I quiz people on what is necessary to start up a business and rarely do they say "customers." Usually they say money, a product, a dream, passion, a good idea, business skills, and if they do get around to anything like customer, it is expressed in the oblique: market or research or some variation of that. Rarely the cold hard word: customer.
Since the customer is undeniably the most important thing in business, my classes are built on that fact, and it becomes the first step in building a business. But that begs the question, what to sell?
I think I know why business proposers do not mention customer first and foremost in starting a business. The problem is precisely that, "what to sell?" I think they intuitively know their ideas will not survive customer contact. Often people desiring to start a business are pursuing a fantasy, a dream, and they hope they have hit on a winning combination. Look, so many people buying t-shirts! China is buying so much USA wine! In Poland they have these great cookies we do not have here! I have this great connection overseas! My language skills will help me!
Three common patterns emerge from this group - front runners, followers and the entitlementarians. Front runners see that wine exports to China are jumping and say, hey, I am going to get in front of that business, I'll get between the buyers and sellers and make a commission. The followers say "hey that guy became a billionaire with facebook, I am going to make a facebook," or "wow look at all the gourmet cupcake stores opening, I am going to open one too!" The entitlementarians say "I have all these degrees and experience, so I choose this position in world trade, and I expect people to work with me." This group is the most susceptible to government programs, consulting with lawyers, creating logos, and first securing all of the presumed trappings of legitimacy. They have business plans that would burden a camel. All will overwhelm you with their insistence that they have a winning combination.
The only thing that legitimates a business is its customers. Nothing else.
Now here is the problem with these three bases for business start -up. If and when the customer says "no" these people have no fallback position.
Why will customers say "no"? To the front runner, the buyers and sellers are already established, and they know each other well enough, so that if the business they have both been in for 20 years experiences some surprising growth, they can handle it. Why do they need you? If Golden Gate Wines has been struggling in Hong Kong for 20 years to introduce USA wines to Hong Kong drinkers, and the Chinese drop duties and restrictions on wine in a surprise move, why would a USA winery work with you, and not Golden Gate wines when exports skyrocket? If there is a surprising advantage, it is those in the field now that benefit, not the newbies.
If gourmet cupcake shops are everywhere, what makes you think those who've been in it 20 years have not already scoped out your location and judged it unworkable? They know. Or more to the point regarding fads, what makes you think just because they have lots of stores they are making any money?
Now all of these examples may represent businesses that start and thrive. I have no opinion as to the viability of anyone's idea. I merely point out what I have observed over the years as to what seems to fail. In a minute I'll get to what seems to succeed.
But before that, back on the point as to my opinion is worthless as to any specific plan, there is an opinion that matters. And that is the opinion of the customers And there is no reason you cannot get the customers opinion before you put pen to paper, or even much think about your idea. Simply ask yourself, who is your customer? Who will pay for what you offer? And then go pitch your idea, one way or another to the very people you think will buy from you.
Just because you are talking to customers does not mean it needs to be a sales call. In fact, you calling on customers to make a sales call is probably a terrible idea. I've broken down business start up approaches into plan A and plan B. In both approaches, the entrepreneur first speaks to the customers, but in neither approach does the entrepreneur attempt to make a sale.
You must at some point speak to a customer. is there any reason why that cannot be the first thing you do? It need not be a sales call, it can be a mere "test of a hypothesis." Eg, "I believe if I import these cookies form Warsaw, you will buy them from me for your shop. Am I right?" That is no different then after importing cookies form Warsaw asking if people will buy them. Ther eis no reason you cannot test an idea or a sample, before you actually buy anything from overseas, or get a biz license, logo, write a plan, etc.
As Drucker says, entrepreneurs do not take risks. If you think they do, you have been woefully misled and should stop all entrepreneurial efforts until you correct this view. You can find the book in which Drucker explains this in any library, or you can buy it on amazon.com.
If it is your understanding that "entrepreneurs take risks" it is critical you cease all business efforts until you have corrected yourself on this point.
My contribution is to have shown how once fractional reserve lending was not longer a criminal act, and charging usury on fractional reserve lending no longer a criminal act, how banks conspired with textbook publishers to introduce the idea of "entrepreneurs as risk takers" to sop up this fiat credit banks were lending, and to hobble anyone who might pose competition to the big biz/big govt fascism extent in USA.
Feel free to forward this by email to three of your friends.
Since the customer is undeniably the most important thing in business, my classes are built on that fact, and it becomes the first step in building a business. But that begs the question, what to sell?
I think I know why business proposers do not mention customer first and foremost in starting a business. The problem is precisely that, "what to sell?" I think they intuitively know their ideas will not survive customer contact. Often people desiring to start a business are pursuing a fantasy, a dream, and they hope they have hit on a winning combination. Look, so many people buying t-shirts! China is buying so much USA wine! In Poland they have these great cookies we do not have here! I have this great connection overseas! My language skills will help me!
Three common patterns emerge from this group - front runners, followers and the entitlementarians. Front runners see that wine exports to China are jumping and say, hey, I am going to get in front of that business, I'll get between the buyers and sellers and make a commission. The followers say "hey that guy became a billionaire with facebook, I am going to make a facebook," or "wow look at all the gourmet cupcake stores opening, I am going to open one too!" The entitlementarians say "I have all these degrees and experience, so I choose this position in world trade, and I expect people to work with me." This group is the most susceptible to government programs, consulting with lawyers, creating logos, and first securing all of the presumed trappings of legitimacy. They have business plans that would burden a camel. All will overwhelm you with their insistence that they have a winning combination.
The only thing that legitimates a business is its customers. Nothing else.
Now here is the problem with these three bases for business start -up. If and when the customer says "no" these people have no fallback position.
Why will customers say "no"? To the front runner, the buyers and sellers are already established, and they know each other well enough, so that if the business they have both been in for 20 years experiences some surprising growth, they can handle it. Why do they need you? If Golden Gate Wines has been struggling in Hong Kong for 20 years to introduce USA wines to Hong Kong drinkers, and the Chinese drop duties and restrictions on wine in a surprise move, why would a USA winery work with you, and not Golden Gate wines when exports skyrocket? If there is a surprising advantage, it is those in the field now that benefit, not the newbies.
If gourmet cupcake shops are everywhere, what makes you think those who've been in it 20 years have not already scoped out your location and judged it unworkable? They know. Or more to the point regarding fads, what makes you think just because they have lots of stores they are making any money?
Now all of these examples may represent businesses that start and thrive. I have no opinion as to the viability of anyone's idea. I merely point out what I have observed over the years as to what seems to fail. In a minute I'll get to what seems to succeed.
But before that, back on the point as to my opinion is worthless as to any specific plan, there is an opinion that matters. And that is the opinion of the customers And there is no reason you cannot get the customers opinion before you put pen to paper, or even much think about your idea. Simply ask yourself, who is your customer? Who will pay for what you offer? And then go pitch your idea, one way or another to the very people you think will buy from you.
Just because you are talking to customers does not mean it needs to be a sales call. In fact, you calling on customers to make a sales call is probably a terrible idea. I've broken down business start up approaches into plan A and plan B. In both approaches, the entrepreneur first speaks to the customers, but in neither approach does the entrepreneur attempt to make a sale.
You must at some point speak to a customer. is there any reason why that cannot be the first thing you do? It need not be a sales call, it can be a mere "test of a hypothesis." Eg, "I believe if I import these cookies form Warsaw, you will buy them from me for your shop. Am I right?" That is no different then after importing cookies form Warsaw asking if people will buy them. Ther eis no reason you cannot test an idea or a sample, before you actually buy anything from overseas, or get a biz license, logo, write a plan, etc.
As Drucker says, entrepreneurs do not take risks. If you think they do, you have been woefully misled and should stop all entrepreneurial efforts until you correct this view. You can find the book in which Drucker explains this in any library, or you can buy it on amazon.com.
If it is your understanding that "entrepreneurs take risks" it is critical you cease all business efforts until you have corrected yourself on this point.
My contribution is to have shown how once fractional reserve lending was not longer a criminal act, and charging usury on fractional reserve lending no longer a criminal act, how banks conspired with textbook publishers to introduce the idea of "entrepreneurs as risk takers" to sop up this fiat credit banks were lending, and to hobble anyone who might pose competition to the big biz/big govt fascism extent in USA.
Feel free to forward this by email to three of your friends.
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