Can’t say I’m a die-hard John Wayne movie fan but I really dig the Duke’s way with words.
Like this quote:
“Life is tough, but it’s tougher when you’re stupid.”
How does that relate to business?
In a lot of ways.
Here’s a few.
#1 Business is tougher when you’re stupid about raising money
I hear and read all the time about this idea of “You can build a business with no money.”
Hey, I’m NOT saying you can’t.
Heck, I’ve made quite a bit of coin with no money out of *my own pocket*.
But here’s the part where people lose sight, get mislead or just plain get stupid about it…
Eventually… you either
need to show some skin in the game
you need cash on hand to lock up one of those rare, life-altering, sweetheart deals.
Maybe not right away and not in all industries.
…raising money for your business or investing your own hard-earned cash to cover overhead and hard costs needs to be on your radar.
And I recommend planning for it instead of reacting to it. (especially if you have physical products)
(especially if you have physical products)
There’s a lot of types of funding and approaches to acquiring funding and you may not need them all. You may not NEED any of them.
But it pays to know what they are and how to access it when you need it.
And more importantly, acquire it BEFORE you need it.
#2 Business is tougher when you’re stupid about marketing
There’s this movie about an Iowa farmer who hears a voice telling him over and over
“If you build it they will come”.
So like any other person who hears voices would do, he builds a baseball field in the middle of his Iowa cornfield (apparently voices are huge fans of baseball and corn ). Somehow this got translated into business advice. That if you build something customers will just magically show up.
Somehow this movie plot got translated into THE CRAPPIEST fortune cookie business advice EVER….that if you build something customers will just magically show up.
First of all, if you’re hearing voices you may want to ask them how much money that advice made them last month. Then go see your doctor and tell her that you hear voices and they are giving you bad business advice.
Then go see your doctor and tell her that you hear voices and they are giving you bad business advice.
Second, I recommend you school yourself on a few marketing basics. In case this is virgin territory we will be sure to post about this in an upcoming article. Yes, the voices and I will guide you along.
In case this is virgin territory we will be sure to post about this in an upcoming article. Yes, the voices and I will guide you along.
Yes, the voices and I will guide you along.
But in the mean time, there are several good books out there. Here are some of the cult classics that shed light on that which I speaketh of:
Here are some of the cult classics that shed light on that which I speaketh of:
- Positioning: The Battle For Your Mind by Al Ries and Jack Trout
- Influence: The Psychology of Persuasion by Cialdini — rarely referred to by his full name, kind of like myself, Oprah and Madonna
- The Irresistible Offer by Mark Joyner
- Shut Up Stop Whining and Get a Life by Larry Winget – not a marketing book but if you want kick-butt marketing results you need to become a kick butt person. Champions are looking for ways to hone their kick buttness and the Pitbull of Personal Development himself is sure to grab you by the collars and shake the complacency out of you and that flabby marketing muscle you’ve been dragging around.
When you dial in your marketing message….life gets real easy.
You get more customers, your customers buy from you more, they wont shut up about you to their friends until they too are buying from you, you get asked on more dates, people insist on buying your meals.
On Sundays people line up at your door waiting to get in your house, form a circle around you in the living room and sing praises about you.
That’s what happened to Jesus and he was the greatest marketer of all time.
His stuff has been going viral before Facebook was even a twinkle in Mark Zuckerberg ‘s eye.
Bottom line about marketing is that if you’re struggling to put points on the board each month or consistently make the money you want to make, then you’re probably doing it wrong.
#3 Business is tougher when you’re stupid about selling a business
Perhaps I’m putting the cart before the horse by talking about selling a business when we haven’t even discussed buying, building, or growing a business but if we don’t take a look at the this now…then puppies will randomly die somewhere and I don’t want that on my conscience.
When the time comes to sell a business there are few harsh realities you may want to know about upfront:
- Your buyer’s #1 concern is whether or not this business you’re selling them will profit them more money than it costs them to run it month after month after month.
- Anything in your business that is not making the cash register ring with sales…is a liability -AKA is costing you money.
If it costs you money to have around, then it will cost them money to have around. (point is, don’t bet on your inventory or equipment to automatically be reflected favorably in your sales price)
- They are probably in this for the money –
hey…I like those romantic stories about people doing good for the sake of doing good…but reality is, we’re not saving the manatees here and someone has to foot the bill.
Don’t expect your buyer to buy the business on warm fuzzy feelings alone.
Build, grow and run your business as though at any given month you are ready to show the hard numbers and sell for a sexy profit.
- Don’t expect someone to want to work as hard at your business as you did.
Chances are that they are interested in buying the business you are selling because they don’t want the heartache of building one from scratch.
The easiest way to get someone to buy your business is by building a business that is easy to run and grow.
So what does it take to do all this? It can all be summed up in one word.
Predictability from income (monthly or annual recurring billing), automated sales systems and processes.
Do this and your chances of one day selling for a sexy profit increase exponentially. Don’t and you may end up handing over your business for pennies on the dollar. Or worse…for free.
FAIL to do this and you may end up handing over your business for pennies on the dollar. Or worse…for free.
#4 Business is tougher when you’re stupid about buying a business
Now that we talked about selling a business the puppies are safe and we can move on to discussing buying a business.
There’s a rule of thumb with buying and selling a business.
Buy on actual. Sell on potential.
If you’ve never heard of this rule it’s probably because I made it up with my thumbs just for the sake of this article.
But nevertheless, I’ve heard and used a version of this over the years and it’s made me a whole bunch a loot.
I was evaluating property I wanted to buy. It was a real estate deal that included 50 lots, 33 units of property and a total of 25 acres. At first
It was a real estate deal that included 50 lots, 33 units of property and a total of 25 acres.
At first glance that sounds like it would cost a lot of money to buy and pretty dang profitable. Especially at only $600,000.00 it sounds like it could be a steal!!!
Especially at only $600,000.00 it sounds like it could be a steal!!! (Such a steal that private money lenders would line up to loan on it sight unseen…which they did)
But I did my due diligence and looked a few things:
- Last 2 years taxes
- Last 60 days of rent rolls
- Last 2 quarterly profit and loss statements
- Copies of the current leases
- Preliminary title search
- Preliminary backgroundcheckon the seller
Based on the income and expenses I determined that I wasn’t willing to spend more than $250,000.00 to buy this property.
Why would I make an offer so far below the asking price?
Because if I were to buy based on the actual numbers and I want to be profitable from Day 1, then I could not spend more than a quarter million dollars on the purchase.
While it’s fine to try to price a business to sell based on the potential profits, it’s not cool to buy based on potential profits. It may take years to make a dime.
It may take years to make a dime.
#5 Business is tougher when you’re stupid about growing a business
Part of growing a business is not only increasing revenue but also growing as a person yourself.
Waaaayyyy to many people who get into business think that running and growing a business has something to do with them doing all the work.
On the contrary, as a business owner you are responsible for seeing to it that all the work gets done in a way that is a win for the customer, for you and for the company.
That means learning to let other people run parts of your company no matter if you can do it better or not.
Unless you intend to remain an emotional midget the rest of your life…
…you eventually are going to have to learn how to be ruthlessly honest with yourself about the limitations of your personal and professional points of view and how to effectively and permanently break through them.
(yes, you have them. Yes you.)
Grow leaders in your company.
Build your network of other like-minded people in your area or niche.
Build your business like you’re building a lasting legacy that makes money for you and the people around you.
Go make the world work.