Tag Archives: starting a business

Owning a Business, Starting a Business

Business is More Than a Crap Shoot

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Those who haven’t owned a business tend to think businesses are built on mystical gut feelings that readily morph into bulging bank accounts, hot cars and holidays. Sure, Mark Zuckerberg and Bill Gates did just fine by following their hunches, but the hype overshadows the massive amount of work it took to make Facebook and Microsoft successful.

Statistics on the failure rate of small businesses can be sobering. Conventional wisdom suggests that about half of small businesses (those with revenues under $30,000) survive after three years, while approximately a third survive after five years. To be sure, this category of business activity, also referred to as micro-enterprise, includes a lot of businesses that are simple to start and easy to jettison when something better comes up. The statistics deal with the most developmental business arena, where a lot of newbies cut their entrepreneurial teeth. It also includes a lot of drive-bys who jump in long enough to check out the self-employment scene, and bail out once they realize they’re earning less than minimum wage.

Whatever else the high failure rate of new business tells us, it hints that success is more than blind luck. Some would characterize entrepreneurs as risk takers. While there’s a bit of truth to this, successful business owners are not so much gamblers as they are effective risk managers.

One of the cornerstones to becoming an effective risk manager is to find a healthy balance between intuition and due diligence. Due diligence is the research needed to validate your hunches and clarify your business case. A business case is built on more than notions and dreams; it has to have a solid indication of demand for your goods, customers that are willing to pay the right prices, and a bulletproof plan for getting in front of customers.

New business owners can increase their chances of survival by doing due diligence in the following three ways.

  1. Validate the Demand. To confirm demand for products or services, business owners will learn all they can about their customer’s wants and needs. This education can come through a combination of reading, working in the target industry, conducting surveys, and most importantly, talking to customers.
  2. Validate the Prices. When it comes to setting prices, there’s no confidence builder quite as convincing as making sales. However, prior to making sales, entrepreneurs can learn about pricing by knowing what it costs to produce their goods, and by learning everything they can about the industry and in particular, the competitors. The Internet is by far the easiest source of information on prices.
  3. Develop a Marketing Plan. Think of marketing as everything you will do to communicate to potential customers. Your marketing plan will detail how you’ll get your goods in front of customers, including costs each marketing campaign or activity.

Business success is much more than a crap shoot, and much riskier than buying a lottery ticket. It’s also true that business, managed effectively, is a surer path to success than gambling. And if you enjoy the work you do, it can also be fun getting there.

Gates and Zuckerberg are inspirations for us all, but don’t be blinded by the hype. If you’re feeling intuitive and lucky, buy a lottery ticket. If you want to build a successful business, by all means follow your instincts, but do your homework by validating your hunches before putting any significant investment on the line.

Market Research, Starting a Business

Competitive Intelligence Not Espionage

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detective

Business start-ups tend to stumble when it comes to gathering information on their competitors. And yet, going into business without having a thumb on the pulse of your industry is a sure way to go broke.

When planning a business, and particularly when it comes to researching competitors, people stress about what’s right or wrong, and often feel they are spying. In business planning workshops, learners ask about the ethics of snooping and whether it’s right to sneak into a competitor’s shop posing as a customer.

Here are a few methods to get you past the initial feelings of espionage and nefariousness, and on to non-intrusive learning about the industry you’re getting into.

1. You can find articles on competitor’s businesses by searching on the Internet. Just plug in your questions and topics and follow your nose.

2. Gather information from competitor’s websites, catalogues and other marketing materials. Whether via the Internet or through offline marketing, your competitors must communicate their offerings to potential customers. And yes, it’s ok to review competitor’s materials; they’ll certainly be pouring over your brochures and flyers once they’re published.

3. You can source information on competitors through Trade Associations and Trade Publications. Just search the Internet for “trade associations” or “trade publications” for your region and your business. In just moments you can narrow your search to a few possibilities for which you can visit websites to learn more. As an association member or publication subscriber, you will be kept up-to-date on industry and business trends and developments.

4. In the process of doing market surveys, you are sure to find yourself interviewing some of your competitor’s customers. A few well-crafted questions will enable you to compare your goods and services with the competition, things such as pricing, packaging, office hours, servicing and guarantees. If you’re uncomfortable doing the surveys yourself, it will cost more, but you can also opt to hire an agency or individual to do them for you.

5. The above methods will fill your folders with heaps of information, but if you do all that and still hunger for more information, there’s nothing wrong with asking a competitor out for a coffee and picking his or her brain yourself. Just be sure to go prepared to share your own information, as the person you’re querying will probably have a few questions to ask of you as well.

In researching your competitors, it’s important to keep in mind that the focus is less about the person, more about the products and services and providing the best deal for your customers.

Just because you’re competing doesn’t mean you are enemies. Most newbies are pleasantly surprised, once they get out and mingle a bit, to learn that their competitors aren’t as scary as imagined. Once you get past the adversarial image, you might find some competitors to be like-minded, interesting people, entrepreneurs just like you. Rather than awakening slumbering trolls, you are far more likely to find yourself learning like crazy, discovering opportunities to collaborate on larger projects, and even making a few friends.

Business Planning, Owning a Business

Burning Business Plans is Sexy LOL

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Last week I was compelled to click on an article that dissed business plans… again.

Why, when the Internet is cluttered with articles that extol the benefits of writing a business plan, would I invest time reading anti-business plan rhetoric?

It is fear? Fear that some guru has figured out a way to bypass the business plan and transformed business start-up into a safe, clean, effortless experience. Not really.  Nor have I discovered any such gem—in fact, it seems to get more and more complicated to own a business, not easier.

Perhaps it’s a fascination with the idea that people are generally more easily attracted to negative news than positive. So, it rather makes sense that a headline that slags business planning would attract more reads than a positive title might. Maybe.

Perhaps I resent just a bit that people are drawn to articles telling them to take the lazy approach. It’s plain sexy to imagine that you can create the next Facebook without lifting a finger or getting your hands dirty.

Invariably, once I read the article bearing the business plan dissing title, I find it’s either a blatant marketing campaign for a slightly different product or someone advising entrepreneurs not to bother with writing a business plan. It’s easy to negate the benefit of a business plan when it’s not your investment or risk on the line.

And now, I have shamelessly used a negative title to get you to read this blog. Guilty. Oh well. If you read this, perhaps the end justified the means.

So, while you’re here and I’m shamelessly marketing, I invite you to check out the Online Business Planner’s RoadMap at http://www.riskbuster.com/online-business-planners-roadmap-description/

Starting a Business

Get Into A Business You Love

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happy-workersGet into a business you love. At the end of each day, you will have invested another 24 precious hours of your life doing whatever it is your business demands of you, and if you’re work life isn’t jammed full of activities you enjoy, you’ll be wondering why the heck you did it in the first place.

Here are a few of the common motivating factors that get people starting businesses, and how they can be ultimately wrong.

  • Doing it for the glory. There’s a certain amount of celebrity appeal to owning a business. Yet most entrepreneurs go quietly about their work, attracting the occasional snippet in press or recognition for a job well done. On the flip side, the effortless notoriety that accompanies a bankruptcy when things go sour, will not only eradicate any glory gained, but give you a black eye to carry forward for a long, long time. Glory may come in bits and dribbles, but your sure to have fun daily when love what you do.
  • Doing it for the money. There’s a widespread misconception that owning a business is a fast-track to riches. Although business is a likely vehicle for building wealth, the early days are often littered with expensive setbacks and lessons. The wondrous overnight successes we love to hear about are usually the result of a lot of grunt work, misfires and raw perseverance.
  • Doing it for the lifestyle. Too many entrepreneurs jump into business to pursue lifestyle dreams, only to find they are mired in long grueling work days, anchored to a mountain of stress, and not netting enough money to have coffee at Starbucks. Lifestyle is a beautiful reason to get into business, but you really have to show the business who’s the boss and do a lot of things right in order to get to where you can take advantage of any lifestyle perks.
  • Doing it to get on easy street. The uninitiated will look longingly at business owners and imagine they live lives of leisure, hardly working at all. That’s a nice image to nurture, but just doesn’t conform to the view from my home office. Getting to bask in the sun takes careful planning, and most business owners end up working double time before and after the breaks they take. Still, easy street is a valid reason to go into business and does get easier when things go right.
  • Doing it to retire early. As many baby boomers are learning, there are a lot of speed bumps on the path to retirement, and generally they delay business owners in the same ways they do everyone else. Bad investments, unstable economy, dishonest fund managers, all nature of shysters prying and poking at your nest egg. Careful planning, frugality, a sharp pencil, diligence, and a long trail of happy customers will lead a business owner to a comfortable retirement; it’s achievable but it’s rarely quick.

When you go into business, you’re inviting an elephant with all its excrementitious trappings into your living room. If you’re going to live with a colossal beast, it had best be one that you enjoy.

In order to avoid being trampled by your own business, it’s important to know what you want to get from it, how you want it to behave, and to take control early onto ensure it meets your needs and gets you where you want to be.

Dan Boudreau is Author of Business Plan or Bust! and RiskBuster Start or Grow Any Small Business, workshop facilitator, and creator of the Online Business Planner’s RoadMap.

Ready to research your competitors and write your business plan? Register now for the Business Planning Online Workshop.

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