Forums: Discussions for entrepreneurs and small business.

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Mike Michalowicz
Author of The Toilet Paper Entrepreneur

Y`know, Kathy and I were just talking about this. We`ve been mostly broke for more years than would seem probable, based on chance and life experience. So we keep looking at what benefits we`ve gotten from having no money.

In other words, instead of focusing on grumbling about having very little money, the frustration, and so forth, we`ve been applying an important rule. Ask yourself:
Here`s only one example. We use templates to cut fabric, measure geometric patterns, and validate the final product. We originally used heavy construction paper, but that couldn`t be cut with enough precision.

So we looked around, trying to find metal templates. Turns out it would likely cost about $100 per template to have metal laser-cut. We couldn`t afford it. One afternoon, because we`re so broke, we were at the Ace Hardware store, looking for a different idea.

One of the guys there suggested using plexiglass. Not only is plexiglass about $3 for an 8x10 piece, out of which we can often make several templates, but it handles precision cutting. More importantly, we never would have imagined how important it is having a transparent template---one that we can see through.

We now have templates (and invented some rulers) that would either have been impossible, or that would cost us thousands of dollars. Had we been able to use startup capital to buy the metal templates we wanted, we never would have created whole new processes we now use all the time.

Let`s look at the economy. What would you NOT have today, if the economy were buzzing along at 1960`s levels?

I`ll argue that in many instances, entire businesses never would have been started. Why bother, when money`s coming in, the career as an employee is just fine, and life is good?

In our case, we`re coming up with new product lines, better ways to market, free shipping (thanks to Bert), and developing ways to make shopping simpler and faster. We`re learning how to target our specific market of people who have money regardless of economic trends.

Real estate is an excellent buying opportunity now, for anyone with cash. We`ve learned the benefits of using mostly cash, despite the never-ending publicity that without a credit rating we`re doomed.

Additionally, with everyone moping about the bad econmy, there`s less competition to starting a new business right now. Later, when people realize that the economy has fundamentally changed, it`ll be like the California Gold Rush.

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http://www.slowcookermate.com
http://www.twitter.com/yslowcook

Craig,

I think you may be overlooking a product line: Clear Templates.

If it works well for you it will work well for other folks.

We`ve got plenty of other product lines we could probably sell, we`re not that interested at the moment. We`ve had to invent all sorts of techniques, and probably could put a process patent on some of them. But the focus is to build the business first, selling our flags.

Someday, if we end up with money, we`ll see about going back and doing something about these inventions. The important thing right now, is that from my perspective, I doubt anyone would be able to replicate or reverse-engineer what we`re doing. That gives us a strong position in the signal flag market, if one does develop.

There`s a quilting product of clear vinyl sheets with a generic name of "clear templates," but that wouldn`t work. There also are many "standard" sizes and shapes of clear acrylic plastic forms (templates). On the other hand, anyone can get an 8x10 piece of plexiglass, precisions-cut it and scratch some lines on it to make a customized ruler. I don`t think that could be patented :-)

Oh well... personality flaw of mine... I see opportunity in nearly everything that comes along!

Not a flaw. We do the same thing, but we also keep an eye on what we can do. The old "achievable goals" thing. :-)

I see a lot of advantages for entrepreneurs in a tough market. Here are three of them:

• Your competitors are focused on cutting costs instead of growing their business
• It’s easier to adjust a small business and its strategy
• Advertising costs are typical lower now (I just got 50% discount from a newspaper)

Personally I’ve got some mixed signals lately. I’m part-owner of an IT reseller/consulting business, and I do have experienced customers asking for the cheapest products in order to limit their expenses.

But more and more customers are asking for the high end products because they’re seeing their purchase as a long-term investment, where they were more likely to make impulse purchases one year ago. Instead of buying cheap products and through them out when they fails, the customers are buying quality products with longer life cycles because they believe that will give the lowest TCO over time.

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Carsten Jacobsen
IT Entrepreneur, living in Denmark
My Blog: www.ScandinavianMinds.com

Why do we have both a Wal-Mart and a Sam`s Club? What`s the advantage of buying in bulk? Isn`t it more expensive to buy a large "thing" when you can "save money" buying smaller things?

Lots of people think that buying cheap, styrofoam paper plates saves them money. Then they spend their time cleaning up food from the floor, or picking melted styrofoam out of their hot lunch.

Plenty of people think it`s cheaper to buy all kinds of things because they`ll save money. But they never remember what they saved when they have to buy twice as many replacement items.

A local town can hire professional police officers, or they can hire "rent-a-cops" from a temp company. So too, any business can hire a network professional or they can have the local kid on a skateboard swing by to take a look at their computers.

There are some benefits to starting your business in a recession.
1) There is more scope to negotiate down professional fees.
2) You can attract high quality hires
3) You business model will be lean - it`s gotta be.
4) Ultimately you can reduce your cash burn during the start up stage.

I firmly believe that there are always opportunities. A lot of  established companies are failing because their business model is out dated. It`s like a forest fire, all the dead wood is getting cleaned out. It`s up to today`s entrepreneurs to position their businesses as the new green shoots.