Forums: Discussions for entrepreneurs and small business.

It wasn`t until I read some of Robert Kiyosaki`s Rich Dad Poor Dad books that I learned that being self-employed is not the same as being in business. In Cashflow Quadrants he says:



That was an eye opener for me. Up till that point all my ventures were built around me. Everything is different this time. Our business plan involves hiring competent people to run the system. For me the fact that our bakery is 2 1/2 hours from our house was a selling point (and we don`t plan to move any time soon).

Have just started reading The E-Myth Revisited. Sounds like he`s headed down the same road. Looks like a good read.





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This got me thinking, as Cartess often does. :-) With hats off to Brains for the Town of Tugg....LOL!!...let`s look at a physician--an MD.

Here`s an entrepreneur, self-employed, building a business. He, being a man for the sake of simplicity, isn`t any different from any other entrepreneur. He`s invested years and capital in training and development. His feasibility study is a  done deal, but his market research will require finding a location for a medical practice.

He has an investment problem, with equipment, buildings, and so forth. So how come 9 out of 10 doctors don`t go out of business or fail?

In fact, many doctors do end up quitting the self-practice business in favor of a group practice, or working for some organization (hospital, HMO, corporation, etc.). One reason can be exemplified by the phone thing.

If a doctor were to answer all incoming calls and respond with medical advice to all callers, he`d go broke. He`d run out of time, and never have time to run his practice. Most doctors pick a time, often in the evening, for the single purpose of returning calls and having short consultations. People have learned that process and it`s accepted as "normal."

The one major difference between a doctor and an e-business entrepreneur is that medical knowledge is pretty much a guaranteed market. With a solid-enough product, it`s much easier to set schedules, develop processes, learn from previous people, and so forth.

However, many entrepreneurs perceive their product as totally unique, never-before seen in the history of the universe.

I`d suggest that an important bit of information for any entrepreneur to take to heart is that no matter how much they want to believe their business is totally unique, it probably isn`t. In SOME way, that business or product is "like" some other, well-established business that`s been going on for a very long time.

It`s the perception many entrepreneurs have that competition is bad that drives them to do something completely "new". Competition is good; it means there`s a viable market out there. Also, if the market can`t support one more entrant then you need to look at another business to get into.


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I wish I knew where I got this, but I`ve heard research confirms that at least 70-80% of all business activity is identical to every business out there.  Anecdotally I can certainly support that - planning, systemizing, hiring, training, managing, sales, marketing, acquiring, retaining, accounting, benefits, structure, processes, culture, etc.  These business concepts and many more apply to every business.

Bottom line - the purpose of EVERY business is a) to acquire and b) to retain customers.  There is no other purpose of a business except for the owner himself, which is to create the desired lifestyle for themself and their family/SOs.  There`s an awful lot we all share in common even if the product or service itself seems very unique.


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Team Nimbus facilitates peer teams who advise each other from their collective business experience to raise profits in less time, so they can focus on the passion that brought them into business in the first place. We help move their business from survival, through profitable success, to significance.

Couldn`t agree more. That`s why something like StartupNation works so well for so many different people in different businesses.

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Craig, great analogy with the Doctors. Priceless!

With the comment above, I think why this works so well with the customer (patient) is because he has been taught/trained that the doctor`s time is valuable. The doctor is the `professional`, the `expert`, and most importantly, he has `their best interest at hand`.

I think when we become all those things to our customers, then we too can train our "herd" (customers). They only call us and email us and do everything they can because they know they can get to us. As long as great customer service is provided on the front-end (timely response to emails, timely delivery of products/services, etc...I don`t think they`ll mind following "OUR" schedule).

Otherwise, they`ll have to start over and find someone new, thus creating a new relationship with a stranger, which most customers won`t do if your "COMPANY", and not "YOU INDIVIDUALLY" have a great relationship with your customer.

Once you get a customer, you must strategize and plan to keep them. By that, I mean:

1. Over-deliver on products/services - Get their stuff out in a timely manner. Add an extra gift in the package that they`re not expecting. It doesn`t have to be big. But if it has a high perception of value to the customer, guess what that little gesture will do.
   
   For example...there is a company I order products from everyweek. And everytime, they put a few pieces of candy in the shipment. I give the candy to the kids and they love it. In fact, they know the day of the week the package typically arrives and they`re waiting on the UPS guy to offload the package. Now...as long as those kids are in my house, guess who I`ll be ordering from
   
   Sometimes that company drops the ball and I get mad, but I ain`t going no where else  (excuse the slang, I`m a country boy from Georgia). And whats bad,  I can only talk to them on the phone 3 days a week, otherwise, I have to order online. I didn`t realize that at first, but after ordering, they trained me and explained why they could only answer 3 times a week (In an effort to provide you with the best prices, and so on...)
   
2. Monthly or Quarterly Newsletters: Put solid information in those things that they actually look forward to getting each month/quarter. As business owners, we should be doing this anyway. Otherwise, you open the door for someone else to snatch up your customers. In those newsletters, have contest that your customers would actually participate in. Put photographs in their of your customers so your other customers can see themselves and other customers. In a sense, you`re building a community of your buyers and once you`re involved in a community, it`s hard to leave.
   
3. Take Care of Your Best Customers. Seperate them from the others. Create some type of "Preferred Members" your customers will appreciate being recognized. Do something special for them at least once out of the year. I`ll elaborate on this later.
   

By doing those little things, we become a "trusted advisor" to our customers. We`re no longer a business owner or salesman. They now know we have their best interests at hand. And they`ll do whatever we ask them to do within reason. If you`re the owner, they shouldn`t be talking to you on the phone anyway. I do understand it may be necessary in the beginning while you grow your business, but once you reach a certain point, things must change. Otherwise, you can`t possibly grow your business

Very practical wisdom, Cartess.   Most businesses can figure out a way to farm in such a way as to increase their yield per acre, or yield per hour

- by focusing on customers that make you more money in less time.
- by hiring or outsourcing the $6-$20.00 per hour jobs, leaving time to focus on jobs others really can`t do (whether its client acquisition, networking, process development, etc) - that will increase your overall yield per hour.
- by changing/improving processes
- by changing marketing strategies (small businesses waste huge amounts of money trying to mimic big business marketing)
- by dropping some product lines that cost more money to manage then they bring in.
- and a bunch of others depending on the business itself.

One of the toughest humps to get over is moving from survival mode, where the owner is indispensable, to success mode.  It seems that the same "take-a-risk" entrepreneurial spirit that moved somebody to mortage their future to get into business disappears when they think about hiring someone to do the day-to-day tasks so they can actually grow the business.  You always make less money up front because you`re now paying someone else - but there`s a lot more money to be made focusing on the big picture.


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Team Nimbus facilitates peer teams who advise each other from their collective business experience to raise profits in less time, so they can focus on the passion that brought them into business in the first place. We help move their business from survival, through profitable success, to significance.

blakeman, I would like to add that it is difficult to hire a person to do the simple tasks you (the "S" self-employed) do because it takes balls. Two obstacles are apparent to me.

One: you (the "S") must have faith that your business can support the employment/contract worker expense.

Two: you (the "S") may not be the best person for the job.

I know that I have always felt… if no one will become involved, I will do everything myself! In my musical career, I originally had no musical contributors (band mates). So I created my own type of 4 track recording device by using two “boom boxes.” I started playing my guitar parts into an average “boom box” back in the day. Then I would use another boom box to record what I just created, playing it back from the original boom box and capturing it on the second boom box and adding a vocal or rhythm track.

Of course it was not the greatest sound after doing it 4 time, but everyone could hear my style, or skills. Eventually, I convinced a few people to put together a band. That kicked off my musical career.

Getting back to the topic, it’s easy to convince yourself that your idea will work. It’s easy to invest your own time into your own idea. It’s difficult to watch the money leaving your pocket (to pay someone else) as you work on other avenues of your business. This takes a real step of faith in your “business plan.” It takes courage to tell someone… will you call so and so and tell them this and that? Then you have to hope the employee will put the same level of care into the task at hand.

Some things that appear obvious to you (the “S”) are not as obvious to others. Such as, smile when you’re on the phone. People on the other side of the line will react to your emotional state, even though they cannot directly see you.

Simple example, but I am sure many people say, “Of course you should smile and have a pleasant voice on the phone. ”But, I bet you remember conversations with customer service reps that did not present themselves in the best light.” Would you be happy using them as your employee? So, even though we all know what’s right, it’s hard to give up the power in hopes that your hiree takes the care in their position as you do.

But that is one way to leaving the hunter/gather stage.


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Vincent Wilcox (a.k.a. KRAKR)
Drummer
My band: Letters Make Words

LOL!!  So to follow Cartess` connection between the free gift with orders and farming, that piece of candy or other free gift is what....fertilizer? 

:-D Hey...don`t get me wrong, it`s a fine idea and I`ve used it as well. It just struck my funnybone that we`re still in the farming v. hunter-gathering analogy!

Blakeman, this is the second time I`ve run across your above. It bothers me a bit, because I`m thinking the rule doesn`t include the concept of product....does it?

I would say the purpose of all businesses is to exchange a product for a value. I understand that acquiring and keeping customers is essential, but without a product, why would customers be involved?

Some would say this is "semantics," or "nit-picking." My argument is that rules of the mind (definitions) are the same as SOPs for the business of life. In fact, a morality is exactly that---the articulated standards for operations and procedures when dealing with life.

There`s no such entity as a "business." It`s an abstract concept, like "the government," which ultimately resolves to actual human beings. I take your point that you`re trying to focus the business-owner on what`s perhaps the second most important aspect of what they`re doing. But I think we want to keep sight of the fact that without a product, there can`t be a business. :-) Would you agree?

The "hunter-gatherer" isn`t exchanging anything for a value. They`re using all the resources they acquire to survive. Farming, initially produces a surplus that exchanges work today for survival tomorrow.

But when we refer to "farming" as in this analogy, there`s an implied but unstated assumption that each farm is producing more than enough for the single farmer and family. The implication is there`s a surplus that the farm then sells to a market.

Simply learning how to plant and grow crops wasn`t sufficient to bring on Civilization. Go back to the original organization of the pilgrims, arriving in America. They set up farms under a communal system, and grew enough to barely survive. It wasn`t until they decided to expand each farm to produce *surplus* that they began running businesses and introduced capitalism into the equation.

Additionally, the hunter-gatherer doesn`t own the resources of nuts and berries. They use those resources, relying on Nature to replenish them. The farmer may or may not own the produce from the farm, depending on the political environment. Given the principle of personal ownership, it then becomes valuable to the farmer to replenish their resources.

That would mean holding back "seeds" for the plants they intend to renew or repeat each season. Hence the term "seed" money, improperly used in my opinion. "Re-invest" is a better term, and that means having some sort of surplus.