Hello SOTGC community,
My last post in this series covered the 1st stage of a woman’s e-ship journey: Opportunity Discovery. We are ready to talk about Stage 2: Commercialization. For this discussion I turn again to our expert Patti Fletcher.
Stage 1: Opportunity Discovery (I’ve got a great idea!)
Stage 2: Commercialization (I’m validating and pivoting my idea)
Stage 3: Startup (my idea is now ready for Startup)
Stage 4: Growth (startup going well. I’m ready to grow my business)
Stage 5: Exit (time to exit this business and start my next big thing)
Heather Boggini: Patti, welcome back for Part 2 of our series on a woman’s e-ship journey. Today, we are talking about Commercialization – the second stage of the journey.
The best place for us to start is with a simple definition. What is happening to the entrepreneur in this stage? And what is happening to the business?
Patti Fletcher: Commercialization is the stage where the entrepreneur learns if she can make a business around her idea. There are several activities taking place in this phase. The entrepreneur is learning:
- about the problem she is solving in the marketplace
- how she would earn money from solving that problem
- how she should create her product in a profitable manner
- how she should structure her business and business model to ensure short- and long-term fiscal results and minimize operational and legal risks
- how she will get her product into the hands of her customer and make a profit doing so
And she will do a lot of due diligence on her competitors and any potential partners she needs to complete her offering.
Boggini: What is an example of commercialization? Something we can all relate to.
Fletcher: Whenever I have a new product idea, I do my research on Google, find reports, look at buying trends related to the problem I am solving and the buying patterns of the people I am solving it for.
Regarding the competitive landscape and competitors, I look at:
- how other companies who offer a similar product or service deliver value with their product (in other words, how their product solves a problem)
- how long the other companies have been around, the loyalty of their customers (do the customers come back to do business again and again)
- how much they sell their product for
- how a customer buys the product
- what the customer experience is and is not
I also try to understand industry margins to establish a best practice against industry benchmarks. I want to understand how long it takes to create and ship the product, how much customization might be needed, what scale (a one-to-many approach is ideal) I could create.
When I am creating something new, something that doesn’t yet exist, I still follow the same process as above. Although a similar product may not exist or the problem I am solving is not yet being solved, I focus on my customer and how they are currently solving that problem.
You will always have competition; your competition is the word “no” from your target customers, partners, distributors. Use the commercialization phase to learn everything about these folks, about anyone who is critical to your business’ success so that you can create a well-formulated plan in the next phases to turn “no” into “yes” a million times over.
Boggini: What are the highlights an entrepreneur can look forward to in this stage? And what are common problems experienced here?
Fletcher: For some entrepreneurs it is a fun extension of Phase 1: Opportunity Discovery because it stills feels like an experiment. For others, it can feel like a hard dose of reality raining on her parade.
Commercialization will look different in the details of your market and customers (external to your business) and of your own business (internal to your business) depending on the industry.
For example, if you are in life sciences, your commercialization stage will be very long and include several, multi-stage regulatory-required trials and participants. You will be working with insurance and government agencies as you progress.
If you are not in a highly regulated industry, like tech, consumer products, or services, you have a fairly straight forward set of tools and steps. Many entrepreneurs adopt an approach called Minimal Value Product (MVP) to test their offering in the market as they learn about how the market will respond and their own ability to perfect and create/manufacture the product idea. Aubrey Pagano, CEO of Bow & Drape, used MVP as a way to create iterations of her final product as she tested manufacturing with partners in her supply chain and designs, price, and value with her target market. This is a brilliant way to be paid to market test.
Boggini: And the next stage is Startup – Stage 3. When does a business transition from Commercialization to Startup? What is happening?
Fletcher: The desired outcome of a high-growth entrepreneur is often to be able to seek external funding to grow the business. This happens in Stage 3.
The entrepreneur needs to know her business opportunity, her customer, how she will execute better than the competition, deliver value better than the competition, and have a roadmap of what’s next. She will know that she is ready for Stage 3 when she can confidently say that she has left no stone unturned in her feasibility assessment of her ability to develop a profitable and long-term competitive business around her product.
Boggini: Any final words of advice for entrepreneurs out there?
Fletcher: Every new idea that will cost you money to create and/or market should include a market analysis and feasibility study.
Boggini: Thank you Patti, and I look forward to your next interview about Stage 3: Startup.
If this post resonates with you, please Tweet, Pin, or share on LinkedIn or Facebook and help spread the message. Reach out to Heather Boggini at @hsboggini, to Patti Fletcher at @pkfletcher, and to their blogs at PSDNetwork, LLC.
Photo credit: www.rpxgroup.com