Sant Qiu’s Speed Profit Blog

Statistics has shown that when economic crisis hits, there will be more people striving out on their own. I guess it’s no surprise. When times are great, people are just too comfortable and complacent. They would rather stay in a good paying job than risk starting out on their own. But when you have no choice… either you do something about your situation or perish, survival instinct will kick in and creativity tends to flourish.

If you’re considering of starting out on your own, here are a few things to consider:

1. If you can, choose a niche/industry that has great growth potential.

I know, I know… lots of the gurus and those media-friendly entrepreneurs often claim that it doesn’t matter what niche/industry you choose as long as you follow your passion. Most sugar-coated advice says “follow your passion” or recently the new buzz-phrase “follow your bliss”, and you will succeed.

But in reality that’s just half true… which means that it’s half bullshit! You have to mix optimism with reality. What you’re passionate about might not pad your pockets. Some gurus (especially those new agey ones) will then justify that “bliss” is different for everyone, and that to some people money is not as important as contributing to society, helping others, etc.

However, I’m operating in the common sense assumption that it is better to have more than to have less. When you have abundant, then you can contribute and help more people.

If you take a look at the different industries (this applies to niches too), you will discover that some industries are much more profitable and have much more potential compared to others. That’s just reality. No matter how passionate you are for your industry, if it is a small industry, then there is a cap… a ceiling to the potential of growth.

Recently I had the pleasure of chatting with a few prominent millionaire entrepreneurs (in Singapore). They are really smart entrepreneurs who have become the leaders in their various industries. Most of them have their brands in the top 5 of their respective industries. In short, they are the cream of the crop.

However, I discovered something very interesting… Even though a few of them started around the same time within their own industries, the results they achieved so far were very different. Some of them are doing 50 – 80 millions per year, and the lower scale, there are those doing less than 10 millions. Don’t get me wrong, all of them are brilliant entrepreneurs. Many of them are still pretty young too! But the size of their various industries has a direct link to how big they can grow.

Recently, I watched a Donald Trump interview. And in the interview he pretty much said the same thing. He told the story of 2 of his friends, one very smart and the other was just average. The average guy went into the oil business, while the smart guy went into another more conventional business. Donald said, the average guy became so wealthy it is ridiculous, while the smart guy was just doing so so.

So choose the industry you want to go into carefully. Industries are NOT equal no matter what others say.

2. Be passionate about what you’re doing.

Now, this might seem to be a direct contradiction to what I just wrote above. However, it’s not, really. You see, you have to choose your industry based on growth potential, but also on how much passion you have for it. If an industry has great potential, but you hate it, you probably won’t do well in it. However, if you’re neutral about the industry, then go for it, because you can always grow your passion for it. And doing well and getting great income will definitely help you fall in love with your chosen industry.

So it’s a balance you need to decide on. If you have a great industry that you’re passionate about… well, that’s your bliss! The point is you have to be passionate about what you do. If you’re not, then you’re practically sabotaging yourself from the start. You might not be extremely passionate about it at the start, it’s ok. But never go into something you hate.

3. You must have overall knowledge of the industry.

To be successful you must have knowledge of how the industry works. You have to know the whole business process:

Who are the suppliers, who are the distributors, who are the retailers. Where do you stand in the process line? What are the profit centres? How many possible profit centres are there? Where are the demands coming from? Who are your competitors? Who can be your allies?

One of the biggest mistakes most start-ups make is the lack of knowledge of the industry they are entering. But these mistakes are not exclusive to new start-ups. A lot of big companies continue to commit such sins. I’ve written on this in previous articles (eg. the Starving Crowd article).

Most new start-ups only know a small part of the whole business process. And it’s ok to start with that. But it is critical to continuously learn and get to know more about your industry. You will be surprised at how many companies just stop at what they know and don’t bother to learn about their own industries. Having additional knowledge will give you the critical edge that can help you outmaneuver, outperform and outsell your competitors… and dominate your industry.

4. Focus On Building Automated Systems

As soon as possible, it is important to focus on building automated, hands-off systems in your business. For example, if you’re a designer, focus on creating a small team of other designers that you can rely on to do the hands-on work for you. You can be the creative director giving them the direction and checking on quality.

This way you free yourself from the time for money trap. This will probably eat into your profits initially, as you have to pay those designers too. So you need to consider your cash flow situation. But as soon as you can afford it, do it. You can keep expenses low by using freelancers so that you don’t have fixed expenses.

Once the automated system is set up, you have a great foundation to scale up. You’re no longer limited by your own time and efforts. So you can get more clients and get more income… while others are doing the hands-on work.

You can apply this principle to other areas (eg. finance, operations, etc) of your business as well. The less reliant the business is on you alone, the more stable it is.

5. Focus On Marketing & Selling

Here’s a cold hard fact: You don’t make money when you are creating/manufacturing the products. You don’t make money when you are delivering the service. You don’t make money when you’re interacting with customers. You don’t make money when you are improving quality. You don’t make money innovating…

You only make money when you sell something to someone. Period. And nothing sells by itself. Nothing.

Of course I don’t mean that all the rest of the above are not important. In fact, they are critical to a business’ survival and growth. And a lot of times, those elements can help in selling your solutions (products/services). But those elements only mean something when you can sell your solutions.

A business with the best product/service in the world won’t survive if it can’t market and sell it. You’d be surprised how often and regular this happens in the marketplace. If the solution is really great, another company with better marketing know-how will eventually end up with it and profiting from it.

So focus on marketing and selling your solutions. Use other elements to support your marketing efforts. Many people think that Henry Ford created the assembly-line that’s why he was so successful. But they got it wrong… they got it backwards.

Henry Ford wanted to SELL more automobiles to more people. That led him to create innovations in the assembly line techniques used in mass productions. He became the father of modern assembly lines.

Most businesses got it backwards. They spend too much time on things that don’t make them money. This is a mistake start-ups can’t afford to make.

To your profits,

Tags: find niche, start up tips, starting out

This entry was posted on Friday, April 17th, 2009 at 2:34 am and is filed under Speed Profit Secrets. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.