moneyFYI
Financial Freedom Is Merely Organized Common Sense
Starting A Business
There are many people starting businesses these days. Some because they need some extra income, others because they think they can do better in their specialty.
Most people find it far more trying and stressful than they expected.
Piano versus guitar.
Some people adapt quickly, while others are surprised.
Working in a large corporation is like playing the piano. You must play the note, but you don’t have to make it first. Your own business is more like the guitar. You have to make the note before you can play it.
Unless you know who your customers are before you begin, you must do some market research to make sure such customers exist, are near enough to be able to service them, and they can afford to pay the prices you need. Businesses that are aiming at a large unknown audience can expect to take six months at least to see results. I saw a video with Jeff Bezos talking about starting Amazon. They had one sale in the first six months. Be ready for a drought if you don’t have customers before you start.
Marketing versus sales.
Marketing is more general and concerns itself with what customers want to buy and what you could deliver. It assesses competitors, prices, trends and more. Selling, on the other hand, is dealing directly with customers on the basis of benefits you can offer for a price that delivers more value than they pay.
Where the crunch happens. Most new entrepreneurs spend 40% to 60% of their time finding and selling to potential customers. That does not leave a lot of time to deliver service if you should find a customer. Be a little selective in the beginning.
The Drucker observation.
“The purpose of a business is to create a customer.”
That sounds a bit too easy, but when you think about how businesses and customers connect, you will find it leads you where you need to go. Find what customers will buy and build it. If you build first and assume customers will want it, you are adding risk,
You and your customers work on the basis of exchanging values. You deliver something for $X, and they pay. The transaction never happens unless the value they receive is much higher than that. Many new entrepreneurs make that happen by lowering their prices. Bad mistake. Better to add more values. You will find very quickly that your minimum viable price is your maximum price as soon as you say it. Avoid price cutting and find useful values you can add for little cost.
The things many people overlook.
Everything will cost more and take longer.
Think how the transition to larger will happen. For example, who will do the work as you grow?
There are only three numbers that matter. Each transition essentially creates a different business. The numbers are none, few, and many. Someone with no employees will find the first hire is complicated. As you grow from small few to bigger few, things are easier. How big few is depend on how you structure your business. The same rules apply to how many customers you have. Few to many involves more legislation that applies to you and issues of supervision and quality control. Usually, that happens around 40 -50 employees.
Have a cheerleader. You will need someone who can keep your spirits up.
It is not easy, but rewarding when it works.
I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software startup, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning and business matters. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Federal Business Development Bank.
Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.
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