What I wish I knew when starting my first business! If you are starting a new business then this podcast is perfect for you!
What we are going to talk about now is what I wish I knew before my first start-up. I kind of picked a few things that I definitely wish I would have known.
I addressed six things here and I’m going to take you through them one at a time, and hopefully, they can help you because I wish I would have had this information.
Start a Business the Marketplace Wants, Not What You Think It Wants
This is important that it’s not the Field of Dreams idea where you think if you build it or you start it, customers will just come buy it. It just doesn’t happen that way. You really need to test your idea. In service companies, I have a demographic that I think is just an absolute home run, but before I go to another city or another area, I will test it with postcards in 5000 increments, because there’s a miracle number that we should get in response in a really good area. This allows me just to test the area. I can buy a local phone number, a temporary phone number, and then if we get a good response, we’ll just run the business on the fly. We will literally launch it immediately, but we’re not going to go out and buy an office and buy all these things if we don’t have a business that people want. So again, start a business the marketplace wants and not what you think it wants.
Don’t Spend a Dime on Anything Extra
I have wasted so much time and money and time where I thought I needed to have everything perfect. The office needed to be perfect, so you know, we could have got by with one desk, but you know, I thought we’d hire three people so I’d buy three desks or we could have got by with one computer and one phone, but I thought we’d grow quickly so I’d buy three of everything.
Don’t spend a dime and I mean a dime on anything extra. Just get it off the ground. You need to think like a minimalist because money is oxygen to a start-up and if you wasted it on something other than what is absolutely necessary to get it off the ground, you’re wasting your oxygen and you’re wasting your supply line for a start-up.
Don’t Start a Business You Would Not Bet Your Life On
That’s a bit much, but it needs to be something pretty close to that. Every business I started, I felt extraordinarily confident that it would do well. I need to feel that confident. Well, that’s why I encourage you to do a business plan. A business plan throws some curveballs at you, and if you can’t answer them on paper, you’re never going to answer them in real life. That’s the thing that I do like about a business plan, is that I want to go into a business feeling very confident.
I want to beta test it. I’m a lot more excited about going into a business where if I’ve already beta tested it and I’ve gotten a good customer response already. If I haven’t gotten any response, well it’s hard to get really, really confident about that business. It needs to be something that you feel very, very confident about.
Hire the Person that Can Increase the Odds of Success
What’s the one hire or partner that I should have brought in with me, I shoulda hired that would have dramatically increased the odds of the business being successful? Bring that person on board now. A lot of times that’s in sales. Hire a superstar salesperson from day one, that is where you don’t want to skim money. That’s where you don’t want to bring in a family member. Bring in a sales professional, especially if you don’t understand an industry really well.
I started a business 20 years ago. I had no understanding of the industry, I knew how to market it, and I knew there was a need for it. I was very confident that I could generate business but I had nobody with me that had any expertise and within a year I had to bring a partner on. In hindsight, it would have been great to bring them on in the beginning. I didn’t have the money and I couldn’t have done that. I do try to bring in someone from day one that can make a huge impact and I find it’s in one of two areas. They either are great in sales, or they have just a tremendous understanding of the business that we’re going into.
What’s the one hire that you need that would make the greatest impact? Make the hire now, don’t wait. I’ve given up a salary before bringing on great hires. I’ve done it in every startup I’ve ever had because I’ve never quit one my businesses to start another business. I always had money coming in and I just made it work.
Create a Basic Business Plan
I would have known all the costs to launch and to continue operating. This is where a business plan helps. Now, I have a lot of different business plans. I wrote the book, The World’s Greatest Business Plan. At this point, I have about six to eight things that are just really critical for me, and it just allows me to vet an idea really quickly. I have done that podcast before about vetting a business idea or vetting a start-up idea. I want to do a business plan because I want to know my costs.
I’ve used the illustration, this new football league that started up a few years ago, and then they never really got off the ground. They put $250 million into this, and then they didn’t realize that their operating costs were going to be more than they were, so they shut it down. Think about that, these are some major investors that put up some up money for this new football league that was going to do so well, and then they shut it down before the end of the season because they didn’t realize their operating costs for what they were. That can’t happen when you probably had billionaire investors doing that.
Your business plan really, it solves a lot of problems and it warns you of potential things. You’ll make adjustments along the way, but what it has to do is give you your cost to launch and your cost to operate because they’re different. A launch might have a lot of promotional money in it or to set up a warehouse or set up or initial inventory. The launch money and the operating money are completely different and you need to know those costs.
Know How You are Going to Attract Customers
What is your marketing plan? Do you know who’s your target customer and how are you going to attract them?
I mean, you hear all these questions. If you’ve ever watched Shark Tank, they’re like, “What’s your customer acquisition rate, how are you attracting customers, how are you converting those into sales?”. That would be my next thing, but this is before the start-up, so I can’t really get into sales because you never know those numbers, but you can know how you’re going to attract customers. You need to know who your target customer is and what vehicles you’re going to use, as in TV, radio, digital marketing, social media, etc.
How are you going to attract them and have you done any beta testing to see if it works? I would almost rather start a business completely beta-tested, and if I get a great response, I launch it 20 days from now and just tell customers that we had such an overwhelming response to our launch that we are a little bit behind the eightball. I’d rather do it that way, then pay for everything prior to my launch and then have crickets.
So if I had a choice between the two, I would definitely set up like a virtual company and then adjust on the fly.
