Hello Ed,I have 2 questions for you. What did you start out with going into these ventures? At what point would you stop expanding one business to concentrate on another?
I am a big believer in “prioritize, focus, and win.” Said another way, I prefer to hunt with a rifle than a shotgun. To answer your question, I focused on my first business until we achieved positive cashflow and profitability before I started to invest in my second business. Which by the way, I lost my shirt on my second business. To me, success in a startup business is all about distinctive competence in the area in which you are competing.
Thanks! I love the analogy between the rifle and shotgun. I’m talking to my business partner about buying a few more trucks to help speed up our work for the possibility of taking on more customers to increase cash flow. We do seasonal work during the summer, and I want to start something that we can do to cover the months we don’t work (September to April), although it is kind of difficult in the area we live as it is mainly oil and gas related. So if it was you, would you increase cash flow first, or start prioritizing on something for the off-season?
You’re getting at the nub of the question: Why is Howard Shultz getting into the liquor business? He has sunk cost in real estate that is operational between 6:00 am and 6:00 pm. If he can launch a successful liquor-serving business (a bar), he will get higher utilization and throughput from his sunk costs in real estate (i.e. more profit). So before I buy more trucks, I would make sure that you can increase the utilization across the full calendar. Otherwise, you should find a leasing company to rent the assets from during peak season.
I have a sole proprietor service business. How can I get clients to pay what my services are truly worth?
If you understand your customers pain points and you can quantify the benefit your service will bring – then invest heavily in nailing down your value proposition. If it’s B2B, focus on hard benefits. If it’s B2C balance hard and soft benefits.
How did you choose what business to start?
I am a big believer in starting and building businesses where you have proven competence in the field (i.e. you understand the customers, pricing, competition, and the way business gets done).
Hi Skip, What business ideas are bouncing around in your head that you have not developed yet?
Wow! That’s a tough one – but since you asked, I think managing new application development and code writing as an outsource provider is a giant opportunity.