Ahh, the old "Chicken and Egg" sales conundrum. An entrepreneur cries about not having capital to build their product, and thus having no idea whether a customer would buy that product to begin with.
"How do I close a sale on my product when I don't have a product to sell yet?"
The typical logic goes that once an investor ponies up the dough to build the product, the entrepreneur will then go out and make the sale. While it would be nice if we could all build the perfect product and have the customer fall at our feet to buy it, that's just not the case.
Entrepreneurs need to sell first, and build product later.
Selling a product before it's produced isn't about selling swampland or vaporware. I'm not suggesting that you lie to customers and tell them to pay for something that you can't deliver upon - that's just dishonest.
Instead I'm talking about presenting your product concept in a way the demonstrates all of its benefits without actually having the final product in place. You buy products like this all the time whether you realize it or not.
When a home builder shows you the architect's rendering of your house, it's not built yet, but you understand the concept enough to take out an enormous personal loan to buy it. When a Web developer quotes you on a big web development project that he's going to build for you, you don't have the Web site built, but you agree to pay for it anyway.
The difference between having a product to sell and just selling swampland is your ability to deliver on your promises.
Therefore your first step in selling your product is having some basic demonstration of the product or at the very least the product concept. This doesn't have to be the all and final "go to market" version. In fact, if you've never shown it to a customer before, the likelihood that it will be everything they ever wanted without seeing it is probably pretty low.
It's OK to show a product to a customer that isn't full refined, as long as you have the ability to educate the customer on its overall potential.
Use your demo not just to get a customer interested, but to get a customer's feedback and learn how to make them more interested. When I talk to entrepreneurs about their new ideas, I always ask them how customers have reacted. When they tell me they have never presented to a customer or tried to "pre sell" the product, I get really nervous. You desperately need customer feedback, both good and bad, before you fully develop any product.
Don't think of the sale as only "when a customer writes a check." Granted it's the most important part of the sale, but getting a customer to say "Yes, I'd buy it" even before cash has been exchanged, is still very important.
I'm a big fan of sell first, build later. I think entrepreneurs need to fully understand not only the customer and the product, but the full effect of the sales cycle before they can truly know whether there is a market for their wares. The traction you get from customers saying "yes" is what creates the incentive for investors to write you a check and to build your own confidence to press on.
Now go sell something!