This podcast is about knowing your industry and the value that you have when you understand your industry.
I have, sadly, started businesses where I did not understand the industry very well and it cost me a lot of money.
I think there are five reasons why you do want to have an industry understanding. Five reasons why you want to know about the industry, that you’re moving forward in. My advice before we even get started is if you do not have this industry understanding that you partner with someone that does. That has been my secret for the last 15-20 years. I don’t let industry knowledge be my deterrent because I look to solve a problem. I don’t care what industry it’s in. If I see that we could solve a problem and there’s a need for that, there’s a big market for it. Then I kind of reverse engineer from there and I will go find someone who fits what I want in a business partner and we will partner to solve the problem. In this way, I’ve used partnerships as my way of having industry knowledge, personally.
Industry Knowledge Will Save You Money
I have spent so much money on things I just didn’t understand and I spent money on things I thought I needed to move forward in the businesses that I chose where I didn’t have a really clear understanding of the industry. So, if you partner with someone, they’re going to tell you what you should have and you shouldn’t have.
The reason why I always talk about partnerships is I’ve often said that I would rather have 50% of a lot than 100% of a little.
Industry Knowledge Will Help You Understand You Target Customers’ Needs and Wants
If you have someone or you understand the industry, you’re going to know far better what the target customer looks like and what are their typical needs and wants. Where if you have no understanding of the industry, you’re really guessing and that ends up costing a great deal of money. You end up creating a product or a service that nobody actually wants or needs.
Understanding the Industry Terminology and Slang Helps in Marketing
It’s very important when you’re interviewing talented people if they can tell that you don’t know your tail from a hole in the ground. It puts you at a tremendous disadvantage and it’s very hard to bring in high-level talent if they feel like the person at the top of the food chain has no clue what’s going on.
Industry Knowledge Saves You Time
If you have somebody who understands the industry, they should be able to get you from point A to point B faster.
If I go on vacation and I want to go see a tourist spot, I want to have a tour guide. They’re going to show me the short cuts and what I actually want to see. And that’s the same case if you have somebody with industry knowledge within the business that you are starting.
Industry Knowledge Gives Your Company Credibility with Customers and Investors
If you present your business idea to somebody who’s investing in it, anybody who’s worth their salt is going to ask you about the knowledge your company has within this industry and who’s bringing the knowledge to the table, and who understands this industry. There has to be someone who understands the industry.
It’s hard to market to the customers if you have no credibility within the industry you’re in.
Fake It Until You Make It
I’m going to be some secrets to how I faked it for a few years. It worked okay but I learned how to fake it and then I still decided that partnering was the best way to do it.
Let’s say you started this business and you don’t have the industry knowledge and you probably want the second and you don’t know who to partner with. Let me give you a few secrets that I have used over the years to give my businesses the illusion of having experience in understanding the industry. It did help give me some industry but again, my default go-to move is partnering.
The first thing I did is when I started a remodeling company is I realized is that I need to have all employees and technicians with a minimum of 10 years experience. I didn’t know enough to help them, so I just needed to hire experienced people so had to pay them more because I knew I didn’t know what the heck I was doing and so I could not go out to a job site and give them any advice.
Second, we were licensed, bonded, and insured, which always gives you this envelope of protection and credibility.
Next, I joined industry groups in our area would be like the Blue Ridge Home Builders, which associated you with other credible businesses within our industry as well as the Better Business Bureau.
This is something I learned when I did not have industry understanding is it made me dependent on employees who did have it and I’m telling you, that’s like feeling hostage and I don’t recommend that. That’s why I go into businesses with partners. You have to have this area covered.
When I get into the business, I try to learn about the industry by asking questions of my partners so that I have a working knowledge of the industry.
If you read Andrew Carnegie, there were countless people within his organization that knew more about steel and manufacturing than he did, but he made sure they were on his think-tank. They were in his team and he knew enough.
You don’t have to be the most knowledgeable person. I am not the most knowledgeable person and in any of my businesses. I am the most knowledgeable about how to start and or grow a business. That’s my area that I understand, really, really well.