One of the key strengths of the entrepreneur is their continual desire to move things forward, to continuously improve things and to not be content just sitting around waiting for things to happen.
Unfortunately though this "strength" can also prove to be the entrepreneurs downfall.
In today's fast paced, modern society, we are unfortunately being conditioned to expect that we can have anything we want, right now. We are conditioned to believe that success, fame or achievements can and should occur easily and "overnight". Stories in the media usually only focus an individuals or business's achievements without telling us about all the pain, obstacles and years of hard work it took for those achievements to become a reality.
For many young entrepreneurs who are already impatient by nature, this desire for overnight success creates an unrealistic expectation of how quickly they can get their business up and running and achieving the revenue, market growth and profits they desire. This can cause incredible frustration and disappointment and this alone can often be enough for the impatient entrepreneur to throw in the towel and look for another venture or business idea to get started on.
But the biggest problem comes when they decide to keep going with the business they have started and they start to do things in their business at completely the wrong time.
One of my biggest personal "Aha!'s" was when I realised that just like everything else in life, businesses also go through seasons, and that trying to short cut this universal law of seasons in business was a recipe for disaster.
Spring, Summer, Autumn, Winter. The farmers knew that each season was a time for a different focus.
- Spring - the time for planting and sowing your crops.
- Summer - the time for growth and nurturing.
- Autumn - the time for reaping what you sow and harvesting in readiness for the Winter ahead.
- Winter - a time for resting the land, reflection and preparing for the next Spring.
Every business goes through these cycles and for the entrepreneur here's what each season means:
- Spring - the time for innovation - creating your business, systems, products or services and testing them in the market
- Summer - the time for promoting your business and aggressively growing your customer base/acquire market share
- Autumn - the time for looking after the customers you've acquired and turning them in to ongoing revenue streams by delivering amazing service
- Winter - the time for resting, cleaning up messes, assessing your progress, making your plans and targets for the next year and preparing yourself, your team and your business for an even better year next year
Obviously the seasons in business will have no correlation to the change of seasons weather-wise, and some businesses will evolve through these seasons faster than others depending on the nature of the business, the industry you're in and the skill of the entrepreneur in getting things done. The more skilled and experienced the entrepreneur, the faster their businesses can go through this cycle.
Unfortunately for many new entrepreneurs though, they often want to be harvesting millions of dollars when they're still in the Spring, or they're trying to capture new customers when they should now be focused on keeping existing customers happy, or they're reinventing their services when they should be focused on monetising their existing ones. Fighting against the natural laws of time and life cycles, or trying to speed it up, only causes you to do the wrong things at the wrong time, jeopardising the long term success of your business.
While it's undoubtedly an amazing time to be alive, technology and the way we live today, seems to have caused us to lose touch with nature and some of these fundamental laws about the way things work.
Understanding and making peace with the four seasons, and learning how to use them to your advantage is an essential skill for entrepreneurs.
NZ Sales Manager launches
Last week saw the launch of my latest project, "NZ Sales Manager" - NZ's fortnightly e-magazine for sales professionals.
NZ Sales Manager is a free fortnightly e-mag delivering thought provoking articles, industry news, events and updates for forward thinking sales managers, business owners or sales professionals.
You can subscribe or find out more about NZ Sales Manager by visiting www.nzsalesmanager.co.nz.
This is a good example of the birth, evaluation and execution of an idea.
How I got the idea:
Being in the sales industry both as a salesperson and then business owner I always wondered why there was no specific publication for salespeople - after all there were over 186,000 Kiwi's employed in sales roles in 2006. Being close to the sales industry I spotted a gap and was able to find out that many others in the sales industry felt the same way.
Assessing the opportunity
Applying the five criteria from my previous post:
1) Am I passionate about the product/service/industry?
Absolutely. I believe that salespeople are the most important people in business and that learning how to sell is an essential skill for all entrepreneurs. (You don't have to agree with me!)
2) Does a market exist for your product or service and is the market big enough?
Yep. Having been immersed in the sales industry for the last 8 years I've been able to gauge what the industry needs. Is the market big enough? Definitely.
3) Is there a gap for you to become Number 1 in?
Yep. There is no existing independent and regular publication specifically for the sales industry.
4) Is it systemisable and can it run without me?
Yep again. There are far more capable people than me when it comes to putting a magazine together - printed or otherwise. While it has long been a goal of mine to create a publication such as this, all the elements of production and promotion can be done without me.
5) Cost. Do I have the resources?
In this case "yes". A few years ago "no".
Anyway, I am conscious of the difference between being a preacher and a teacher and hope this helps as a practical illustration of how to turn an idea into a business!
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
Anyone can have a good idea but turning a good idea into a successful business is another matter altogether. (There are plenty of people with good ideas out there but not many with good businesses.)
One of the problems is that when you're just starting out, you can get so excited about the fact that you've come up with an idea that you launch straight into trying to turn it into a business. Successful entrepreneurs know that they will have plenty more ideas and therefore are happy to take their time to assess their ideas objectively and only act on those with the best chance of success.
As Richard Branson says, "Business opportunities are like buses, there's always another one coming."
In fact this is one of the biggest differences between successful entrepreneurs and others - successful entrepreneurs have an "abundance mentality" when it comes to ideas while most people have a "scarcity mentality". In other words, inexperienced entrepreneurs are often worried that they won't have any other good ideas so they proceed with the only one they've got (often the first one they come up with) instead of taking the time to apply a stringent selection criteria to it.
So here are a few of the criteria I've adopted when assessing new opportunities:
1) Am I passionate about the product/service/industry?
Many people will say that you don't need to be passionate about your product or service - just about building your business. For example, they say you don't need to be passionate about paper clips to go ahead and build a paper clip business. In my experience, and from talking to other business builders, I have to disagree.
Building a business is hard enough without not caring about your product or service, or the problems it will help your customers solve.
When the going gets tough, as it surely will, and when even the potential monetary rewards aren't enough to keep you going, as they surely won't, what is going to make you do what it takes to make the business successful if you don't passionately believe in the good you are doing?
2) Does a market exist for your product or service and is the market big enough?
This question speaks for itself. Are there enough people who will buy your product or service for what you need to charge to build a profitable business? No use building a business to solve a problem only you and your friend care about.
An add on to this question is, "Is the market concentrated enough?" While there may be a big enough market nationwide, are there enough potential customers within your reach for you to build a profitable business?
3) Is there a gap for you to become Number 1 in?
My favourite strategy in business is not to compete. When you have the chance to create your business from scratch, why choose to make it harder than you need to? In terms of assessing ideas, the question to ask is this, "Can I make this business number 1 in it's category?" If yes, that's fine. (Note: this is just my criteria - in reality there is often room to build a successful business occupying the Number 2 or even Number 3 position. Think Coke and Pepsi, McDonalds and Burger King, Telecom and TelstraClear... It's just that the more competitors you have in your category, the more you need to compete in price and the harder you'll have to work to achieve market share.)
If not, the next question to ask is, "Can I create my own category in which I can be Number 1?" If yes, then go ahead. (For example, Burger Fuel created it's own fast food category - gourmet burgers. Consequently it doesn't have to compete with the price of burgers from McD's.)
4) Is it systemisable and can it run without me?
If the business you're thinking of starting cannot be run by anyone else but you, or the products or services you're producing cannot be produced or delivered by anyone but you, then it's a fair bet you've come up with an idea for a job, not a business.
That's not actually to say you shouldn't go ahead with the idea, just that your scope for growth will be limited by the amount of work you can do personally and that the value of the business will be intrinsically linked to you, limiting it's attractiveness should you ever want to sell it.
5) Cost. Do I have the resources?
Do you have the capital, time, knowledge to turn your idea into a successful business? If not, can you get it?
Turning a good idea into a successful business is all about execution. Many great ideas fail not because they weren't a great idea, but because the entrepreneur is undercapitalised, doesn't have the man power, or doesn't have the skills or knowledge to implement it.
If the answer to any of these questions is "No" then my advice would be to find another idea.
Having said that, if you back yourself, and are prepared to learn some hard lessons and to never quit, then go for it.
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
They say that ideas are "a dime a dozen" and it's true - there's certainly no shortage of people with good business ideas out there.
But having an idea and having an idea that will enable you to build a great business are two completely different matters. (Just ask anyone who's tried to start a business!)
Two of the most common traps that new entrepreneurs fall into is that they either:
- Invest everything they've got into the first idea they have (because they are only just learning how to come up with them) rather than being patient and waiting for a better opportunity, or,
- They get so excited about their new found ability to come up with ideas, that they try and run with every idea they have!
Both of these traps can be a recipe for disaster and help explain why many successful entrepreneurs fail again and again before they achieve real success. But as time goes by and they learn from their mistakes they get better and better at choosing (and executing) the right ideas to act on.
So where do the best ideas for new businesses come from?
The first step is to properly understand where money comes from.
Money follows value. We earn money by exchanging something of value for money. In your job you are exchanging your time, strength, brainpower or other skills for money. For example, if you're only providing $20 worth of value per hour to the market, you will earn $20 per hour. On the other hand if you want to earn $200 per hour then you will need to learn how to provide $200 worth of value per hour. The more value you can provide to the market, the more you earn, and it's exactly the same when you're running your own business.
So first things first, your idea must provide something of value to the market. If it doesn't, you'll have a hard time getting people to give you money for it.
How do you do this? Well I've found that the best ideas come from finding a problem and solving it, or finding a need and filling it. By coming up with a solution to a problem that people want to solve, you will be ensuring that your solution is valuable. The bigger the problem you're solving - the more valuable the solution.
For example, at the RSN we identified that sales managers are expected to recruit great salespeople but aren't being given any training or instruction on how to do it in the first place. As a consequence they are left to fumble along, learning solely by trial and error, costing the companies they work for million's of dollars in lost sales opportunities, recruitment costs and staff turnover. To solve this problem we created a full-day sales recruitment workshop which managers can attend for less than the cost of a decent ad in the newspaper.
The mistake many people make is that they do it backwards -they create or invent something and then try and figure out what problems it will solve, rather than finding a problem to solve and then coming up with a way to solve it.
So how do you find a problem to solve? Many people start businesses after being spurred into action by something that annoys them or to fill a need they've experienced in their own lives.
You probably know the story of how Sam Morgan founded NZ's leading online auction website Trademe.co.nz after not being able to find a second hand toaster for his flat. He got sick of ringing classified advertisers in the newspaper only to find out what they were selling was already sold.
But what if you can't think of any problems that really annoy you? (That method didn't work for me!)
Well, the next best way to find problems (also referred to as "spotting a gap") is to throw yourself into doing something you're passionate about and ask yourself how you might be able to improve it.
The thing with "gaps" is that in order to spot them, you need to be close enough to see them. For example, I have absolutely no interest and know nothing about the robotics industry. Therefore it's almost impossible for me to identify what might be missing or what might need improving in robotics - I'm simply too far away from the industry to spot any gaps. On the other hand I have invested a lot of time, energy and passion into the sales profession and because of my involvement in the industry, I see opportunities to improve the sales profession everywhere.
A good example of being close enough to spot a gap is Paul Manning. Paul founded Auckland based advertising company Metromedia (now Ogilvy Metro after being sold to global giant Singleton Ogilvy) and was NZ's Young Entrepreneur of the Year in 2006. He started Metromedia when as an advertising sales rep he discovered there was no full service advertising company offering "end-to-end" services to NZ's small and medium sized businesses.
This is one of the reasons they say you need to find out what your passion is and do it. If you do this, and you commit yourself to being the best in your field, you'll soon spot plenty of areas of improvement that you can contribute to. On the other hand if you try and spot problems and gaps in a field you're not passionate about, a) you won't be able to see as many opportunities because you really don't care, and b) you certainly won't care enough to build a business to solve it.
This method of spotting gaps may take you a bit longer than simply sitting down one day and trying to come up with a list of things to invent, but when you listen to the stories of many successful entrepreneurs you find that their business ideas were born out of personal frustration at a lack of products or services, or noticing what was missing in an industry. The saying "Necessity is the mother of invention" encapsulates this concept nicely.
So there you have two clues about where great business ideas come from. You'll notice that these methods are quite different from simply coming up with ideas for the sake of having ideas. By starting with a problem you'll ensure that your solution is creating value.
No matter how hard you try, you will not find any product or service which has done well that does not offer buyers more value than it costs them to obtain it.
Next time... Ideas Pt 3: How to assess whether an idea is worth pursuing. What are the final criteria to consider before trying to turn it into a business?
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
Alright so you've let go of all the negative beliefs you used to have about your ability to come up with great business ideas. Now what? How do you actually start having more of them?
Well, spotting opportunities and coming up with great ideas is actually just another habit, and like any habit you want to develop, you simply need to practise it. In fact I know many people, myself included, whose problem is not a lack of ideas, but too many ideas! Because once you get good at it and you get accustomed to spotting the gaps and the holes and opportunities, ideas start springing up all the time. (At this stage the problem becomes not so much "what to do" but "what not to do".)
What we're really trying to do here is change from a "scarcity of ideas" mentality ("There aren't enough good ideas to go around") to an "abundance of ideas" mentality ("There are more great ideas waiting for me than I can deal with").
Thus it shouldn't come as too much of a suprise that now that you've let go of all the negative beliefs that were stopping you coming up with ideas, the next thing you need to do is replace them with positive beliefs that enable and encourage you to have more ideas.
Sound a bit too easy? While this seemingly simple solution is a fundamental step towards entrepreneurial creativity, it is not at all easy if you've been brought up like most people have, brainwashed into thinking that starting and building a multimillion dollar business is "not what people in our family do".
However it is essential that you persevere with this as this is one of the key things that differentiates those who go on to build successful businesses and business empires, from those who would like to but don't. They simply believe that they can. (Even if they're not sure how!)
So the first thing to practise is this: Start telling yourself over and over, every chance you get, that "Opportunities are everywhere and I know where to find them" Write it down, say it out loud, meditate on it - do whatever you need to do to program this thought into your subconcious. Just like you did when you programed your timetables into your subconscious at school, and just like you did when you learned how to change gears without even noticing when you were learning to drive - through constant repitition.
And do the same for this one: "I have amazing ideas all the time".
These are two affirmations that I used after being inspired by an awesome book called "Money, Success & You" by mind power and wealth expert, John Kehoe. It very clearly and concisely outlines the relationship between what goes on in your head and what turns up in your real life. It was after reading this book that I finally got started on my first business and I highly recommend you read it as one of the first steps on your path to entrepreneurship.
Now of course you can come up with whatever affirmations you want - it's your future after all. The main thing is that you replace the beliefs that were holding you back (such as "All the good ideas have already been taken" and "If it's such a good idea why hasn't someone else already done it?") with at least one or two beliefs that will actually help your subconscious mind come up with great ideas. (If you have any suggestions on some positive beliefs about ideas please let me know and I'll share them with our readers!)
How will you know when you've achieved this? One, just ask yourself if you truly believe you're capable of having amazing business ideas all the time. If the little voice inside your head says "yes" - you've done it. If not you've got some more work to do.
Two, you'll know when you've succeeded in adopting this "abundance of ideas" mentality because you'll find you'll actually start coming up with ideas on a fairly regular basis - probably not fully fledged mult-million dollar business ideas everytime but ideas all the same, even if it's just ideas on how something could be done better or ways to solve annoying problems. The important thing is that you are now starting to exercise your entrepreneurial muscle.
How long will all this take? It depends on how much you want it.
Next... Ideas Part 2 continues: You've replaced the beliefs getting in the way of your ideas, with beliefs that will help you have more of them - but the world is full of great ideas - so where do the best ideas come from?
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
While many people dream of starting and building their own multi-million dollar business, most never get started.
And one of the biggest reasons for this is that they are unable to come up with an idea worth pursuing.
Having been in this position myself when I first decided to start my own business, I remember how frustrating it was, wanting to get started but not having any ideas! And what was even more frustrating was reading and hearing about all sorts of people who were coming up with great "blindingly obvious" ideas left, right and centre.
"What's wrong with me?" I used to wonder, "I could have done that! They're no smarter than me! Why didn't I have that idea?!"
In fact it took me two long and frustrating years from the time I first decided to start a business (after my first year of full time work), to coming up with an idea good enough for me to quit my job and take action on it.
Interestingly enough, many of the explanations I hear people give about why they are unable to have a good idea, are the same explanations I used to give myself when I was trying to get started.
Here's some of the most common ones I hear:
"All the good ideas are already taken."
"Everything people could possibly need or want has already been invented."
"I don't have enough ....(skills, knowledge, money)... to get an idea like that off the ground."
"It's so competitive out there that someone else has probably already started and will beat me to it."
And the classic, "If it was such a good idea someone else would have already done it!"
Do any of these sound familiar to you?!
Now no matter what your favourite excuse might be for not being able to come up with a good idea, they all amount to the same thing. You simply don't believe that you are capable of having a good idea.
And this is an absolutely critical lesson to get your head around. All excuses, including all the ones listed above, are nothing more than negative beliefs that you have picked up throughout your life, and which are now holding you back, preventing you from living the life you deserve.
The truth is that the ability to come up with great ideas is inside all of us, but like many of our hidden abilities we have never been taught how to use it!
The first step to having more ideas is to recognise the problem for what it is. It's not that you can't come up with good ideas. You can! Multi-million dollar ideas are being born as we speak by people who are no smarter, no luckier, no more connected, and no wealthier than you are! And what millions have done before you, you can learn to do too.
Every single one of the excuses listed above are false. There is no truth to any of these at all. Somebody has to be coming up with all the amazing new ideas and opportunities out there, and if you ever want to get started it's essential that you start accepting that you can too. So if you have a mental block when it comes to coming up with business ideas, take some time to think about what you're telling yourself and make a decision to let go of any limiting beliefs today. Write them down and then screw them up and throw them away. There will be enough people coming up with excuses why your ideas won't work without you helping them too!
These negative beliefs cost me two years and have cost some people their whole lives. Don't let them rob you of your future!
In the next post we'll look at some simple techniques that I and others have used to start having great ideas all the time.
Stay tuned for Ideas Pt 2: Where The best Ideas Come From And How To Have Great Ideas All The Time!
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
One of the biggest things that prevents many people from starting their own business, is a lack of ideas.
How frustrating it is – wanting to get into the game but not being able to come up with a good idea to follow!
If this sounds like you then I have two pieces of great news for you.
Firstly, you’re not alone. This “lack of ideas” isn't just stopping you from getting started - it's stopping millions of others too! So first things first, you can stop beating yourself up and wondering what’s wrong with you.
And secondly, there is something you can do about it. Once you understand what’s stopping you having great ideas, there are things you can do to start having great ideas all the time!
Over the next series of posts we’ll look at:
· Common misconceptions about ideas and what stops you from having them
· Where the best ideas come from and how to start having great ideas all the time
· How to assess whether an idea is worth pursuing
Stay tuned for ideas Pt 1: The Number 1 Obstacle To Having Great Ideas
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
While Vodafone's announcement that they will stop providing broadband services through the ihug brand, is consistent with their vision to be known as an international full service communications company, the move provides an interesting case study for budding marketers. So why would Vodafone stop using a brand that cost them $41 millon less than two years ago?
Vodafone's purchase of broadband provider ihug in October 2006 was an easy way for the telco to expand into broadband internet. Rather than spend their time and money trying to start their own broadband service, it was far easier for Vodafone to simply acquire one of the existing leaders in the broadband market - and then squish it into the Vodafone name later on. For their $41 million they got ihug's infrastructure and technology, client base, revenue stream and management. But most importantly, a good part of the purchase price will have been for the goodwill and reputation attached to the ihug name through 14 odd years of hard graft.
Now mergers and acquisitions (or in this case, acquistion and merger) are a sound and accepted strategy for business growth, but they don't necessarily make sense when it comes to enhancing a business like Vodafone's biggest asset - it's "Number One" position in the customers mind.
You see, what made Vodafone so fresh and exciting when they emerged on the NZ scene a decade or so ago, was the fact that they only did mobile phones. Consequently they led the charge in mobile phone uptake and in no time "021" was the preferred prefix for NZ's mobile phone users. Telecom's 025 and 027 were arguably just as good, and the prices were much the same, but Vodafone had the key advantage of being seen as the specialist mobile phone company - the experts, the leaders. On the face of it, Vodafone should never have had a chance against New Zealand's largest company in it's own back yard. But compared to Vodafone, Telecom was seen as a generalist - monopolistic land-line provider, directory giant, internet provider, and last but not least, a cumbersome and unsexy mobile phone co. Vodafone provided a text book example of how a newcomer can upstage the market leader simply by narrowing it's brands focus.
However, in recent times Vodafone has since become a provider of mobile internet access, an online music store, a fixed line phone services company, and then broadband internet company through their acquisition of ihug. So the question is what exactly does Vodafone specialise in now? You cannot be a specialist in everything. Indeed in the minds of the market, their offerings are now no different to those of the other mobile phone company Telecom. Who are the trendy, disenchanted or anti-establishment, mobile phone users to turn to now?
There are really two interesting things to note here. First, the further dilution and confusion of Vodafone's brand as it deviates from mobile phones (the market in which it made it's name), and second, the strategic destruction of a successful brand in an already crowded internet market.
While Vodafone's hunger for growth and expansion is understandable, there is a danger that by extending a it's brand name into categories already owned by other competitors, a name that used to stand for "mobile phones" will ultimately stand for nothing.
"Vodafone" is fast becoming a "Vodawhat?"
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
This Xmas we enjoyed a fantastic holiday in Mangawhai, a bustling seaside town an hour north of Auckland, and it was while ducking into the local bottle shop for some last minute New Years eve supplies that I was reminded of the awesome power of packaging.
As I was standing in line for the cashier, I noticed that the enterprising store owner had sellotaped mini bottles of Jagermeister to cans of Redbull, which were displayed on that prime piece of impulse-purchasing real estate - next to the cash register on the counter.
Those who know their drinks will know that a shot of Jagermeister combined with a can of Redbull combine to form a potent brew known affectionately as a "Trainwreck". "That's a good idea," I said to the checkout lady, "I'll have a couple of those too thanks." To which she replied, "Yes they've been selling like crazy - would you like some chilled ones from the fridge?"
Now the lesson here is not that Trainwrecks are a great drink. The lesson here is that it is very easy to add value to your products and services (and therefore make them more attractive) simply by packaging them in a way which makes life easier for your customers.
Alone, neither the Redbull nor Jagermeister, caught my eye. I had no desire for just Redbull and no desire for just Jagermeister. In fact I had walked right by a whole fridge of Redbull, and a prominent Jagermeister promotional display. But when packaged together (and let's face it, a piece of cellotape is about as simple as it gets!) the two solved a problem I (and many other customers) didn't even know I had.
As a result of this simple exercise in value creation, this bottle store was able to add an easy few hundred dollars to their tills for the day. How much could you add to your business' sales by applying this proven and simple concept?
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
This weeks collapse of flat-fee real estate firm The Joneses bears several lessons for entrepreneurs.
How can a high profile business be talking about listing on the stock exchange one week and then be in liquidation the next? Ironically the company that positioned itself as the one everyone else was trying to keep up with, was brought to it's knees by falling victim to its own game of "keeping up with the Joneses".
So what can we learn from this episode?
First lets look at some of the many things The Joneses did right.
1) They had a unique and valuable offering.
This is the most important element to get right. If you're going to start a business you must ensure you're offering a product or service which the market will value. Home vendors have long been complaining about the high commissions charged by real estate agencies and The Joneses flat-fee ($8995) promised great savings for vendors, when compared to the traditional percentage based commission model. The Joneses unique offering was not that they were good at selling houses (all real estate firms claim this so it doesn't differentiate you from your competitors) but that they could save their clients substantial money.
2) They created a new category.
The best strategy when launching a new business is not to compete. What do I mean by that? When you think "real estate agency" chances are that the first name that springs to mind is "Barfoots" or "Bayleys" real estate. Trying to knock these two out of these positions in the mind of the market is just going to be hard work. It's a bit trying to take on Coca-Cola and Pepsi at their own game - next to impossible (just look at what happened to Virgin Cola and a whole host of also-ran "cokes". Instead The Joneses created their own category to compete in - the flat fee real estate category. Who owns the market position "flat fee real estate" in your mind? No one. (While there are firms that offer alternatives to the traditional real estate sales model I can't think of any that offer a fixed fee for full service house sales).
3) They had a great name and well executed brand visuals.
"The Joneses" - cheeky, clever, short, memorable. The name translated well into a logo too - much more interesting than the boring and staid logo's of the dinosaurs of the industry.
4) They made great use of PR to build their brand.
Whether they planned it or not, The Joneses got themselves some great PR. Right from the start Murray Cleland and the real estate industry's unofficial "talk-up-the-market" body, the Real Estate Institute of New Zealand (REINZ), came out swinging, predicting the demise of The Joneses and dismissing them as just another wanna-be, while patronisingly wishing them all the best. As the saying goes though, "even bad publicity is good publicity" with these comments to the media bringing The Joneses name to light. Chris Taylor from The Joneses then made a great move by making a controversial statement about what was wrong with the real estate industry, saying that percentage based commission was the "root of all evil" in the real estate industry. And better still, the REINZ took the bait, charging Mr Taylor with bringing the industry into disrepute and pulling Mr Taylor and The Joneses in for a disciplinary hearing. After much media attention, the REINZ subsequently cleared The Joneses of the charges.
The following quote from Mr Taylor (again in the NZ Herald) highlights just how beneficial good PR can be for a new business:
"Mr Taylor said his company had been "overwhelmed" by the level of support it received since the issue "blew up in the media"."
5) Good advertising campaign.
The Joneses spent $3.2million dollars on advertising and promotion in their first year. What more can you say?
Unfortunately though, in business you only need to get one element in the execution of your strategy wrong, to bring the whole house down - regardless of all the things you may have done right.
So where did The Joneses go wrong?
1) Timing of the market was a little late.
In hindsight the entrepreneurs behind the Joneses may have launched a little too late. While we've just gone through one of the biggest property booms NZ has ever experienced, the market was almost at the top of the cycle by the time The Joneses joined the party (late 2006). With only a year to get the operation up and running and to get the cash coming in before the market softened, The Joneses were unable to really capitalise on the sellers market.
2) Failure to secure revenue streams or funding for growth before spending so much.
But the biggest mistake The Joneses made was spending too much too quickly. With The Joneses (unproven) business model of low flat fees for clients and paying their sales people a salary instead of on commission, they may well have had no choice but to get as many sales people on board as quickly as possible to try and get the sales they needed to cover their overheads, and to make the most of what was left of the property boom. But while the $3.2 million dollar advertising campaign may have been a good one, certainly getting them the attention of the market, the timing of such a huge expense probably wasn't. Nor was the establishment of flash offices in four cities within 12 months, or the hiring of 80 full time salaried staff before the cashflow was there to sustain such a pace.
With their unproven business model a better strategy would have been to scale down the size of their operations, maybe just getting one office up and running and ensuring it was making a profit before expanding into other centres. And rather than relying on such an expensive advertising campaign to generate business, adopting some good old fashioned sales and lead generation techniques, capitalising on all the PR and using the cash to support the team during the slower times ahead as they built up their business organically.
The real pity is that The Joneses low fees might actually have insulated them somewhat from the effects of the slow down in the property market. With a lower fee for selling, vendors may have been able to reduce their asking price to meet the buyers at their level.
Note that had The Joneses had the necessary cashflow, whether through sales or through additional debt or equity funding, the outcome may well have been different. Their attempted back-door listing on the stock exchange came too late and no doubt the directors had done everything in their power to raise the finance needed to keep going.
But that at the end of the day the responsibility lies squarely with the entrepreneur and this is a risk entrepreneurs must be willing to take. Indeed had the entrepreneurs behind The Joneses not taken that risk there wouldn't be a company to write about in the first place!
For this reason I commend the team behind The Joneses.
They came out with good intentions, looking to create real value for the market and to shake up a desperately flawed industry. They took the risk willingly and while their game wasn't quite up to scratch in this instance they did many things right. While the setback will undoubtedly have created a few economic hurdles for the founders, I hope the experience doesn't put them out of the game for good.
Richard Liew started his first business at the age of 23 and founded the Rev Sales Network, a personal and professional development network for salespeople when he was 27. Along the way he has helped develop sales strategies for several startup’s, helped extreme sport ‘le parkour’ (freerunning) find it’s feet in NZ, and is a regular newspaper and magazine contributor on the topics of sales and marketing. He is currently working on a recruitment related internet business. Email Richard here.
|
|