K,
Last week you pressed a line of inquiry, and I want to make sure you got my point, especially since it relates to something I was discussing with a colleague in Hong Kong. My colleague in Hong Kong offers seminars to lucky folks who had a million dollars given to them, and are charged with starting a business. The attitude on the part of those with the million dollars is, “I’ve done the hard part, the money, now you do the easy part... show me a business at which I can be successful...”
The problem with this attitude is the money makes no difference whatsoever. We need customers, not money. Customers are the most important thing in business, and getting the product (or service) right is the hardest thing. These two aspects take “you,” not money.
If you get the product right, you’ll get the customers. The money will follow.
If you have no money, you can join the billions of people since the beginning of time who started business with no money.
If you have money, you still must go through the process, the same as people with no money, to get your business going.
Coca-Cola put one billion dollars into launching a re-formulated Coke. Total bust, one billion dollars gone. The dot-com boom saw new companies financed with billions, the vast majority of which failed. The fellow who started Kinko’s with no money but a few rented photocopy machines is now a billionaire.
Products and services are solutions to problems. Companies are formed to solve problems for others. Your company starts because you experienced a problem, and you came up with a solution. In English we use the Greek word “passion,” which means to suffer, for those who start a business. We suffer a problem. You’ll hear people talk about the need for passion to be in business, but there is one more part as well, and with the passion is the joy of working on the problem, the solution. For the business person, suffering and joy are operating at the same time. The suffering gives us the impetus to start the work, the joy gives us the delight to continue it. But a key point to realise is all this suffering and joy is extremely personal, this is based on you, who you are.
This may seem strange, how can suffering and joy happen at the same time? We usually think it is one or the other. Well, women will tell you childbirth is suffering and joy. The closest men ever come to childbirth is starting a business. Be ready to take the pain, to suffer. But there will be joy in equal measure at first; then the pain ends, the joy continues.
As the product is developed, you offer it to customers. Now “you” are critical here too. You interact with customers, who in turn give feedback and criticism that helps you grow. Again, who you are as a person will determine how well you work wth customers. And as you meet and learn more about your customers, you will be given the opportunity to grow in character and skill. You first success is getting to a point where your offer is good enough to get enough customers to cover a suppliers minimum production requirement. After that, self-employment is a pas-de-deux in which you ever improve your offerings to customers who ever advise you on improvements, an upward sprial that takes you somewhere between where you are now and sitting to the left of Li Ka Shing. (Or who knows? To his right!) For everyone, rich or poor, this all starts in the same place, a solution good enough to cause others to want to buy your solution. But that starts with you, not money. This is true in all places and all times.
And here is another key point: the very act of being self-employed engenders a personal transformation. Whereas an employer will gladly overpay you for one specific repetitive skill, self-employment urges you to develop every talent you have, and learn your hopeless weaknesses too. And then you find yourself farming out the impossible, and weighing cost/benefit analyses on your possibilities, within the contraints of mortal time.
Another problem is we see someone else apparently successful, so we decide we want to copy his success.
Since these businesses are built on an individuals unique array of skills, experiences and psychological make-up, (especially as to how the entrepreneur relates to his customers) no one can copy anyone else's specific business. Each business is utterly unique, so any one business is useless as an example. There are countless coffee shops in USA, and countless noodle shops in Hong Kong. Nonethelss, we have one we prefer, because even a coffee or noodle shop will be in some way unique. I make the example of Martha Stewart, whose offer seems simple enough, as illustrative of how no one can copy an original. Every newspaper in USA weekly ofers for free what Martha Stewart sells. But there is only one Marth Stewart. People believe Martha Stewart is a billionaire making the dining table more attractive. Wrong. Martha Stewart is a billionaire teachng how to make an attractive table easy. You’ll probably have to reread that sentnence to catch the subtle difference, but the difference is worth a billion dollars.(Also, small businesses tend to die with the owner... and I would never recommend buying a small business.)
Martha Stewart, Calvin Klein, Li Ka Shing are not rich because they are smart, they are rich because they can listen, especially to customers.
My business activities are ordered to accomplishing my goals. There is no possible way my goals and yours match, so even if one might copy my business activity, and even if following me specifically might yield the same results, you would likely be miserable as can be living my life, since it is ordered to me, not to you.
Take one small point: take home pay. Some judge success by take home pay. Self-employed people generally want as little take home pay as possible, for a couple of reasons. First, there is no rationale for paying taxes (Senate Majority leader Harry Reid says in a taped interview taxes in USA are voluntary, and he is right), so they are to be avoided as much as possible. Take home pay is taxed at the highest rates. Second, there is little outside of business that the self-employed, properly oriented, are interested in. Or, stated another way, there is little that cannot be attributed to business activity. Therefore, almost all time and money is spent within the business, pre-tax. If your goal is to make a lot of money, you will be working with the Feds against yourself. If your goal is a certain lifestyle, then self-employment is the mostly likely means. Given the descent of the USA into kleptocracy, this is more true than ever.
Another aspect of entrepreneurship is, as a process, whether it is up to you to "succeed" on your terms. There is a seminal book out there by Thomas Sowell called the Politics of Economics of Race. He may have coined "cultural capital" but certainly uses it, in this context to mean people who build up the know-how in certain areas. It occurs over time, if not centuries. Families store up cultural capital generation to generation. It may not fall to you to be "successful" on your terms, it may be that your role is to accumulate "cultural capital" that is passed on to heirs who exploit it to do remarkable things in business. If your goal is money and that is just not in the cards, then you'll be miserable indeed. If the goal is solving problems and living a certain lifestyle, then it does not matter what the money is.
Very often I hear people are afraid to start their own business since they will not have employer-provided health care. A perceived imperative to have health care is a conditioned reflex. We are trained to believe we need this. Once we believe it, then we get caught in a false dilemma: Unless I am an employee, I will not have health care.
First, employer provided health care must be what the government defines as health care. Since these definitions are political, what an employer offers in the way of health care is not really healthy, and care is no part of it.
No where are injured people dumped on the street for lack of money. If it were true, the first thing you would do is start a business so you never lack the means to pay for health care. If you have no health care, you will still be attended.
Health care is diet and exercise, and completely up to you. Broken arms, pneumonia, and a bad rash require medical intervention, and these might cost a few hundred dollars, if you have to pay cash, if you should be so unlucky. Such is life. Some catastrophic injury could costs hundreds of thousands of dollars, but catastrophic insurance is cheap, since such catastrophes are rare. It is hard to overcome a conditioned reflex, a belief you need something. You can live without health care. Even with health care, you can die. Don’t let this false dilemma trap you.
If not health care concerns, you may have others. Hard times bring up tough questions. What make times hard is the anxiety of not knowing. “Where will the rent come from?” “My kid needs to see the dentist.” The employed go to the boss and get an advance on wages when such problems arise. The self-employed move out of their home into their warehouse, cut a deal with a dentist. It’s just business.
But what money there is all depends to what extent you serve customers. That starts with you, and you know the drill: experience "why dont they just, 2. good idea does not exist, 3. enough orders to cover a suppliers minimum order requirement, in a workable amount of time, profitably. The part that is true in all times and all places is that process. The content is you.
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