By Ed McLaughlin with Wyn Lydecker
Before you start your business, ask yourself: Can you secure pre-orders from your target customers? A pre-order is an informal commitment from customers to purchase your product. Pre-orders will validate your business idea before you launch. If you cannot secure pre-orders, can you partner with someone who can?
I’ll admit that my years of developing solid relationships in corporate real estate put me well ahead of the game for pre-orders. While I knew I couldn’t take my employer’s best customers away from them, I did have the exposure and knowledge to attract new ones. And in a few cases, I had close relationships with long-standing customers with whom I could try out my idea informally. It turned out that this would be the way I would line up my first pre-orders, which gave me the confidence to leave my job and launch my business. Looking back, securing pre-orders was one of the key factors that led to my business, USI, realizing a profit in its fourth month of operation.
Securing pre-orders is the single most important point of validation and vitality for a new business. If you can secure enough pre-orders, you can maximize control and minimize the need for equity funding.
Copyright © 2014 by Ed McLaughlin All rights reserved.