Page 39 - The Bootstrapper Bible

ChangeThis it reaches a consumer. Starbucks, for example, starts with a coffee bean in Colombia that is so cheap itʼs almost free. Then they roast it and transport it and brand it and make it convenient and brew it and sell it. At each step along the way, Starbucks is adding value—making the bean worth more to its ultimate consumer. The more value you add, the more money you make. When portable telephones got hot…it was easy for Stereo Advantage’s owner to talk to Sony and other suppliers and get some in the stores quickly. When looking at a business model and the value chain it creates, I like to start from the last step: 1. Whoʼs going to buy your product or service (called product for brevity from here on in)? 2. How much are they going to pay for it? 3. Where will they find it? 4. Whatʼs the cost of making one sale? These four questions go to the critical issue of distribution and sales. The Pet Rock was prob- ably the worst thing that ever happened to bootstrappers, because it led people to believe that they could turn a neat idea into nationwide distribution without too much trouble. Nothing could be further from the truth. Getting nationwide retail distribution without money to spend on TV ads, a sales force or rep firm, and massive inventory investment is essentially impossible. | iss. 6.01 | i | U | X | + | h 39/103 f