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How to Capture Someone Else’s Market


If you’re a motorcycle enthusiast, you’re probably a fan of The Discovery Channel’s hit show American Chopper about the innovative and entertaining crew at OCC.

Here’s the catch; the show has a huge following of people who aren’t motorcycle fanatics at all. So the question is, how’d they do that? How did they reach a market that’s outside their target market?

The 2 Ingredients for Capturing Someone Else’s Market

1. Sell You, Not Your Product

The Teutul family at Orange County Choppers is a great cast of characters. They have all the comedy and drama you’d expect from a wacky made-for-TV family. The difference is, they’re real. And the strong family values and hilarious misadventures they go through day-to-day are things that everyone can relate to.

In the Laws of Leadership Challenge, law number 14, the law of buy-in, is all about selling yourself before you sell your ideas. You have to believe in the leader before you believe in their ideas.

The Teutuls don’t sell motorcycles on the show. They sell The Teutuls. Motorcycle sales follow.

2. Make a Product that Everyone Can Relate to

You’d think a motorcycle was simple enough for anyone to relate to. But if you’re not a big fan of motorcycles, then you probably don’t care about how they’re built.

What’s easier to relate to is how someone can take inspiration from a NYC firetruck or the Statue of Liberty or a Gillette razor and turn it into a motorcycle. And that’s what OCC does with the theme bikes they build on the show.

They build products that have a story that’s bigger than the product. And easier to relate to than just a regular motorcycle would be.

Keep it Real, and Keep it Simple

Marketing is not selling. Marketing is getting your message out there so people can find you and bring you a sale. If you do it right, it goes viral and then other people start spreading your message for you.

Because their message is real and it’s simple, OCC expanded their market quickly by crossing over into other markets. They captured an audience that should be someone else’s.

And that’s a wild ride. Digg it! Reddit Yahoo Comments (6)

The Entrepreneurs Action Toolkit: Turning Lemons into Lemonade

Seeing lemonade

Entrepreneurs rarely have a solid business plan. They fly blind and frequently jump into things they know very little about.

That’s true. It’s also necessary.

Entrepreneurship is Vision

To be an entrepreneur, you have to take above-average risks. The risk comes from venturing into uncharted territory, and while sometimes that territory is only new to you, other times it’s truly unique. It’s new to everybody.

To take the risk, you have to see an opportunity where others see none. You have to see a tall refreshing glass of lemonade when everyone else just sees a piece of sour fruit. The opportunity is everything. You figure out how to buy lemons, how to make lemonade, and how to sell it as you go.

An Action Toolkit for Entrepreneurs

Ideas need action or else they just stay ideas. With some business savvy and some actionable strategies, you can get your vision rolling and keep it rolling in the right direction …

  1. Be unstoppable. There are a hundred hurdles to jump just to get started. Everything from procrastination to being surrounded by people who love your lemonade idea, but don’t believe it’s possible. Stoke the fires every day and keep your momentum going. The best question to ask is “how can we take it further”? Answer that question every day with action.
  2. Sell early. Pre-sell … you see ads selling condos all the time for places where they haven’t even broken ground to start construction. Selling before you purchase gets you in tune with your market and gets you to profitability better than anything else can. It bankrolls your business.
  3. Keep on keeping it simple. Every great business idea starts out as a simple, kick-ass, visionary marvel. And every day after that adds another complication. A big threat is trying to be too many things to too many people which happens when you try to capture a dollar here and a dollar there to force profitability. Evolve and expand but keep it simple every step of the way.
  4. Never flog a dead horse. As much courage as it takes to take the risk in the first place, you need even more to admit defeat and jump off a sinking ship before you go down with it. Pride is not a good friend. This is fight or flight, and when you can’t win the fight, the only way to live to fight another day is to get outta there. There are always other ideas and other opportunities.

Lemonade doesn’t grow on trees.

But if you’re willing to climb the tree to get the lemons, it sure does taste good on a hot summer afternoon. Digg it! Reddit Yahoo Comments (11)

What Mentors Can’t Teach You, Anti-Mentors Can

The anti-mentor

Mentors are important. They can fast-track the learning curve with experience and insight that you just can’t get out of a textbook. But there’s some things they can’t teach you.

Sometimes, you need an anti-mentor.

An anti-mentor teaches you what NOT to do. They lead by example and so their lessons are very powerful. We’ve all had them, and probably didn’t realize they were teaching us something at the time. Or that what they were teaching was so valuable.

I’ve had a couple of bosses who really liked to tear a strip off people. Basically, when something went wrong, they’d be in your face screaming, berating, and carrying on like maniacs. And usually, right in front of everyone else. They’ve taught me a lot.

An Anti-Mentor Story

Years ago, when I was a supervisor, my boss and anti-mentor started tearing a strip off one of my guys in the plant. It was pretty bad, and to make matters worse, it was for something small that was completely not his fault.

Everyone was standing around watching, speechless. But I’d had enough so I got in between him and his current victim. I usually got a lot of respect from him but the challenge set him off and he started in on me.

It escalated to the point where I was about as angry as I’ve ever been. Which was unsettling, and I put a lot of thought into what had happened.

What I learned (a few times):

  1. Focusing on the right things is key. When you only point out the problem to someone, they focus on the problem instead of the solution. So the problem keeps coming back again and again. 
  2. Freaking out is a time waster. It doesn’t solve the current problem. It just wastes valuable time that could be spent fixing the problem.
  3. Anti-mentors have a leadership ceiling. Business is about relationships, and at a certain level nobody wants to deal with someone who’s difficult to deal with. And they won’t.

Fast Forward to the Lesson Learned Well

A couple years later I became the plant / operations manager, (remember lesson #3?).

I had a good group of people. But what I needed was a great team. I never tore a strip off anybody. When we had a problem or a screw-up, I created the attitude of “Let’s fix it, learn from it, and move forward”.

Over time, everybody started focusing on solutions rather than just the problems. They became a team. They gave a damn. And that freed up my time to get into the business side of the business where I learned a lot from some really amazing mentors.

But it’s what I learned about what not to do from an anti-mentor that made it possible. Digg it! Reddit Yahoo Comments (12)

Everyone Loves an Underdog


Maybe your business is up against heavy competition. You’re not the biggest. Or the most well known. And you don’t have the cheapest prices. But you know that if people compared apples to apples, they’d see that you’re the best. And still, everywhere you look, the chips are stacked up against you. Every day you’re fighting an upstream battle.


That means you’re the underdog. And that’s a good place to be as long as you remember who you are and why everybody loves an underdog.

Here’s why everybody loves you …

  1. You’re scrappy. You’re always up for a little friendly competition. It’s an opportunity to learn and exercise your assets and abilities. You’ll chase the cat up a tree every chance you get. But you do it with a great sense of fair play. I mean hey, you’d never actually hurt the cat.
  2. You’re fun. Maybe it’s your ability to innovate. After all, who else can spend hours having the greatest of fun with a stick? Your tail is always wagging. Every day is a great day and everything is always new and exciting.
  3. You’re a best friend. Customer service matters. You’d never bite the hand that feeds you and you’re always willing to shake-a-paw or fetch a pair of slippers. Loyalty is something that just seems to come naturally.
  4. You always do your best. You’re always off and running. And no matter how futile the effort is to gain traction on a hardwood floor … you just don’t stop until you do.

The big dog is not always the best dog. But everyone loves the underdog. And underdogs that stay true to their roots do very, very well.

Go get ’em Rover. Digg it! Reddit Yahoo Comments (12)

How to BUY a Great Business instead of Starting One

A brand new used business

It’s true, there’s no amount of work or investing that equals the earning potential of having your own business. But business is hard. And risky. And a lot of the worst stuff that happens will happen during the start-up.

Not might happen. Will happen.

One of the ways you can avoid all that bad stuff and the risk that comes with it is to avoid the start-up. And you do this, quite simply by buying an existing business. All the groundwork is laid, the tough lessons have been learned, and there are important assets (like customers) already in place.

Why People Buy Instead of Start

There are a few different reasons for buying a business instead of starting one:

  • To get in! It’s the quickest way to get into business.
  • Expansion. One of the absolute best ways to expand your current business is to buy a competitor and bring in all of their customers.
  • Diversification. Buying a business that has nothing to do with your current business or investments is a good way to diversify. All markets go up and down, and while some are going down, others are going up. The reason to “buy” is to take advantage of the knowledge and experience that’s in place, since it’s most likely an industry your not familiar with.

What Kind of Business to Buy?

This is an easy decision to make because there are only 3 kinds of businesses:

  1. A failing business. These are great because you can often get a floundering business for a steal of a  price.
  2. A thriving business. These are great because the business is already a solid earner.
  3. Somewhere in between …

They’re all great. The main thing you need to know going in no matter what kind of business you buy is what YOU can do with it. What can you bring to the table to increase sales and lower costs? How can you take it to the next level?

Think about these things:

  • Do you have customers or connections that have assured you additional sales if you buy the business? Sell before you buy.
  • Can you source or negotiate better pricing on the business’s purchases?
  • Do you have a lot more experience than the current owners in this type of business?

What Are You Buying Exactly?

There are two main ways to buy a business. One way is to buy it all; lock, stock, and barrel. The other way is to purchase it through an asset sale.

An asset sale means you’re just buying the assets. For the most part this is “stuff”. But keep in mind that there are a number of assets that you also want such as the rights to a brand. And a client list. Those are two huge assets.

The reason to buy just the assets is that the business is failing and you don’t want to take on an ugly balance sheet and all its liabilities. On paper, you’re just buying stuff. But with branding and customer assets, and by bringing in the key people you need from the “old” business, the transition can be relatively seamless.

Doing Your Due Diligence

Or, how to make sure you’re not buying a lemon. At least, not for more than a lemon is worth. Let’s look at some of the things that you need to go over with a fine tooth comb before you sign on the dotted line:

  • People. Identify the company’s key people. Are they committed to stick around? Can you bring in the right people where needed? A good idea sometimes is to lock the current owners in to help run the business for the first few months or years. What kind of agreements are in place between the company and its people? What’s the salary breakdown?
  • Plan. Go over the company’s business plan. See where things went right and where they went wrong. Is the infrastructure good or a heavy burden? Old technology or the wrong technology? What are the competitors that are succeeding doing? What will they be doing a year from now?
  • Sales. Talk to some of the company’s customers; especially the big ones. You want to make sure they’ll stick around and assure them of a smooth transition. Work your own network to pinpoint opportunities to bring additional sales into the company. Look at the pricing structure and the competition. Is there room in the market for growth?
  • Capital. Get an itemized inventory of all capital assets including serial numbers, etc. Get a lawyer to check for liens or debts secured against the assets. What do the outstanding payables and receivables look like?
  • Purchasing. Ensure that there is significant margin between the cost of goods and the sale pricing. Use your network to find more cost effective suppliers and look to see where costs can be trimmed in the current operations. Is there too much useless inventory that’s not worth purchasing?

You have to prove to the seller that you’re serious about buying the business before they’re going to hand over all the internal documents you need to do your due diligence. That means proving you have the cash. Or can get it.

And If you’re trying to buy a company and they aren’t willing to give you everything with complete transparency, something’s really wrong and it’s time to walk away from the deal.

Getting the Cash to Buy the Business

The most difficult thing about buying a business is finding a great buy. But for a small entrepreneur, coming up with the cash can be just as difficult. Buying a business might even seem completely out of your financial means.

Being an entrepreneur requires a lot of will. And where there’s a will, there’s a way. Here are some of the ways to raise the cash to buy a business:

  1. Have the cash! Simple and obvious. But look at it like this; what can you sell, mortgage, or reduce the cost of to raise the money if you don’t have it lying around? You want to think carefully about the risks of jumping in with both feet. Sometimes it’s the only way.
  2. Personal loans. Nepotism can be a good, good thing. A cheap or no interest loan from family or friends has great advantages. Low cost of capital AND generous repayment terms can get you started quickly. Personal loans can strain relationships, but if your situation is good, they can be one of the best sources of capital.
  3. Institutional loans. Even billionaires usually get a bank loan to buy a company. The key to getting a loan to buy a business is to show that you can repay it. They most likely want you to put in some cash of your own, or put some security on the line like your house. You need a detailed business plan that’s solid and realistic, and you need full disclosure documents from the business that you’re buying. And … you can also use the assets of the company you’re buying as security to get a loan for their appraised value.
  4. Angels. There are many private investors who like to invest in start-ups or other business ventures. They require some equity in the business because they’re investors not lenders. But they also have business experience, and a network of connections that can be invaluable. Most cities have angel networks that stage regular gatherings and events where you can meet and pitch to angel investors.
  5. Form a partnership. Sometimes your best option is to form a partnership with one or more other people. Stay away from partnerships where one person puts up all the cash and the other does all the work. These arrangements are fundamentally flawed and they frequently end badly. What you want is someone or a group of people to go in with you to buy a business you can’t afford by yourself.

Remember; the cost of buying a business is not simply the purchasing price. You have to make sure you have enough operating capital to run the business until it’s pulling in positive cash flow. Don’t buy it and worry about operating capital later. Your operating cash has to be a secured part of the plan from the beginning.

There’s a lot of experience to be gained by starting up your own business. And buying a business, large or small, is a big step. But done carefully, you can bypass most of the start-up issues, capitalize on the company’s momentum, and gain a good headstart.

And just like that, you’re in business baby. Digg it! Reddit Yahoo Comments (2)

How to Create Business Cards That Bring You Business

Business Cards

You don’t get a second chance to make a first impression.

There are a few different options for getting business cards on the cheap. A quick Google search will deliver a number of free business card offers. You can also buy those perforated sheets and print them out yourself, or get a fairly cheap deal at any big-box office supply store.

And they’re all great ideas in the name of bootstrapping your costs. But they’re also cheesy, raggedy, or just plain flimsy. To do serious business without having to apologize for your cards or tell the story about what a great deal you got, you need professional cards.

Let’s get to it …

Make Sure They’re Worth the Paper They’re Printed On

The free and cheap sources I mentioned all use cheap and flimsy 10pt (point) or 12pt card stock. Both of these are more like glorified paper rather than good card stock. Frequently, you’ll get a box of curled cards at these paper weights.

The best card stocks for business cards are 14pt for full color C1S/C2S cards, and 16pt for matt (non-glossy) cards. This doesn’t sound like much more, but they’re a lot heavier. You can get these heavier professional card stocks when you order your cards from a professional printer. Office supply stores don’t usually offer the option to keep prices down by buying light-weight paper in high volumes.

Full color cards should be coated with a UV coating on both sides. UV coatings give it a little or a lot of gloss, depending on what you want. C1S means the card is coated on one side. C2S is both sides and is not really something you need. The full color printing and the coating give the card additional strength and thickness which is why you can use 14pt card stock for color cards.

Card Sizing

There are different standard sizes for business cards all over the world. The most popular is the US standard which is 3.5 x 2 inches. The next most popular is the ISO (International Standards Organization) size of 3.37 x 2.125 inches.

Card sizing is important! Larger than standard cards might seem like a good idea to make your card stand out, but they don’t fit into a lot of card carriers or a wallet without being cut or crumpled.

Taking Advantage of the Printers Layout

Most professional printers will print 4 cards on a single sheet. This means that you can print cards for 4 different people by setting up the layout with a different name on each card. In fact, you can get any of the following combinations:

  • 1000 cards for one person
  • 500 cards each for two people
  • 500 cards for one person and 250 cards each for two other people
  • 250 cards each for four different people

Keep in mind that the next time you print your cards, you’ll get the same combination unless you buy new printing plates with a different combination of names.

Design and Color

There are 3 basic things to consider when designing your cards:

  1. Make it bold and simple. Your logo, company name, and contact info should all easily stand out. Simple, bold designs are the best way to achieve this. Too much information on a business card means clutter and teeny, tiny type that’s hard to read. Remember, it’s not a newsletter.
  2. Keep some whitespace. A great reason to print (and gloss coat) only one side is to leave some space to write down notes. I frequently jot down notes on business cards that I receive. It might be info about where I met this person from, services they specialize in, or pricing. Whitespace (non-glossy) on the front is especially good for noting a private number or other important info that’s not printed on the card.
  3. Get proof. The printer should get you a proof to sign off before the cards are printed. Check it, and get someone else to check it as well to make sure all the information on the layout is correct. Color proofs should be very close to the actual card, but they won’t be exact. If you have any questions, talk to the printer. And always keep a copy of the proof for yourself. 

For some great tips on designing your logo, download my free Branding eBook.

I have a large and growing collection of business cards from different people and companies. And while a great business card doesn’t cause me to form any sort of opinion about who I’m dealing with …

A bad one sure does. Digg it! Reddit Yahoo Comments (14)

5 Things Every Entrepreneur Can Learn From Bottle Collectors

Bottle Collecting Shopping Cart

You might not think of the guy you see every Saturday morning with his shopping cart full of pop cans and beer bottles as an entrepreneur. But that’s exactly what he is.

And while I haven’t seen any bottle collectors on the cover of Business 2.0 lately, that’s mostly due to a big lack of start-up capital. And a big lack of glamour in attracting talent. I’m completely serious. There are likely a few bottle collectors that, with some capital and some talent on board, could very easily grow their know-how into a million dollar waste-management company.

Some are very diligent and proud of their little businesses. And there are some smart things that they practice that every entrepreneur could benefit from understanding.

5 Business Savvy Things That Bottle Collecting Can Teach You

  1. The early bird gets the worm. Bottle collectors have to be up before the garbage truck comes by. They’re working when everyone else is sleeping. In any business, when you’re the first on the scene when somebody needs something, you get the sale. And a part time entrepreneurial venture is very rare if it’s your primary source of income. To be successful requires long hours.
  2. Stake your territory. I’ve seen a few arguments about who “owns” a particular dumpster when new competition comes along. Every business has competitors. And a lot of times, bringing in a sale means you’re taking that business away from you’re competition because the customer isn’t happy. Then, to keep that customer yourself, you have to keep them happy. And you have to pay special attention to them when a competitor swoops in to wine and dine them.
  3. Find a way through the fence. There are very few fences, or other obstacles for that matter, that stand between a bottle collector and the bottles. You’re going to come up against roadblocks in your business; regulations, supply issues, hyper-competitive pricing, and a million other things. You have to find a way around or through them all.
  4. There’s a lot of garbage between you and the gold. Literally, for a bottle collector. Figuratively for you. There are sales that are not worth getting because the profit is too small and the task of even getting paid is too large. You’ll have to put up with competitors with sub-standard offerings that get the contract simply because they’re cheaper. And you’ll constantly be torn between offering quality and producing something cheaper. And faster.
  5. Expand your horizons. There’s the odd bottle collector that salvages a lot more than just returnable bottles and cans. Old TVs, metal, furniture, whatever they might be able to sell to someone else, take to the scrap-metal yard, or take into the local pawn shop for a few bucks. And so, while you need to have absolute focus on what you’re business is all about, you also need to have an eye on lateral opportunites. Maybe there’s an area of growth you need to explore. Or a direction that you and your company would do much better travelling in than the one you’re going in now.

There are many different people travelling many different roads. In the most unlikely places, you’ll find that some of them are entrepreneurs.

And they have much to teach. Digg it! Reddit Yahoo Comments (8)

The Changing Landscape Of Business

Changing Times

Are you ready for it?

Every product has a limited life cycle. That’s easy. But what happens when your entire industry changes? And where are you in the lifecycle of yours?

The are a number of things that cause an industry to change. Some of the main factors are technology, globalization, and regulation. Any one of these things can turn a business upside down if it’s not ready for them. And in time, something is going to happen that has the power to cast your entire business model aside.

No big deal as long as you’re ready for it.

Faces Of Change

Jon from Smart Wealthy Rich left an excellent comment on my post about marketing music. He’s a musician, and he knows what’s going on. Better yet, he’s recognizing and embracing the new paradigm that music downloads have forced onto the entire music industry.

Here’s another example. I’ve previously talked about how the comics industry changed. This also came about with advances in technology. But unlike music, where technology has started to de-monetize the biz through slumping CD sales, the comics industry suffered a different kind of transition. Technology grabbed people and pulled them away to other rising medias … video gaming and the internet for example.

And one more example. Here the evolutionary factor is globalization. But it’s also maturity. Every industry matures and as it’s goods and services become more common place, and as competition increases, the price goes down. Back in the early ’90s, a 24 pack of bottled water in Costco would cost you about 15 bucks. Today, you can buy a 35 pack for anywhere between 4 and 5 bucks.

That’s a big difference. Bottled water as an industry has matured. It’s become commoditized as a result, and as multinationals have used their purchasing power to drive the price down and drive smaller players out.

The New Opportunity

The beauty of change is that it brings new opportunity for those who can initiate it or recognize and embrace it. Marvel Comics has moved heavily into film and video games. A lot of water bottlers have jumped into value added products such as oxygenated or vitamin-enriched water.

Wind-surfing manufacturers have embraced kite-boarding. Phone companies are delivering digital cable TV. Companies are adding blogs to their corporate websites. The list goes on.

Every industry is bigger than any single company. And the factors that create change are bigger still. But by staying in tune with the shifting landscape, anyone can survive the shakeouts that change brings. You need to be part fortune-teller, part inventor, and always moving in new directions.

Are you ready for it? What are you doing today to make sure your business has a place in tomorrow? What is the future of your industry? Change happens. It has to and it will, so live it, love it, and ride it all the way to your next big success.

Better yet, grab the bull by the horns and create it. Digg it! Reddit Yahoo Comments (3)

How Do You Market An Album … Every Way You Can

Record Player

The music biz is a very competitive industry.

For every great success story we hear about, there are plenty of failed attempts. But, that’s the same in every industry, and as with any venture you can jump into, it’s not about what you produce, but how well you sell it.

A question I got a couple weeks ago was “So do you have any good ideas for marketing an album”? I always shudder when I get a question on how to sell because the answer is not what most people want to hear. In fact, even the most experienced business people sometimes don’t ”get it”.

The Brass Ring Of Selling

The answer that everyone wants to hear is an amazing viral marketing idea that puts a product or service on the global stage quickly and effortlessly. Great success and great riches follow.

It happens. These are the stories we all hear about because they’re so amazing. They’re also few and far between. And truthfully, there’s usually a long backstory of hard work behind these success stories that we don’t hear about.

It’s reaching for the brass ring. And for the most part, it’s not so much of a business model as it is a product of circumstance. Right place, right thing, right time. And all the right people.

There’s a better way to ensure success. A much better way that’s practiced by very successful businesses everywhere everyday.

Knocking On Doors

The idea of getting out and knocking on doors to sell is not entirely metaphorical. But mostly it is. Mostly it means getting out there and taking what you have and putting it in front of as many people as you can.

One person at a time. And then as you create some success and grow … 10 people at a time. Then 20. You get the idea.

Build The Up And Down The Street Business First

A very good salesman that I know told me how Naya (a water company that was purchased by Danone) built their business up from nothing to selling 12 million cases a year in a few short years.

When they first started out, the big retailers would have nothing to do with them. So they went after all the little ma and pa corner stores. Basically, they went after what’s called the up-and-down-the-street business first. The more little customers they got, the more the big ones started to see them around and take interest.

It’s not sexy. It’s not a brass ring idea. But while many other companies are sitting around trying to come up with the perfect idea to rocket themselves to riches, this works every time. And it starts working the minute you start working it.

Some EPic Ideas For Music

So back to marketing music. The brass ring scenario is where a big label picks it up and throws a ton of money at it and it becomes a huge success. This could happen.

But by forgetting about whether it happens or not, and focusing on the up-and-down-the-street business, you can increase the odds of making that happen. Drastically. And since different things work better for different people, it’s good to work a lot of different avenues. So here’s a list of ways and places to market an album:

  • Perform at music festivals
  • Perform at coffee shops and pubs
  • Put it on iTunes and other internet download sites
  • Make a YouTube video
  • Put a couple songs on a MySpace page
  • Connect with radio stations
  • Canvas satellite radio stations (there’s hundreds of them)
  • Participate in song writing contests
  • Hand discs out to friends
  • Send it out to a bunch of record labels
  • Get it into the hands of music directors for television and film
  • Perform on one of those little cable shows that feature independent artists
  • Talk to the purchasing departments of major record shops
  • Sell them on consignment to little indie record stores
  • Stage an impromptu rooftop public performance
  • Get a friend to write about you on their blog!

There are probably many more avenues, but this is a good starting list. Some of them are easy and some are harder. But none should be discounted as each of them lead to more exposure and that up and down the street exposure is how you get the big fish to notice you.

Every business should practice marketing “every way they can”. Getting out there and knocking on doors works. You’re taking it to your customers instead of waiting for them to find you. There are always plenty of ideas that are too big.

There are none that are too small. Digg it! Reddit Yahoo Comments (8)

Building Your Business By Investing In People Rather Than Stuff

Resourceful People

You’ve just started your business or had a brilliant idea for one you want to start. After some research and planning, you’ve figured out what you need to setup and launch your business and you’ve got a list of things you need to purchase.

Now throw that list away and read this.

There are two main areas where you can invest your start-up capital. The first is in the infrastructure or “stuff” you need to operate your business. The other is people.

One road is easy and largely ineffective. The other road is challenging and leads to powerful results.

Buying All The Stuff You Didn’t Know You Didn’t Need

There are a lot of caveats in investing too much into building your business’s infrastructure too soon. Most people start buying the stuff on their list and as they go along, end up whittling the list down because the cash starts running out quickly. Or, they buy cheaper stuff.

Didn’t really need a Porsche to start a couriering company did you?

The reason this happens is because stuff doesn’t sell anything. It doesn’t go out and knock on doors. It doesn’t even produce the goods you’re selling without people at the helm. Without people, stuff is an expense that brings in no revenue.

And if you buy stuff before you know enough about your business, the market, the competition and the emerging technology trends … you’ll probably buy the wrong stuff. Now you’ve got all this useless stuff!

And no capital.

How To Invest In People Instead Of Stuff

Sure, you need some stuff. But by investing your capital more heavily into people rather than stuff, you’re building a company with a foundation and a good measure of the best resource every new business can hope to have. Brain cells.

Consider these things:

  • Managing is hard. Buying stuff is the easy way out of what you really have to do which is build and lead a team of people that can make things happen.
  • Managing is really hard. Not only do you have to find the right people, you have to keep them. There are going to be people that you hire that you have to fire. There’ll be others that just don’t stick around very long. It takes time to build a great team and you need great people to grow a company and move forward.
  • ROI. The more stuff you buy, the more sales you have to get to pay for it. And the less time you have to do that before you run out of capital.
  • Scalability. When you first start your business, outsourcing the work as you need it to get done means you’re paying as you earn. You’re only paying to fullfill the needs of each sale as you get it. If you buy a whole bunch of stuff, you need a certain amount of sales to pay for all the monthly expenses on that stuff. It might be rent on a large building or a loan payment for equipment. Don’t assume you’re going to get sales you don’t have yet.
  • Expertise. Stuff is stupid. You’re going to run into problems that you never considered or dreamt of. The more brain cells you’ve got to work on the problem, the faster you’re going to find a great solution and move forward.
  • Flexibility. A box packing machine packs boxes. A warehouse management system counts boxes. A person can do both. Just a little slower. Until you know exactly what you need, and how big or how much, flexibility will allow you to juggle a lot of different things. You can automate with stuff once you have enough experience to know exactly what you need.

Follow The Business Chain

The right things in the right order make a successful business. Break the chain and you break the business. But if you do the right things in the right order, you’ve got a better than average chance of success. The chain goes like this:

Idea > People > Plan > Sales > Capital > Purchasing

You purchase stuff. It’s at the end of the chain. But luckily, you threw that list of stuff away. Digg it! Reddit Yahoo Comments (11)