by Norm Brodsky
There are two phases of the entrepreneurial process in which focus is critical and too many opportunities can be a big distraction, maybe even a fatal one. The first phase begins right when you’re getting ready to take the plunge. A lot of people find they can’t do it. They’re mesmerized by al the opportunities they see. I’m constantly hearing from people who have ten different business ideas they’re considering at the same time. They want to know which one I think is the most promising. I tel them, “You’re asking the wrong question. You should be asking, ‘Which business do I want to be in? Which one do I like most? Which one fits in best with what I want to do with my life?’”
If you’re serious about having your own business, you need to begin by selecting one opportunity out of al those available—a single idea that, for whatever reason, strikes you as more appealing than the others. Then you need to research it thoroughly. If you can arrange to spend time working in the industry, so much the better. But you should at least find out everything you can about the current players in the industry and how the business real y works. That includes getting information from trade associations, talking to people in related businesses, interviewing customers, whatever.
Bear in mind that you’re preparing for a long-term commitment. I usual y tel people they should plan to give the business their ful attention for at least five years. Not that you should neglect the rest of your life, but at work you need to be total y dedicated to the path you’ve chosen until the company is firmly established, which can take a long, long time.
So it’s important to determine not only whether you’re going to enjoy the business but whether it’s viable for you. Do you have the resources and skil s you need to be successful in that particular business ? Is it reasonable to think that the business wil get you where you want to go? You’l find it very hard to answer those questions unless you’re focusing on one specific opportunity and pushing the others out of your mind.
The bigger chal enge comes in the next phase, after you’ve made the commitment and begun to build your new venture. You’l soon discover there are more opportunities around than you ever imagined—both inside and outside your business. You’l find them very tempting. If you’re not careful, you’l lose your focus and, with it, your best shot at success.
There is only one opportunity you should be thinking about during the start-up of any business. I’m talking about the opportunity to build a customer base that wil make the business viable—that is, able to sustain itself on its own internal y generated cash flow. First, you have to figure out what kind of customers wil give you such a base and how you can draw them in. Thereafter, you need to focus relentlessly on building the base.
That’s not easy. It takes a lot of discipline, which doesn’t come natural y to most people. Look at the experience of Bobby Stone, which I recounted in chapter 1. And he is typical. Most first-time entrepreneurs I know have trouble maintaining focus. They forget that in a start-up, there are two limited resources, time and money, and you can’t afford to waste either one. Understand, I’m not saying you should wear blinders. Although you need to be focused, you can’t be rigid. After al , your approach may not be working.
My initial approach to the records storage business didn’t work. When we started out, we couldn’t get much information out of people in the industry, and so we didn’t know basic things, such as how to go after customers and how much to charge. In my delivery business, we’d always done wel by offering competitive prices, great service, and state-of-the-art technology. I decided to use the same approach here.
Our target customers were big law firms and accounting firms. We put up display booths at the trade shows their office managers attended, and we made our pitch. We promised them service they’d never dreamed of, at the same prices our competitors were charging. Those prices were, in fact, a lot lower than we wanted, but they were high enough for us to earn an acceptable profit. Guess what. We got no bites. Not a single customer.
We had to change our whole approach to sel ing and pricing before we found a formula that worked.
The point is that you need to be both focused and flexible. You can’t let yourself be distracted by opportunities, but neither can you be so single-minded that you ignore signs of trouble. And there probably wil be signs of trouble. It almost never happens that a business idea works exactly as you thought it would when you started out. You have to figure out how to make it work. You have to watch, listen, ask questions, experiment, make changes, refine your concept, and constantly develop your customer base. That’s what building a business is al about, and most people can succeed at it—provided they don’t lose their focus along the way. There’s a big payoff at the end. Eventual y, your business becomes so strong that it doesn’t need you anymore. Then you can chase after other business opportunities to your heart’s content.
Ask Norm
Dear Norm:
When I was in high school, my father and I made furniture pieces that we sold at craft shows. The business could easily have grown, but my father didn’t want it to get bigger. Now my brother-in-law and I are talking about starting a furniture business that we’d build into a substantial company. Our problem is that we have trouble imagining ourselves doing it. How can two men from poor backgrounds get over the difficulty of visualizing themselves in a situation that’s so different from anything they’ve ever experienced?
Jace
Dear Jace:
It sounds as though you’ve already visualized the company you want to build. I think you actual y have two other problems. First, you’re not giving yourself enough credit. You know more about business than you realize. Second, you’re looking too far ahead. Before you can have a factory, you need to have a business, and almost every business starts smal . My advice would be to put together a plan about where you and your brother-in-law want to be in five years. Then figure out a good short-term goal. You might fol ow in your father’s footsteps, sel ing your furniture at craft shows. As you’re sel ing, you’l make contacts. Tel people you’re thinking of starting a company. Some of them may be interested in helping you. Also look for a mentor who has built a business before. Being poor as a child is not an obstacle in business.
—Norm
Peripheral Vision
Let me say a few more words about the flexibility part of the equation. I’m real y talking about what I cal “peripheral vision.” By that, I mean the ability to see things out of the corners of your eyes and thereby to find solutions to problems that other people think can’t be solved.
I ran into such a problem in the secure document destruction business that I started in 2000. My timing turned out to be just right. Within a couple of years, the company was growing like gangbusters, with sales increasing 150 percent from month to month. That was exciting to watch, but it highlighted a critical problem faced by every company in the industry, namely, the lack of off-the-shelf, industry-specific software for tracking the work that’s been done, generating accounting reports, and automating the bil ing process.
We’d searched high and low for software that could handle those tasks. We’d talked to dozens of other document destruction companies and found they were al in the same boat that we were in. We’d gone outside the industry, checking out businesses we thought would have similar software needs-bottled-water distributors, for example—only to discover that the similarities were more apparent than real. We’d even contacted the software supplier for our records storage business and tried to sel its people on developing comparable software for the document destruction industry. They would work on it, they said, but it was going to take a while. The market wasn’t yet big enough to justify a major investment in a document destruction product. “Wait a few years,” they said.
But we couldn’t wait. Without the right software, we were forced to do al of our tracking and bil ing by hand. The bil ing process alone was taking three or four days each month. Inevitably, mistakes were made. The bil s weren’t uniform. Customers
complained. With our sales volume growing so fast, moreover, we could see that the situation would get much worse in the near future.
“We’ve got to do something,” my partner Sam said.
“Yeah, but what?” I asked.
“I don’t know,” he said. “Everybody says it’s impossible, but there’s got to be a way.”
I think that’s when I decided that, come hel or high water, I was going to find the solution. What made the chal enge difficult was the diversity of services a document destruction business provides. In our company, for example, about 40 percent of the revenues comes from special jobs, most of which are so-cal ed cleanouts. We do those for customers who have accumulated a large number of sensitive documents over a long period of time and want to destroy al of them at once. We go get the material, take it out, shred it, and provide the customer with a certificate affirming that the documents have been destroyed in a secure manner.
The other 60 percent of our business is with customers we service on a regular basis. Those customers keep locked bins on their premises.
Each bin has a slot through which employees can slide sensitive documents that should be destroyed. The problem is that there are two types of bin, and they’re handled differently. Some of the bins look like pieces of furniture. We cal them cabinets. Our service person goes in, empties the contents, and leaves the cabinet in place. Other bins look like big plastic garbage cans on wheels. We cal them containers. If the customer has that type, the service person rol s the ful bin out and replaces it with an empty one.
So we have some bins that stay in place, and some that are moved around, plus al the special jobs, none of which is the same as the others. In addition, we have different sizes of bins and different prices and payment terms with each customer, based on number of bins, bin sizes, type of service, pickup frequency, and other factors. We needed a tracking-and-bil ing system that could handle al those variables, which wasn’t easy to find. If you came up with one for fixed bins, it didn’t work for rol ing bins, and vice versa. What’s more, nothing you did with the bins could be applied to the special jobs. That’s why everybody was stumped.
In my gut, however, I knew we were al approaching the problem in the wrong way. People were searching for a global solution—a system that would cover every type of job a document destruction company might handle. What if, instead, you took one piece of the problem at a time?
I can’t tel you how exactly I came up with the answer, but it involved using peripheral vision. I knew that everyone else was focusing on the special jobs. I decided to start at the other end, looking at the bins. In any case, I walked into the office of Louis Weiner, my company’s president, one day and announced, “OK, I’ve got it. We can put al the document destruction stuff on a computer, and we don’t even need new software or equipment.”
In fact, I didn’t yet have the whole solution. There was stil a piece I hadn’t figured out, but I had a feeling I could come up with it by talking the problem through with Louis.
He looked at me with obvious skepticism. “OK, let’s hear it,” he said.
“We can use the same system we have with the boxes,” I said. I should explain that, in our records storage business, we track boxes with bar codes and handheld scanners. We send a sheet of bar codes to the customer, who puts one on each box. When our driver picks the boxes up, he scans their bar codes. The scanner spits out a receipt, which he gives to the customer. Back at the office, the information is downloaded to our computer, which generates the invoices and the reports.
“What are you thinking of?” Louis asked. “Putting a bar code on each bin?”
“Sort of,” I said. “You can put one on each cabinet. With the containers, you can put a little plastic sleeve on the back. In the sleeve, you put a laminated bar code identifying the location, the customer, and the size and type of bin. When the service person comes in, he scans the bar code and moves it from the container he’s taking out to the empty one he’s leaving behind. So the bar code stays at the location.”
Louis thought about it for a moment. “OK,” he said, “what about the special jobs?”
“Wel , what about them?” I asked. That was the part I hadn’t worked out yet.
“They’re 40 percent of our business,” he said.
“No, they’re not,” I said. A thought had suddenly occurred to me. “They’re 40 percent of our revenues. How many special jobs do we do a month?”
“I don’t know,” he said. “Five, six, ten at the most.”
“And we have about a thousand bins, right?” I said. “Suppose we think of every bin as a separate job, and let’s say we empty the bins once a month. Now we’re talking about 10 jobs out of 1,010. That’s not 40 percent. It’s less than 1 percent. We’ve solved 99 percent of the problem.”
Louis grunted.
“And how long could it take someone to key in the information on ten special jobs each month?” I went on. “Fifteen minutes? Half an hour? It’s nothing. That’s easy to do by hand.”
Louis sat there thinking. Then he began slowly nodding his head. “Wel , it’s worth a try,” he said.
The solution wasn’t quite as simple, or as perfect, as it had seemed at first glance. We had to do some experimenting to figure out which type of bar code worked best. (In the records storage business, we use different types of bar code for different purposes.) In the end, we settled on one that would provide us with al the necessary information but could accommodate no more than 9,999 bins of any particular size. That would work for a few years, at which point we’d have to do some more tweaking. Meanwhile, we’d solved our tracking-and-bil ing problem, and we’d also created a new benefit we could offer customers: computer-generated receipts and invoices. Just as the system al owed us to track our work better, it let customers monitor what we did more closely and gave them greater confidence that our bil s are accurate. That was an advantage we had over our competitors—at least until they developed their own systems.
The X Factor
There is one other quality that you must have to succeed as an entrepreneur—and it may be the most important of al . What’s more, it’s a quality that can’t be taught or learned. Either you have it or you don’t.
Ask Norm
Dear Norm:
I’m a forty-nine-year-old career changer. I started a trucking business in 1975. By the mid-1990s we’d grown to twenty-eight employees, and I decided to sell, getting an all-cash buyout in 1997. After the sale I took nine months off, built a house, and began looking for a new career.
Eventually, I landed a sales job in a computer business, where I had struggles with the owner. Having never been an employee before, I didn’t grasp the depth of the emperor’s-new-clothes mentality. I was fired after two years for failing to toe the line. After taking some time off, I’m back in the job market. I just wonder if I’m too headstrong to work for other people. Will I ever find happiness as an employee? Is there hope, or do they shoot old horses?
Bruce
Dear Bruce:
A lot of us are too headstrong to be long-term employees. I know I couldn’t work for someone else anymore, but that doesn’t mean I couldn’t work with someone else. Think about becoming an independent contractor—doing outside sales, for example. If you real y want to get involved in the management of a business, find a smal company that wants and needs the help of an experienced entrepreneur. If that doesn’t work, start a business.
—Norm
Don’t misunderstand me. I think it’s possible to learn everything you need to know about starting and growing a business. Not that every start-up wil become a viable company, but—as I noted earlier—there are certain habits of mind you can develop and certain principles you can fol ow that wil maximize your chances of success and minimize your losses in case of failure. What’s more, anybody can learn what those principles are.
But to apply them successful y, you need something else as wel . It’s more a character trait than a skil , and it lies
deep within a person, hidden from view. I’m not even sure that the people who have it are aware of it until they’re put to the test. But recognized or not, the quality I’m talking about is real, and it al ows certain people to accomplish things that no one else would think they were capable of doing.
Consider Malki, whom I met through my wife, Elaine. A divorced mother of three, Malki was supporting herself at the time by tutoring, teaching, and doing clerical work. She wasn’t happy, however. Her dream was to have her own day care center for infants and toddlers. She talked to Elaine about it, and Elaine brought her to me.
Now it so happens that a day care center is an extremely tough business to start in the state of New York unless you have a lot of money, and Malki didn’t. Before you can accept your first child, you need a state license, and it takes a year to obtain one. You can obtain a license, moreover, only by passing a lot of inspections, which means you need a space that’s been built out to conform to al the applicable fire, safety, and health codes. So you’re paying rent and construction costs for an extended period without any income while your application is pending. If you don’t get the license, you lose your investment. And even if you do get it, that’s only the beginning. You stil have to go through the process of building the business.
After my first meeting with Malki, it was clear to me that she had little chance of succeeding—one in ten at best. She had no money, no business experience, no partner to give her support. She’d never had an employee or a customer. She’d never negotiated a deal. She would have had a struggle establishing any type of business. A day care center seemed completely out of her reach. But I hate to discourage people from pursuing their dreams, and Malki was determined. So I agreed to advise her.
