Want to start a successful business the first time? I’ve run across many people who have tried. One woman I know actually tried starting a business seven times and failed each time, so I wrote a book for her essentially. The theme of the book is: you have to have a passion. Once you’ve got a passion for something, you find a niche that you can implement that passion into.
Part of this process requires you to have a niche that somebody wants, but you have to plan for it. That means you have to put a business plan together. A business plan is a document you can get from most banks that’s all about your vision and your mission. How are you going to run the company? What do you see for the future? There’s a financial aspect to it as well: what’s your startup budget?
Also important is what you’re going to do about hiring personnel. People say, “Well, I’m just going to start a little thing and it’s only going to be me.” But realistically what happens if you’re a T-shirt company, you’re plodding along making your T-shirts, eight hours a day, and then someone comes in and orders a thousand T-shirts that have to be done by tomorrow (I’ve actually done that to a client before)? You have to have a plan and a contingency plan in case of not enough work or too much work. So those are just a few of the landmines you’ll run across as you’re opening up your business.
How Do I know if the Product is Viable?
Trying to find your viable product is a thing that you have to do research on. Just go online and see what’s available. If you’re trying to replicate somebody’s business that is two doors down from you, I’d say that probably won’t be a viable business for you. A lot of people will research in a different country or a different city. Find out what is being done in that niche that they’ve got an idea for and then try to replicate it in their own town. That works well for local retail, but for online products you have to put a plan together and in terms of what you want to give to people. If you’re looking at it from strictly a monetary standpoint, it’s probably not the right business.
You’ve got to find out what people need or a problem they have and how are you going to fix it. And once you’ve got that in place, you can put the building blocks around it. One of the things that I like to do is have focus groups. If I’m going to start a new business (and I do regularly; I’m a serial entrepreneur), I get a group of friends together. I have a series of questions about my proposed business for them, and I asked for their advice. You can knock off things like, “What would be a good name? Do you like this name?”and I offer them a couple of variations. “This product, do you think it should be packaged like this or like this?” You have all the questions in line and you’re trying to find out what the normal average consumer would go for.
Family and friends are interesting. I had a guy come to me and said his family all told him he was nuts to start this business. So he went to his friends and they said he’s nuts. So I said well it’s like there might be an indication that you are nuts and your business isn’t viable. There’s a lot of considerations and family and friends are a really important aspect for you to bounce ideas off. After all, they probably know you better than even you sometimes.
How Do I Get Funding?
You’ve got your plan together. Now you have to come to the crunch which is: how are you going to finance it? I prefer not to finance anything with my own money. The theory is OPM: Other People’s Money. Traditionally it is family and friends that you go to if your family says, “That’s a great, dynamite idea!” You say, “Well, how about investing five grand into it?” That’s when the crunch time happens because if they’re committed as you are they’re going to help you. Some banks can give you micro-loans which mean they’re small enough just to give you a bootstrap. For instance, if you’re opening a lawn mower business you don’t need to buy 50 lawnmowers. There’s only you. Buy one lawnmower and a used truck. It’s very easy to get into some businesses. The whole thing is about scalability and finding the resources to help you.
Now one other aspect of it is you could find a partner. It doesn’t make sense to have a partner who’s another lawn mower guy. It might make sense for you to have a partner who is a finance guy or a marketing guy. So when you joined partnerships it’s always good to have complementary skills. And that’s probably the way that I would go if I had little or no money was to find someone else who did and who wanted a part of the business for themselves as well.
How Do I Brand Myself?
So you’ve got the money and you’ve got this great idea. Now you want to start to brand yourself how you want the world to see you. One of the things that made my book successful was the fact that a lot of it is common sense like “How to pick a great business name.” I have this great story about one of my clients. Lovely guy but he’s from South Asia he’s from India. His company was called Dubble Exxpresgo. There’s no way in the world anybody is going to find them in the yellow pages (if people still use those) or even on line they’re not going to find them. So I created a Web site for them. Vancouvervendingmachines.com. He sells vending machines! That may sound really funny and silly, but the bottom line is you have to start off with something that’s going to relate to people.
To start off with branding, come up with a guerrilla marketing budget. I love guerilla marketing because guerilla marketing means marketing without spending any money. How do you do that? Get friends and family enlisted into the process of getting your name out there. Join social media like LinkedIn, Twitter, and Facebook. Tell the world about you!
It can be a long struggle. It might take you eight months to a year to get any momentum. But that’s also the reason for having an investor and having some money behind you because most people don’t have enough money to run a business for six months. Six months is roughly the average time it takes to start bringing in revenue. Part of being an entrepreneur is being a risk taker. That is like like taking that step off the dock into the water; it’s a big deal! Whether you’re willing to take that risk or if you just want a calm, easy road defines you as an entrepeneur. If you want a calm and easy road, go get a franchise. You’ve got to be the right person to do your business justice.
I’ve seen a lot of people try to set up their own companies, and they got to a point where the company got too big for them. They had to bring other people in to manage it. And that’s the perfect scenario. But if you’re not dedicated or you don’t have the passion, your personality will run your business and when you need to change to grow, that will be a tough nut to crack.
The second thing is you have to have the resources. Whether it is borrowed money or an investor you still have to have some resources to be able to do it. I know there’s government funding and government support, but that’s few and far between and hard to get. There are training programs you can take online that will give you a heads up on how to initiate all these plans. You have to have a strategy for moving forward. You have to know when you’re reaching milestones so you can see just how to gauge yourself on how your business is doing.
How Do I Sell?
The toughest part for anybody is selling your product or service. I actually have T-shirts made that are black that have in yellow letters across it, “Doubt kills the warrior.” Lack of confidence in yourself is probably the number one cause of failure in all business. You understand when you’re starting out that maybe the world is charging $50 an hour for your product or your service, and you think “Well, I’m not there yet. I’m going to charge $25 an hour and I’m going to get more work because I’m cheaper.” Well, you might stay that way for 10 years if you don’t have the confidence that you reached that level and to raise your price.
And that’s just one of the things that people have a hard time with. They think, “OK, I’ve got this product that’s really good. How do I sell it?” And they stop right at the point where they have to go out and sell it. They’ll do everything else. They’ll clean up the office or they’ll take the dog for a walk rather than pick up the phone and talk to a prospective client.
You have to define your SWOT analysis. A SWOT analysis is your strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal. So part of your planning process is to come down with all your strengths but more importantly all your weaknesses have to be defined too. And then you can put down underneath all your weaknesses how you’re going to mitigate that. “I can’t sell. I need to hire a salesman.” “I can’t manage my books. I need a bookkeeper.”
Pricing a Product
I can’t get rid of them right now but there’s 32 different types of pricing.” What I do is I send people into the competitions shops or offices and do intelligence gathering. Find out how they do things. Go on their Web site, check out what they’re doing to sell their product or service. Yeah I mean when you’re developing your price, you have to understand at your basic level if you are the cheap product on the market or if you’re you the high end one. Only you can determine that. Your customers will reinforce it.
Everybody you know starts off as a technician in their own business whether it’s a service or product. They’re doing all the bookkeeping, they’re doing all the marketing, and they’re doing everything the business requires. Well there comes a point where you can’t do everything well, so you hire your first employee. What happens is you get to another point where you have to replace yourself to move on to the next level, which would be a manager. As you’re watching all your now growing employees grow, you pick out one that’s really, really hot and you make him the manager to replace yourself. So now you are the CEO, and at that level now you can devote all of your energy on growth of the business.
One of the things that people really don’t use a lot is getting a mentor. I found that there are people out there that love to give back. And of course, I give back too. There are retired people who would love to get hands on and get back into it because they don’t want to retire at 50 or 60. I’ve also had young entrepreneurs. I have a husband and wife team . They’re 30. What we set up was a board of advisors, unpaid, and once a month we would sit down over a coffee or a drink and say “What are your problems? Can we offer solutions?” And that really really worked. They were supportive advisors, just three or four people. They could be friends; they could be industry people; they could be anybody, but make sure it works for you.
How Do I Evolve My Role?
You’ve grown a little bit and now you’ve become the CEO of your own company. That’s a challenge because a lot of people just don’t have that in them. So as you’re growing, you can easily find out what kind of management style you have. Some people lead by consensus which drives me crazy because you’re just asking everybody in the company what we should do next. I actually have a CEO in Seattle who I mentor and he calls me his ghost CEO because what I do is I wait for his call and he calls me before he makes every big decision and asked me if it’s the right one because his five partners—imagine, FIVE partners!—are all his best friends. He doesn’t want to look bad.
One of the problems when you’re becoming the head of your company is that you’re not the technician anymore. The reason you probably got into the business in the first place was the fact that you had this passion for something. My first business was as a commercial photographer, and it really was really hard for me to give up a good gig and not give it to one of my staff to do. You really have to be the personality type to get to that CEO level. You’re just sort of graduate to it after having gone through the technician part, the management part, and then the CEO .
How Do you Maintain your Success Once You’ve Actually Got There?
There’s a lot of companies that have a quality control department to make sure that everything’s consistent. I mean if you have a McDonald burger in Boston it better taste the same as it does in Vancouver. So you have to be constantly on the on the prowl in your own business for things that need improvement. And you equally have to be as good at looking at your competitors and what they’re doing. Going back to McDonald’s. You know they brought in a healthy breakfast. Well Burger King doesn’t do the same, and they’re in trouble there because they don’t have something to compete with. There’s a constant gathering of intelligence necessary, whether it’s competition or internal or whatever to keep your company strong and in a good place for success.
Overall, you need to have a really good product. You have to have the passion and you need support behind it whether it’s family friends or a mentor. You should never pass up the opportunity to get a mentor. Lots of friends of mine will volunteer to help somebody struggling at the beginning. This is a pay it forward society, and at one point I had a client who was opening up a video shop (this goes back a number of years because most people don’t know what a video is.) I said to them “Well, I really don’t know the system either. I know how to run a company, but I don’t know anything
about the video market where you can actually go into a store and rent a video.”
So on a lark, I called up a one person video store 350 miles away and asked him for help. And he said, “You know what? I’m coming to Vancouver next weekend. Can I come in and help you?” He said “If you pay for my flight, I will set it all up for you.” We weren’t competitors, but he saw a chance to give something back from information and knowledge that he’s learned from others. So that was a really good plan for this client of mine.