle: More generally, we also need to learn to give before we receive and preferably give more than we receive back.
A lot of entrepreneurs because they’re focusing on their problems, it’s all about what do I receive?
How do I get that money now?
You need to prove your value first.
This is especially true online because it’s such a busy space with lots of people talking so you need to prove your value and that you’re trustworthy.
If you focus on solving your problem which is money and if you just tell them your solution about listening you’re going to be ignored.
Harms: And online it’s even more challenging to receive.
As busy as it is the amount of people vying for your attention, your money all of those things become a lot more challenging online.
It is like taking the off-line world and putting it on steroids because there’s that many people who you’re trying to receive from.
Kyle: Which is why it’s so important to prove your value first and to do that we need to give first before we receive, you will receive.
That will happen when people see the value when you help solve their problems they will reward you for that.
This is hard especially for people getting into an online business for the first time, because if you have a job you’re used to doing a set amount of work and you get paid, you expect to receive it immediately and that’s not really a question when you are salaried.
When you are starting your own business it’s not the same as receiving a paycheck.
You need to go out there and prove your value, your work, which is why it’s much riskier than just receiving a paycheck.
But if what you do create, give to the market is really valuable and they recognise that then the rewards are much, much, much higher.
But it’s up to you to prove that.
Harms: It is an extremely difficult shift because that’s the final part which many people may be an employee or they used to getting paid for the work pretty immediately.
Even freelancers will sit between this, which is I’ve done this work for you now I’m going to get paid.
We’re taking this to another level which is becoming a business owner whether it’s online it becomes extremely challenging because sometimes and we faced this, you have to prove your value for months on end, you have to prove your value in some cases online depending on what niche you’re for years before you can be remunerated for that.
Which is why some people are suited within a job ecosystem.
Some people are suited within the fact of actually I’ve got this mindset which is I understand I have to give, give, give and my time will come, however you want to describe it you will receive at some point in the future, but it comes with a mindset shift.
It comes with the fact that you will get paid at some point in the future but because you have to prove your value in order to do that first, and the tough thing is we don’t know how long you have to prove the value.
Kyle: It is up to the market entirely.
We can’t tell you how long it will take.
It depends on what problems you’re solving for which market.
Harms: Then we move into the next big question which is what problems do we solve?
Because we now have identified we need to create value by solving problems and we know we need to focus on them not us, that is amazing.
But what problems do we then solve?
Now what do we do because we could do it the old way, which is surveys, focus groups and just head out there in the world and say what problems do you have?
Now what if we told you that a company exists and it’s got a database of information which you can have access to?
I’m building up the value here, but this database will give you everybody’s problems.
It will give you all the problems people are having in the world and it will lay it out.
What if we said you could have access to that?
Kyle: It is a little boutique agency known as Google.
When you go to Google you’re asking the Internet a question, a search query is the technical name.
It is a question, it doesn’t matter whether you phrase it as a question. Google is the largest problem-solving platform on the planet.
We use it for absolutely everything.
It is the way we find information.
We all use Google on a daily basis to ask questions because we have problems now the great thing is all of this information is available to us as business owners and we’re going to be using that.
Harms: Back in the day you could purchase a mailing list that gave them those examples of people’s problems. That meant you had to go purchase a list that was viable for a set period of time, you answer problems, lots of factors that play into that.
What we’re saying is we can now take it to another level, which is access the world’s problems, 24, seven globally as well.
There are two ways we can do this the complex way and the simple way.
The complex way is we can go into a deep dive in Google AdWords and identify and pull out data from people’s essentially search queries on I have this problem and even as far as what kind of adverts they’re clicking.
If we are looking at Kyle’s business how to learn Chinese we can even restrict that to the UK, now we can look at the data and start to segment it whether it’s geography, interests, but we can restrict it to the UK. We can narrow it down to London.
You can look at how many people search for this information per month and you can compare lots of different criteria.
Now this is great.
This is great if you are data driven.
Kyle: It is a free tool and you can experiment with it.
Harms: At this stage it’s complex and is too much for now and the assumption is some people have that skill set some people won’t.
What can we do to be indifferent to whether you have the skills or not like the marketplace and give you a more simpler version?
Kyle: There are other companies and other websites that pull that data from Google and make it more accessible to us, with just the information you need to know and they get rid of the extra information.
The one we use a lot is a website called answer the public.com.
It’s free and you can do three searches and then after that you can get a paid account, but you can just go back the next day if you need to keep doing searches.
The basic idea is you plug in your niche and it needs to be one or two words, it shouldn’t be pilates for men between 50 and 60 with back problems.
It shouldn’t be something long like that as you won’t get any information it should just be pilates, or pilates back pain.
Technically, it should be one or two words tops and that’s going to give you the best results.
For example I put in backyard chickens and what answer the public does is it pulls questions, the problems, the top concerns that people have.
People are going to Google typing these questions to learn more about backyard chickens. It gives us a really good rundown of the things on their mind, what they’re worried about, what they want to solve.
I like to go to forums and groups and see what terms they use and then get the most out of the tool.
Backyard chickens are an amazing example of a niche as when people are thinking niches they’re thinking about pilates.
But if people are making good money doing something obscure such as raising chickens in your urban garden that gives you an example of you can really make money online if you find your niche and it doesn’t really matter how odd it is.
As long as there is a market there is a business.
Harms: We’ve gone from identifying the fact that what is valuable, how do we create something of value?
How do we shift the mindset of becoming a problem solver and now we are accessing the world problems that they have given to Google and then Google gives it to marketers, niche identifies, people who want to start a business.
The difference between my gut feeling on what people are asking about backyard chickens instead these are real questions from real people.
Who are these people?
These are the markets.
You identified the who, the market and now we’re talking about what problems do these people have within this market?
What are their real problems?
Remember the logical chain we’ve built to this point is we build a business by creating value for our market, logical chain.
We create value by solving problems for our markets, the who and what.
It’s very powerful.
What problem does this market have?
Kyle: We’ve identified a niche that’s really popular and we’ve identified real problems in that niche, and that is such a powerful place to be.
Once you have the problems you can answer then and that creates value, that creates a business.
Harms: So if you’re ever curious about how people make money this is it, they identify a niche.
They find out what problems people have within the niche and then they get on and do it.
That’s what they’re doing, they’re not selling the idea of backyard chicken protection or whatever it is.
They’re not selling the idea they’re building a business from the niche they’ve identified.
We’re not talking about a product; we are not saying great you can dive in and start creating a product around that one question.
Kyle: Right now we’re talking about what value we are producing.
Now you’ve identified a problem this is where your creativity kicks it.
This is where we can start to think this is a real problem.
There are 5,000 people a month searching for how do I stop my backyard chickens flying away in the UK, that’s the market.
That’s a real problem now I can exercise my creativity and my imagination and create products and services to help the problem.
It might be a training manual about how to keep your chickens safe.
We don’t know what those products are but now as an entrepreneur these are the problems you solve.
Harms: A final note on problems and looking at them in a deeper way.
Looking beyond the surface because what we’ve done now is amazing but it is surface.
We’ve looked at the problem of runaway chickens.
That’s the problem that people have and they come to the Internet with that problem and we can help them solve that.
But what is the real problem and the deeper we go, the more we can solve their true problem.
So what are we talking about here Kyle?
Because often people are talking about and in my mind I think of it as features and benefits, but let’s talk about it as solving the problem on a deeper level.
That’s the surface my chickens are running away, how do I solve the problem?
Kyle: When we ask people what their problem is they’ll give us a symptom not actually giving us the problem.
We need to peel away the layers and this allows us to in everyday life work out things.
We ask them why at each stage and we can do this with backyard chickens with every problem people come to us with.
Harms: If someone asked how do I stop my chickens flying away?
The question is why is it important to you?
What’s the real issue here?
They may say so that the chickens are safe.
Okay, but why is that important?
Because I care for them and my kids have an emotional attachment to them, now we’re getting into a deeper problem.
Somebody’s else’s answer could be because they cost so much money to raise or that’s my source of eggs, or that’s my source of whatever.
In that case it’s food, security, emotional love, and care.
That’s their real problem.
Why this is great is if we can speak to the deeper problem we cut through even the noise of somebody solving the surface level problem because when they read it they’re like, if I can stop my kids from being really upset and mourning the loss of this chicken for example then my life will be a lot happier.
So the flying away element is a symptom, that’s the thing that will happen.
That’s the kind of question process you will go through yourself or with some kind of people who have this problem.
That’s the kind of way to think about this.
Kyle: We can look at all the questions and do this why process and if we find common threads that’s an extremely strong piece of information here.
Now we know why people get backyard chickens.
Harms: Nail this deeper process and the first stage is okay you’ll still gain traction there.
You’ll still be able to operate your business, but if we can get deeper it is an amazing place in terms of the information you’ve now gathered, you can talk directly to them as people within the marketplace, rather than just speaking to the marketplace.
Nail this and you will genuinely know your market, so it’s amazing.
What we’ve discussed is the fact that a business must create something of value, value to whom ultimately it’s the market, do they care about us yes or no?
It is indifferent.
We create value for the market by solving problems.
We spoke about that and shifting the mindset.
We also spoke about tools which can help you identify what problems do the market have and we can delve into these problems which is amazingly important to us because it goes from a friend in the pub saying we’ve got a cracking idea to actually identifying people’s real problem that they search for.
Because what people say and what people do are always two different things, and Google history and Google’s data they collect sadly doesn’t lie.
This data driven approach is fantastic.
Kyle: You should have now shortlisted three, four, five markets niche you’re interested in exploring.
Now you need to head over to answer the public plug in the name of that niche again and keep it one or two words as short as possible.
Answer the public will display a report of all the questions being asked.
Also, in order of the must frequently asked so you can start to get an idea of what the problems are within the market you are interested in serving.
Harms: Once you know the problems think of solutions.
You know your niches problem, but how do you best solve it?
Harms: We’ve been speaking about business and understand it is all about providing value to the market.
So far if you can take one big take away it is we need to solve the markets problem, especially the niche market that we’ve identified.
We showed you how to find out what people’s real problems are not gut instinct. Not my friend down the pub says or my wife says this, my cousin says this it’s finding out what people’s real problems are based on search queries based on what they search for in Google.
We left you in a position where you may have been starting to think about products, ways, services in which you can solve these problems you’ve started to discover.
The way we’re going to provide value is by fundamentally solving their real problem not assumed problem.
All successful businesses are built upon problem-solving.
We create something of value and the only way to create something of value is to solve people’s problems, we looked at how we find out what these problems actually are.
Then we can dig a bit deeper to get to those true problems.
This is vitally important we’re solving their problems, not about our problems.
Kyle: It’s not about how we make our business successful.
It’s about how we serve other people.
If you are not on board with this and this is a mind shift switch I would say take some time to reflect a bit.
I wouldn’t bother at the moment proceeding with the rest of this guide because we’re really going to be coming from that direction by deciding we are going to be serving other people.
We’re going to be solving their problems.
We have to do that exclusively.
We will also help ourselves later, absolutely. But right now we need to commit to solving their problems.
We’re going to be looking at how we provide value, maybe you’re already starting to think about products and services and different things you can produce in the market that’s absolutely great.
Most people start with those ideas before they think about the market before they think about units of value.
By holding off until this point we can start to outline what our product and service offerings are going to be.
It is a totally flipped way of doing this, we didn’t start with the products instead we started with the market.
We worked out what is valuable for them, what their problems are and now we’re going to look at how we deliver value to them, how we package up value and get out into the market.
Harms: That leads us onto the next question which is how do we solve their problems?
That’s the key.
In the MBA book one of the things highlighted was what is a business? Also in that book he talks about different forms of value and highlights 12.
He speaks about 12 standard forms of value as one of the chapters or segments in the book.
Any of these could become the basis, the foundation of your business and let me list these out for you.
Number one in terms of form is a product, next is service, another one is shared resource then you’ve got subscription, resale, lease, in the form of an agency you got something called audience and patient to explain the form of an agency, audience aggregation, loan, option, insurance and capital.
That’s 12 different forms in which you can base your business on.
These are going to be different and you will be operating different business economic vehicles to deliver that value.
Kyle: We are going to be focusing on the ones relevant to online business because that’s what we teach, that’s our niche any of these could be the foundation of your business and it’s going to depend on your market and expertise.
These are all different ways of packaging up value and getting it out to the market.
All are equally valid, just not necessarily in every single market and not necessarily all online or at least some are going to be better than others online.
Audience aggregation is getting lots of eyeballs in one particular place.
So lots of people looking in a particular direction whether it’s a billboard or a more modern example, a website then you run adverts.
That is basically audience aggregation; you have a lot of people paying attention to you.
You can monetise that by running adverts or sponsored posts or whatever it is, we’re not looking at that. But that is a perfectly valid form of value for online but not for today.
Agency is another one and in the book it says, market and sell an asset or service you do not own on behalf of a third party, then collect a percentage of the transaction as a fee.
Great business model.
Harms: In the UK we refer to that as a broker.
Kyle: Online we tend to call that affiliate so I’m promoting or selling someone else’s product, I take a percentage of that sale it’s not my product.
I didn’t create the product. I’m just saying it is a good product or service. Then I take percentage again perfectly good form of value you can make a lot of money with affiliate marketing but not the focus today.
Resale is another one which in the book is to acquire an asset from a wholesaler, then sell the asset to a retail buyer at a higher price.
This is drop shipping. This is fulfilled by Amazon, you’re not actually manufacturing the product yourself you’re finding products, generally from China from Alabama or Ali express, these are where you find wholesale products and then you are basically flipping it and selling it on Amazon to individual retail people.
Again, great business, not today. Instead, what we’re going to be focusing on our product, service and subscription.
These are the big three we’re going to be focusing on, they are our preference.
I would say they’re probably the most relevant in the most amount of markets and they’re going to be a good place to start.
But that doesn’t mean you should close your eyes to all of the rest of the opportunities, the other ways to provide value.
Harms: All of these are valid.
We want to come from a place which can be applicable to as many people and accessible to as many people as possible, without assuming things like you’ve got a lot of capital to lend or reallocate or invest.
We want to strip it down and make it very accessible, let’s start with the first one product and this is the most basic one.
Typically think about it as a tangible object, a pen, a glass.
They’re typically thought of as tangible especially in the past we thought of these products as physical goods.
But also just as relevant in nowadays and people do sometimes miss is a digital product like an e-book.
I’ve got a bookshelf of physical books but also an ebook.
Kyle: Often you can buy the same basic product in both forms, physical and digital. I’m looking at a PlayStation game I want to get, I can buy from the store or just download it.
There is no physicality, just download it onto my hard drive or I could buy the same thing, same product as a physical disc and I get same value either way, but the line between physical and digital is increasingly blurred.
Harms: The big advantage of products in general is scalable.
So, for example, you make it once and it can be made again and again and again.
But in the case of physical goods there’s a cost connected to that, the manufacturing, shipping, logistics, the quality control, supervisors, all of that is a part of the manufacturing and distribution process.
It’s not like the more you sell the fixed cost stays the same, actually the fixed cost sometimes rises with the higher quantity you’re selling.
If you translate this to digital it is infinitely scalable it’s incredible, and often the fixed cost doesn’t change the more they sell, that’s the reality of it.
They may have to have bigger servers, but they are very marginally compared to distribution. Manufacturing costs associated with the physical product.
Our preference is digital products for those main reasons it is just scalable in an incredible way that physical products can’t be scaled.
Remember our products need to solve the problem, that’s the key and the way in which we do that is we ensure that our product that we create matches their problem and provides a solution to the market.
What we don’t want to do is start conjuring up product ideas that fits and matches so the product purchased by the end consumer actually solves their problem.
For example we talked about backyard chickens, we can produce a physical product like a very secure coop that doesn’t allow the chicken to fly away. If it’s digital that could be an e-book detailing the best methods in which to ensure the safety of the chicken, we want to match the problem and solution here.
Kyle: If you sell a physical coop it’s a big item made of wood and mesh that needs to be shipped over and it’s going to cost you a lot to ship, what if instead you created a PDF which shows people how to create that coop using stuff they can buy from B&Q or Homebase, or if you’re an American from home depot.
You get these pieces of wood, you need this and this, you need X square metres of chicken wire, etcetera and then these are steps to build it yourself.
So yes, you might still sell the product to people and that’s $500 or £300 or whatever it is, but then you can say okay if you don’t want to buy this premium item that’s absolutely fine, you can also buy a PDF which has the step-by-step instructions and the blueprint for building it yourself, or you can get a video course which includes the PDF and I’m going to be walking you through the steps.
It’s just another way to consume information.
These are all products and they are all solving the same problem.
The problem is my chickens are escaping. How do I stop them from escaping?
Instead of just having that one product which is this big, bulky chicken coop we’re having to send all over the world, now we’re being smart about it and we are continuing to solve the problem using a more scalable and cheaper digital goods, which opens up our market and allows us to solve the problem for more people.
Harms: That’s a product.
Now, what about the other area we want to focus on the other four which is services.
Kyle: Services are again just another way of solving our markets problems, so unlike products and this is the big difference.
They are not easy to duplicate.
A product once you’ve created it once can be duplicated to be made again and again and again. Whether it’s a physical good made in a factory or it’s a digital good where you just copy and paste.
A service cannot be duplicated in the same way.
Instead, each time you perform the service each time you serve a client, it’s going to take time and there’s no way around that.
It’s always going to be tied to the amount of time it takes to deliver that service whereas with the product there are no such time connections.
We did some podcasts with people in osteopathy and physiotherapy recently, and these are fantastic examples of a service that’s really hard to productise because the basic form of value delivery is a service.
It is literally a hand service where the physiotherapist will have to actually literally hands-on with your muscles and bones, finding out where the problem is.
Let’s say I am a massage therapist and I provide massage as a service.
My client’s problem is they have sore muscles and they want somebody to help them solve the problem. As a massage therapist I can do that.
I can help them with that particular issue that’s a service.
So what happens if that massage therapist or myself suddenly has a hundred thousand bookings?
If it were a product we would just sell a hundred thousand units and we would take that to the bank and we would be very, very happy.
If it’s a service we suddenly have a huge spike in demand.
We can’t fulfil, we’d have a backlog of clients for the next four or five years, probably longer than that because a service is inherently not scalable in the same way that a product is.
Harms: On the flipside, a service is typically more lucrative than a product.
For example, the chicken coop may produce an e-book or video course that can be build it yourself, and that kind of information. They could probably sell it for £15, £20, £25, the service product off the back of that may be a chicken coop.
Now the service could be I come and install the chicken coop for you that often increases profit margin and starts to act as a premium offer.
The same can be put in the world of consultancy.
The consultant may download their thoughts and knowledge and information to an ebook, the eBook sells for £10, £15, £20 but to hire the consultant in to come consult on the business would have a premium fee associated with it. It could be £500 for the day or they could charge double somebody’s working salary to spend a month with that business putting together a strategic plan.
They can be more lucrative and just expand on what kind of services you can provide.
Think about training, education, events, conferences, giving talks, public speaking appearances, consultations, mastermind sessions, workshops.
These are all different ways in which you can provide your service for a premium fee, but remember it’s not scalable, it becomes a challenge when you want to scale it.
That’s where the product has the advantage.
Kyle: When we are thinking about what kind of services can I provide we need to once again and I know this is repetitive but we need to come back to what that problem is.
Yes, a customer could buy my book on making my garden chicken proof or building a chicken coop or they can buy my £500 product, or they can hire me personally for £1,000.
I will come and install a chicken coop; I will chicken proof the garden etcetera as a service it’s done for you.
I will do all the work for you but I’m still solving the same problem.
I’m just making it easier for you and as a result you need to pay me for that.
Kyle: The final one we want to talk about was subscriptions.
It’s almost an honourable mention because it’s often connected with either products or services, but subscriptions in particular are increasingly especially nowadays a really popular form of value.
A lot of our salaries now go on subscriptions, things like Netflix is a very common example, any continuity product.
We think about subscriptions as things like gym subscriptions or subscription to a magazine but it can be any continuity product. Something like a dollar shave club where you sign up and they send you razor blades on a regular basis.
That’s a subscription. It’s just we are used to using words of subscription for magazines and stuff like that.
Nowadays it’s an incredibly common and very powerful form of value.
It’s used by most online businesses who are smart and increasingly off-line businesses as well who need regular revenue coming in the door.
Really, there’s no excuse not to add one of these into your business once you’ve nailed down your products and your services.
If you create a recurring version of either a product or service you’re going to be in a very good place.
Harms: Subscription is a fantastic model and I agree it should be part of or starting to introduce it as part of if you’ve got an existing business.
Start to think about how I can introduce that into my existing business on value that can be delivered ongoing and somebody pays for the ongoing value as part of a monthly, weekly quarterly subscription.
If I think about companies which execute this Microsoft office annual subscription, dropbox annual subscription.
Kyle: It is a very stable source of revenue over time so small entries unlike services, but it’s also continued and stable, unlike products which are one-off sales, so subscription is kind of the best of both worlds.
And if you can fit it anywhere in your business model we definitely recommend it.
Harms: The subscription can’t be the subscription for the sake of it.
It must serve the problem.
For example, if your market helps people lose weight within a specific niche it could be month check ins, meal plans, exercise tips, it could be escalating someone from a beginner level exercise person to someone who can do 20 pull ups.
For example, a client wants to learn digital marketing; it could be a monthly drip of content.
Kyle: The key thing there is primarily the recurring nature of this product or service needs to be valuable for them.
You’re not making it recurring just because you’ve heard us saying this is a really good business model for you.
Again we need to be thinking about how we solve their problems.
Yes you’ll get paid on a regular basis, but why would they go for subscription rather than just buying a product, just buying a service so it has to solve their problems.
With learning digital marketing if we drip feed the content over weeks and months, even years.
It’s much more likely that the customer, the person who wants to learn digital marketing, the person paying the subscription will actually make their way through the content.
They’ll actually action it and they will therefore solve the problem of I want to learn digital marketing where as if we just throw 200 videos at them and say, there you go.
Most people shut down, that’s too hard, so again it needs to match.
Subscriptions are a fantastic business model for you.
So that’s a bonus.
But the subscription has to make sense for solving their problem.
Harms: The next part to focus on is let’s order these.
We looked at three categories and now let’s give you our definitive preference of order.
The best way to structure this is to go for the product first, then subscription then to services.
This has a particular reason for that because most businesses would actually do this the wrong way around.
Kyle: Most businesses, especially early businesses would start with services and there is a model called the cashflow quadrant by Robert Kiyosaki.
It’s employee then you go to self-employed. Then you go to the business owner then you go to investor and it’s basically how you make money, you’re either being paid a salary or you are a freelancer and you’re making your own salary as a self-employed person.
Or you own a business and you have people working for you or systems working for you and the money comes from that, or you are an investor and your money works for.
Harms: The core philosophy is you either exchange your time for money or build an asset based on business where the money comes in regardless of how much time you spent on it, so it becomes an automatic income.
It is shifting from one side of the quadrant to the other side.
Most people automatically default to services which actually typically fits on the employee side of the equation.
Kyle: As it is still linked to time so, yes, you might be self-employed so you think you have a lot more freedom, but as long as you’re still providing services the amount of money you can make, the value you can put out into the world will still be tied to your time.
That’s going to limit scalability.
That said, a lot of people start in the self-employed quadrant because if you’ve come from a salaried position if you’ve come from being employed and then you’ve struck out on your own, the natural thing to do is to continue to provide the service you provided in your job, but now you’re just providing it as a self-employed person so you make more money and its quick way to get cash in the door.
But you are still selling your time basically.
Harms: That’s why we start with products as they’re infinitely scalable.
Especially if you stick with our preference which is digital products.
They are amazing and they are scalable and that allows us to when we say continuity move into some form of continuity rather than come out of your current position and go into services we go into products, which means continuity in terms of time management.
Continuity in terms of a consistent product i.e. one product continuity in terms of the income coming in month after month.
These are all the things we want to get continuity around before we move onto subscription and then services.
Treat services as the final destination.
Kyle: If you’re just starting out in your business maybe you’ll be doing services on the side but the problem there is that will be your focus.
It will be services and servicing clients.
And yes, it pays the bills.
Yes, it gets you cash but it’s not a good basis to grow the business from that point onwards. So that’s why we go for products, subscriptions, and then services.
Kyle: We’re going to give you what is the classic online funnel.
This may or may not be the right funnel for your market.
This may or may not be the right funnel for you depending on your business goals and aspirations.
But we’re going to give you the classic so at least you have a template that you can make edits to instead of coming to this entirely out of the blue.
We’re going through products then into subscriptions and then services and we’ll give you different forms of value that we can use or are used in a classical online funnel in each of these categories.
We normally start off with a very low cost but still high value eBook.
An e-book is something that can be developed relatively quickly and it allows you to get your value and start solving the problem ASAP.
This could be a Kindle, this could be a published book, but that’s means you have to go through gatekeepers like publishers. We tend to suggest sticking with Amazon for now.
That’s going to be your first from of value.
You have identified the problem you’re using the e-book to solve their problem.
The second product will be some kind of course which will be very similar to the e-book but going through in more depth and going through using video which people tend to value more than they do text.
People will spend a lot more on the video course than they will on an e-book.
So we’re starting to escalate.
We’re starting to increase the price point already at the third step and we’re still in products that will be some form of physical product.
Again, this is going to depend on your niche, maybe physical products are totally irrelevant. In which case this would be a more premium digital product, maybe a piece of software.
But it’s going to be a higher cost product that people purchase.
We’ve gone from an ebook a course to some kind of physical product or a higher cost premium digital product. These are the three products and then we’re going to move into the next category, which is going to be subscription.
Normally we would have some form of membership or subscription here.
If you do have physical products it might be a subscription for the physical products to continue delivering X amount of units per month.
If you’re entirely digital, then it’s going to be a membership group where you continue to help them solve their problems by adding accountability, by adding community, by adding a constant feed of new content, helping them action the information you’ve been giving them and helping them to move towards a goal.
That’s our subscription then and only then, once you’ve built this foundation of products and subscription service, then we can start to add in events and services.
We’re moving to services here starting off with one-off events and then things like masterminds, coaching, consulting, one-on-one where you are actually selling your time.
That’s really at the high-end once you have delivered a lot of value to a lot of people earlier on in the funnel with your products.
You have a continuity offer in place, then you can start to sell your time because you’ve built all this value up until this point, the price point of your services is going to be high enough for it to be worth your time.
Harms: Another way to describe what we’re talking about here is a value ladder.
We are escalating people through a value ladder but at each stage of the ladder we’re solving the problem.
Now the problem that we’re discussing this entire ladder will ideally solve that one problem that’s the key.
The other element to consider is each of these items should be a complete solution so this item shouldn’t intentionally be built to leave someone hanging off the cliff saying you have to buy my next product to get the complete solution.
The challenge with this is people in today’s marketplace, understanding marketing and how many products are available to them get turned off.
It becomes a feeling of you just wanted me to buy things, whereas how do we do this in a way in which people are comfortable to naturally escalate through the value ladder?
The way we do that is by ensuring each element is a complete solution and that’s another big mindset shift massively.
Kyle what are some common objections with what I’ve just shared?
Kyle: We show them that and we say we will be answering the exact same problem solving a problem all the way through, focus, focus, focus, focus.
We’re just solving a problem in different ways, using different forms of value.
They’ll say no they’ll just buy my five-dollar e-book and that’s it. They won’t buy anything else; they won’t come to my events.
Basically, this is not how the market works, this is not how people get their problems solved because of these reasons, it means we can escalate.
We can take them from one unit of value to the next unit of value, even if we’ve given them everything they need to solve their problem at each step, even if it’s a complete solution.
Think about the number of weight loss books on the shelf in Waterstones or in a big bookshop hundreds and hundreds and hundreds books. Hundreds more come in each and every year but the basic idea is you need to eat less, eat real food, move around a bit more like it’s quite basic, but there’s still a market there.
Even though the problem has been solved technically by many books, so don’t worry too much.
There are two reasons why so the first reason is once you’ve solved an initial problem in let’s say the e-book or the video course the customer out of the market now knows more about what you teach, they have more knowledge and the more you know, the more you realise you don’t know.
You’re going to have additional questions, so let’s say, my first question is I want to get backyard chickens where do I buy them?
Okay, now I’ve got another question. How do I feed them?
Okay there’s a video course it goes through the best ways to feed them to keep them healthy, fantastic.
Now one of my chickens is sick. How do I protect my backyard chickens from salmonella?
It’s getting more and more specific, which means we can have different products and different subscriptions, different services addressing all these sub problems that will arise in the mind of your customer as they go through this value ladder.
So yes, they still have the same overarching problem, but as they learn more they’re going to need to know more and more and more, and that allows for that natural escalation from a simple ebook into a course, to some physical product and then membership and then even into consulting in the service sector.
That’s the first reason.
The second reason is a little more brutal but also quite accurate people are lazy.
The information is already out there and we have the Internet.
All of this information is out there, you could probably learn how to look after backyard chickens just based on stuff online.
But that’s hard work so people will still buy an ebook, they will still buy a course, they will still buy a $500 chicken coop.
Instead of building it themselves because you’re offering convenience. You are helping them solve their problem in the easiest possible way, and that’s what we’re doing with this value ladder with this escalation, we are solving the same problem, but we are making it easier and easier and easier for that problem to be solved.
At the top end it’s basically done for you, we will take you by the hand and we will consult with you, we will do it for you, and you don’t need to worry about anything at all.
Obviously, that comes with a higher cost.
So people are buying results they are not just buying the book they’re buying the result, yes they’ll read the book but if they do not act on it they’re not going to get that result.
Which is why they might look at something like a membership community so they have other people they can chat with to help them get through small problems to get them closer to that result.
Another example is a PT we know that if we do know squats, press ups we will tone up, so why do we hire personal trainers?
Why is there a personal trainer industry?
We could just do it at home and get the same result eventually.
Because we’re lazy.
We know, if I spend 30, 40, 50 quid an hour or whatever it is on a PT he or she is going to kick my arse and I’m going to do the work. I’m going to show up to the gym. I’m going to do the work and do it properly and I’m going to get my result.
I think this is vitally important.
People need help to sort their problems and that’s all we’re doing with this value ladder; we’re focused on the same problem, this is your problem, this is how you solve it, but we’re just doing it in great detail and with more support, help in order to increase the probability of them getting the desired result.
Harms: The desired result will be applicable to them depending on what stage they are at in regards to what sub problem they’re solving.
As at the start the sub problem will be very basic.
We can’t hit them with the overwhelming information that is out there online that leads to no results.
We want to make it easy for them to achieve the results by answering sub problems and ease them through the process.
There will be a group of people that will come and purchase our premium product and service, and at that time because we have done steps now we have time to exchange our time for premium price points.
Because if the products in place and it is selling if the subscription is generating this revenue every month, suddenly you are a lot more hands off you have that time, if you so please to run an event, want to do one-on-one consultation, or to put together a mastermind or a retreat to take people to a mansion in the south of France for a retreat.
Whatever it is, you now have that time because you have this basis based on products and subscriptions.
Rather than the other way around which is start with the services and then you’re so swamped with the services that when someone suggests you write an e-book or you should put together a video course, all you’re going to say is what are you talking about?
I need to keep working.
You get stuck in the hamster wheel.
Harms: For example people leave their careers and jobs in order to pursue and be more autonomous and independent.
They end up at the service stage first and they get fed up and they think why did I ever leave my job?
Kyle: They have just made their own job, they’ve made a job for themselves and it’s a harder job because they’re also having to do the business elements.
Like accountancy for the business as well as doing the technical skill that they had in their old job and this happens quite a lot.
Harms: If we do it this way, we have a better chance of the holy Grail which is working on the business, not in the business and we appreciate everyone has to go through a certain level of I have to do everything.
I get that but if we build it this way there will be a point where you can step back and work on the business and charge a lot more for your time, your products and premium services, workshops, public speaking talks, etcetera.
We’ve plugged a big gap in the entire guide which is how do we specifically provide value to our niche market?
We do that by solving problems and how do we solve their problems?
We provide them one of 12 forms of adding value to the marketplace.
We narrow down specifically on products, subscription and services in that order because it allows us to produce value ladder in order to free up our time later on for charging more premium price for our services in the marketplace and solving the high-level problem which people will have and they want done for them.
Four ways to beat the competition in your new niche
Harms: Up to today you could have identified a niche market and a way to solve that market’s problem based on the exercises we have given you and the theory behind that.
We had you work out in which way to solve that market’s problem, how to provide value to them specifically based on typical value forms and again we’re leveraging the personal MBA Josh Kauffman’s theory behind this and we selected three for you to get started with.
Those three were products, subscriptions, and services in that order.
The reason for creating it in that order is this value ladder here.
Kyle: Remember this is the final step of the process of working out our business.
Today we’re going to be looking at what the competitors are doing, what they’re already provided to this market.
We proved that there is a market so now we’re going to be looking and seeing what value is already out there.
How are the market’s problems already being solved and we’re going to be using this as a jumping off point.
The whole idea here is we’re going to be looking at how our competitors are solving the market’s problems and we are going to be working through a series of steps to work out how we can better solve those problems.
How can we make it easier or faster for our customers and for the market to get to the end result?
How can we do better than what the competitors are already doing out there?
Then from that point, once we’ve worked out how we’re going to do better, wow we are going to more efficiently solve our markets problems then we’re going to start plugging these products and services, subscriptions into our first version of the value ladder.
Our hope is by the end of this guide you should have a very clear statement of this is the market, this is the problem, and this is how I’m going to solve it and have your value ladder with different products, subscriptions and services in place, all of which are going to be created in order to solve the problems of the people in the market.
Harms: Let us identify what is already working because we don’t have to reinvent the wheel here.
Now if you are of a natural, entrepreneurial, creative tendency, a natural problem solver, the reality is you would have already gone out to solve something or by Wednesday, Thursday, you would have started to write down exciting ideas.
But let’s take a step back as we want to give you a structure and a system that works, and a way for you to again take the guesswork out of things.
The way we do that is by looking at what already is working, but some people may say that means I’m going to copy what they’re doing and the answer is no.
We’re going to look at what’s working, but answer the problem and provide a solution in a different way to help serve it could be the same customers or it could be customers that are currently not being served within that market space and that will help identify what you as in me or Kyle, you the person who is going to be starting a business can specifically bring in terms of a solution to the problem to the market.
That is how you start to differentiate yourself, let’s work through a process and a system to see what’s already working.
Kyle: By solving similar problems to what your competitors are already solving but solving them in your particular way, you’re automatically going to have a unique product.
You’re going to have different stories and backgrounds.
You have different ways of explaining and consulting or teaching.
Depending on what your product is. Myself I tend to create things that are extremely systematic and logical. That’s just my style.
That’s how I like to create products for other people it would be more emotional they’ll be able to engage their customers in an emotional way and even if I’m teaching or producing a product that is solving a similar problem, my product is going to end up being different to the product that somebody comes at it from a more emotional engagement point of view.
We will be solving the same problem, but our products are going to be totally different because of who we are and the personality we will personally put into our products.
Harms: you’ll also have a mechanism which you can improve on what’s already out there by using four factors which also doesn’t necessarily have to involve you.
Because the other argument is I have got my own personal way of doing something that is applicable.
But we may not know how to get that across to the customer, so we’re going to share with you four key mechanisms in which you can actually get across the fact that you are different to the end customer and you are different to what is out there in the market, without having to convince I’m a more systematic person, I will come at this in an engaging way.
All that they will start to see and my personal thought as the brand grows, that becomes obvious to them and future customers.
But if you’re starting this from scratch there has got to be more of a formulaic approach to how we do this.
The first exercise within the section to do is simply this.
We want to see what products are currently out there in the three categories we spoke about and those three categories are product, subscription, service.
Kyle what is the actual activity to do when looking within these three categories?
Kyle: We are just doing a survey at this point.
We want to see what the landscape is, how competitors are, how other people in the market are solving the problems of their potential customers.
For products pretty simple you’d head onto Amazon first so you’re looking for specific e-books, are people selling e-books?
You can search within the Kindle or the book section of Amazon and all you’re doing is plugging in, in this example, backyard chickens, or whatever your niche is and you will see all of the products.
All of the e-books and books that are being produced.
You can do exactly the same thing with courses and then for services and subscriptions you’d probably use Google, but all we’re doing at the moment we are not doing an exhaustive competitive analysis.
We are simply seeing what is out there.
We are noting it down with a rough price point, you may want to do a deep dive later but right now I recommend you just stick them on Post-it notes and start to group them together.
That’s all we’re doing at the moment it is a survey.
Harms: Then I recommend getting a piece of paper and drawing this value ladder out and you can do it in three columns, a funnel however you prefer.
Now title the sections product, subscription service because what we want to then do is take these Post-it notes e and start to put them and place them in different parts of the value ladder.
We mentioned backyard chickens. We identified that this is one potential profitable niche and when we say backyard chickens that applies to any niche that you’ve identified at this stage.
So start to put the Post-it notes in these particular sections so we can start to visually see the value ladder.
But not just your value ladder at this stage, but the competitive value ladder that is out there in the world, Amazon, Google. Again not a deep dive, but a quick search.
If it’s hard for your customer to find you don’t have to worry about it, so just look at the surface stuff that’s available on Amazon and Google.
Let’s assume they’ve got the value ladder.
They’ve done their quick scan research on product, subscription, services they’ve put it on Post-it notes and they’ve started to populate their own value ladder visually.
Kyle: As we’ve gone through we already know there’s a market already, people are already making money in this market, what may not have happened in this particular niche, there may not be a good value ladder in place.
What you tend to see is individual businesses will sell one product or they will sell one service, and they won’t necessarily be able to talk to the whole market and solve the markets problems in a step-by-step fashion which is something we talked about as a valuable way to address your markets problems.
Kyle: So when you draw out this chart. When you start sticking Post-it notes on what products and services, subscriptions are already out there, you will see physical gaps on the paper.
There will be parts of this value ladder that do not have very many Post-it notes.
They do not have many products or services addressing this stage of value ladder.
What you tend to see is lots of stuff at the low end and lots of stuff at the high end.
The mid-ground tends to be left out, but it’s going to depend on your niche and your market, you will see different patterns.
But we’re going to look at different ways to find gaps, but this is the most direct, it is literally nobody is doing a video course this year.
There are people selling a service to help you do this, but nobody is doing the course use and you can physically see that on the page.
Harms: The best way to start to see gaps is that if you look at these smaller words ebook, course, membership, digital subscription membership, physical subscription, events, group, consultancy, coaching.
Those were examples of what would typically fall into a product, subscription, service within that value ladder.
So now if you want to take this to the next level and start to identify the gaps quickly on paper start to categorise them into these elements.
Then you can start to see gaps within that value offering, I mean product, subscription, service.
The next phase of this determining on how we can better serve the market or how do we even enter the market in the first place is, now we’ve physically seen the gaps we can start to work out how to better serve the market.
Solving problems better than anyone else.
Kyle, how can we serve the market better?
Kyle: Before we can better solve the problems of our market, we need to know how our competitors are already solving those problems.
We need a benchmark.
That’s why we started by having a look at what competitors are doing.
We have identified big glaring physical gaps in the market in the value ladder and that gives you a massive focus area, but apart from that, we can also start to look at the reviews of the current products.
The feedback of the current products Amazon is a really good place for reviews just because they collect a lot of reviews for products in particular.
Trust Pilots are good for services and each niche will tend to have a forum or somewhere where the people in the market hang out and discuss things.
It might be a Facebook group but if you look up your competitor’s name, the name of the product plus review on Google, you tend to find people discussing the pros and cons of the various offerings.
Harms: A note of warning when doing this, which is something to be aware of is when analysing reviews, when analysing people’s description in forums, etcetera a good rule of thumb is to ignore the extremes.
You ignore anybody who is rating things five stars.
There are two reasons for that one is they’re very excited.
Yes, they love the product great. They love the product just so much that they can’t see anything bad with it, or maybe they just had a fantastic experience. But that’s one kind of extreme behaviour the whole five-star behaviour.
The other danger with a five-star review is it’s very easy to get fake five-star reviews, how do we know if they’re genuinely legitimate?
Amazon may have mechanisms, but there are very smart, intelligent people out there which can bypass things short-term to stack a whole bunch of five-star reviews.
The other extreme is the zero stars of one, two stars.
These people are typically classed as haters or somebody who is extremely upset and the reality is those people are exactly the same as five-star people. They just feel a different extreme.
They have either had a terrible experience, or they feel like they’ve been ripped off or they are again a competitor trying to claw down another competitor.
What I would say is very simply that for those particular reasons avoid the one and two stars avoid the five stars.
They are people who are either too happy which is a bad thing in this case or too angry, which is also a bad thing in this case.
Where to focus is in between the three and four stars where somebody is giving you a rational, realistic review.
That gives us pros and cons.
Kyle: The best ones are longer reviews where someone writes out their reasons that’s a goldmine for you entering the market.
If it’s a three or four star review it tends to be much more thought out because you have to go through a thought process before you give something three stars.
That’s where we’re looking to actually get useful, actionable feedback.
Harms: What can we do with these reviews?
When we are analysing this what are we looking for?
Now we know we’re looking at three and for stars or something more thought out, what are we looking for within this?
Kyle: The natural tendency would be to look at these reviews and then basically fulfil the requirement that the reviewer be suggesting.
The reviews have added these are two things you can do better. I would then do them as well.
The problem with that is that we are just chasing around people’s opinions and we are focusing a bit too much on the competitors’ product.
The whole point of looking at these reviews is not so that we are creating our products and services entirely based as a reaction to our competitors, instead we want to make the best product possible that solves the problem for the customer as quickly as possible.
We need to keep the focus on the market, not necessarily on our competitor and if we focus too much on our competitor’s products there is a tendency to forget that we are serving the market first.
We’re not in business just to destroy competitors if you’re focusing entirely on your competitors you’re ignoring the actual market problems, so don’t get too obsessed here.
All we’re looking for is starting points mentioned in reviews of things that might be ways to improve the products, that’s all we’re looking for.
Because we’re then going to go into a process of a deep dive of how we better solve the problems of our market.
Harms: Focus on the market not the competitor.
Yes, we’re going to look at it, but we’re not going to suddenly take 100& of our attention and become obsessed.
Let’s give you a framework in which it allows you to better solve the market’s problems but also allows you to analyse the competitors a bit better using the framework and these are four core elements.
Now let’s dive into this because this is where we can leave today with a way in which we can be better which we can provide the market something different, in which they may not have and then apply that to our value ladder.
To summarise we have the gaps.
We now have a mechanism in which to look into the gaps, reviews, forums, Google, Amazon now, let’s deep dive into this and actually work through an exercise in which we can solve the markets problems better.
Specifically we are going to be covering four different ways.
These include number one, can we do things and make the customers’ life easier and more convenient?
Is that one way in which we can better solve the market’s problem?
Can we better solve the market’s problem by number two just being more simple in the way in which we deliver, present depending on what your product is without overwhelming the customer?
Number three is can we better solve the market’s problems by being more engaging?
The final one is very simple, can we be faster?
Can we provide results faster?
Can we have the delivery faster?
Can we reduce friction?
That’s four ways in which to attack the market but there’s many other mechanisms, but these four will definitely get you started and help you start to categorise, even when you’re looking at people’s reviews when you’re looking at the discussion around the competition start to categorise some of the takeaways.
Rather than having a jumbled piece of list you can start to put it into easy, convenient, simple, less overwhelming, more engaging, faster.
Now you’ve got four mechanisms in which you can be better and solve the market’s problem better.
Kyle over to you for number one, which is how can we make things easier?
Kyle: These are four different ways to approach improving a product, there will be many more but the point is to give you a toolbox because ultimately creating a product or service is a creative process.
It’s going to have so many different factors listening to the market, listening to yourself, listening to what the competitors are doing.
There’s going to be so many factors.
All we can do right now is give you a toolbox and say, okay, these are ways you can negotiate this problem and come out with better products and services.
The first one is the market has a problem.
They want to get that problem solved.
They want to reach the end result. How can we make that journey easier for them?
So they’re going from A to B and we want to make that journey as easy as possible.
One which works really well online is a format upgrade.
Let’s say in your particular niche there are lots of e-books and there are lots of people buying e-books that tell them how to solve the problem.
The fact that there are lots of ebooks being sold, lots of reviews, lots of happy customers is good, that means there is a vibrant market we can serve. If there are e-books are their audiobooks?
Are there video courses? If not there’s a massive opportunity here.
Text is great. E-books are great, but if we can make the consumption of that information they require to solve the problem, if we can make that consumption easier then we’re going to better serve the market.
Audio is easier to consume than text because a lot of people commute. That’s a lot of time to be listening to an audiobook and that’s an hour and a half less each day to be sitting at home reading a book, so audiobooks are just easier than text.
What about video?
Video allows you to deliver material in a much more engaging fashion and they can fit into the lunch break while sitting on the phone, again a bit easier than getting out a book, reading the book. So can you upgrade the format?
If there are already e-books being sold if the e-books are doing well, but nobody is doing audiobooks and nobody is doing videos of this information, that’s a nice easy way, something you can do to make it easier for your market to reach the end result.
Harms: At every stage of the value ladder what we want to be doing is making people’s lives easier.
That’s, the key.
How can we make their life as easy as possible?
That’s a powerful question to ask because then one method is a former upgrade.
Harms: Another method is removing choice.
Now that’s a tricky one to wrap your head around.
But if you have way too much choice to consume one piece of content or you have way too much information in terms of available choice, it becomes very difficult to make a decision and start.
It becomes a lot more difficult for the customer to say yes, I know exactly my first starting point. This is why some restaurants limit their menu offering.
An example of a company who has removed choice or made it a lot less available is Five Guys. It allows them the ease of choice; it means there is one place for them to go to.
To allow that to be the case, there must be a strong gap where nobody else is fulfilling it, otherwise somebody else is also providing that choice.
So another way to make it easier for them is to remove choice.
Kyle: If a competitor has 20 different products at the entry level that gives you an opportunity to simplify the process for them, to basically say that is great, but this is the thing you need and then they can start on that value ladder journey with you.
Whereas with a competitor it’s overwhelming.
Harms: How does that translate to the online world?
Their website may have every product offering, every single headline, every banner and that is very common, whereas what we say is okay, take all of that away and just give them one choice.
How that translates to the online world is to go from a website to a landing page as an example if you’re interested.
But there is also the argument where you say actually, I want to maintain choice and I’ve got a great selection of products and they’re fantastic and there is a gap for this within the product range and I think I should be offering it.
Fine, that’s awesome.
What you must do instead then, is make the journey the meaning and the context of what you’re offering a lot easier.
Let’s look at some examples and I am aware of Gary Vaynerchuck.
He’s got a wine company and the wine store will have a lot of choices.
So what he did is made the customer’s journey/experience in purchasing wine a lot easier, he would have a tasting session live on YouTube maybe try one or two or three or four wines and say your first purchase if you are at this level is these two wines as a bundle.
Or this selection here is a great starter pack for wine versus trying to walk into a wine shop thinking where do I start?
The way to make the experience easier is maybe package it up in terms of an idea and meaning as a starting point.
Kyle: Marcus Sheridan, he more famously wrote a book called, they ask you answer which is educating your market in order to sell later. He did this in swimming pools.
Building a swimming pool is a big complicated project and he just produced a lot of content which made it easy, he gave people all the information.
That’s the first way you can do this, just ask yourself the question, how can I make it easier for the customer in this marketplace?
How can I solve their problem in an easier way to make their experience easier?
Now the next way to do this is by removing overwhelm working on the fact of how can I make my customers’ life simpler?
The first one was easy whereas this is simpler.
Kyle: People looking for ease have already started their journey, they’ve already made that first step, and now they’re starting to hit roadblocks.
With overwhelm it’s a bit different.
It’s when you approach a complex subject and there’s just too much immediately.
They give you too much stuff, it’s too overwhelming and that means you do not start.
You do not even get onto that value ladder in the first place whereas ease is about you’re on the value ladder, you’re on your journey, you’ve started to solve your problem but you keep hitting these roadblocks and we as business owners.
We want to remove as many roadblocks as possible.
This is connected to what we just talked about choice from a website.
If you have 20 different options for a product that makes it harder for the customer.
They need to go and research to find out what other people think they need to read reviews. It’s just a lot more work.
It’s more difficult, but it’s also very overwhelming to deal with that amount of information, which is why when we work with clients, we tend to use a sales page or a landing page.
It is one page that has one product on it and it talks you through why this product is right for you and they have the choice, they either buy it or they do not.
We haven’t got rid of the other 20 products.
We are just laddering you’re saying that this is the entry-level product you start with.
This is absolutely fine this will get you going.
This is the cheap $20 Bordeaux that Gary Vaynerchuck would talk about and then once you purchase this you’re using this and you understand it, you learn a bit more about what you like what you don’t like in this niche then the other products will be introduced.
You’re chunking down information that the customer has to go through.
So instead of throwing everything at them at the same time instead you say start with this.
This product will get you started and it will get you on your journey and then we start to introduce the rest of the products.
Harms: The other way to make things simpler and reduce overwhelm is by simplifying the information.
Think about providing an entry-level starting point in regards to information when solving some of these problems.
Because yes we’ve got a big headline which is a problem, but they may not be aware of the complexities of that or even be in a place to understand the complexities of that and I’m an example of that.
A great book called Thinking fast thinking slow is, that’s a great example of an entry-level book.
The actual contents of that book and the subject is a way more complicated and it’s been written, expanding on for decades and it’s complex.
It has the experiments, outcomes of the experiments. This book would feature early on as an entry point of information for a customer.
If they love what they read and they want to explore this deeper than they can move onto the more complex item.
Remember the concept that we’re talking about here is easing somebody in and the way we described it is answering sub problems that people have, which fall under the banner of the main big problem and that big problem will have smaller questions.
We help answer the question at different stages, so it’s simpler for them to absorb and simpler for them to take action on, simpler for them to solve a problem quickly and say right now I’ve got a new problem which needs solving, great the next item on your value ladder can help solve that problem.
This is easing them into the value ladder.
That’s a nice way to allow them to purchase more but also get better results, because the end products of that two-volume mega book it’s just not going to do it.
It’s not going to provide any meaning or context or even be understandable, digestible to most of the customers.
Kyle: From a practical action point of view is there any way you can look at what a competitor is doing and create a much simpler version?
A way to make it more appealing to a large amount of people and to ease them into that market.
So focusing on people that your competitors may not even be thinking of yet.
Harms: The fact that we are using a value ladder is already putting you at an advantage because most businesses and even friends you know who started a business or got a new idea they’ve just got this one product and it’s their premium product.
Now that means it sits within the service sector typically it’s a service but it could be a product which is at the higher price end with a physical item.
Not the entry-level so the fact that you have a value ladder or you’re exploring this gives you a massive leg up on the competitors.
Because most don’t have it, most will have the e-book, the one-off product and most will have a service they won’t have this step up in between.
So by doing this, this form of competitor analysis and saying how can I do it simpler?
How can I provide an entry-level point that sets you apart just by doing that one principle.
Kyle: Instead of thinking about the individual products and services, which is where most people focus, think about how these individual products and services are connected?
What’s a pathway between these different units of value that we’re giving the market?
Very few businesses think like this they’re thinking about one product at a time.
Harms: If we look at this as if we’re looking down on the surface of this business and looking at the value ladder and all the competitors, we can start to link some of the competitors value ladders in terms of the journey and what you’ll often find is the following.
They provide the products i.e. they’ve got 10,000 e-books that get sold every month, but they have nothing after that.
Or they’ve got a subscription service, but they’ve got no way to get people to learn about the subscription service, i.e. the e-books missing.
This is the most common one as they have the service here and they get hundreds and hundreds of customers, but they’ve got no e-book.
They’ve got no course introducing people, they’ve got no membership site, the lower entry point to their premium service.
That’s a real shame because there’s lots of customers still who have a problem that is not solved, and that’s a big gap and a big opportunity and all you have to do is just simplify.
Simplify the fact that somebody has a service but they don’t have a subscription or product.
Just simplify the process and allow more people to enter and in a weird way you’d be doing your competition a favour as well because you’ll be introducing them to them as a natural benefit.
But that’s okay because they would have bought into you and trusted you and that is a good thing I guess to do for the market to start introducing value ladders.
Harms: The third way in which you can better serve the market, better solve the problem is make whatever you’re offering more engaging.
Engaging can mean lots of different things.
Make it more engaging, make it more fun, make it enjoyable.
We’re not talking about making a fool of yourself, we’re not asking you to put yourself in an embarrassing position just to get clicks or attention, or the perceived element of enjoyment.
It is also not about making it falsely funny or wacky.
Of course this is going to depend on your personality, you may naturally be a hilarious person, in which case you’re not deviating from something that you’re already comfortable with.
So that’s fine.
But how do we want to do it instead?
Kyle: Instead, one really solid way to make something gauging is to add community.
The basic idea of engagement is we want to build mechanisms into our products, our subscriptions, our services which make the process of getting from A to B of solving the problem and getting to an end result.
It makes it more likely the customers are going to actually complete that journey.
That’s what we mean by engaging here.
It’s going through the process of completing, reading the ebook, going through the course or using the product they’ve purchased.
That’s engagement and adherence, so community is one of the quickest ways to do this; it’s especially powerful online.
We can build communities into our products, I’m talking about a Facebook group, a slack group, it could be a forum.
What community means is you’re getting all the people interested in this topic.
This is your market, you’re bringing them into one place and you let them chat to each other, you’re letting them have discussions, share tips, reviews, et cetera. It means a couple of things in terms of adherents in terms of engagement, the first one is accountability.
Let’s say you’ve written an e-book which tells people how to get started with beekeeping, for example, if you also add a community people can go to the community and say this is what I’m going to do.
A community is a good place for public accountability for finding your tribe and for getting support and positive feedback and positive peer pressure from the other people in the group. Which makes it more likely that you’re going to follow through from A to B.
The second thing is it communities allow you to break through roadblocks.
Everybody on the journey from A to B trying to solve their problem they’re going to hit different difficulties and their difficulties are going to depend on those personal situations. It’s very hard for you as a business owner to account for all of these in your products or services and your subscriptions.
However, if the customers have a place where they can go, they can ask a community of 40,000, 50,000 other people who have taken this journey with you then the community is going to be able to help them get through those roadblocks.
It means engagement and importantly this is engagement with your product with your service with the process that you are giving people, but it doesn’t rely on you to be constantly engaging people.
Instead, you are outsourcing engagement to a community of people to a tribe.
Harms: Where this typically can play out in your value ladder is within the subscription phase.
You can charge whether it’s paid or whether it’s free and they need an account or they need to be in a Facebook group which allows, I need to join this can you please allow me into the Facebook group, so it’s a private closed community.
Anything like that sits really nicely here in subscription.
If you think about the process so far we spoke about making things easier and also making things simpler.
Now easier and simpler very much fall into a great place to leverage the product opportunities. So if there’s a gap in the product area on your value ladder and there’s a gap here, think about how can I make things easier and how can I make things simpler, less overwhelming for the customer?
When we are talking about making it more engaging now we’re talking about naturally subscriptions.
If you find gaps in the subscription part when you do your competitor research think subscription just naturally.
Again these have overlapped but think subscription.
Now what about service?
Where can we best leverage this and introduce the service into the market?
This falls into the final way in which we can better serve the market, which is to be faster, quicker, which is to provide a result and a solution for the problem now.
Because what you may find is with competitors that they’re occupying phase one or phase two of the value ladder, the product and subscription, but when you’re having a look at the competitors nobody is helping the end customer get the result now.
As we know there’s a lot of people out there who like convenience, they want the result and they’re more than happy to pay for that result.
But your competitors may not be doing this.
They may have all the books in the world, but they may be missing a critical point in the value ladder, which is the service, or having a team of people who help you do that by providing the service.
Now that can also play out in the online world as well in many different niche categories.
When I say physical, it could mean literally you go to someone’s house and create and build a chicken coop that could be an example, but that can also be done via many digital mechanisms. You could provide services online.
Kyle: London muscle is a fitness niche about workouts, etcetera so their main product is a PDF e-book, which is expensive, I think about £50.
It is full of workouts and nutrition advice; the subscription is meal plans.
They team you up with a nutritionist, they also do a subscription product, which is protein powder and then at the end service they have training.
That can be online training or one-on-one in one of their actual gyms, so that’s an example of a company that has really nailed it down.
They have a product, subscription and the service. The service is going to be the most expensive, obviously, but it gets you to your end result faster because maybe you’ve already got the PDF, maybe you’ve already got their protein powder subscription but you’re not getting the results you want.
So that’s where this faster service comes into play.
It’s for the people who have the money and they’re impatient and want to get that result right now and that’s what you can do in your market as well.
If there are lots of people providing products and people providing some form of subscription or community, but nobody is saying okay, I know you’re ready, I know you want this, I’m going to guide you through.
I’m going to get you to that result now and then that opens up another area of the market that you can move it to where your competitors are not.
Harms: The reality is competitors won’t have this in place and when people come to them and say, hey, do you do this as a service, they may say yes sort of and they may be doing it ad hoc or becoming overwhelmed with that type of service they’re providing because they hadn’t planned for this within the value ladder.
There was no thought of I can provide this as a service.
The demand is going to be there as a service and the demand will be there as a service if you ease people in entry, middle part of the journey to the end part of the journey.
So just bear that in mind when producing your value ladder.
Don’t be too concerned the focus is not on what the competition provides; it’s identifying the gaps.
The reality is if one or two competitors provide the service there is plenty of room for more service providers.
People haven’t entered the market for various reasons or simply they’re just not aware of this value ladder, they don’t know how to escalate the customer through the value.
Kyle: If you are providing this faster service there are two basic ways to do it.
One is going to be consultation, coaching and mentoring.
If you are a personal trainer that’s what you’re doing, you’re giving people advice, making them accountable, guiding them through the journey.
You can’t ultimately do it for them though which is the second way that we can provide a very fast service, which is done for you.
Where we literally come in we take up the process and we handover the finished result, we hand over the finished product.
Obviously with something like weight loss we can’t do that.
We can’t just make somebody lose weight.
It needs to be a process when you’re working with the client with the customer, so depending on what your particular niche is and what problem you’re solving, you need to think whether this is a done for you service as in 100% hands off and you use the business to do everything for the client.
If so, that’s going to cost quite a lot of money or is it more of an ongoing consultation and mentoring with them to guide them through the process of solving their problems.
These are the two-basic way.
Harms: Now let’s talk about actually constructing your value ladder.
You’ve got all of this laid out, you’ve got the competitor analysis, you’ve got it on sticky notes, you’ve started to categorise things, you’ve started to think about can I provide things easier?
Can I provide things simpler without overwhelm?
Can I be more engaging?
Or help them get the result faster?
Again all of these fall into the value ladder product, subscription, and service.
When analysing the market you may find some real obvious gaps, some natural fits.
You may find there are lots of e-books on the topic but no video, great that helps you enter the market immediately.
You may find that there’s lots of people providing the done for you service, a premium product but nobody providing the do it yourself version of the e-book, the video course, the subscription element so that may be an opportunity.
So sometimes there are going to be these wide-open gaps which you identify and by going through the process within this particular topic that we’re talking about there will be gaps.
Just simply by following this process you’ve already identified niches that work. Now we’re just identifying how best to enter that gap.
How best to serve the marketplace better, rather than just copying what the competitors are doing, that’s not the purpose here.
We want you to stand up for yourself and the best way to do that when starting is easier, less overwhelming, more engaging and faster.
So that’s the critical way.
Kyle: Now we want to quickly guide you through an exercise which is the capstone.
It will help you come out of this week with a single piece of paper which basically has your business plan on it.
Business plans are much thicker but they tend to be less useful than what you’re actually going to have, which is a single piece of paper.
We started by defining what the market is. We then agreed we’re going to focus on solving our markets problem, we’re not solving our problems we’re solving their problems.
Now what we’re going to do is we are going to at the top of that bit of paper, write down who the market is and what their problem is.
At the top we’re going to write, I help blank to blank and the first blank is going to be I help urban 22,35-year-old environmentalists.
Let’s say that’s our market.
To raise their own backyard chickens for the purpose of eggs, that would be the problem statement. Their problem is I want to raise backyard chickens and get eggs I do not know how to. How do I raise chickens in my backyard in the city?
Then underneath that we are going to draw our basic value ladder and this is going to become the how, how are we going to help the who to do what.
How are we going to help these urban environmentally conscious 20 to 35-year-olds raise backyard chickens in their garden in order to get eggs?
The how is going to be our value ladder, so we recommend you start with the classic value ladder.
That’s going to be in your product, you’re going to have an e-book, a course and you’re going to have some kind of core product.
It might be a physical product or it might be a more expensive digital product. Then we’re going to have a subscription, then a service that is just five elements we’re going to be putting together.
Depending on your niche it’s going to differ.
Maybe you’ll have a different mix of products, subscriptions and services, but this is a nice place to start with right now, just with the five.
Each of these we’ve already gone through and had a look at what the competitors are doing. This is where we can stick all our Post-it notes onto our value ladder that you’re drawing out now, maybe you’re already drawn it that’s fine.
We’re going to stick our Post-it notes with the competitor’s products that’s e-books, courses, and physical products, we’re going to stick the Post-it notes on the different areas of our value ladder.
We’re going to do the same thing with subscriptions and services that’s going to tell us whether there are any giant gaps in the market that we can automatically go into, that’s fine.
But then for each of these value forms so the e-book, course, product, subscription, and service we’re going to run through those four areas.
The easier, simpler, more engagement and faster.
Then your answers to each of these and this is going to be a process it’s going to take a while.
Let’s say we’re running that process on e-book we will run through easier, simpler, more engaging, faster based on our competitive research.
We answer those four questions and the answers that we come up with is our response, our response to how we solve the problems of the people in this niche.
This is how we carve out our particular place within the niche.
It’s through all of this work that we’ve been doing, we’ve been giving you a lot of tools, but it’s going to be this final exercise going through and for each of these five e-book, course, product, subscription and service, answering those four questions based on what’s already available and coming up with a better solution.
If you go through and do this with all five units of value you have the basis of an online business, a strong online business.
Harms: Once you’ve come through this the answers will help you carve out your place in your niche.
That’s the key here and that’s where your creativity can come in, but what we didn’t what you to do is fall into the trap of having all this creativity, but no direction to put that creativity in.
That becomes very dangerous and expensive, it becomes very time-consuming, so if you’ve got all the creativity amazing, but we’ve given you a framework to express that creativity within.
That way you’re going to get the results because we’re talking about a business here.
In summary number one is the focus.
The focus here is solving the market’s problem.
We apply our creativity into the area.
Number two is we provided a starting point.
What is already being offered by competitors is the starting point and then how do we improve that? That is number three.
A framework to improve and which to create and expand our product, our idea, our e-book, etcetera into.
By putting things into the three value areas which we defined as product, services and subscriptions into this value ladder here.
That’s important.
Then we’ve added the structure that helps customers flow in between that.
Then finally we’ve given you a method to refine this, so for each element we ask how can you make it easier, simpler, more engaging and faster for your market to reach the end result?
That’s the framework now you can go creative and have so much fun with this. That’s great.
Hopefully this framework has helped you get to your end result in the way you’re going to help your customer and the marketplace get to their end result.
By doing this you’re going to create a business that also helps you get to your end result which is I want the successes, I want the better income and finances.
I want the enjoyment of having a business and operating.
All those cool things that you may be entering the business for or have the idea of entering the business for you can achieve those, but by solving the markets problem first and it’s an exciting prospect.
There’s lots of work to do but once you’ve got this built and especially if you can get as much of this as online as possible it’s going to be incredible for you.
Kyle: So yes, this is where you turn on your creative juices as an entrepreneur, you start to think about what you can be creating but importantly we have a framework to slot these individual pieces into.
You don’t just have a hodgepodge of different products and services you instead have a business system.
If you get that piece of paper filled in for your niche that is potentially a business plan for the next year, couple of years and it doesn’t need to be a thick wad of paper with lots of Excel charts.
The actual thought of the structure of your business can fill one piece of paper and it will look a lot like that.
Harms: It is extremely difficult to do but the rewards are amazing like Kyle said a business plan for years and that allows you to focus for years which allows you to make money for years and have a sustainable business which is fantastic.
In conclusion
Hopefully now you are confident that building an online business is not a get rich quick scheme. Instead it is no different to a conventional business. Your online businesses success relies on the very same principles that apply to any business – old, new, online, offline or a hybrid of both. These principles you learned within this super blog.
Including understanding what a business is, creating something of value through problem solving, identifying your niche, verifying the market, different forms of value, creating a value ladder, four ways to beat the competition and enter a market and a few other principles in between.
What does this knowledge now allow you to? Well start as many businesses as possible from idea stage. But instead of committing loads of money and time at each and every one – you can now tactfully put each idea through what you have learned. This will increase the probability of that business being a success. But more importantly (in our humble opinion) you save money and time. Life is too short to pursue one failure after another. Let’s stack the odds in your favour by doing the foundations right.
A final note before we part ways, what you have now learned is the first and most important element of our BATON marketing system. This is an acronym to highlight the components all businesses must nail in order. Business, Audience, Tribe, Offer & Network. By now understanding and implementing Business – you will naturally be ready to build an Audience. The first step to getting people to become aware of your business idea, product, service or subscription. Until then, let’s nail down your business idea.
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