How important are the early stages of your business? Lots of the time we call it the start up phase. Well, think about it like this. Brett and Sara both sell widgets. Brett’s widgets are great and amazing. Sara’s widgets are good and solid. Side by side in 3 different stores Brett’s widgets outsold Sara’s widgets. But how are Brett and Sara’s companies different?
Brett has a cool idea to take his widgets nationwide, maybe even worldwide. He decides to build a website. He finds a couple of online sites that wanted to charge him between $700 – $1,200 for a website. They wouldn’t be interactive sites, they would not really be set up to do any drip marketing, there would not be a blog, and they wouldn’t design the site around proven SEO strategies. After all, what do you expect for only $1,000? They would have an online cart to receive orders and that was about it. The site would be pretty static and wouldn’t change much. It would be a total of about 3 pages, a homepage, a checkout page, and a thank you page.
After seeing the costs, Brett figures he’ll set up his own site to save about $1,000. He’s never owned or ran a business but how tough can it be to set up a website? So while Brett starts setting up a website, Sara takes a different path to sell her widgets.
Sara decides to do a few things. First she obtains some small business funding. Since she’s a startup she doesn’t have any revenue so she knows her best bet is to get some business credit cards. She knows about things like the Capital One Business Credit Card so she is careful about how she obtains her funding. In the end she gets some help and has $50,000 to use for her business. She thinks she’ll need about $15-20k but everywhere she reads the people with experience tell her that everything takes more time and costs more than expected. So while she’s getting some funding she decides to educate herself. She does this by reading books like The E-Myth Revisted, Built to Last, and Predictable Success. She also signs up for two free courses on Courera.org.
The next thing she does is create a marketing plan. She learns about the 7 Musts of Marketing and makes a strategic decision to invest part of her funding in building a website that will engage people and generate leads. She knows she could “do it herself” but also knows that you get what you pay for. In her research she realizes that she could spend $1,000 and get a “cheap” website built for her. Or she could spend $3,000 to $5,000 and get an “inexpensive” website that is very good. She knows she does not need one of those $20,000 or $50,000 websites but for an extra couple thousand dollars she’ll get a far superior website that will sell more widgets, create relationships with her customers, and represent her company in a very professional manner.
When it was all said and done, Sara spent $4,000 getting her funding, $4,500 on her website, $250 on some books and educational resources, and $750 on an email marketing system that integrated with her website leads and her twitter and Facebook accounts for a really cool backend campaign for her website visitors.
So let’s compare Brett and Sara. Brett ended up building his own website. With the tools and apps and resources he needed he ended up spending $600, out of his pocket. It was a savings over what he would have spent if he had one of the online companies build his website. Sara, on the other hand, financed her company’s start. She got a website that was superior to Brett’s (by far) and she spend some time and money learning about business from great books and a quality online site, plus she has access to additional funding for any future needs. She set some goals and then created a marketing “plan” that was basically a “path” for “how” she would get to her goals. Lastly, Sara spent no money out of pocket. Her business credit card paid for everything, she’s paying 0% in interest for the first year and her monthy payment is less than $200. She did make an initial investment of almost $10,000 but it will be more than 3 months before she spends as much as Brett did out of pocket.
So who is going to sell more widgets? Who has a better chance of success? Who would you rather be, Brett or Sara? Success as small business owners does not require a high IQ. It doesn’t require you to be smarter than the next guy. It’s pretty easy to open a business. It’s pretty easy to “be in business.” The tough part is making consistent profits year after year. It requires a “plan.” If you’re thinking about starting a business or you are already a business owner then read more about the 3 main reasons businesses fail here.
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