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Unusual
Ways Newsletter
(Subscriber Access Only)
(Subscriber Access Only)
I have a few business ideas and insights for you to ponder. These are some of the "big picture" things that people often overlook when they focus on the day-to-day details of doing business. Hopefully one or two of them will inspire you to try a new approach.
Experience
It is surprising how often people go into a new business with relatively little experience. I have seen people with no restaurant experience start a restaurant, for example - and fail. General business experience may be enough, especially if you buy businesses which are already going. If you've run businesses before, you don't need hotel experience to buy a hotel that has been around for years - and succeed with it.
But what about those businesses where experience really is a good idea? Those where the owner is intimately involved, like a small pizza restaurant or a cleaning business, especially call for some experience. How do you get it without risking too much?
By working in that field. Owners of towing, drywalling, and flower selling businesses may not like it, but they are always training their competition. And from the employee side, getting paid to learn all about a future business from the inside is a great deal.
A Job Versus A Real
Business
You can use the words you like, but there is a difference between a business that requires you to be involved every day and one that you can safely ignore for a month. The former is a job, although you do get to be your own boss (not always such a great thing). The latter is a true business, in which your mind and your money work for you instead of your time as a laborer.
Look at businesses with this new perspective: Can they be run without your participation for long periods of time? Some businesses are inherently more manageable in this way, while others require years to get to that point. For example, you might run the show by yourself in your janitorial business, but within a few years grow big enough for employees and a manger.
The ability to hire management leaves you free to go on vacation or to start another business or grow this one larger. In fact, it is tough to grow big if you are "in" the business too much. You need to get a business to be more free-standing before you can take the time to work "on" the business.
What The Customer
Really Wants
In industries which have been around for a long time, it is fairly clear what customers want. That doesn't mean that business people always provide those things, but they can if they want to, because they are easily determined. We know that restaurant-goers want good food, a nice, clean environment, and great service, for example.
Don't be so certain you can guess what customers want in newer industries though. In the world of software sales, for example, the designers don't seem to have a clue. I can't use most word processing programs, for example. If the one I wanted existed, I would buy it today. There is a huge market out there for more usable products.
Asking customers what they want is a start, but they may not always be clear on that. Watch how they use your service or product as well. If a software company sat a non-programmer in front of a computer, for example, and let them try to use their product without help, for example, they would quickly see where design changes were needed.
Cricket has made a lot of money by being the first to recognize how many older folk want a cell phone that simply makes phone calls. There is a fortune to be made in identifying what customers really want - and then giving it to them. Not a new idea, but under-utilized.
Price Testing
Many small business people do not understand the most basic relationships between profit margins, sales and overall profit. As a result they over-price or under-price, and make less money than they could in either case. Most never even consider price testing.
For example, suppose a man is selling picnic tables as a weekend business for $110, and they cost him $90. He makes just $20 each, and sells 25 per month. He may be happy with the extra $500 income, and so never try another approach. For example, perhaps if he raised the price to $140 he would still sell 20 tables each month. Less in sales, but now he works less and makes $800 instead of $500.
The basic idea is that you don't want the most in sales, nor the highest profit margin. You want the price that generates the most total profits. Often you can determine this by testing. Here's a thought to ponder: If a widget costs you $1, and you sell it for $1.05, you can increase the profit-per-sale by five times with just a 29% raise in price to $1.25, and if you lose three-quarters of your customers, you'll still make more 25% more money.
Enjoyment And Interest
When we first started our online business, some of the worst advice I got was to ignore what I was interested in and focus on what the "market" wants. This seemed reasonable at first. What I want should be irrelevant if I want to make money, right? It is what the people out there want.
On the other hand, I also read advice to "just follow your passion, write interesting things, and don't worry about website optimization." That was bad advice as well. You need to work where your passion is, but you also need to find a way within that to provide something people want and do it in a way that makes money.
Note: This is part of the "Unusual Ways"
Newsletter.
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