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With the 3D Print industry being so new, it can be hard to find a 3D print business model to follow. How do you decide if you need to take things slow, or jump in with both feet and completely commit?
Listen to the podcast here:
Diving into Your 3D Print Business Feet First
Talking today about diving into your 3D print business feet first or if you should just dip your toe in like when you get to the pool and you are worried about if it is too cold to get in or not. Is that the best way to do it or should you jump into it and be like a cannon ball? We have had some businesses call us up on the phone and wanted to talk about their 3D print business plans. This issue of diving in or jumping in with your feet first or just dipping your toe in to really raise first the money at scale that has a really good chance of succeeding or do you start really small and use it as a test? This is a very debatable point about starting a new business and a new venture in the 3D print business world. There are just as many valid opinions on each side of this. But I thought it is a good subject to talk about today.
3D printing depends on what type of business you are going to do if this is something really new in the industry and there is no model of a 3D print business that is quite like it because it is so new. That might be an opportunity or a situation where you want to dip your toe in and do some small scale market tests to try to get some proof that there would be a market for what you want to offer. This is what Tracy and I debate quite a bit in terms of different 3D print business ideas. There are no models or no existing market so that you can research for certain aspects of it.
Somebody called us up and wanted to start a new 3D print service bureau. That surprised both of us. There are models for that. There are models that have been operating for quite some time. You can do some research and modelling and see what others have done in that arena and succeeded. In that case, our big question was why would you want to do that? It takes a lot of money and lots of capital to start a new service bureau with any kind of scale. You will buy large commercial machines that are going to be very expensive. You need to have staff to prep models and operate machines, and pack and ship and have a sales team that is going out to try to take 3D print business away from other service bureaus.
Our big question to this person is interesting because there is an ongoing dialogue here is what is going to be unique about it? Why do you want to make a service bureau when there is really quite a lot of existing service bureaus out there? Consumers have a great range of choices and not just in the big ones that we all know about – Sculpteo, Shapeways, WhiteClouds. There are more regional service bureaus that are doing the same thing and are combined with or have become a part of different kinds of prototype shops around the country. There has been a great network of places where you can get prototype parts that are CNC machined or have patterns that are made and cast in urethane. Now, they have all gotten into additive manufacturing. That is a bit of a saturated market in the United States, I won’t speak for other countries. To start a new service bureau is asking them “what is your unique proposition going to be?”
What if you are doing something that is probably more typical where you are doing something new in 3D printing? We have a new interview coming up sometime in the next few weeks with BeeHex, where they make a pizza 3D printer. These guys are doing something completely different in 3D printing. There is really no model for it or no model of business. Is this going to be sold to consumers is the idea that people would have on their kitchen counter and use it as home. Or is it really a commercial play and you are going to be selling this to chains of restaurants to do some unique branded designs of the pizza that is printed and baked?
When you get into that situation for a 3D print business, which is quite different. Here is what I think conceptually dipping your toe in to a 3D print business makes some sense. Doing some proof of concept really having a long plan with a long tail marketing approach to try to get as much free media as you can, but also to test and test and test over and over again, and making sure there is an interest in it and a potential market in it. That makes sense a lot of the time especially when you are doing something new or revolutionary. That market proof is what any investors are going to do when looking at your 3D print business. It doesn’t matter how you raise the capital if you are early on and seeking some angel investor or you are really going for a seed round or you really raise capital via the new crowd funding platforms that are out there like Sproutt.
I’m talking about equity crowd funding to raise millions of dollars that the people are going to invest on this want to see that there is some market proof, especially if this is not another type of business you are modelling after. Having some small scale proof that you can then take those findings and results and extrapolate them out into something much more scalable and meaningful, and then an investor can say they can see how they will succeed and get their return on this investment.
It is a really tricky thing especially for entrepreneurs who you would be their brain child. The business will be their brain child. I wrestle with the same thing: should we just be doing a test alongside of our core business? So I am not going to dedicate a full time effort to it. I am not going to abandon everything else I am doing because I need to keep paying my bills and keep money coming in today. But I really want to do this other thing. Is that the way to go? Or if you go down that path, are you just going to be in permanent potential? Are you going to never really get this thing off the ground if you do not dedicate yourself to this in a more than full time effort, not doing anything else, in order to be able to take care all of the details necessary to raise a large amount of money, and then do it in a big way with scale and with for money with marketing.
For small businesses, money for marketing is the most critical issue. We see this not just with 3D print business but with any business. We have some friends and colleagues in business here in our town and also a part of the organization we belong to called CEO Space. This couple, just like me and Tracy, this couple named Brian and Sarah owns a business called AllGreen. The name may seem strange, and they are a branding firm but they also help people raise capital. It is an interesting mix of business. They are not just a branding company but they also will help businesses raise capital they need to execute their plans and some of that may be used for branding, some of it may not. The purpose of the point is that they see this all the time, that younger businesses and new business ideas and start ups have this chicken and egg scenario where they want to grow organically. They want to just put out their service or put out their product and get some sales.
From those sales, they want to then use that money to be able to not only support them, but put some more money into marketing and get more sales. It really is a chicken and egg situation. It can be very hard to do lead generation and to get the word out that your company exists and you have this product or service to sell other than your local circles and who you know. That will get you a little but down the road. It really never seems to be enough. Without going into heavy debt, it is very hard to come up with enough money to be able to market to do that lead generation to get sales, and to really make this thing work.
If you don’t have money, then there is really no other way to do it. You are trying to bootstrap it and make it work. You are in this constant state of “I need more sales to do this, but I need more money to get more sales.” It is very tough. I have done it many times in bootstrapping it. It is difficult. Raising capital is also an effort. It is not a simple thing. It is not just deciding to raise capital and going out and doing it, unless it is angel investment. It is easier but still involves many tens or hundreds of hours put into putting a business plans together and having some rationale why this is a good investment for that angel investor.
It is a tricky thing. There is no right or wrong answer here. You try to start that business organically and get as many sales as you can to get the word out on a shoe string. So much marketing is happening today over the internet and across social media, whether it is LinkedIn or Facebook. It takes significant amount of money to either hire a marketing firm to help you do that research and generate those leads, or to straight advertise to who the target customer is. Even though there is a lot of money to spend in trying to figure out exactly who is the right customer is or what message is going to convert, you do a lot of A B testing on it on which one converts more.
It is a tough chicken and egg situation when it comes to a 3D print business. There is something that can be said if you are going to do it, do it right, go big into it, be bold, and in some ways, people may think that is throwing caution into the wind. You are going to go after this big goal of raising lots of money in starting a company on a premise you believe in. You are going to convince others that they should believe in you. That takes some guts. It is not for the meek. You need to have conviction and you have to have a comfort with taking a bit of risk in order to do it.
If your risk profile is such that you’re not going to be able to at sleep at night if you have borrowed a whole lot of money or convinced investors to invest in this operation, then maybe that is not the way you want to do it. There is a personality aspect in understanding who you are and what your comfort level is, and what you are good at and what you are not good at. This is a good time to do some self analysis or get some professional help potentially to make sure that you understand who you are and what your comfortable with, can help dial in. Dive in, raise that big amount of money, and go big, or go home type of thing. There is something to be said about doing it with scale and having the dollars to do it, it is a lot easier to achieve things with a real budget to do it.
Then again, there are a lot of well known companies that started on a shoe string and started in a garage. They end up getting some investment, but the question is, can you get to that point of proof where the part time effort comes in? Can you get that proof? Not only it gives you confidence, but being able to convince investors before you have to go spend much more time and money on your own and take a bigger risk.
My mind is meandering in this because I convince myself one way all of the time, and the other way other times. The next thing I would say in about diving in or dipping your toe into 3D print business is this: One thing true for leaders and entrepreneurs who start a business sis at some point you need to make a decision. You need to pull the trigger on a plan. It is either going to be the big plan going forward or it is going to be a longer term plan and testing some things out before I go get the capital.
In terms of diving in or dipping your toes in, I guess that is the biggest advice that I can give from my 25 years experience in business and having done this, I raised angel investment. I had investors in business and built businesses up and sold them. It is very critical that you make a decision. Have conviction and go for it. Don’t be wishy washy or undecided. It doesn’t mean that you don’t have a plan and you have gates. If you don’t meet them, if you have measurements and if you don’t meet them the plan changes, that is fine.
I am not saying you keep going for the first thought even if all the signs are telling you this is not working; not at all. It is about making a decision to move forward on a path whatever that path is. Rather than just continually leaning whichever way the wind blows depending on what you hear or what others tell you, or which your family says. Don’t ask your friends or family. They either love you and tell you its great even though it is not. Seek council from peers, mentors, and others that have experience in business. Make sure you understand who you are and your strengths and weaknesses. That is something that investors like to see.
They like to see as a line item on a business plan and when there is personal development in there. They learn and come to believe that you are not just a cowboy who is shooting from the hip and are not going to seek council of other wise people. That may have a lot of great contributions.
That is about it. I hope that is helpful to you on Back to Business Monday. It is something we think about a lot and we continue to. We are not done starting business and not done building a 3D print business in this industry. The podcast is just one aspect of our foray in 3D printing. We are excited to do it. We are having the same issues that you also have if you wanted to get in the industry and starting a startup business.
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