So where do you aim your tiny sales team? To whom are you speaking on your website?

If you’re like most entrepreneurs, you’re probably aiming at a target market that’s too broad when you start. There are two typical reasons for this:

• You’ve told yourself, your team and your investors about the HUGE potential out there for what you sell. Hey, there are MILLIONS of people who could use your widget. You’ve been trained to THINK BIG, so why give up hope now?
• It’s still early and you haven’t proved that the outer edges of your target won’t buy your product. Why rule anyone out if you don’t know for sure yet?

In the early growth stages of new companies, it’s easy to overestimate demand for your product or service, especially if you have investors in the mix. (Have you ever seen a startup sales projection chart that wasn’t a hockey stick?)

The reality is that the only people who will actually buy from you are those who are in desperate need of what you offer. Or, at least, those for whom what you offer is critically important to them or their businesses. For everyone else, what you offer is a “nice to have,” which today is the same as “that’s interesting, but I wouldn’t pay for it.”

And there’s another reason to narrow your target audience even more — web search.

People who desperately need things are typing very specific words into web search engines like Google. They’re not typing that cool new category name you made up last week (“online financial optimization solutions”). They’re typing concrete and common words that they think will guide them to a quick answer (“reduce bank fees”). If you aren’t in the game on several important keywords in your market, you face a much tougher sales and marketing battle.

Sound scary? Don’t worry. Narrowing your focus helps your salespeople to zero in to real business faster — and win. You can also spend marketing resources more efficiently and create a more credible brand story.

Your hockey stick sales chart may have to wait until the competition dies down and everyone starts spending frivolously again.

No, I wouldn’t wait for that either.

Is it time to narrow your focus?

This is great, but guerrilla sales efforts can only take the company so far. At some point, these companies have to create awareness and demand beyond the prospects their small sales teams can reach through networking and cold calls.

Startup entrepreneurs have to do great marketing to continue to grow.

Surprisingly, this is a much-misunderstood concept with most startup entrepreneurs. To many of them, marketing means, “I need to spend time and money for something that doesn’t drive immediate revenue.” To others, it’s “just create a website and a nice presentation for our salespeople.”

This is the Marketing Trap. From my experience, misunderstanding the strategic marketing challenge is the biggest reason entrepreneurs are prevented from reaching their big startup dreams. “Hockey stick” growth, market leadership and a successful payoff for investors almost never happen through sales efforts alone.

The Secret — You Need to Create Your Category

If you have 1) a valuable product or service that is generating sales, and 2) a unique benefit that makes you different from competitors, then you are really creating a new category (or sub-category) in the market.  An established category is a type of product or service that people know and understand.

For example, a sub-category of mobile phones is “smartphones” — you know, the phones that do email, calendars, contacts, and web browsing. Five or ten years ago, this category didn’t even exist in the minds of the market. The early pioneers had to create compelling new smartphone products and explain this new type of phone concept to the market. Now we just say, “I want a smartphone,” while years ago this category didn’t exist and people didn’t know they wanted one.

Everything fits within a category in minds of your target customers. Big, successful markets are filled with categories that are clear and compelling. If you’re really, really good, your product name is the category, like BlackBerry (in the early smartphone days) or iPod.

To achieve your growth goals, you need to be known as the leader of that important category.  But who will  establish that category in the market? If you don’t do the things that will establish the importance of this new type of solution and position yourself as a leader, someone else do it for you and take the prize. Remember, market leaders always get disproportionate market share, recognition and profits.

If you are a leader and you want to grow your new category, you have to sell your products and your category.

Your Strategic Challenge

Stop thinking that marketing is something you “do later when we have time and money.” You don’t need big money to get started. Really. But establishing a category and a defensible leadership position takes years, so you have to start now.

Start thinking, “How do we start now to establish our category of product/service in the market and position ourselves as the leader?” This is more a challenge of your mindset than your budget. It’s your biggest business challenge in the long run and only the CEO can really drive this  effort. It’s that important.

If you aren’t thinking this way about your strategic business challenge, then you should not be telling your investors and employees how huge your company is going to be. You can have a nice business, but you won’t have a big, valuable success story that will change the world.

What are you waiting for?