A Chance Meeting
A couple days ago, I was at Barnes and Noble browsing the business section, making the very obvious observation that my book, The Tradesman’s MBA, wasn’t on the shelves, when I overheard two young men nearby discussing their different business ideas.
These two gentlemen were extremely young. I later learned that one was 20 and the other was 23. But despite their ages, they both had dreams of charting their own course and starting a business. As I stood to one side, eavesdropping on their conversation like a Samwise Gamgee “droppin’ eaves,” I couldn’t have been happier. Their entrepreneurial spirit was obviously new and unrefined, but strong.
As I listened in to their conversation, I learned that the taller one wanted to start a clothing line and the other was interested in operating a vending machine route. In the shorter guy’s meanderings on the Internet, he had learned of the new-to-him concept called “Passive Income” and he thought that sounded a hell of a lot better than trading time for money in a ‘regular job’ like he’d been taught to do all his life.
Obviously, with me standing right there, I couldn’t remain silent. These two young men were the very reason I got into Small Business coaching in the first place!
So, I walked up to them, handed each of them my card and introduced myself. When I explained what I did for a living (guiding entrepreneurs towards entrepreneurial success), they visibly became much more interested in chatting with me. In fact, we stood there in the business section of Barnes and Noble for at least 45 minutes chatting until the clothing designer gentleman had to leave.
In those 45 minutes, I fielded all sorts of questions from them. They asked me questions like:
How do I know if my idea is a good one?
How do I find customers?
How do I do marketing?
How do I collect money?
As you can see, their questions were basic, but very good, questions. They certainly weren’t asking me how to compute the Weighted Average Cost of Capital or explain the different between IRR and ROI.
I told them that I was extremely happy that they knew enough to ASK these questions. That’s half the battle; realizing that you don’t know half of what you think you know, when it comes to business.
The Hardest Question of Them All
It wasn’t until after the clothing designer left that the other young man asked me the question that caused me the most grief. At one point, the young, aspiring vending machine operator paused, looked me square in the eye and asked:
Isn’t business success just luck?
Wow.
I wonder if you see the same underlying assumption in his question that I did?
What his question shows is that he had been led to believe that there’s no way to succeed without luck; that the successful sharks he sees on Shark Tank and elsewhere only got to where they were due to luck. He had no idea how much hard work, good ideas, passion and (above all) planning contributed to business success.
In that moment I realized that our education system has utterly failed our young people, squashing their entrepreneurial desire to be the master of their own destiny by NOT teaching them the skills they need to succeed in small business. It has prepared a population of hourly drones, teaching them nothing when instead it should have taught young entrepreneurs how to identify, quantify and eliminate RISK; luck is for lotteries, not business.
In fact, this was the EXACT reason why I wrote The Tradesman’s MBA; to provide the skills and information young entrepreneurs ABSOLUTELY NEED to make their own luck through planning, strategy and good old fashioned business skills. What? You think business skills can only be learned at some fancy college in the Northeast?
How to Increase Chances of Business Success
Luck is what happens when preparation meets opportunity.
For aspiring entrepreneurs, your first step after conceiving a business idea should NOT be to leap into action and start spending money.
The biggest lie told to young entrepreneurs is
“It takes money to make money.”
Many folks not knowing better use this mis-applied aphorism as an excuse to raid their savings account or 401k thinking that, by spending money, they ensure success. WRONG!
Instead, you should hit the books (or Internet) and dive deep into research and planning. Why? Because of BreathEasy’s 3 R’s (patent pending!):
Research Reduces Risk
You see, As Risk goes down, the Likelihood of Success Goes Up.
How to Plan Your Small Business
Here are three critical areas of preparation that can help transform mere chance into calculated success:
1. Market Research and Analysis
Study your target demographic thoroughly
Analyze competitor strengths and weaknesses
Understand market trends and potential future shifts
Validate your business idea through customer interviews and surveys
Your research should answer the following questions:
Who is my perfect customer(s)?
What is the problem they are experiencing that I can solve?
How are current competition solving that problem?
2. Financial Planning for Business Startups
Create detailed financial projections
Calculate your startup costs and operating expenses
Determine your operational break-even point
Plan for failure, identify its causes and ELIMINATE or mitigate those causes.
Your financial projections should answer the following questions:
What are my start up and monthly fixed costs?
What will the average value of my product or service be monthly?
How many customers will I need per month to cover my fixed costs?
How large will my marketing budget need to be to result in that minimum monthly revenue?
3. Operational Strategy Development
Design efficient business processes
Identify key partnerships and suppliers
Plan your supply chain and logistics
Develop contingency plans for potential disruptions
Your strategy development should answer the following questions:
Who are my key partnerships or suppliers?
Are any of these single-source?
How will I obtain my raw materials/goods efficiently to keep internal costs down?
You wouldn’t believe the amount of existing small business owners who didn’t do ANY of this sort of research before they started their business. And they wonder why they are struggling…
The Business Plan – Documenting Your Work
OK. So you’ve spent weeks doing the research to determine if your idea is a feasible one. The market looks ripe for your solution, and you’ve identified your perfect customer demographic. You’ve developed marketing strategies to reach that target market and the financial projections are both conservative and positive. All this indicates that your business idea is not only needed and valuable to the market, but feasible and profitable for YOU.
Great work and well done!
But what are you supposed to DO with this information?
Well, whether you realize it or not, you have just created all of the components that you need of a Business Plan. All you have to do now is to put those pieces together into a single, well-organized document.
And WHY do you do this? There are two primary audiences for your freshly-written Business Plan:
Investors,
Yourself
If you are looking to raise money for your very feasible and very profitable business idea, investors (family, friends, venture capital, banks, landlords) will ALSO want to see all that same research and determine for themselves that the idea is a good one. Your business plan collects and organizes all that information in one place for them to read and assess.
And, the business plan is a great tool FOR YOUR OWN USE. Just as for investors, it organizes all that research you did in a single place for your own reference. It also acts as a de facto checklist for business planning, making sure you didn’t overlook any key aspects of the business idea.
The Tradesman's MBA: Your Business Planning Guide
To help entrepreneurs master these essential planning elements, I wrote "The Tradesman's MBA." This comprehensive guide takes the guesswork out of business planning by providing practical instruction in:
Strategic Planning & Business Strategy
Finance and Accounting Fundamentals
Inventory Management Systems
Project Management Essentials
It covers everything you’ll need to plan and operate your small business successfully. I have taken it as my personal mission to improve the state of small business in America by teaching fundamental business skills to young entrepreneurs anxious to get started, but simply lack the fundamental know-how they need so they don’t rely on luck to succeed.
Take Action Today
Schedule a free consultation today and begin your journey to small business success.
Sincerely,
R. Altomare
Founder, BreathEasy Business Coaching and Consulting
The Shameless Plug
If you'd like to learn more about this and other key topics that help you manage your business efficiently and successfully, may I recommend The Tradesman's MBA? It covers all the topics you need to operate your small business effectively and efficiently. Planning, Strategy, Finance, Accounting, Inventory Management, Marketing and Project Management are all covered to help you avoid costly mistakes.
And, if you'd like to learn how BreathEasy Business Coaching and Consulting can help you lower your costs and keep more money in your pocket, please fill out the contact form on the homepage and I'll reach out within 2 business days to discuss your particular challenges.
*Need help developing your business strategy? Contact BreathEasy Business Coaching and Consulting today for professional small business planning services.
About BreathEasy Business Consulting:
BreathEasy provides comprehensive business planning and other services, helping entrepreneurs turn their dreams into successful enterprises using age-old business skills and techniques.
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