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How David Favor validated his business

I’m a HUGE fan of validating businesses BEFORE going full-time with them.

This is an 18 minute interview with my friend David Favor who now owns a multi-million dollar company selling superfood stuff.  Now his company is a well-oiled machine, but it wasn’t always like that.  At first he was scooping product into little plastic baggies (kinda like a drug dealer):

 

An important lesson to be learned from this:

“When you’re blind-sided by the success of something you’re doing….perhaps there’s a business in it.”

How to validate a taco stand

What if you wanted to open a Taco stand? 

Like a taco-truck on the side of the road.  
 
How would you do it?
 
A typical “wantrepreneur” would do the following:
  • Start researching licenses and city permits.  
  • Scout out possible lease locations and speak with all the property owners. 
  • Start Googling taco recipes.
  • Take out a loan (or borrow money) to buy a truck or cart.
  • Spend money and time to get the truck food-certified by the city.  
  • Start looking for employees to help with making the tacos.
  • And…… 
  • A……
  • Bunch……..
  • Of……. 
  • Other……
  • Boring……
  • Stuff……. 
 
Soooo after all that work, thousands of dollars, and months of time…. where are we?NO WHERE!
 
NOT ONE FUCKING TACO HAS BEEN SOLD!!
 
So let’s say $10,000 later, and 6 months down the line….we’ve got this magical taco truck ready.  
 
We excitedly go out to our pre-researched location and turn on the “Open for Business” sign!  
 
::CRICKETS CHIRPING::
::CRICKETS CHIRPING::
::CRICKETS CHIRPING::
::CRICKETS CHIRPING::
::CRICKETS CHIRPING::
 
Well shit.  That didn’t work out so well.  We were open all day & night, we spent hundreds of dollars on fresh meat, avocados, tortillas…..and we only sold 10 tacos the whole night.  
 
“But oh well, it was just the first night…..we’ll get more business soon!” 
 
The next night….
And the next night….
Aaaand the next night……
And our taco truck is still bleeding money.  
 
And since we spent all our money and all our time on this…..we still desperately cling onto this shitty business.  
 
All because WE DIDN’T FIRST VALIDATE THE IDEA.  
 
Bad. Bad. Bad. Bad. Bad. Bad. 
 
 
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Ok, now let’s take a break and re-do this whole taco-truck idea as if we knew how to validate ideas before jumping in:  
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The absolute FIRST THING TO DO is see if people even WANT your tacos.  
 
Now there’s hundreds of things that could make a successful food business……so instead let’s focus on something the late & great Gary Halbert said:
 
Gary Halbert said (I’m paraphrasing here):
 
“If you opened a hot dog stand…..and I opened a hot dog stand……I can beat the PANTS off you.
It doesn’t matter if you have better hot dog buns, or fresher meat, or more condiments….. 
My secret would be setting up my hot dog stand around a STARVING CROWD.”  
 
 

Using this theory, let’s do a taco-stand validation in one day:

 
FIRST STEP.) Let’s make a bunch of tacos at home (maybe 25-50 tacos) and wrap them in foil.  
 
SECOND STEP.) Let’s take those tacos to some location we think there is a starving crowd, and stack them in little pyramid on a cheap plastic table.
THIRD STEP.) Let’s use some markers and poster-board to make a big-ass sign that says:
 
“HOT BEEF TACOS – $2 each”
FOURTH STEP.) See if people actually buy all your tacos. 
That’s it.  Kind of like this:
DO YOU REALIZE WHAT WE’VE DONE HERE ALEADY??
In one day, we’ve understood:
  • How easy or hard it was to make all those tacos.
  • How much time it took to make the tacos.
  • How much money it took.
  • If we even LIKED doing this work.
  • If our tacos were delicious, or shitty.  
  • A rough estimate of how much to charge for each taco.
  • If the location was good or bad.
  • …..and most importantly:
  • If people even WANTED our tacos from that location.
The next day, we can repeat the experiment, but try a different time, or location, or even an entirely different product…..and see if it works.  
 
And don’t give me shit about, “But Nevillleee…..what about city permits and stuff!!”
 
There’s many ways to get around this (such as setting up your stand on private property like a bar stoop or house lawn)……or even doing it WITHOUT permission.  If a cop actually tried to stop you (highly unlikely), you can just shut down the experiment and repeat elsewhere.  
 
(I asked cops in my bottled water experiment what they would do if they saw me selling water without a permit…..they said, “We don’t really care”) 
 
BE SCRAPPY.  
BE CREATIVE.  
USE LOOPHOLES.  
 
The point of this is to SEE IF PEOPLE WANT YOUR DAMN TACOS.  And if you do an experiment like this, you’ll learn SO MUCH.  
 
So if night-after-night your tacos sell out within 20 minutes…..You’ve proved that people love your tacos, love your location, and love your prices.  
 
…..you might actually have a damn good business on your hands!
 
However if no one buys, or the logistics of taco-making are just entirely too difficult (or boring) for you…..it might make sense to just SHOOT THIS IDEA IN THE HEAD AND KILL IT BEFORE IT SUCKS UP ALL YOUR TIME AND MONEY.  
 
………………and there you have it. We validated a taco stand! 
 
 
Sincerely, 
Mexican Neville

NEVINNEWYORK

–or you can LISTEN to this post-

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Written from Union Square in New York where Noah and I have rented a condo for a week
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I was speaking with a younger friend who’s taken a liking to New York recently.

….and we were discussing why New York churns out so many hustlers, deal-makers and driven people.

And it came down to:
Competition for resources.

You smash 10 million people into a tiny spit of land, and the competition for EVERYTHING naturally builds.

Here’s a real example:
A woman in Georgia sold her company for $7million.

“WOW!” said all her friends in Georgia…..“YOU”RE RICH!”

She moved to New York City and bought a condo which a person with $7,000,000 can afford (in the $1.5 – $2mil range)….and suddenly she felt poor.

She could look across the river, and see condos which only people with $100million in the bank could buy.

Then she could look a little to the left and see homes and penthouses that only billionaires could afford.

Whereas back in her neck of Georgia, she was the queen-of-the-world…..in NYC she was just a poor little fish.

That $7,000,000 payday seemed like a windfall in one place, and like a small paycheck in another.

All because of increased competition for resources.  

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This concept very much reminds me of THIS post:
http://www.nevblog.com/your-top-5-influences/
….and how you are most often a product of your environment.

 

 

 

Ryan Deiss ripping apart biz ideas

I got Ryan Deiss in a room and ask him the question (which people here voted for):

“If Ryan Deiss lost his $30,000,000/year business, what would he do to build his next $1,000,000 business?

  • Where would he start?
  • How would he find good business ideas?
  • How would he make money from what he knows?

Ryan had a pretty damn-good system in place where he can tell within about 3 minutes if a business idea (or skill) has a chance to succeed.

He THEN further drills-down (within another 3 minutes) into WHAT the person should sell in their industry:

  • Physical products?
  • Information products?
  • Services?
  • Consulting?

I originally thought he was going to re-hash what is taught in the SumoBusinessBlueprint, but to my surprise it was pretty different (yet equally as easy).

It was really damn cool to watch him tear apart business ideas as I named them …and we thought it’d be really damn cool if he ripped apart YOUR BUSINESS IDEAS!

So if you want Ryan to do his whole process on your business idea or skill, enter your info below.  We’re taking 4 full case studies….and maybe a few extra ones:

Click this link:
http://www.appsumo.com/what-do-i-sell/

 

-OR-

Just enter your info here:

Noah giving away free mini biz consult

Noah Kagan needs 4 case studies of existing businesses.

So if you fill out the form below you might get a free consult of your business (Noah will be determining where your customers ACTUALLY hang out, and how to reach them):

Too lazy to write more detail….other than we’re closing this form at around 8:30am on Thursday (6-12-2012) so you have a pretty decent chance of getting picked (since it will be up for no more than 12 hours)!

http://www.appsumo.com/where-are-my-customers/

Funky Munky

If you see any links or items on NevBlog that look all funky-munky or don’t work, lemme know.

I just switched over to WPengine as of last night, so it might take a few days to work out some little kinks & bugs.

Comment if you find anything weird!  (I’m already aware the top navigation has some broken links).

 

Thank you!
-Neville

 

P.S.  If you want free copywriting by me, enter this Kopywriting Kontest before June 10th!

kopywritingkourse.com/free-kopy.html

How to get out of a slump

Me and Noah talk about how to get out of slump:

I know what you’re thinking:

“Neville….what’s wrong with your hair??”

Well….at the beginning of the month my hair color was “bright blue …..but now faded into “i-don’t-know-what-the-hell-is-on-my-head” color.

Which hair color

I want you to vote what color my hair should become:

BLUE, GREEN, RED….or enter your own color suggestion:

Whatever color wins, I’m going to dye my hair that color!

One time before I turn 30 (Nov. 17th) I wanna make my hair a weird color.

I have no idea why.
I’ve just want to for a while.

In fact this is probably an all-around bad decision since I do a lot of video stuff….and I’ll be talking about a serious subject with dumb-ass looking green hair!

Keep in mind I’ve made my hair “blonde-ish” many times:
http://www.nevblog.com/the-blonde-hair/

….and not one person has EVVEERR told me, “Wow, that looks really good on you.”

But I’m still gonna do it.  Vote for what color you wanna see in the form above!

If you haven’t..

If you haven’t already signed up for this page ….it’s about to get really good. ESPECIALLY if you’re a wantrepreneur.

Wantrepreneur AppSumo Video

The SumoBusinessBlueprint LIVE EDITION is coming out on March 29th….and we made a pretty great autoresponder for it which starts tomorrow (March 22nd).

Signup to see it!