Many of us can make business seem a little bit more complicated than it is.
Setting up a business is really easy. I did it (for the 2nd time in my life) this week . I had thought of a name, which had an available web address, a line that encapsulated what I would do, and I asked my accountant to do all the legal work. I bought a new PC and monitor to set up my home office, asked my bank to create a new business bank account and Fiverr did my logo (on 3rd attempt, but I was happy with the outcome). I tested the name and logo with some people and was met with positive reaction.
I’m not fully launched yet, but I’m on my way. The website (which will be here) is still being built. However, I do have my first paying customer.
As I have written before, startups are easy, as you are buying things. Anyone can buy things. Buy a domain name, buy a logo, office, PC, some accounting services… but it’s much harder to sell things. Get money coming back in, the opposite direction.
When it comes down to it, how you are going to get money coming in is the most important question in business, because without it, you don’t have a business. You may have a not for profit, or a loss-making organisation, but it’s unlikely to become a self-sustaining business. These days, setting up a business is so cheap (my total set up costs have come to $3,200) that you can be “in business” very easily, but unless money is coming in somehow, it is not really a business at all.
I’ve met a few people along the way who are still struggling with this fact. They have a great website, lovely content, are pure and passionate in what they do, but they don’t have a business model (a way of having money come in). They’ve tried a few things, but to no avail or not in sufficient quantity to cover costs.
My advice to them is to stop thinking about what they want to do, and start focusing on the problem they are trying to solve for the customer. In business, the money flows in from the customer. In some cases, there are users and customers, different sets of people. One of them uses the service for free, the other pays for their use.
For example, when we started aussiehome.com way back in 1999, we thought we were building a web site for people like us, home buyers and renters. We were going to make property searching easier, by showing properties on maps on the web, 24/7, rather than forcing people to wait for the weekend papers. Fine, except the business model was a subscriptions one for real estate agents. They were our customers, the ones who paid us, not the users who used the site and found their properties for free.
So, in order to get the real estate agents to pay, we had to work out what problem(s) we were solving for them. It took us about 18 months (post launch) to figure this out. (I don’t advise doing this post launch, as we did.) The agents’ problem was not trying to get buyers to see their properties. Buyers seek out properties. They will use whatever means they can, including driving by favourite neighbourhoods, reading sign boards, ringing up agents, waiting for the weekend and local papers…
You can rarely force someone to buy a house they don’t want to live in. What real estate agents know is that if they get a good listing (property), and present and price it correctly, it will sell (most of the time), depending on market conditions. In boom times, properties fly off the shelves. In tougher times, they seem almost impossible to budge. The poor agent can exert little influence on the market. The market is the market, as they like to remind us.
What real estate agents therefore want, is a great listing. List and last, as they say. In order to get the best listings, agents need ‘listing tools‘, the latest gizmo or script or shiny object that will set them apart from their competitors.
Once this penny dropped, we realised what our business was.
Give our agents listing tools, to make them more competitive over the next agent, and they might just win that great new listing. Price and present it properly, and the property will sell. Or not, depending on market conditions. Pretty much. It was all about the listing, not the selling.
We then spent the best part of 10 years building listing tools for our agency clients; great websites that ran off our platform, the ability to list on a dozen real estate sites through single data entry and XML feeds, full colour gloss magazines, apps and social media advice… anything to give them the edge in that pre-listing interview with the owner.
So – what is business really? It’s all about solving problems for customers. If you can solve problems for them, then you create value. If you create value, they will pay. If they pay, you might be in business.
It all comes down to relentlessly focusing in on the customer problem, and hammering away at that in ruthless fashion.
Never ever fall in love with your own product or service (the worst salesman does that). Fall in love with solving your customers’ problems instead.
So, after all this, what is my new business, and what customer problem have I fallen in love with solving? Agh, you will just have to wait a little while longer before I reveal… although I have left a few hints on this website.
Photo credit: Steve Fettig, Flickr