Evan Carmichael advises Jeremy on scaling MentorUp beyond beta. First, generate enough cash flow to survive. Second, prove unit economics work by testing cheap experiments like ads and trade shows. Third, use that proof to decide between slow organic growth or seeking outside capital.
Questions this video answers
Evan advises three steps: first, ensure you’re past the survival stage by covering personal and business expenses; second, confirm that each dollar you invest yields a return greater than one dollar through small‑scale testing; third, use this proof of concept to decide whether to grow organically by reinvesting profits or to seek external financing for faster expansion.
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Hi, I'm Evan Carmichael. Welcome to another edition of Ask Evan. Today we're continuing our challenge series with Telly Talks Business where we're answering questions from you guys who have a business and have questions. So today's question comes from one of our Facebook friends from Telly Talks Business, his name is Jeremy. And Jeremy wrote in, great advice to Mark's question. In my business mentor network I just launched a pilot of a new platform called MentorUp. How do I know when my new product is validated to the point where I'm ready to move out of the pilot beta phase and start scaling? So great question, Jeremy, thanks for asking it. I'm going to give you 3 suggestions that I hope will help you. Number 1: Get past survival. The first challenge for entrepreneurs in startup mode is getting past the survival stage. You need to find a way to bring in enough money to pay your bills and put food on the table. You don't have to make a ton of money yet, that may be the event eventual goal, but it's not what you need right now. Most businesses fail, and a big reason is because entrepreneurs run out of money too quickly. It's great to have big ambitions and be optimistic about the future. That's what we do as entrepreneurs. But you have to first find a way to get to the point where you know you're making enough money so that you don't have to worry about going to get a job in a few months. Now, Jeremy, I don't know where you are at financially with your business at the moment, but if you're not past the survival phase, Worry about that before thinking about scaling. Invest your time and not your money into making the model work and bringing enough dollars in to support yourself and your family. Get close to your customers, provide outstanding service, change your model as many times as you need to in order to solve their problems, and you're on your way to breaking through. Number 2: Make $1 bring in more than $1. Once you're past your survival phase, it's time to start investing some money into your business. In the early days of any business, I'm a big believer in bootstrapping. Only invest money that you have from your business and put it back into your business. You know from the survival phase that you can turn your time into money. Now you've got to turn money into more money. You have a model that works on a small scale and that's paying the bills. Where can you invest some of your dollars into growing the business? Is it building a website, investing in advertising, hiring a part-time employee, doing trade shows, running contests. Try a few different ideas that you think will have a high payout and start on a really small scale. Invest minimal dollars and see if it generates a return. Keep playing with the model until you find a way to turn every $1 of investment into more than $1 in return. You'll find that some things work well and others don't. Maybe trade shows bring in a lot of business, but postcard advertising doesn't. Don't invest big dollars in anything until you've shown that it can work on a small scale. You may get frustrated with the early results, but it's important to stick with it. You're building a model for rapid growth, and you need to know which levers to pull before you can scale. Number 3: Use proof of concept to scale. If you followed steps 1 and 2, you now have a business that feeds you (step 1), and you know how to get more growth by investing your dollars strategically (step 2). Now it's time to ramp up. How big you grow will depend on how big your ambition is. If you can turn $1 into more than $1 in return, then you can either build slowly and continue your growth organically, or you can raise capital to expand more quickly. Even though I was in the venture capital business, I'm generally a fan of the organic growth. You make fewer mistakes and build a more solid business. Just keep plowing your profits back into the systems that you know generate returns. Along the way, you'll have to think about staffing and all the issues that come with a growing business, and I'm of the belief that it's better to tackle those things one at a time. You're more likely to get it right. If you want to grow more quickly though, this is the time to do it. Since you know how to turn money into more money, it's easier and much less costly to get financial help, either in the form of a loan or equity investor. Before you pass through steps 1 and 2, your business is risky for anybody to invest money with. Because it's riskier, they'll want higher interest rates or bigger percentage of your business. Once you get to step 3, your business is more solid and it's easier to get favorable terms from people. How much money you need and when you need it depends on how quickly you want to grow. Thank you for joining me for another edition of Ask Evan. If you like the video, you want to see more, please give it a thumbs up below. It makes me want to do more of these videos for you guys. I'd also love to hear what you have to think. If you want to leave a comment under the video, or if you have a question for your own business, Maybe we'll feature you in one of the upcoming challenge video series. So thank you, and we'll see you on the next episode.
