[EDIT #2: Feb 1, 2016]: If you'd prefer to read this post in web format, you can do so here: www.founderorigins.com/university-business
I've already posted this in a few other threads, but I'll post it again because it's applicable to this question.
Are you in university? If so, have you thought about placemat advertising? (still applicable if you're not in university)
Probably not, but it's a totally viable business.
For example, there's Glenn Buchan who created a placemat advertising business called Adspad while he was in his first year of uni! He was able to do this despite having:
- No existing connections
- No coding/programming skills
- No previous entrepreneurial experience
What was Glenn’s super simple business?
Glenn made it easy for local businesses to advertise to university students. To do this, he supplied environmentally friendly paper placemats for food trays in the university cafeterias, and would sell the advertising space on the placemats.
The university would allow him to do this because in return, they would get free space to communicate to their students.
Glenn’s story is a perfect example of what a first time entrepreneur should be doing. Instead of trying to create the next big mobile app or website, he went for a simpler and proven business.
The best thing?
The monetization strategy was straight-forward.
Unlike many startups these days where you build a huge audience and THEN figure out how to make money, Glenn’s monetization strategy was much simpler.
Glenn had a partnership with two universities.
For each university, Glenn’s placemats would have a total of 10 advertising spaces which he would sell for $150 each. That’s total monthly revenues of $1500 per university.
His total monthly costs were $600 per university in order to print and design the 10,000 A3 paper placemats.
The result? Monthly profits of $1800/month
Let’s just forget about the financial rewards for a second. Personally, I think the transferable skills Glenn gained from this experience was more valuable than the money.
Even if his business failed, the experience alone would have been worth it. Because of Adspad, he’s picked up skills like: negotiating, marketing, sales, and much more.
You can’t learn these skills inside a classroom or at some regular part-time job…
…just imagine having this on your resume when you’re only 19 years old!
So how can you do the same thing?
As with every guide I share, I never want to give you just some fluff with no real-life examples. Instead, I’ll try to lay out a detailed action-plan that you can follow.
Phase 1) Finding and Meeting the Decision Makers at the University
Step 1: Make a List of Potential Decision Makers via Linkedin
Make a list of the departments that would be affected by the business. In this case, Adspad was providing free advertisements (marketing group) for the university through the cafeteria trays (contracts group).
He would then use Advanced Search in LinkedIn to identify potential decision makers, and people directly reporting to the decision maker.
The main lead would be the “Head of Marketing”.
Once you have their name, most universities will have a staff directory which you can use to get their contact information.
Step 2: Confirm the Decision Maker
For confirmation, it’s highly effective and low risk to reach out to people you know who aren’t the decision makers. In this case, it would be the “Marketing Officers”, and the purpose would be to ask them who the decision makers are.
For example, you can call them and say…
“Hi X – My name is Wilson, I’m a student at Y University and I was hoping you might be able to help me out with a university project. I’m trying to connect with someone who is in charge with approving the university’s marketing efforts. Do you know who that person might be? [Respond to any of their questions…] Great, that’s all I needed. Thanks for your help.”
Step 3: Get an Introduction with the Decision Makers
Once you know who to talk to, the goal is to get a meeting with the decision maker.
Getting an introduction/referral increases your credibility and helps bridge that initial trust gap, plus, the decision maker will get back to you much quicker.
To set up this introduction, who do you think would have the highest motivation to help out a random student? A professor.
Just imagine you’re a business professor and you’re approached by a student with entrepreneurial ambitions. The student is fully prepared with pitch decks, proposal documents, and a clear path forward on what needs to be done. On top of that, the student knows exactly who they want to talk to, but needs you to introduce them.
What would you do? You’d help the student out!
To make it even easier… you should provide the professor with everything they need to send the introduction email:
- Brief information about you and your company
- Why meeting makes sense for both parties
Once the intro is sent, follow up right away to thank the professor for the introduction (you should probably BCC him out of the email chain now too). You can then ask to set up a meeting with the decision maker at their convenience.
NOTE 1: Most universities contract large corporations to operate the cafeterias (e.g. Sodexo). Based on Glenn’s experience, you want to deal with the University, and not these contract companies. Also, in Glenn’s experience, the decision makers will most likely be either the marketing or contracts group.
NOTE 2: Glenn’s approach to getting an introduction from the student union/association would work too. However, I personally would prefer approaching a business professor purely for additional faculty networking, mentorship, and as a future reference for job applications.
Phase 2) Communicating the Benefits to the University
When starting a new business with no reputation, all the credibility is on you, the founder.
Glenn was just a random student with an idea to make money. So how did Glenn go from a regular 19 year old student to a trustworthy partner for an academic institution?
Instead of relying on just a presentation and a pitch, he showed them. Let the prospect see what the general design of the placemats and advertising space will actually look like.
Here’s how Glenn did it.
He borrowed (stole) a cafeteria tray and created a mockup of the first placemat. In the meeting, these two items served as a visual aid, and allowed Glenn to present around the tray/placemat combo.
Here’s the design of the mockup he used for the meeting…
See how simple the mockup is?
It might not be visually appealing, but that doesn’t matter. The purpose of the mockup is for the decision maker to visualize the general concept/design of the business.
Glenn understood the importance of a Minimum Viable Product. He did the entire design himself on photoshop, and created “fake” ads to act as placeholders before he even secured any customers.
And it worked.
Anyone with photoshop can figure out how to create a mockup just like the one Glenn made.
Tip: If you can’t get your hands on photoshop, check out Canva. Or you can pay someone for cheap to do it for you on Fiverr (warning: you’ll get what you pay for).
Once Glenn was able to SHOW them his vision and the general concept of the business, that’s when he followed it up with the benefits.
For example, here’s the framework of the pitch Glenn used…
“The XYZ University has fantastic catering facilities and we are delighted to have seen it improve so much over the time we have studied at XYZ.
One of the main things that we still think could be improved is the way the University communicates its catering developments and improvement to students. Adspad has many advantages and we feel that we can offer a lot to XYZ.
– Fantastic way of communicating new canteen initiatives to students and staff- Adspad is completely free for the university and costs are covered by our advertising- University saves printing costs by cutting down on posters and leaflets- Improvement of hygiene for staff and students with clean paper- Good way of increasing feedback through promotion of the ‘text service’- Updated monthly so staff and students are always up to date- Included Sudoku gives students and staff entertainment when eating- Keep customers coming back with high brand image on placemats and good student offers-Eye catching design to improve image of canteens”
The result? He received permission and the support from the university after just one meeting.
Phase 3) Finding Clients to Pay for the Advertisements
Now your job is to get your first paying customers. Getting the first clients is always the hardest because no one wants to be the first customer.
But once you do get the early adopters on board, it gets much easier because you’ll have both recurring customers, and testimonials/social proof to rely on.
To get his first clients, Glenn initially had a success rate of 1 in 50 (FIFTY!!!). To get these first clients, Glenn had to go door-to-door, cold call, and send cold emails.
Once Glenn had a track record and a portfolio of previous placemat designs, he created a flyer which he would distribute to potential clients. Using this flyer, his success rate improved to 1 in 10 businesses.
In addition, once Glenn obtained his first 10 customers, he had a monthly retention rate of 60%. In other words, he would only need to get four new customers per month.
To get these first customers, Glenn’s used a shot-gun sales method by approaching as many businesses as he could, and it worked for him.
However, just to give you another perspective, here’s another possible approach.
Step 1: Identify the Early Adopters
When you have no experience or past clients, you want to customize your sales pitch.
This is a time consuming process which is why you need to prioritize the businesses that have the highest likelihood of being your early adopters. You want to create a list of potential early adopters by looking at the businesses that already advertise with your competitors.
Who are your competitors? The university newspapers, student magazines, and campus ad boards. These are the businesses that are already paying to advertise to students.
Once you have the list ready, follow the same steps previously mentioned in Phase 1 to find out who the decision makers are. Use twitter, facebook, or their website too.
Tip: Based on Glenn’s experience, businesses such as restaurants, nightclubs, and bars are not ideal clients. They tend to be unreliable and don’t pay on time or at all. The best clients to work with were local charities, national health services, and public organizations because these are the people with larger marketing budgets. That being said, that was just based on Glenn’s experience and could have been unique to just his circumstances.
Step 2: Create a Customized Sales Pitch
You need to stand out from all the other sales pitches small businesses are usually bombarded with.
To do this, make sure you highlight the end results for the prospect if they were to become your customer, for example:
- # of students who eat in the cafeteria daily (reach)
- How often an individual student will eat in the cafeteria (frequency/retargeting)
- Average time a student takes to eat their meal (exposure time)
- Ads are placed along the border/edge of the placemats so it’s not covered by the food
- You’ve secured a partnership with the university and already have their support/approval
Are you starting to see the unique benefits your placemats have over traditional ads in a newspaper or magazine?
For example… a magazine reader will be exposed to an ad for a few seconds while flipping the pages. Whereas on a placemat, they’re going to be eating and have nothing better to do but to read the placemats.
Now the next step is to customize your sales pitch to each individual prospect.
For example, check out this video sales pitch.
Now… that video sales pitch is for an online business, however, the same can be applied for local businesses. You could quickly go over their existing ads on newspaper/magazines and highlight how your placemats would be more effective based on the points mentioned previously.
Just by doing this you’ve already differentiated yourself from most of the other “consultants” and “salespersons” by customizing your pitch.
Now I know this is A LOT of work just to get the initial set of customers. As Paul Graham says, you want to“Do Things That Don’t Scale” when you’re first starting out. Once you have your initial set of customers, it will get much easier.
Step 3: 100% Money Back Satisfaction Guarantee
Generally, you should stay away from providing discounts because when you’re starting out, you want to validate if customers will actually pay you at your desired price point.
Instead, provide early adopters with a 100% money back satisfaction guarantee. Since you’ll most likely be receiving payments at the end of the month, if your prospect isn’t happy, you don’t have to worry about any of the logistics of giving them the money back. Just make sure you find out why they weren’t satisfied with your service.
Step 4: Be Persistent
This sounds cheesy but I’m serious. Do not be discouraged when you get rejected because you’re going to be turned down so many times. It’s to be expected.
Remember at the beginning of this guide, when I mentioned Glenn’s experience far outweighs the financial rewards?
This is the type of experience aspiring entrepreneurs should actively seek out. Always think of the long term benefits, getting rejected this often is great experience and it’ll improve your communication/sales skills. Plus, you’ll now have experience on how to methodically implement a sales cycle.
Phase 4) Logistics of the Placemats (placing/printing)
I won’t go into too much detail here because this section is pretty straightforward.
The main thing to note here is that part of the agreement with the university was that the canteen staff would manually put the placemats on top of the trays everyday.
However, Glenn would often go to check on the trays and would notice that sometimes the placemats weren’t being put on the trays. It took Glenn a lot of face time and visits to the canteen management before the placemats were put on trays properly and consistently. Glenn made sure he was super friendly, and would provide treats every time he visits the staff (e.g. chocolate during easter eggs).
Also, when you’re shopping around for printing suppliers, just remember that you have buyers power. There are so many printing stores that you can shop around and negotiate lower printing costs once you know your monthly volume.
That’s how Glenn went from being a normal 19 year old student to a successful entrepreneur.
His business wasn’t the next big mobile app or website. Instead, it was a simpler business with a proven revenue model. From there, it took lots of hard work, a solid execution strategy, and persistence.
That's the end of the post, if you don't want to read my self-promotion, stop right here!
Otherwise, if you want to read what I just wrote, it's on my blog, founderorigins.com/university-business If you sign up via the blog, there's some bonuses you can get (sales pitch, pitch deck, more mockups of his placemat ads).
Plus if you sign up, you'll receive a bunch of other guides I've written just like this one! I write step-by-step guides for beginner entrepreneurs. Each guide I write is based off a successful entrepreneur and I try to include as many examples as possible.
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If I cant answer it, I'll include Glenn into the email chain!