The Internet is an extremely powerful platform that allows entrepreneurs to reach a worldwide audience. The right concept paired with the right marketing can lead to explosive growth and revenue. When asked about revenue goals, a large majority of startup founders will say, "We want to hit $1 million in revenue." It's a milestone that serves as a goal for every business -- hit that million-dollar revenue mark and then continue to scale from there.
How hard is it to reach that number? When you map out a goal and break everything down it appears much more doable than just stating you want to reach a million-dollars in revenue. Below are five steps to create an online business capable of generating $1 million annually, but rather than just listing the steps, I wanted to use a real example. LAWYERS is a project that my company is currently working on. It's an online law firm directory that will be monetized through paid listings and lead generation. I'll be using this example in the steps below.
1. Identify a concept that has potential to be profitable.
You first need to identify a concept that has the potential to be profitable. You need a great product or service and there needs to be a large audience that has a use for that product or service. It's important to understand that you don't have to launch large-scale at first. You can start regionally and then expand. Just make sure your idea can be scaled to reach a large number of potential customers.
We decided to create an online directory of lawyers and law firms because there is a large enough user base in the U.S. alone, with more than 1.2 million active attorneys and an estimated 50,000 law firms. We can also expand into other countries as we scale the directory. With this project we have two customers we need to attract -- the firms and attorneys that want to be listed on the directory, and the consumers that need a platform to locate local firms and attorneys. The user base on each side is large enough to warrant us to start this project.
2. Map out a plan to monetize your idea, generating $1 million in revenue.
Your planning will make or break your business. You have to account for every expense that will come up and map out a solid plan that will allow you to launch without running out of money. Identify ways to cut startup costs and get your idea off the ground. For example, to eliminate development costs we are using this directory theme instead of developing our own from the ground up. This not only saves us a tremendous amount of money, but it allows us to launch with a proven platform.
You also need to know what your goal must be in order to reach that million-dollar revenue number in one year. How many customers do you need? What is the quickest path to reach that number? Our top directory package is $997 per year, so just using this as a benchmark, we would need to sign up 1,000 law firms at this level to hit that million-dollar revenue number. While that might seem like a lot, when you break it down you see that it's not as difficult as it might appear. Broken down, that's just 20 law firms in 50 states. Break your monetization goals down so they are easy to digest.
3. Provide value that surpasses other options in the marketplace.
Every idea has competition. It's important that you identify a unique selling point that sets your idea apart from the other options. You need a potential customer to look at your offer and immediately identify why it's a superior option. If you're an online store, offer free shipping or discounts on a particular day of the week. You need to stand out and give customers a reason to select you over the other options.
There are other online law firm directories out there, but we are offering firms that list with us value that isn't provided by the other options. When we determined our pricing structure we didn't take into consideration what the other directories charge. We based it strictly on the value we are providing, and it's ten-fold what we will be charging annually.
4. Seek validation.
Before you move forward and invest your time and money, it's important that you validate your concept. You need to make sure there is an interest and make sure your price is justified and accepted by potential buyers. You can do this by creating online surveys, or do what I did, and cold-call for feedback.
When we were in the validation process I was cold-calling law firms and speaking directly with the person responsible for writing checks. I told them what we were doing, what is was going to cost and what benefits they would receive. It was exactly the real-world validation needed to justify moving forward with this project. We heard directly from our target customers, that yes, they would buy-in. That type of concrete validation is crucial.
5. Test, analyze data and adjust.
When it comes time to launch you will need to make sure you are constantly testing new marketing channels and new lead generation strategies. Dive into your data and determine what is working and what isn't. Scale up the winners and clip the losers. You can never remain stagnant -- you have to constantly test and adjust in order to maintain forward momentum.
Our initial marketing push is already laid out, but that doesn't mean we won't be constantly looking for new opportunities and shut down channels that aren't producing the results we want. A great idea and a strong initial launch can quickly crash due to lack of testing, analyzing and adjusting.
Jonathan Long is the Founder & CEO of Market Domination Media®, an online marketing agency that provides SEO coaching and online marketing consulting. Jonathan also created EBOC (Entrepreneurs & Business Owners Community), a private business forum. Follow him on Twitter.