You may be looking at your personal balance sheet and cash flow statement, and realize you’re running pretty tight with the money. Really tight. You might be thinking it is time to look for supplemental income sources by starting a business.
Decades ago, when I was just getting my career in banking started, I saw that the Social Security System was flawed. It was a sham. For my entire working career, I made financial decisions based upon the assumption that SSI would not be there when it came time for me to belly up to the bar for my cool sip of government money. If I DO get money from SSI in a little over a decade, I will look at it as “bonus money”.
That view has not changed. Social Security is still structurally – and financially – bankrupt. Soon enough, this Ponzi Scheme will collapse, as they always do.
I also have made the assumption that investment and business decisions I’ve made may not play out as planned. As they say, “Stuff happens”. Just as with prepping for a natural disaster, I assume a financial disaster could be a real possibility. One or more of my plans for future cash flow might go sideways.
So I give myself options. One of them is starting a business. As many as I can handle.
Instead of investing research time and resources into another company – via the stock market – I invest in myself. Without going into mind-numbing detail, I’ve got a number of models I’m working with.
One model has been to start a business, get it running, then hand off the operation to competent individuals. I get payments from the business in lieu of dividends from a public company. Where the numbers make sense, I will sell the business and cash out.
Another is self-servicing (for lack of a better term) online businesses where you provide information one time that’s in demand (via videos or e-books) and sell access to that information. The buyer pays once, has unlimited access, and you don’t need to do anything other than ensure your servers are serving, and the occasional content updates. Training and How-To products fall into this category.
Regardless of the field, there are some fundamentals that must be followed when starting a business – AFTER you’ve determined if there is enough market demand for what you’ll be selling. Here are my thoughts on what it takes. Later in this article, you’ll find some videos from other business owners – some you’ve surely seen on TV – giving their take on what is needed for a successfully starting a business.
Solve A Problem
And solve it in a way where you can solve it better than the other guy. Your product or service has got to have a niche, or they won’t choose you first (or at all).
For instance, with my gold shop, I can put your gold or silver in your hands immediately. Give me your money, walk out the door with your bag of silver. An online vendor can’t say the same thing.
Market To The “Why” Not To The “What”
I don’t care what kind of business you’re selling, you will be more successful if you are able to find an emotional hook.
Let’s say you’re an accountant for small businesses. There are a MILLION JILLION accountants out there, all looking to do the same thing you do. You can focus on the What – you are the best QuickBooks person on the planet, you can make an Excel spreadsheet weep with your accuracy and expertise, and you’ve got the lowest prices in town. Every other accountant in town says the same thing.
OR, you can focus on the Why – you provide a seamless, painless service that allows the business owner to focus on their brilliant, visionary product or service. THEN you follow up with the What – tooting your own horn on your credentials, superior expertise, and how you can do it for less than an in-house accountant.
Don’t just give lip-service to the Why. No one but you and your mom cares that you’re the smartest kid on the block. Leave your ego at the door.
With my gold shop, I don’t just sell gold and silver. I sell privacy and anonymity. For everything I sell, I cost more than an online vendor of the exact same product. When a customer comes in and starts quoting online prices, I nod, and tell them, “If your PRIMARY reason for buying metals is price, I can’t compete with the online guys. Where they can’t compete with me is on your privacy. With an online purchase, the credit card company, the shipping company and the vendor all have electronic records of exactly what you purchased. In my store, I couldn’t care less about your name and where you live. I give you a manual receipt, and you could tell me your name is Donald Duck for all I care!”
Sell to the heart, not the head.
This is so cliche, yet so true. The whole, “Exceeding the customer’s expectations” is what gets you re-hired. It’s very expensive to get a customer to buy your product or to even walk in your door. You NEVER want them to consider going elsewhere after they’ve used your product or service. In fact, you want them to be so happy they found you that they now become free advertising for your company to their friends and “circles of influence”.
>Give them truly free education. An educated customer is a loyal customer.
>Depending on your product, give them more than they paid for. If you sell coffee beans, give them an extra half-scoop. Or even better, give them some of that new tea product you just started selling.
>Make them feel welcome by offering them coffee, bottled water or the like. The longer they stick around, the more likely they are to buy. Every customer that walks in our store gets offered coffee or water, and if they have kids, we let them go to the “Treasure Chest” and pick out a free foreign coin. It helps with building a relationship.
If one of my customers buys $100 face amount pre-1965 silver coins, I place in their hands a few extra silver dimes, saying “The coins you just bought were machine counted, but even a machine can make an error. Take these with our compliments just to make sure the count was right.” They love it.
If they buy some jewelry, I tell them to bring it in at any time, and we’ll clean it for free. They can also bring in jewelry they bought elsewhere for the same service. It costs me next to nothing, but strengthens our relationship, and keep me “top of mind”.
Differentiate yourself from the rest of the pack.
Build A Business With The Infrastructure To Sell It
Here’s a concept: Assume you’re going to be successful and someone wants to buy your business! Unless you’re selling the business to an insider or employee, a prospective buyer is going to want to see “the books” and how you operate your business.
Employment policies, regulatory compliance policies (damned near EVERY business is affected by this nowadays), licensing, marketing, supplier and vendor lists, security issues, banking relationships, how to update websites and social media accounts, etc.
I’m not trying to pimp franchises, but this is really what they’re selling. They’re selling their “play book”. How to do this, how to market that, where to buy the other thing.
Not having a documented business infrastructure won’t necessarily kill a potential business sale, but having one will certainly increase the value. And as a side-bonus, you use it to train your new employees so that your product or service being sold is done so in a consistent manner.
Acknowledge Your Weaknesses
In many of the videos that follow, there is a recurring theme: Hire, or partner with someone that is different from you. If you can sell, hire someone that can manage inventory and pay the bills, and someone who can set the strategic direction of the business. If you’re a technician or designer who is the expert on a given product or service, get someone who can sell it for you and someone who can keep the boat afloat. If you’re a visionary that can lead an organization, get someone who can sell and someone who can manage the business.
Do you see the recurring theme here? You’ve got to have all 3 legs to the stool or the stool falls over: Leader, Sales and Operations. Know this, though: Sales fix all ills. It may seem like a, “Well, DUH!” concept, but the reason so many businesses with great ideas or products fail, is because they can’t get them sold.
It is the rare entrepreneur that can do all three, at least for a sustained period of time. Getting the business off the ground can be done solo, but you will need to fill in the missing pieces rather rapidly to sustain a thriving and successful business.
Mark Cuban rubs a lot of people the wrong way. He’s brash and cocky. And incredibly successful in business. Listen and learn.
Guy Kawasaki is generally credited with the meteoric rise and success of the Apple Macintosh computer. His business principles apply to any business of any size. Watch both parts of this great interview –
I love this guy. He runs a successful firearms training and consulting business. He’s passionate about what he does, but understands that a business without structure is nothing more than a hobby.
Of all of the videos, I think this one gives the best over-all snap-shot of what it takes.
Warning: Not Safe For Work (or kids) –
Get out there and do it.