So you have a unique idea that you think can transform your business. You found someone that can bring your idea to life. How do you know if you should proceed or pull back?
In this episode of the eCommerce Lifestyle Podcast, Anton shares what you should do to make your idea into a reality.
As always, if you have any questions and suggestions, please feel free to leave a comment below. Don’t forget to share this with someone who needs to hear it.
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What's up, everybody? Anton Kraly here from ecommercelifestyle.com and welcome back to the podcast. If you're new, this show comes out twice a week, every single Monday and Thursday morning, with a brand new episode that is designed to help e-commerce store owners to increase their revenue, automate their operations and become the authority in their niche. Specifically, what we mostly talk about is how to build a better lifestyle business. So if you're not subscribed yet, go to your phone or whatever podcast player you use, search for eCommerce Lifestyle, click subscribe, and you will get notified every time a brand new episode goes live.
So today's episode is actually building on what we talked about on Monday. If you remember, and you listened, that episode was called, You're Probably Wrong, and in that episode ... Yeah, funny name I know, and clickbait, and well, it's true, I'm usually wrong, so I'm assuming we all are, but in that episode I spoke about how as somebody that's not technical, as somebody that's not a coder, that doesn't really understand the back ends of the systems we use, very often I'll have ideas for different projects that are unique, meaning I don't see my competitors using them and I can't find a simple solution like an app in the Shopify App Store.
And because of that I'll write it off as either impossible or something that just can't be done. And like I mentioned in that episode, which by the way, you should listen to, basically every time I've done that I've been wrong. Everything I've ever thought of can be done or could be done, and a lot of the projects we've ended up either working with our own developer on or outsourcing it to a freelance developer and having a lot of these ideas come to life. So I basically shared my process for making that happen, again, last episode.
But today what I want to talk about is what comes next, and kind of the risk versus reward. Because I definitely understand that a lot of listeners out there, maybe you, are running an e-commerce store. Maybe you're doing it as a solopreneur, so everything on you, maybe you plus one VA, maybe you have a small team. But either way, a lot of times you might have these ideas, you might go out there and get quotes for them, and you might find some pretty crazy or out there responses or applicants. You might find yourself in a situation where you're looking at these offers presented to you and you're like, "Well, I really like this idea, but do I like it that much? Is it going to change my business enough to make it worth it?"
And by the way, at this point, I'm assuming you've already had the idea, created a document describing exactly what it is and how it should work, posted that job online, talked to your circle or network about it, and then started to get these proposals. So I'll tell you a couple of ways to handle this, again, in my opinion, and ways I've handled it in the past. Now, if you're newer and you're maybe part of different online communities, especially during COVID, I doubt you're going to many local meetups if you're in the States, at least, and maybe somebody says, "Oh, you know what? That's an awesome idea. I actually am technical. I actually do know how to build that and I would love to do it for some kind of partnership arrangement or some type of equity or some type of revenue share."
Let's just say it was some type of upsell thing you wanted to create, something unique that nobody's doing yet, and the person says to you, "Yeah, I can do that. Let's work out a deal where maybe I get 10% of net profit for the next 36 months, or maybe I get 5% of your business or whatever it may be." And what I'll tell you, as maybe a new business owner, a lot of times when you're short on cash and not heavy on sales, revenue and profit, that might sound great because you're like, "Oh, 5% of my business? Yeah. And I can have this game-changing thing? Of course, let's do it." And then a year later your business blows up. You're doing two to 5 million a year in sales and you're like, "What did I do?"
So I've seen a lot of people make that mistake, and I don't want you to do that. So just know, first of all, no matter what your idea is, no matter how little technical experience you have, if somebody presents the offer to you as, "Yes, I will do this, but I either want equity in your business or a revenue share," my advice is do not do that. The revenue, the equity, is worth holding on to for yourself. Because as your business grows, you don't want to basically grossly overpay for a project because you made one of these deals while your business was still relatively small. Again, I've seen people make this mistake. I would highly recommend you do not do that.
One reason is because again, your business will grow and you can end up just grossly overpaying for a project, but also, these ideas that I spoke about in the last episode, in Monday's episode, these typically aren't things that come up once in the business lifetime. You might have one of these ideas a month. You might have a few of these ideas a year and you don't want to constantly be like, "Okay, I want to hire somebody. Now I have to give up more equity or I have to share the new increase of profits from idea two with the guy or girl or company that implemented idea one." This isn't like a one-off thing, so keep that in mind too when it comes to business partnerships, equity, any type of rev share. Again, in my opinion, it's almost never, ever worth it.
Now, the next situation you might find yourself in is, again, you listened to Monday's episode, you had your idea, you created a meeting document, you posted the job online and you did get applicants, but the applicants were well outside of your price range. So maybe you were thinking ... You heard my example of the project we got completed for about $350, and maybe you were thinking like, "Wow, maybe I'll get a quote for $350." And maybe you got quotes for 3000, 5000 and 6000, so above what you were willing to spend to basically risk to see if this will pay off.
Because that's another important thing. While these ideas can be game-changers, they're not all going to work. So there definitely is risk with laying out cash. Again, when they pay off, they pay off big, but it's not like everyone is going to be a home run from day one and you're a thousand X-ing your money right away. So keep that in mind too. But let's just say that situation you're in now. You created that meeting doc, you shared it online, you have applicants, but they're well outside of your price range. What do you do next?
Now, obviously the first thing you're going to want to do is just try to negotiate. But with negotiations, let's just say your budget was 500 and the quote was 5000, you're not going to negotiate 4500 off and still get what you were expecting. So know that. But there is this, I guess, thought process or this term with technology, and really for even info businesses and even like website design, that is MVP, and that stands for minimum viable product. If you find yourself, again, you made a great job description, you have a good sample size of applicants and they're all well outside of what you wanted to spend, what you want to do, before you even counter anybody, is think about what does the MVP of what you want done look like? The minimum viable product.
What is the bare bones version of it? What can you strip out that might drastically reduce the price? And I'll circle back to an example that I gave you in Monday's episode where I was talking about that basically product customizer we had built, and it could be two different parts of the item, and you can change the color for each of them and it would change the image. And then you can add the item to the cart and all of the customizations would be added from the visual representation. And that we did get done for $350. But let's just say all the quotes then were for 3000 and that wasn't my budget, well then what you can start doing is thinking, "Well, what can I basically strip away for now that might drastically reduce the price?"
So maybe one thing you think is, "I still want people to have this visual representation of it, so let's try to keep that, but let's see if we remove the functionality of when the shopper clicks add to cart, it's automatically added in this color combination." Because maybe that's the thing that takes 90 of a hundred of the programmer's hours of time, and maybe that gets the price down to where you can implement it in your budget. Again, not the full completed way you want, but you can get it out there, you can get it shipped, meaning published online, you can start seeing if it affects your sales and if it's working great, then take the profit, maybe reinvest into phase two of that project.
But basically any idea that I have, and I'm sure that you have, there are always ways that we can kind of pull back and strip them down, again, going for that MVP approach, that minimum viable product approach. And again, when it comes to equity, revenue share, a business partnership, just to have one of these ideas implemented, in my opinion, the reward that you can get from having somebody do it is not worth the risk of giving up X percentage of your business or X percentage of net profit. So in my opinion, don't do that.
Hope you found this episode helpful. I just wanted to build on what we talked about Monday a little bit because I was thinking about it and I didn't want to leave anybody hanging. I definitely didn't want to put anybody in a bad position where you contact me in a year and you're like, "Yeah, Anton, I paid some developer, you know, whatever, $10,000 and gave him 5% of my business. Why did I do that?" So keep this in mind, use this in your toolbox of negotiating skills and business building skills.
And as always guys, if you're listening to the podcast and you are not subscribed yet, be sure to go to your favorite podcast player, search for eCommerce Lifestyle, click subscribe. While you're there, do me a favor and leave a review if you get value from this podcast. And if you're listening and you are brand new, you don't even have a store yet, be sure to go to dropshipwebinar.com, where I have a free training on how you can build a highly profitable semi-automated store. Again, that's dropshipwebinar.com. I will link it up in the description.
So that's it. Thank you. I appreciate you. And I will talk to you on Monday and the next episode of the eCommerce Lifestyle podcast. See you, everybody.