So you want to start a business? Is it because you have an awesome idea that needs to get out of your ether and onto the street? Or is still an information product in vapourware land and you are itching to monetize it?
There are several approaches people take when they start a business and I just wanted to share a few details about them and give you the information needed to be informed.
Business Models to review for Start a Business
1) Buy an Existing Business
2) Start one from Scratch
3) Buy a franchise
4) Get a license to do a commonly needed service independently
5) Hang your own shingle (do something you previously did while someone else profited)
6) Sell a product of somebody else’s (become a distributor for someone else’s ware – direct sales, or Multi-Level Marketing)
Let’s start with the pros and cons of each. If you buy and existing business, you are likely helping someone with their retirement plan. They are done and they intentionally created the business with the intention of selling it one day. Some of these are newer companies, and the businesses may be a little immature in some ways. The frame around this business is “thin” and either they have just started accumulating products, profit, people.
Make sure that what you are buying doesn’t depend too heavily on them and that it will work in same location you are intending to place this. Some businesses are distribution based, or some are people based. Often financial, investment or services business were successful because of the one individual.
Next, you can create a business from scratch. These have a high failure rate and that is because often the business owner liked the idea of being their own boss, or are seeking some type of “freedom” and really just build a job for themselves. They become an independent owner/operator and others can’t see their vision and don’t want to join, or they can’t do all of the tasks themselves. Often they spread themselves too thin or go broke hiring others to do the work for them.
It’s really important that these people complete a good business plan and have enough funds to support them during these early lean years until they have learned enough to be successful. Often the best successes here are where the owner hires a coach or models successful businesses on the right scale and really are focused on their progress.
Some folks really believe that buying a franchise will guarantee their success. Did you know that many franchises fail? That’s right – with a Franchise you’ve bought the branding and the model, but there are often so many costs to get started as well on an ongoing basis and one’s dream of freedom by creating this is dashed when reality sets in, or the pain of the different location and the slim number of people that are successful with these franchises becomes reality.
Now what about getting a license? These next two are relatively the same. You always wanted to be an esthetician, and so now you looking into making this real. You want to be an independent and often this means if you want to hang your own shingle, you’ve got to buy the shingle! I’ve seen so many people that did businesses in their house cry for clients once they have hung out their shingle and they really believed the “if you build it they will come” mentality.
Think again. The business plan is really important here, and especially if you are an independent IT professional, worker, consultant, speaker, or some other type of expert. Often that first client is somewhat simple to get, but the second and third are the hardest. You’ll really want to start and build your networks long before you start your business.
People and relationships are critical here, and having some skill in social media never hurts either. You are also going to want to really think about which skills you will provide and what you can buy or pay others to do for your (outsource or out task). Really it’s quite liberating to pay someone else a smaller amount than what you are charging your customers to do your menial or less important tasks.
I’ll never forget the day that my first out task results can back and I felt freer than free. I thought I could do this for everything and then I realized what happens if you are managing many outsourced resources, you will have to spend time adequately showing them what you want done, monitoring their work and then checking it carefully to ensure what they say is done really is done.
What about your client in stream? What if you get one really good client and then you keep going back to them. There are risks here that are worth mentioning. If you are working inside one customer’s world, it doesn’t give you much time to look into the next world you will transition to. It also means that you don’t have as much time to network with the potential new client or to market yourself appropriately.
What about the management of the business? You will need to get some marketing, complete requests for proposals (some businesses), get your accounting done, do your sales work, keep your supply drawer full and get some legal work done. The number of services you’ll need is bigger than the number of products or tools you’ll need to buy to keep your business going. Where are these tools sold? It takes both time and money to procure these things and if you are working in your business, who is working on it?
Finally we come to the last option for you if you want to start your own business – network marketing, multi-level marketing or direct sales. Many people cringe because they had a really bad try at this business or have a friend or relative embedded in one of the unsavory companies and the experience is so bad they just can’t see themselves getting anywhere near it.
What if you have tried it and the company was bad? They couldn’t manage their own business, and went bankrupt after you’ve sold all of your friends and family on the products, and now there is no money to pay you. What if your company was ok, but then they started a different business model mid stream.
That’s right – there are companies out there that promise sales distributors the exclusive rights or territory, then decide to start selling the product on infomercials or worse, in storefronts. Seen that “As Seen on TV” store? What about Wal-Mart or Costco? After the companies aren’t making what they thought or get an offer they can’t refuse, money trumps relationships with you! What if they even selling this stuff on TV???
What if you are one of these people who says “I can’t sell anything?” What if you feel “I don’t like to or won’t sell?” Reality is, unless you are paid by the hour, you are selling. If you are a consultant, you are selling you. If you own a franchise, you are teaching kids to sell your brand and then your product. Everyday employees at their places of work are selling their ideas, projects or themselves just to get promotions or a raise.
There are good things about network marketing companies. Some really have good products – they are actually science based and the companies protect their distributors. They don’t sell their stuff anywhere but by their private sales force just like on Amazon. Not on Amazon – but their software! They don’t have rigid territory and they actually have real scientists. The best companies employ many scientists (more than two or three) and the ultra good companies have a huge number of scientists that have peer related papers that are published. The best ones have the media doing stories on “them” and many have even gone public.
Heck – so many people thing that Tony Robbins, Warren Buffett and Robert Kiyosaki and Donald Trump are the smartest business people alive. Tony Robbins has just done a live event with offers to the 180 million people alive doing network marketing today, Buffett has bought one of the home party network marketing companies, Kiyosaki says this is the business of the 21st century. Donald Trump has said that if he went bankrupt again, he’d get on the best network marketing company he could find and then market the hell out of it.
There you have it – I’ve shared these business models with you and I have tried just about all of these. One I did not mention was information products and there are many styles and this one is a real crap shoot. Others are affiliate marketers for others who have either fixed or information products to sell and make their money that way.
Whatever your decision, make sure that you aren’t informed and your poor friend isn’t giving you advice. Get it from a known and trusted source and then good luck to you!
If you want to know which ones of these I have tried, I’d invite you to find out here, and even get some great modeling examples to find your own success! Here is a road map my coaching clients have asked for