Opportunities are all around us every day. Businesses, large or small, were not created by God in the garden of Eden, and just existed here as they are now, ever since. Each one of them has a life; a beginning and an end. Yes, even the big ones. And they all started by somebody having an idea and thinking about the numbers and working it, to make a go of it.
It is very common for people to try many things. Many famous people tried many things which did not work out, before they tried something that worked, and they became famous for the things that worked, not thought of as a failure for the things that didn’t work.
One of the best pieces of advice I can give you is to keep scheming; keep thinking; give it a try. Find someone, or a small group, to work together with. If it doesn’t work out, you learn and try again, and have new stories to tell.
But don’t be stupid. Don’t throw your whole life’s savings into something. Do the numbers. Be smart; be optimistic, but smart, all along the way. Keep your options open. Options are a good thing. Be flexible; don’t define yourself too tightly into one business or trade. Try to have multiple streams of income, from very different sources. You might call this a “robust” set of income sources. Be conservative with your money. Spend money on things which will grow in value. Cars don’t. Boats don’t. You get what I mean. Creating is infinitely more fun that consuming.
Every day is a new opportunity to smile about all you learned yesterday, and to start again looking at the world and seeing what others do not see. That’s what entrepreneurs do.
I know this is basic, but I love entrepreneurs, and this just seems to be something so many people miss. Let me give two examples.
- A gal thinks about how much markup (profit margin) there is in auto parts. So she opens an auto parts store. She is dreaming about buying a part for 10$ and selling it for 15$; 50% return of investment! Can’t get that at a bank! But she just can’t seem to sell enough parts to scratch up enough money to pay for the building, the utilities, and yes, more parts! She has good margins, but the volume is too low.
- A guy thinks about how many mowing lawns, and he gets more customers than he can possibly get around to, so he is thinking about that money he will get for every lawn. But after gas money, keeping his lawnmower fixed, and other expenses he realizes that he’s just not making any money; even though he is mowing a lot of lawns. He has high volume, but the profit margin is too low.
So, please, you entrepreneurs out there, when you are thinking about a business, please estimate all your expenses, and please estimate both your margins and your volumes, and make sure you are going to generate enough actual $$ to make a go of it.
I don’t have space here, but don’t forget about tax laws about losses, and about the possible tax benefits of doing something you really enjoy, as a business. Those factors could tip the scale for you.
Get out there and “entrepreneur something”! But do a little math before you get started!
The fundamental nature of business is the exchange of value. One kid has a toy truck and the other kid has a water gun, and they trade. One guy has money and the service station has gas, so he gives them money in exchange for gas. And it goes on and on.
It is interesting the thing about money. Before we used it, people would have food, livestock, etc. It was easy to see how much someone had, because it was all visible stuff! Now, you can look at a group of people and have no idea how wealthy they really are.
It is also interesting that value is in the eyes of the buyer. Some people think that if their organization delivers exactly what the customer asks for everything will be great. Wrong. Leading companies create value; they create products and services which customers never thought about, but when they see it, they have to spend their money on it! That is innovation. Creation. Creating value. Creating products and services people want to buy, whether they ever thought of it or not.
Don’t just benchmark other companies. “World Class” companies are pretty common these days.