“What kind of business should I start?”, “How do I grow a successful business?”
Most aspiring entrepreneurs ask these very questions at the beginning of their journey into business. If you are like most people, the idea of starting your own business probably involves a restaurant franchise, a coffee shop, or a retail store of some sort (such as selling clothes or books). Or, if you’re a little more in tune with the times, you’ll be thinking of starting a technology company of some sort and hoping to secure some venture capital funding.
There is absolutely nothing wrong with these types of businesses. However, if you’re a first-time entrepreneur (and likely, you are if you’re asking this question) these businesses are a bad idea to start with. They are very risky, take a lot of start-up capital, and you’ll most likely end up doing 12-hour work days, 7 days a week. Even more so, you are betting your most important resources (time and money) on an unproven strategy. To grow a successful business, you need a vision, achievable goals and a concrete plan to reach those goals.
Instead, I challenge you to think of your first business as a pet project of some sort. Something that you are passionate about, and don’t mind spending a little bit of money on here and there. You’ll never “fail” — you’re simply learning.
And to maximize your chances of success with your business, here are 6 rules you should follow when you’re launching a new business that can help to grow a successful business.
1. Solve a certain problem for a certain group of people.
Instead of thinking about business ideas, successful entrepreneurs think about problem-solving for a select group. Look to answer the question, “how can I solve THAT problem?” when brainstorming for business ideas. People are more inclined to buy when they’re in a state of looking for a solution to their problem. It’s much easier to sell the cure instead of the prevention.
Preferably, you should be a member of that particular group to TRULY know what solutions you can offer them. After all, you can’t REALLY know what sort of problems pregnant women have if you’ve never been pregnant yourself, can you?
2. Test the demand for your product prior to launch.
Do not create a product and hope to create a demand for it once it’s done. Ideally, you should be able to launch a dry test before you spend valuable time and resources developing the product. Set up a sales page and launch an AdWords campaign and see how many people “purchase” your product. Don’t take their credit card information of course; simply say you are sold out and will contact them once you’re fully stocked again. Additionally, you can also list the item on eBay and pull down the listing at the last minute.
3. Run as quickly or as cheaply as possible.
You don’t have the capital, nor the resources, to build the next PSP or iPod just yet. If you attempt to build something that huge and this is your first time going into business, your chances for failure is very, very high. Once your dry test proves successful, you should be able to quickly capitalize on the demand even if that means starting out with half a product (half a product, NOT a half-ass product). It’s perfectly acceptable to start small for now and get bigger as you progress.
4. Outsource the bulk of the work.
Not being able to outsource is a common syndrome for would-be entrepreneurs. They insist on doing it all themselves, then burn themselves out in the process. Don’t be cheap, and outsource activities. Think about this as a wise investment for your business. There are plenty of entrepreneurs who have launched entire businesses on the Internet by outsourcing everything, even product creation.
You shouldn’t be working on trivial things when you can save days or weeks of work by simply paying someone else to do it. So if web design or programming isn’t your strong suit, find someone on Elance who can do it cheaply. Focus your efforts on marketing and selling your product.
5. Never buy anything that isn’t required until you’re making a profit.
Did you know that you only have to double a dollar 20 times before you turn it into a million? Take $1 and double that to end up with $2. Double that to end up with $4. Double that to end up with $8… By step 20, you would’ve made over a million dollars.
Of course, that’s easier said than done. The lesson here is to take the profits you’ve earned and reinvest them back into the business. Until you’re making a profit, do not spend on unnecessary things like coffee mugs with your logo on them, new desks, office rent, etc. Before you buy anything, first ask yourself this question: will the business crumble tomorrow if I don’t get this right now? If not, put it on the backburner and move on.
6. Scale the business.
This is perhaps the most important rule of them all. After all, you’re starting a business, not getting a job. The end goal for your company should be that it functions without your presence. Your business should function in the same way whether you’re selling 10 or 10,000 products. Be the police officer on the side of the road who steps in when needed, instead of a toll booth which all cars need to pass through.