Selling on Amazon is a great way of starting, and even building, a business. However, if you want to start and build a six- or seven-figure business more effectively, you must go through stages.
Ryan Daniel Moran is the founder of Capitalism.com, Freedom Fast Lane and the author of an upcoming book titled 12 Months to $1 Million.
He has also helped over 300 entrepreneurs launch and grow seven-figure businesses on places like Amazon by encouraging them to ask and answer three simple questions that guide them through these stages.
Who Is The Person Behind The Purchase?
New entrepreneurs sometimes target their product or service at a broad market or anyone who will buy from them. Instead of opening up your store or investing in a product, Moran recommends considering your target market and identifying people within that market.
"If you go into business and you are just absolutely committed to selling CrossFit knee sleeves, you're going to have a hard time. You could be the number one knee sleeve seller in history, and you are still going to run into a barrier because there are only so many people buying knee sleeves," he says.
Our would-be entrepreneur should consider their target market as the sport of CrossFit. Next, according to Ryan, they should identify people who "are insanely passionate about this sport." That means speaking to them and figuring out their interests, likes, and dislikes.
Have You Validated Your Idea Through Sales?
A friend or family member might say your idea for selling custom knee sleeves on Amazon is a great idea and you'll earn a lot of money. And a prospect could claim they're interested in your product too. Neither is good enough.
The entrepreneur can consider their idea validated only after a customer hands over their payment details and buys the product or service.
"Most people assume that … if they get enough people to get excited about something, that is actually going to move the needle," Moran says. "It doesn't. Money is what ultimately determines whether or not your business is going to be successful."
Product validation isn't as difficult as it sounds either. Thanks to crowdfunding services like Kickstarter and Indiegogo, entrepreneurs can validate a product idea without spending much time or money creating it.
Can You Name Three To Five Products The Person Already Buys?
Our entrepreneur who wants to sell to CrossFitters should identify three to five products prospects already buy before creating or investing in their product.
These might include weightlifting shoes, a weightlifting belt, protein powder, wrist straps and, potentially, kneesleeves. The entrepreneur should start with the first product rather than the fourth or fifth. In this case, a new CrossFitter will probably buy weightlifting shoes or a wrist strap before kneesleeves.
"Most people will obsess over what that first product is going to be. I instead like to look at a bigger landscape," Moran says.
"I look at that entrepreneur, and I try to get them to...look at the total landscape of what that person buys, and then look for the first product that that person on that journey buys."
When I asked Moran for another example of how someone could scale a business faster, he cited the example of an entrepreneur who wants to sell on Amazon to yoga practitioners.
"If I'm selling to [new yoga practitioners], I know that they buy yoga mats, yoga blocks, yoga towels, yoga clothes, and tea," he says. "So a yoga mat is probably going to be the first product that they buy on that journey, and then they're going to buy a yoga block, and then they might buy yoga clothes, and on and on."
Based on this research, the entrepreneur could start by selling yoga matts on Amazon before moving onto yoga blocks or towels. Being effective or productive is often about asking the right questions. Yes, Moran's process for creating a profitable business involves more work up front, but answering his questions will help you reap more dividends than starting a business and hoping for the best.
