Yesterday, I published this post about the strategy you need to make a good business idea actually viable. I told you about Ewing Marion Kauffman, who worked for a pharmaceutical company for years before leaving to start his own business, which he sold forty years later to Dow Chemical for over a billion dollars.
How did Kauffman do it? He followed three guidelines:
1. Simplify your life to what you do best.
2. Focus your efforts on the highest potential customers.
3. Leverage your network of people who know and trust you.
As promised, here’s some advice on how to put those guidelines to work:
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The key is to stick to an industry or function you know well, where you have a relevant network. This is your starting point. My friend George, who I told you about yesterday, has it in spades with every major media outlet around. All he has to do is pick up the phone and producers, bookers and directors will answer his call. That’s money in the bank! He’s not valuing that network at all!
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If a family owned business wants to take you in as a partner, be wary. There’s always the risk they will treat you as an outsider.
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Find a service business that is in high demand. It should have low or no inventory costs (low fixed overhead). You’ll weather the economic storms better because your fixed expenses won’t be so high.
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Avoid businesses that are highly seasonal. Retail fits this description. So does the flower business. Another friend wants to open a flower shop and do floral arrangements. What’s her point of difference with FTD and Flowers.com? Being a florist is seasonal and highly competitive. It’s difficult to generate enough gross margin to pay yourself a decent salary. Only consider taking this plunge if you can find a niche or a local market that is under-served. Fox News took off because the networks abandoned the conservative public. Apply that same kind of analysis to flowers and you might have something. Are there events, audiences or populations that need a certain type of flower at a certain time but no one’s paying attention?
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Build your own reputation as a thought leader; don’t rest on the halo of other high profile names. You’ll always be a slave to them otherwise. Write articles for your trade journals. Start a blog about your expertise. Write a column on other blogs. Get your name out there so you’re not an unknown. It’s far easier to do that now with social media.
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Leverage the relationships with people who know, love and respect you. Suppliers, customers, colleagues, trade association contacts are all your first stop. Build a database then work it strategically. Tell people what you’re doing. Celebrate the little things with them. Keep them informed about your start up idea and the progress you’re making. Everyone loves to cheer on smart people.
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Build a strategic partnership with a current business that needs help because they’re growing like crazy. Consult for them on a project basis. Let them get to know you. Perhaps you can get their client overflow. You’ll generate cash flow sooner and get to breakeven sooner.
You have a great idea, and now you have a great strategy for starting out. But can you be your own boss? Can you weather the hard times? Can you motivate others? Only you can answer those questions, but check back throughout the week for more advice on starting out that may help!
Turning Your Business Idea into a Business Strategy (Part 1) is a part of a week-long series on How To Start Your Own Business.
