By Clément Yeung | Published: 8 May, 2009 Page viewed 4378 times
Are you making these business mistakes?
I want to talk to you about some startup business mistakes and why it is massively important for you to familiarize yourself with them before you start trading. For example, it may seem like common sense to know your target market before you create your business, but it’s shocking how many businesses start without really knowing where they stand. This foolish approach accounts for the majority of business startup failures in the US. According to the U.S. Small Business Administration, over 50% of small businesses fail in the first year and 95% fail within the first five years.
Here’s a funny spoof video of a popular TV show called “Dragon’s Den”. It’s a show where some of the world’s most successful venture capitalists sit through pitches for loans in return for stakes in their business. In the video below, we see a couple of entrepreneurs that clearly haven’t done their homework…
Me, my client, noodles and a whole lot of disbelief
Here’s the story of a business startup with massive potential, who because of mistake #1 (lack of business education), sits on a gold mine and has yet failed to act on it. This person has already made their business plan and had it qualified by the local government business authority.
So I’m in a noodle bar (yes, a noodle bar…) meeting with a client for my design business. The mood is relaxed and we’re stuffing our faces with various stringy japanese foods.
Earlier in the week, when we had first met I asked him:
You’re starting a business in catering (not his real business) which is highly competitive, so do you have a unique selling point that sets you apart from the other businesses?
He sat for a moment, looked at the ceiling, and then replied:
“We offer catering training for pet events (not his real niche), and we have discovered that it is not yet provided anywhere else in this area.”
Since then I had researched his product for myself and confirmed that he is in fact sitting on a gold mine, but I wasn’t sure that he quite understood that yet.
The reason for this is simple – there’s literally NO competition in his niche and the demand for his keyword phrase is VERY high.
Back at the noodle bar, I powered up Google (is that even possible?) and showed him the research results. I was about to discover some common, but dissapointing traits associated with startup business owners who have not yet familiarized themselves with their chosen market…
It was made clear to him that from the findings, his business could flourish not just locally but GLOBALLY (more turnover)
It was made clear to him that focusing on this specific area of his business would bring in the most cash and establish him as a “go-to” guy in the marketplace
Now, one thing that I need to mention is that this guy’s miracle niche product is actually sitting in his arsenal as a “side dish” to catering in general. There’s literally THOUSANDS of other businesses out there that are offering his services. In the business plan, there is a lot of talk about how catering will grow and flourish, but very little is mentioned about this very rare, but highly targetted catering training for pet events.
Disturbingly, even after talking to him about recognizing profitable business ideas and highlighting the advantages of having a product that will sell in abundance and not be limited to this geographical area – even after jumping up and down on the noodle bar tables with such excitement that this guy could have found the business of his dreams… the client did not show any enthusiasm or interest in dominating that market.
“Why not?!!” I hear you scream.
It could be for a number of reasons:
He’s uneducated on niche markets
He’s operating from a scarcity mindset, and thinks that he has to appeal to a wide audience to get enough custom from which to survive
He’s worried about supply and demand and figures that if he follows the market research I showed him, that he’ll be inundated and won’t be able to keep up
It’s not about the money or freedom, he simply loves his general catering expertise and plans on doing it for the rest of his life
It could be a mixture of all of the above – in my opinion it’s a mixture of points 1, 2 and 3.
Naturally, I had to know why he seemed strangely apathetic to my emotional presentation… so I asked him. He replied:
We don’t want to get ahead of ourselves. We want to start small, and build ourselves up. We want to offer our catering training for pets services, but we don’t think the market is ready for it yet – so we’re going to aim to spread it via word of mouth – introduce it slowly to our customers. We also don’t think that they’re ready to pay the price for it. It’s expensive. We are going to offer our “flagship” service and we can sell other products/services on the side (various products with high overheads and a lot of time and planning involved).
This approach is fine if you’re planning on joint venturing with other business owners. The problem is that this guy is a one-man band. He didn’t fully grasp the concept of joint venturing before I talked to him about it.
Offering too many products/services is something that I’m very familiar with. It’s so easy to do – we all want to be as appealing and as resourceful as possible. However, when we offer more than we should, we effectively dilute our brand and we end up loitering in too many places, not specializing at anything. This is our scarcity mindset operating at large.
The thing about niche marketing is that you must attack it – literally. Only then, after hammering your marketing down the throats of your prospects (for lack of a better expression) can you hope to claim any kind of “go-to guy” reference. It requires research, and action – two things that your business MUST be fed.
Also, look at the emphasized words – “think“, “small“, “slowly“. Are these the same words used by business with huge, explosive growth? Are these the same words that are used by businesses that have done their research and are recognizing profitable business ideas for what they really are? I don’t think so. What are they using instead? Words like “CONFIDENCE”, “HUGE”, and “ACTION!”.
What else can we deduct from what our client said here? They’re worried about points 2 & 3 - the scarcity mindset and supply & demand. Let’s start with scarcity.
(I want to point out something very fundamental here – YOU WILL ATTRACT THE CUSTOMERS THAT YOU ARE MARKETING TO – therefore, if you operate from a scarcity mindset and price-based competition, you are going to attract troublesome characters that don’t pay you on time and love to freeload. Marj told me the other day, that these kinds of customers will KILL YOU, and I wholeheartedly agree with her)
The Scarcity Mindset
Scarcity is a hard mindset to avoid. We’re constantly drilled by the media, the government, friends and family that there’s a shortage of everything and that true abundance doesn’t exist. Understandably, this may be the position of thought that you operate from when you start your first business. NOT GOOD.
Why? Because you’re going to believe that there is a shortage of customers, or that they don’t have enough money to buy what you sell. Whilst this may be true in some cases, it really doesn’t help to believe this BEFORE you’ve done your research.
There are more than enough customers, and there is more than enough money in the world to which you have access. If this wasn’t true, then all business would fail immediately – because if they’re doing it – YOU CAN TOO.
Supply & Demand
It can be daunting thinking that you are going to be overwhelmed with business and that you don’t have the capacity to hire people to work for you. This is an outdated way of tacking a supply & demand problem. You see, you don’t NEED to hire people to expand. You don’t NEED to rent property to expand – you don’t even NEED more hours in the day, to expand. All you need are the right people, and you can get these people by applying joint ventures.
Marj & I actively promote joint ventures on this blog, because we believe that it is information that everyone should know. Unfortunately this kind of education isn’t taught in schools because apparently it’s not necessary education… but you can read all about them here: joint ventures.
Joint ventures address the problem with supply and demand. They increase your supply so that you can deal with more demand. They leverage the resources of other people so that you, in turn, may profit from them. In my opinion they are the most beneficial, efficient way of doing business and they are practiced daily by huge corporations (would you have guessed that these corporations are so big BECAUSE they know how to leverage their competition’s resources?)
Stop thinking that you haven’t got the capacity to supply your market. You have everything you need already – joint venture with those that can deliver what you promise and your business will expand beyond your wildest dreams. Think BIG and you’ll grow. Think small and you’re doomed to stay small for the rest of your years.
So here’s a simple conclusion.
The only reason that my client didn’t understand the true importance of niche marketing – the reason why my client didn’t make plans to act on a very highly lucrative opportunity - the reason why my client wasn’t recognizing profitable business ideas is a simple case of miseducation or lack thereof.
We must understand our market before we start selling to it. If we build a business plan without having done the necessary research, we may as well be looking for land in the middle of the ocean.
Get the research – LEARN how to research if you don’t already know – and then put together a bullet proof plan that simply cannot fail if you put your heart and soul into it. Starting a business should not be a gamble – there are so many ways of finding out what your market wants that it’s almost a joke (I’ll be talking about these in my next blog post, after which, recognizing profitable business ideas should be a breeze).
I like your site, just read this post. This is exactly what i needed to be reading at this very moment. I need to know the thing you said you’re writing about next. The various ways to go about researching your niche market, who they are and their needs, wants, fears and frustrations. Can you cover this in detail please or direct me to some place I can find out?
Cheers, neroli
http://www.joelbrown.id.au Joel Brown
This is a fantastic post, very in depth.
I think it is absolutely something that happens all the time, and i have no doubt more then a few businesses have failed or at least failed to reach their full potential for not taking not of a potential golden egg they may be sitting on.
What i think it comes down to is businesses need to do their research, do their plan, and unless there is any major blocks foreseen, just go ahead and run with the idea.
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Are You Making these Startup Business Mistakes?
Page viewed 4378 times
Are you making these business mistakes?
I want to talk to you about some startup business mistakes and why it is massively important for you to familiarize yourself with them before you start trading. For example, it may seem like common sense to know your target market before you create your business, but it’s shocking how many businesses start without really knowing where they stand. This foolish approach accounts for the majority of business startup failures in the US. According to the U.S. Small Business Administration, over 50% of small businesses fail in the first year and 95% fail within the first five years.
Here’s a funny spoof video of a popular TV show called “Dragon’s Den”. It’s a show where some of the world’s most successful venture capitalists sit through pitches for loans in return for stakes in their business. In the video below, we see a couple of entrepreneurs that clearly haven’t done their homework…
Me, my client, noodles and a whole lot of disbelief
Here’s the story of a business startup with massive potential, who because of mistake #1 (lack of business education), sits on a gold mine and has yet failed to act on it. This person has already made their business plan and had it qualified by the local government business authority.
So I’m in a noodle bar (yes, a noodle bar…) meeting with a client for my design business. The mood is relaxed and we’re stuffing our faces with various stringy japanese foods.
Earlier in the week, when we had first met I asked him:
He sat for a moment, looked at the ceiling, and then replied:
Since then I had researched his product for myself and confirmed that he is in fact sitting on a gold mine, but I wasn’t sure that he quite understood that yet.
The reason for this is simple – there’s literally NO competition in his niche and the demand for his keyword phrase is VERY high.
Back at the noodle bar, I powered up Google (is that even possible?) and showed him the research results. I was about to discover some common, but dissapointing traits associated with startup business owners who have not yet familiarized themselves with their chosen market…
Now, one thing that I need to mention is that this guy’s miracle niche product is actually sitting in his arsenal as a “side dish” to catering in general. There’s literally THOUSANDS of other businesses out there that are offering his services. In the business plan, there is a lot of talk about how catering will grow and flourish, but very little is mentioned about this very rare, but highly targetted catering training for pet events.
Disturbingly, even after talking to him about recognizing profitable business ideas and highlighting the advantages of having a product that will sell in abundance and not be limited to this geographical area – even after jumping up and down on the noodle bar tables with such excitement that this guy could have found the business of his dreams… the client did not show any enthusiasm or interest in dominating that market.
“Why not?!!” I hear you scream.
It could be for a number of reasons:
It could be a mixture of all of the above – in my opinion it’s a mixture of points 1, 2 and 3.
Naturally, I had to know why he seemed strangely apathetic to my emotional presentation… so I asked him. He replied:
This approach is fine if you’re planning on joint venturing with other business owners. The problem is that this guy is a one-man band. He didn’t fully grasp the concept of joint venturing before I talked to him about it.
Offering too many products/services is something that I’m very familiar with. It’s so easy to do – we all want to be as appealing and as resourceful as possible. However, when we offer more than we should, we effectively dilute our brand and we end up loitering in too many places, not specializing at anything. This is our scarcity mindset operating at large.
The thing about niche marketing is that you must attack it – literally. Only then, after hammering your marketing down the throats of your prospects (for lack of a better expression) can you hope to claim any kind of “go-to guy” reference. It requires research, and action – two things that your business MUST be fed.
Also, look at the emphasized words – “think“, “small“, “slowly“. Are these the same words used by business with huge, explosive growth? Are these the same words that are used by businesses that have done their research and are recognizing profitable business ideas for what they really are? I don’t think so. What are they using instead? Words like “CONFIDENCE”, “HUGE”, and “ACTION!”.
What else can we deduct from what our client said here? They’re worried about points 2 & 3 - the scarcity mindset and supply & demand. Let’s start with scarcity.
(I want to point out something very fundamental here – YOU WILL ATTRACT THE CUSTOMERS THAT YOU ARE MARKETING TO – therefore, if you operate from a scarcity mindset and price-based competition, you are going to attract troublesome characters that don’t pay you on time and love to freeload. Marj told me the other day, that these kinds of customers will KILL YOU, and I wholeheartedly agree with her)
The Scarcity Mindset
Scarcity is a hard mindset to avoid. We’re constantly drilled by the media, the government, friends and family that there’s a shortage of everything and that true abundance doesn’t exist. Understandably, this may be the position of thought that you operate from when you start your first business. NOT GOOD.
Why? Because you’re going to believe that there is a shortage of customers, or that they don’t have enough money to buy what you sell. Whilst this may be true in some cases, it really doesn’t help to believe this BEFORE you’ve done your research.
There are more than enough customers, and there is more than enough money in the world to which you have access. If this wasn’t true, then all business would fail immediately – because if they’re doing it – YOU CAN TOO.
Supply & Demand
It can be daunting thinking that you are going to be overwhelmed with business and that you don’t have the capacity to hire people to work for you. This is an outdated way of tacking a supply & demand problem. You see, you don’t NEED to hire people to expand. You don’t NEED to rent property to expand – you don’t even NEED more hours in the day, to expand. All you need are the right people, and you can get these people by applying joint ventures.
Marj & I actively promote joint ventures on this blog, because we believe that it is information that everyone should know. Unfortunately this kind of education isn’t taught in schools because apparently it’s not necessary education… but you can read all about them here: joint ventures.
Joint ventures address the problem with supply and demand. They increase your supply so that you can deal with more demand. They leverage the resources of other people so that you, in turn, may profit from them. In my opinion they are the most beneficial, efficient way of doing business and they are practiced daily by huge corporations (would you have guessed that these corporations are so big BECAUSE they know how to leverage their competition’s resources?)
Stop thinking that you haven’t got the capacity to supply your market. You have everything you need already – joint venture with those that can deliver what you promise and your business will expand beyond your wildest dreams. Think BIG and you’ll grow. Think small and you’re doomed to stay small for the rest of your years.
So here’s a simple conclusion.
The only reason that my client didn’t understand the true importance of niche marketing – the reason why my client didn’t make plans to act on a very highly lucrative opportunity - the reason why my client wasn’t recognizing profitable business ideas is a simple case of miseducation or lack thereof.
We must understand our market before we start selling to it. If we build a business plan without having done the necessary research, we may as well be looking for land in the middle of the ocean.
Get the research – LEARN how to research if you don’t already know – and then put together a bullet proof plan that simply cannot fail if you put your heart and soul into it. Starting a business should not be a gamble – there are so many ways of finding out what your market wants that it’s almost a joke (I’ll be talking about these in my next blog post, after which, recognizing profitable business ideas should be a breeze).
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