Money is better than poverty, if only for financial reasons – Woody Allen
Having your own business is absolutely the best way to attain financial security, but beware!
There are a lot of pitfalls that trip up the majority of startup entrepreneurs. That’s what I want to help you avoid, so you can go on to have the life you dream of.
If you’ve ever tried to start a business without much success, this first article in this series could be the start of just what you need. Here I cover a broad overview of what you need to start and run a successful business.
What principles should new and existing business owners know or gain knowledge of?
1) Start with the end in mind
Have a picture in your mind of how you want it to end up. This is assuming you’ve spent a lot of time thinking about what you want to do – I’ll come back to this at the end. Have a picture in your mind of where you want your business to end up.
There’s a lot of hoo haa – particularly on the internet – about various ways of visualising your success.
But there’s no question whatsoever that having a picture in your mind about where you want to end up will ensure you’re far more likely up there. So you want to know the kind of business you want to have.
2) Get the lay of the land
This next one is really from an old military generals’ maxim where they say that ‘time spent on reconnaissance is seldom wasted’.
The importance of reconnaissance – don’t just say I’ve got a great idea: here we go.
So many people are in such a hurry to make money, they lose everything they’ve got. Believe me, I know; I’m one of them. They’re in a hurry to make money, they don’t conduct reconnaissance.
So, if you know what area you’re trying to get into the first thing you’ve got to do is study other successful businesses that seem to be in that area. If you want to get into a certain area, you’ve got to study what everyone’s doing.
Marketing is a battle: fighting with other people. And generals that succeed are those who understand what all the other generals are up to.
So, the importance of reconnaissance is studying the other successful businesses and, by the way, studying unsuccessful businesses. We learn as much from the way in which people have failed as we do from the way in which people succeed.
3) You do not have to reinvent the wheel!
Following on from this is the value of stealing – although I don’t really like using that word: it’s too negative. I prefer modelling: see what others have done and try to model their success.
Being the first person to try something is not necessarily a good idea. There’s a lot to be said for modelling others’ ideas.
So study; see what others are doing and model them.
“There is only one valid definition of business purpose: to create a customer.” – Peter Drucker
4) Know what a customer is worth
You’ve got to realise business is about customers.
You’ve got to realise the value of a customer.
Obviously, it’s important to have a good product or service but you’ve got to remember where the money comes from.
Now, what you’re actually doing in a business, whatever kind of business it is – it can be an online business; it can be a mail order business; it can be a retail store – what you are trying to do is to gain as many customers as you can.
And each of those customers will, over a period of time, spend a certain amount of money. And you have to try and calculate how much a customer is worth to you.
In fact, the most important thing of all to consider is how much it’s worth paying to get a new customer. That’s very important: what’s the value of a customer to you? How much will they spend with you over time?
If you’re a new business you won’t know this but this is one calculation you have to start thinking about right from the start. Because if you don’t know how much a customer is worth you are flying blind. You don’t know what you should invest to get a customer; you don’t know what to invest to keep a customer.
5) Test and measure
You need to test and measure.
If you can’t measure it, you can’t manage it. Therefore, everything you do; every activity you undertake, you’ve got to measure.
When you start a business you’re going to measure. What are you going to measure? You’re going to measure how much you’re going to have to pay for rent – if rent is involved. If you’re on the internet how much it is going to cost you to set up another website?
So everything starts with measurement. And then from measurement comes testing. Because you never know what’s going to work. You may be surprised by what does work and what doesn’t work.
So you have to test and measure everything. This is a complicated subject but very, very important.
6) What’s your unique thing?
Just remember, going back to what I said earlier, that you’re in a battle; you’re fighting against other people.
So, if you look at what happens in a battle, generally speaking, the winner is the one who chooses the right battleground. He has things the enemy doesn’t have – maybe more men; you’re the first to have a machine gun or the enemy has no machine gun at all, or whatever it may be.
The next thing is you determine how you differ from your competitors in many ways:
- In your personality;
- The personality of your business – people like to do business with people they like;
- The positioning of your business – what kind of business are you? If you look at the analogy of airlines, Virgin and British Airways: they both fly the same planes, to the same places, at much the same time, they both cost the same. And they both have pretty good service. The only real difference is the character of the airline and the people who work for them;
- And then, the thing that people talk an awful lot about – the USP, the unique selling position. By that I mean, what are the reasons, or the reason, for people choosing you rather than your competitor? Because in the end, marketing is about choice. And when we talk about setting up a business, in the end, it boils down to marketing to a very large extent.
7) Who do you choose to BE to your market?
The next point you should consider, is how all these things I’ve mentioned – personality, positioning, USP, character of your business (You have to stop and ask yourself, what kind of person am I? Because whether you like it or not, your business will reflect you. ) – how do all these different things lead to a brand? What sort of brand do you want to be?
There’s all sort of nonsense talked about brands. The things I’ve mentioned are the things that add up to a brand – the way you’re perceived in other people’s minds.
8) Get ready to work!
This next point you should consider is that this is hard work. This is all about the process. Therefore you have to spend a lot of time studying how precisely do you acquire, retain and profit from customers.
You will need to consider what proposition you will offer to people; which media can you use to reach people; how do you price your product or service; how will you ask people to pay?
And once you’ve got these people, how will you keep them? What is most likely to keep them?
How are you going to make money? You’ll need to spend a lot of time thinking about that.
9) Never stop asking and listening
The next thing you have to start thinking about – and never stop thinking about, night and day – is the need to stay close to customers.
If you want to succeed, there are three things you have to do:
- Respect your customers. Because that’s where the money comes from. Don’t treat them like idiots. Don’t patronise them. Don’t exploit them.
- Stay close to your customers. Spend your time thinking about them: what they want; what they don’t want.
- Use your imagination.
10) Pay attention to detail
You must pay attention to detail.
Far too many people are wandering around in the wide blue yonder with their grand desires and their big pictures of what they’re going to do. They forget that it’s detail that makes the difference; attention to detail.
So you’ve got to spend an awful lot of time looking at what might go wrong because, believe me, more things will go wrong than you can possibly imagine.
The next thing you have to think about …
11) It’s in the data
How important is the database?
The database is the list, if you like, on which you hold your customers and their details. It is an extraordinarily valuable asset.
If one company buys another, particularly in financial services, they’re not buying that company because they like the buildings they own or the people they employ. They are buying because of the product they sell – if it’s unique – and the database; the customers.
So, the importance of the database; you have to spend a lot of time thinking about that.
And if all the lists I’ve given you haven’t put you off enough, you must remember the importance of persistence.
The man who built up McDonald’s had a favourite quotation, which was from an American president called, Calvin Coolidge, and the last line of this quotation was, “Persistence alone is omnipotent.”
A few years ago chief executives were asked what they think is the most important thing, the most important characteristic, the most important driver – if you like – of success. And over 70% of them said ‘persistence’.
Warren Buffet said the most important thing is focus.
And that in a way takes us back to the very first thing I said – having a picture in your mind of how you want it to end up. That’s focus – you have this picture in your mind and you focus on it.
Well, that’s it for this article. I hope you’ve found it useful.
In the meantime, let me know what you think in the comments, below.