Doomed From the Start
Volume 12, Number 8
Issue 556
Most people who start businesses are simply doomed. Yes, doomed. And, regretfully, I lose many potential new clients because I try to get them to realize it. They don’t listen, they yell at me, they talk nasty to me and, yes, they think I am too aggressive. What do they want? They usually just want me to sit and smile and nod my head while they pitch the same ideas that I’ve seen many other people fail with. I’ve gotten to the point where I just can’t do that anymore. Either get your business able to overcome my reservations or purposefully use me to find your weaknesses but please don’t use me just to smile and listen.
Leo McGary (President Bartlett’s Chief-of-Staff) on NBC’s The West Wing, once said that they “have the smart guys take the opposite position when doing research.” Surrounding yourself with people who will purposefully challenge your weaknesses by expressing opposing, but reliable, views makes you much more destined for success. But this takes hard work and is not fun. It is emotionally draining. In the old days it was called “devil’s advocate.” Now it’s called “opposition research.”
One of my particular specialties is working with people who want to start businesses. I enjoy working with entrepreneurs and start-ups about entity structure and business planning and facilitation. I market to these people and I appear to have picked-up a reputation for being agreeable to working with new or “about to be started” businesses.
Even though it makes me appear to “come on too strong,“ I try to center first telephone conversations and initial meetings around how well the budding entrepreneur has researched their business idea to make sure if it is, simply said: “viable.” People get upset, they don’t like me and they often get mad at me for stating the obvious: “you haven’t thought out this idea even with regard to the simple basics--you have a LOT of work to do; you are moving way, way too fast.”
My personal opinion, after working with hundreds of entrepreneurs over the years and having hosted a radio show for three years that talked with entrepreneurs from all over the United States about starting businesses and making existing ones more successful, is that four of five business ideas fail within the first two years. I think that most people who have failed say they failed because they were “undercapitalized.” I think that the real reason for failure is simply that the idea for the business simply wasn’t a good one or, more precisely, was an inappropriate one for the time, place or person.
First: every business idea has a “moment in time.” The best business ideas have a life-cycle and the smartest entrepreneurs have their “moment in time” sooner than a rival in the marketplace does. There is good historical data that proves being the first to have a product in a particular industry or area usually launches a successful business. If there are many people already selling or providing the same thing to a target market, why would you want to start a business doing the same thing that is already being done? My great friend Peter Powell once said that “America is simply over-stored,” meaning that there are too many people selling or providing the same product already. If you are going to start a business, make sure that you will capture an opportunity to provide uniqueness to your marketplace by being there at the right time.
Second: every business has to have a unique “place”--a particular target market that is underserved by existing rivals in the marketplace. Why in the world would you simply want to market a product or service within a geographic area that is already being adequately served. This is a very common mistake because most budding entrepreneurs have big egos that make them think that they can serve a target market better by competing simply on “service.” This usually isn’t the case. Strangers usually don’t perceive any difference initially except for price and, maybe, convenience. It takes time to build loyalty and a corresponding customer base. Until you do, you will have to compete on price alone.
Third: Person. Who is the person that represents an ideal customer? Have you defined them precisely and yes, I mean VERY precisely. You have to be able to market to a specific customer and not simply “everybody.” Customers won’t come to you--you have to go to them. And, yes, you guessed it, what will be your plan to get to that person? You have to identify and go after a particular segment of a marketplace--an ideal customer--with immense passion and enthusiasm. “Person” is so important. Define that person and draw them to you. Be their siren. Target them--shark them out. Successful entrepreneurs need to be “hunters” not “skinners” (seeking out prey rather than waiting for it to simply die on your doorstep).
Starting a business is truly the American dream. Most people think that it is easy because they see others who they perceive to be enjoying easy success in the marketplace. People naturally want to emulate other successful people and they want this soooooo much that they become blinded by emotion and desire and simply don’t do the research about their idea--especially “time,” “place” and “person.”
If you simply start a business because you want to be self-employed, you will walk naively into a firestorm of risk--both financial and emotional. You can be the most talented person in the world, but you must research your idea completely over and over and over with the help of objective professionals who are not afraid to tell you what you probably don’t want to hear by giving you good opposition (to your own stubbornness) research.
David B. Robinson, CPA
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