Venture Level - Entrepreneur

Most of you that read this blog are entrepreneurs, some aspiring; some serial. Nonetheless whenever you are starting a new project, it is just that...a new project. It could fail, it could succeed. Do you ever do "market research" or spend a year or two just sinking your feet into the world of your project? Probably not. Entrepreneurs don't really do that. We just jump right into what we want to do, with some homework.

I'm not saying it is bad to do market research or it is good not to, but I will say that it is good to at least have a glimpse of what the industry has offered- or lack thereof; to other people. Whether you are starting a shoe company, an internet start-up, or anything else; there is a high chance you are not starting a company that is going to offer something totally new; something unheard of. Meaning that most entrepreneurs don't create the internet, they just make it more useful. So what exactly is "doing your homework?"

• Finding out what companies have ventured into the same space as you.
• Learning what they did. (Raised funding or not; location; staff; etc.)
• Did it work for them? If yes, it probably won't work for someone else trying to create a clone. If no, it probably still won't work for someone else. So "entrepreneur X" better have a different product in some way, regardless.
• How fast did the "REAL WORLD" catch on to the product(s) or service(s) offered. And no, the real world doesn't include one's siblings or friends, but could include one's grandparents.
• You can probably find out what every company in your industry did, but it is what they didn't do which is truly important.

That list can go on forever, but for times sake, I will keep it at that.

More often than not, each person that is creating a new company; reading this blog; is probably venturing into the internet space. I'll say this- it is easier to gather "dirt" or "information" on internet companies, than any other. Why? Consumers who use products or services that are on the internet, have tech skills, so they speak their mind in the same space. If someone has a bad experience with a company, they will blog about it, etc.

You can also find funding information and information about failed companies all over the internet. I would suggest that any entrepreneur that is looking to start an internet company, to first read the TechCrunch deadpool and learn what every company did wrong.

To sum things up, don't take "market research" for granted, but also it is smart to keep in mind if "entrepreneur X" is studying the market for 20 years, the product they are trying to develop will be obsolete by the time it comes to the real world.

Think about it for a minute. Being too macro-focused. As cliche as it sounds, too many entrepreneurs do it. They just want it all. There is absolutely nothing wrong with 'wanting it all,' but when it gets in the way of getting even something small, it is a problem.

If you look at an average entrepreneur starting a company, they have serious plans and plan to dip their hands into just about everything from the start. This ends up leading the person to tap only partially into their skills and not achieving each task to their full potential. Just like with anything in life, it is usually better to have four of the same size tires for your car at regular price, than 50% off, four different size tires.

Even if you look at developed companies or companies that have been around for awhile, you may find prime examples of factors that set them back. Usually companies that are around in times like today (a recession), and are doing okay, have some product or service that they excel at, otherwise it would be very tough to survive. That said, those very companies & their owners, have to keep offering that product or service at a premium level; otherwise they will see their customer count shrink. But due to the recession, business owners or management in companies feel like they have to be "innovative" and come up with new products. This is a great thing- as long as they don't try to create a product that caters to the need of customers five needs- only partially.

If none of the above made sense, excuse me; but I will explain it right here. The problem with many entrepreneurs or just people who manage businesses in general is that they create something that isn't truly worth it. Lets take "Sam's plumbing company" for example. Sam is the owner of the company and he plans to create a product "agent Y" -which is a cleaning product to "clear all drains from backup" -to bring in more revenue to their company than just what product "X" brings. But while he is innovating this product, he also thinks about having the cleaning product be used to "germ proof" drains. This requires him to spend countless dollars in research and the end result is that it cannot be done. Because "Sam" was too Macro-Focused, he wasted time, money, and loss revenue by the delay of "agent Y" being launched.

So the bottom line is, if an entrepreneur creates something, it better be GREAT AND SIMPLE. Trying to have something fulfill 10 jobs, might not be the right thing, even if it is possible to create such a product. Being the best known for 1 thing is far better than being known as an average Joe for five things.

I am pretty sure you have heard of "affiliate marketing" before, but if you have not, it is basically where you get paid upon delivering a certain action. I won't go into that into too much detail, so I don't bore most of you, but if you really don't get it, search for the term online.

There are a lot of affiliate marketers in the space today, regardless of if they make $0.05/year or 7 figures, they are all the same. It is just how one decides to present affiliate offers.

I'm going to tell you about a specific example of how a business was created from affiliate marketing and sold for about $48 million.

I can't go into detail about the specific company because I told you the amount that it was roughly sold for, but I will tell you everything that the business was about. It was basically a website promoting affiliate links in the travel industry. If you are the least bit involved in affiliate marketing, you will know that hotels.com has affiliate offers as well as other travel sites. This affiliate site was created from hotels.com and expedia.com affiliate offers. For quite a long span of time it was the number one performing "affiliate" for expedia.com.

To be a number one affiliate for any program, it takes A LOT of sales. In order to make sales, you have to be putting the right amount of money in advertising and even have repeat customers to your site. But it is all easier said than done, quite frankly.

I won't discuss how much the company was cranking in on a daily basis, but I'm sure that you can figure out some estimates by looking at the sale price of the company.

Everyone wants to learn the affiliate business, but it is hard to learn from a lot of resources on the web, since they are mostly restating same concepts and there is a lot of risk when you want to try out a new business with your own money involved.

Jeremy Schoemaker, also known as "ShoeMoney" is giving away his knowledge in a 12 week course, which is again, completely free. The course originates from his major book deal, which has been canceled, but it is all worthy information. All you have to do is sign up and you will receive emails of how to's and detailed information on getting into the affiliate business. Jeremy is also getting vouchers from ad networks, so you can experiment with advertising, without risking your own money. If anyone in the industry know's their stuff, it is Jeremy. I wouldn't promote him if I didn't think he was giving beyond expectations.

I encourage you to sign up and really learn what he has to teach, even if you decide not to become an affiliate marketer or create a business from it, you will get a very thorough understanding of the industry, for the future.

P.S. - Please don't contact me to ask about the company I discussed in the article because I cannot say much due to a NDA.

Sign up for the ShoeMoney Internet Marketing Course here.

Particularly aspiring entrepreneurs, love to hear about how established and successful entrepreneurs did what they did. Unfortunately, things weren't always as the stories behind successful entrepreneurs tell them. A lot of the time, "rumors" are unleashed in such a way that more publicity is given- than should be received or just the fact that a business model is so good to be true, it is a viral phenomenon.

That said, I always listen about entrepreneurs trying to create a business off of another entrepreneurs story. In most cases, this will never work. Even if you sit down with Bill Gates, he might be completely transparent and tell you everything he did to start Microsoft and create it into a thriving business, but nobody can replicate the same success with the same product due to the following general factors:

1. Timing is different.
2. There is only one Bill Gates who conceived the concept behind Microsoft.
   
3. Small things happen which made the company successful, which even Bill Gates probably cannot even recall.
   
4. As time progresses, it takes more to filter through noise.
5. The staff cannot be replicated.

As far as timing goes, creating a software company when software is just evolving, gives the option to map the future of software. If a company like Microsoft would be created today, they would have to literally pave a road with a different future, than what is expected. So eventually, the concept would be totally new and it wouldn't be a replication of Microsoft anyways.

When looking at an any entrepreneur and trying to replicate their success, with the same products they offer, you have to keep in mind that you are not that person and you are you. Entrepreneurs can range from running a plumbing company to a law firm to even something related to health care. Talent turned into a business is what makes an entrepreneur, so not every entrepreneur can run every business. And even within a certain field, it is hard to match up to a different person's DNA- so to speak.

Everyone knows a business isn't created in one day- or night. That means that there are a lot of external factors that influence the success or failure of a business. Small things either contribute or take away from a business which can add up in a positive manner to take a company to the top or add up and bury a company. It isn't humanly possible to remember each and every move any entrepreneur makes, so there are things left out of stories behind successful entrepreneurs.

If I tried to create the next Microsoft, or even something smaller...the next Facebook, by myself (as those respective companies were created), it probably could never happen. The times when these companies were started, gave them leverage over introducing a new way of doing things. Building something and remodeling a look is different. If anyone tried to create the next Facebook, they would surely need a team of people behind the product, just to live up to consumer expectations; which is why it is more encouraged to create a new concept, instead of just reinventing the wheel. You won't be recognized for learning how to speak English, but if you created a new language, people will be amazed.

A major part of any business, new or old, is the people that run it. The staff behind a start-up company can be a great asset to the growth of a company, or be the cause of a company to fail. It is really difficult to put together a stellar team, nonetheless create a stellar team and replicate a business that already exists in the space.

To sum things up, I don't want to discourage or say that copy cat or me too businesses won't succeed; or even the fact that you can't replicate a successful entrepreneurs story, but I won't say that it is possible either. Creating a new concept is what gets people talking, if you are the 2nd person or company in a space, you will always be compared to the first.

I know a lot of people who own franchise businesses. Including myself, I probably at least one person who is a franchisee of every leading franchise in the world. That said, I hear a lot of stories about how some franchisors put their franchisees through a bunch of "hell" and others really work with their franchisees. I want to discuss a little bit about how actually being a franchisee of a major brand can be a win for the franchisor and a lose for the franchisee.

First off, let me say that NOT ALL FRANCHISORS are bad to work with. In fact, many are extremely helpful and easy to work with. However, there are some who think that they are the kings and should have all the power to do whatever they want. A lot of my friends are franchisees of one brand, which shall remain nameless, but all of my friends have the same opinion about the franchise; which is that the franchisee is full of "dictators."

A lot of time time franchise corporations "experiment" with new products at the franchisees expense. In fact, franchisors include in their franchisee agreement that they have the right to terminate the franchise if the company promotions are not followed by the franichsee. So basically if a franchisor is launching a new product which requires the franchisee to invest $20,000 into their business for new equipment, they are "forced" to do it, or the franchisor can "threaten" to terminate their franchisee agreement, which results in the franchisee losing their investment. Now, you may ask: "Why wouldn't the franchisee want to invest in something that will make their business better?" The answer to that question is simple; a lot of the times when franchisors come up with new products, they fail. For example, in the quick service restaurant (QSR) industry, equipment costs are extremely high. When a franchisee invests in equipment and a new product fails, they basically get pennies back on every dollar spent on equipment purchases, if that. So it is basically like investing in something that will give no ROI, with depreciating value, like a car. That is just one part of a lose for the franchisee.

The next aspect that some franchisees suffer from is in the marketing and brand building. Every franchisor wants their brand to be thriving and well known throughout their market areas. That said, I will give another example of the QSR industry. How many times in a given month, do you hear about free products being given away at your favorite restaurant? Probably quite frequently. National brands like to do this because it basically creates "buzz" around their brand and gives them a great reputation among consumers. So when a franchisor decides to "give something away," it really doesn't mean much to them, except for profits from every aspect. You may ask how; and the answer is from:

1. Royalties that franchisees have to pay franchisors from sales. (Even though products are being given away, some people are bound to buy more than just what is being given away.)
2. When each store buys product from the franchisor. In most big franchises, the franchisor has some cut with the supplier for every purchase that a franchisee makes. So all the products given away for free, will increase sales that the supplier makes, putting more in the franchisors pocket.
3. And the last benefit is that the brand is going to grow that much stronger. This is because they joke is on the franchisee, having to give away a product, but growing the brand as a whole. Franchisees do not own every location, therefore they are, in a way, donating and building "someone elses" brand.

Notice I didn't say that franchisees benefit from promotions and product giveaway's. Which is because they don't. They don't get a kick-back from the franchisor of the product given away, no break on royalties, and they still have their operating costs at the end of the day. Think about it this way- if you were to buy a pack of gum and give it away to someone, with no charge; you lose money, the person you give the gum to is happy, and you just helped spread and grow the brand who makes the gum.

The last thing I want to mention about franchising, is in terms of local marketing. I know people who have tried to market their franchised brand in their local area, when the franchisor stepped in and said, "You can't market the brand, only we can do that because we don't want you to mess up our brand image." In my opinion, that is totally ignorant. If a franchisee wanted to mess up a brand, they could do it in so many other ways. You literally have to get every marketing campaign approved and the last say is with the franchisor.

All of the situations above might drive people away from becoming a franchisee, which is NOT what it is meant to do. It is just stating the facts of real situations that have occurred in the past with franchisees and still occur as on-going issues. There are many more "lose" situations that franchisees face, some are extremely bizarre, which I will save for another day, but you just have to be careful before you sign the dotted line and hand over that hefty check- in rush of becoming a franchisee of that huge nationwide brand.

Kind of like bootstrapping a start-up, a first time entrepreneur can actually be more beneficial and prone to success over a serial entrepreneur attempting to grow the same kind of business. First time entrepreneurs, undoubtedly, have a lot of hurdles to overcome, but they are usually more dedicated to their start-up business than a serial entrepreneur is. In many cases, a serial entrepreneur will be involved in existing businesses while they attempt to uplift a new one. This causes their attention to be diverted throughout all of their involvements, as to where a first time entrepreneur has just one business to focus on. For first time entrepreneurs, I would say the biggest task to achieve, is breaking the shell in their industry. Since they probably have no proof of prior experience, or no “connections,” they are forced to start from scratch and grow something out of nothing. A serial entrepreneur will probably have some cash to blow through, less time to give to a new business, and will probably hire other people to get the job “done,” rather than putting their own effort to finish something. I’m not saying that a serial entrepreneur has a tough time to grow a new business, but sometimes they are blinded by their own success, or just can’t see the reality of a new business.

Let me discuss a scenario for a web start-up. A first time entrepreneur trying to create a thriving web start-up will probably spend 23 out of 24 hours working, trying each and every way to grow their business. A serial entrepreneur will probably hire a bunch of people to do it for them, spending just a few hours looking over the results achieved, or lack thereof. While a first time entrepreneur might be inexperienced with starting a business on the web, leading to more time in the learning process, they will most probably know the ins and outs of what they are doing and where there ultimate goal for the business to be is. A serial entrepreneur might put a fixed amount of money up and see where the project goes and if it isn’t successful after a certain point; they will probably discard the whole concept. The problem is that serial entrepreneurs don’t feel forced or have as much pressure to really make a business grow. A first time entrepreneur is putting all of their efforts and time into making the business grow, so they really only have the option of it going in on direction- which is up.

Now let’s look at the downside of being a first time entrepreneur versus a serial entrepreneur. First time entrepreneurs face the difficult challenges of knowing almost nobody, requiring them to create a lot of “buzz” or “viral traffic” to their business. If a well known serial entrepreneur is behind a new venture, “buzz” is automatically created and eyeballs are attracted like a magnet. But at the end of the day, it doesn’t matter whether or not you have “buzz,” if your product is junk. It is as simple as that.

So what is the whole conclusion behind this? Easy- it doesn’t matter whether you are a serial entrepreneur, a first time entrepreneur, or don’t even consider yourself to be an entrepreneur. You need to:

1. Know your business
2. Know where you want to take it
3. Have a plan to take it there
4. And execute on the plan, with a lot of personal involvement

Creating a thriving business can usually only be done if one puts time into every action and sees it through. If doesn’t matter what someone has created in the past, because most of the time a new business will not depend on the success of one's old businesses.

I'm sure you have probably heard it over and over; that you need an AWESOME business card, one that will stand out from others, so I won't repeat that story. Instead, I will tell you that you should view the video below and acknowledge how creativity can bring out the best in business cards. I don't recommend you spend years developing a card or even design a costly card, but just to keep the thoughts below in mind when you are coming up with one. Also, some may argue that putting money into fancy business cards is nonsense, but I think that is an invalid point. My business cards cost a few dollars and I don't mind handing them out because I only hand them out to people who are worthy of having it. It's not like people just hand their card to unknown people who they have only known for 5 seconds, so it is well worth the investment, if you really want to develop the person you are handing your card to, into one of your well known contacts. I also consider my business card, a product that represents me and my brand, which is premium, so the card shouldn't be cheap, but that is just me.

[Click here for Video]