You have $2,000 and an idea. How do you use the money?
A big factor in your success is determined by where you allocate your resources. Being indie hackers means that most of the time those resources are very
limited, so a smart approach becomes even more important.
So imagine your current product is still an idea (to even out the terrain for everyone) and your ultimate goal, of course is to launch and make a business out of it.
How do you invest the money? What do yo do yourself vs delegating? How much do you put into validation, dev, design, marketing, ads, etc?
Share your experience! :)
For any business idea, I'd start by going through the four basics: problem aka market, solution aka product, distribution channels, and business model.
Let's assume I have the $2,000 for business expenses you gave me, but only one month of additional living expenses before I exhaust my runway and I have to get a job. One month is super short, so my thought process would be based entirely around speed.
Constraint #1: zero costs. If I've only got a month of runway, my biggest risk is running out of time. So I'd use that $2k to extend my runway another few weeks instead of wasting it on expenses like servers, ads, tools, etc. Thus my business would need to be free to start and run.
Constraint #2: proven problem, proven model. I'd pick a straightforward problem to solve and have a straightforward business model. I wouldn't innovate in either area. Innovation = doing something new = never done before = no proof that it works = high risk = lots of time necessary for validation. I don't have time, so I'd need a business model and problem that have already been validated by others. Of course the tradeoff here is I have to innovate on my solution, because you can't just solve a problem the same way everyone else is solving it and expect anyone to care. But I'd validate my solution by actually trying to sell it to people.
Constraint #3: no-code or low-code. Coding is my specialty, but it takes forever to code up a product, often many weeks or months, and I don't have that kind of time. The next scalable thing besides code is media, and that can be created in minutes, especially writing. So I'd probably create some kind of written content.
Constraint #4: high price point. I'd need to make about $5000 dollars in a month or two. You can't do that charging $5/month, because you'd need 1000 paying customers. That takes years. So I'd do something where I can charge $150 per customer. Then I'd only need 30 paying customers or so. The best B2C market that comes to mind where consumers are willing to pay that kind of money for content is education and courses, arguably conferences. For B2B it's all of the above plus reports, white papers, marketing and ad copy.
Constraint #5: sales-based distribution. Again, I don't have time to figure out how to reach thousands of people, and going through massive channels is a crapshoot. I might not fare well on HN or PH. But I definitely have time to reach a few hundred people manually, and there's no luck involved there, only brute force cold outreach. In addition, it's hard to convince people to shell out $150 through marketing and a landing page alone. You really need a sterling reputation, lots of testimonials, word-of-mouth recommendation from friends and colleagues, amazing marketing copy that resonates, etc. It takes time to build those things, time I wouldn't have. One-on-one sales calls and cold emails, however, take zero time to ramp up, and can be personalized to be even more persuasive.
Putting it all together, I'd probably do some sort of informative content that helps my customers make money.
For example, I could sit down for a few days and put together some amazing research on a niche topic that can help certain businesses grow, then use LinkedIn to ping people working at those businesses, start helpful conversations where I share what I've learned and know, and maybe set up a paid course or newsletter they can sign up for that only supports annual subscriptions.
@csallen, you spent $2000 on this domain.. on a project which got no direct revenue making possibilities (other than ads...) What was your plan for revenue, when you started IH?
The plan for IH from day #1 was ads. The current "adpocalypse" notwithstanding, ads are actually a pretty good source of revenue:
Of course, to get reliable ad sales going you generally need some traffic and/or buzz about your site. And there are some negatives to advertising. The big one for me was I didn't like the fact that the people I was providing value for (readers) weren't the people paying me (advertisers). It misaligns your incentives.
Great to see the constraints set and explained. No wonder infoproducts are popular launches. They are also pretty honest in that it leverages experience/expertise/research to a products that should save a lot of time for people. Though it's difficult to select which niche to create for if start from zero.
Great analysis. The pricing decision specially resonated with me, because I think sometimes we underestimate how long it takes to build a decent income by only charging around $5 per customer. Not only that. Some products besides being on the lower end in terms of price are on the higher end of required support which makes the road to profits even steeper.
Take 20 people who you think are potential users of your product out to lunch and hit them with The Mom Test. http://momtestbook.com/
When all you have is an idea, validating that idea is the most important thing you can do. If your idea is a bust, you'll probably know that after 5 of those 20 meetings. If you want to stretch your money further, make it a coffee and danish instead of a meal.
When I read "Take 20 people..." I thought you were going to suggest a pyramid scheme where you ask 20 to "invest" in your product and find 20 more and so on.
Good point, validation is key because it's probably what will end up saving months or even years of work. But do you really need to spend $2,000 just in meetings?
Good thinking. However, you could probably take them for coffee and use the rest for hosting.
I saw the title in and thought "this mush be from someone in Canada" and I clicked the post, aha!
Hello fellow Canadian wave hands
lol, now I realize the similarities! but, nope, I wasn't even thinking about the $2,000 some people are getting here in Canada (not me). Waving hands, eh!
you need a beta and validation and repeating beta and validation until you can invest for web and mobile apps and then finally marketing
In my humble opinion the best experience is to achieve your goal with the resources you have, not the ideal resources you don't.
Find a way to allocate those limited resources on things you won't be able to do your self as indie hacker or to pay for services that will hack your way
hey @jorgevmendoza, your last sentence summarizes my thoughts as well.
The key is being wise to know what to do yourself and what not. For example, I know I can both design and program, but programming is probably a much better use of my time because it's a more scarce skill and it's also much harder to delegate quickly / at a lower cost.
Exactly (btw I also develop and love to design my own stuff) but at the end of the day the criteria shall be, what thing that you can do will add more value to your project and that's the next thing you have to do
$2k would just be consumed over a few months of servers costs, support site, email, etc. So, I wouldn't use it for anything that's not essential.
tl;dr spend it on Google Ads and optimize for cost per conversion.
It depends on many factors and I'd have to do a lot of assumptions to answer this in a meaningful way. Assuming:
Regarding the idea: I'm assuming the business is already validated in the market and you're trying to get a share of the pie. You can compete on price because your costs are lower, and your product/service is different enough that it could appeal to a percentage of customers.
Given the above, I'd invest the $2k on getting traffic via highly targeted Google Ads campaigns. I would start with extremely specific keywords that may not get any clicks, then go broader gradually to capture more views and better understand your target market. The intelligence build in the Google Ads system that works 24-7 to get you the right customer at the right price is incredible. At some point, when you have enough traffic, you can tell the Ads system what your target cost per conversion is and it'll match that on average per month.
It's incredible that you can be on top of Google Search results on day 1 after launch with barely any content on your website if you're willing to pay the price for it. Companies spend years perfecting and promoting their content to organically appear in the first 10 results list; but advertisers get their websites to appear on top of that. Ads are looking more and more like organic search results (especially on mobile) which is very appealing for advertisers.
Yeah, advertising is probably one of the few things that you necessarily have to pay for, if you need it, since you literally can't do it yourself (unless you're Google), unlike development, design, etc. I'm curious on your "I would start with extremely specific keywords" statement; have you had any success in the past with this approach? Does it work particularly better for low-budget campaigns?
The point of being overly specific initially is to try to avoid spending on keywords that aren't getting conversions. You're essentially focusing on customers at the very end of the purchasing funnel. Those who have their money out and want to give it to a merchant that has what they need. From experience, this audience is the easiest to capture and optimize campaigns for when on a tight budget. Once you have a model that works and generates enough income consistently you'll eventually raise your budget to meet the growing demand.
Good luck!
Give it to charity or to my parents and then continue working on my indie project.
It literally costs me 7$ a month so far and if I really wanted, I could make that 0$.
You're a nice person :)
Maybe, this was also what made me fall in love with indie hackers so much.
The idea that you can create a business with literally zero funding and just kickstart it yourself.
And if I succeed it will be a fun story to tell. "I created a business with 7$ a month funding".
Create a test to determine viability. For example, a landing page, an Amazon Giveaway, and FB ads.
Is Facebook advertising as useful as companies think they are? I can't recall the last time I clicked on one of those with the intent of actually buying something or converting into a long time user. If anything, the clicks were accidental.
Plus most people are running ad blockers (me included), so I wonder if you really want to capture the audience that actually clicks on these.
It depends on your product. My wife runs a non-tech business and finds Facebook ads worthwhile. What they do give you is the ability to target a very specific demographic. There are other ways to do this without paying for it as discussed frequently on this site.