Many thanks for your letter to Alka on volunteering. She was thinking of volunteering because she can’t find a job. I was thinking, instead, of starting a business! Any advice for me?
If you are thinking of starting a business only because you can’t find a job, you may still succeed, but it is much better if you start a business for the right reasons (not being able to find a job is the wrong reason).
The right reason to start a business is that you would like to serve unmet needs profitably. You will notice that there are two parts there: “serving unmet needs” and “profitably”.
Some people like to fulfil other people’s needs but don’t like making a profit, or don’t bother about whether they are making a profit. These are not likely to succeed in business, though they are definitely very nice people – and exactly the kind of people that I like to have as friends! But would I put my money into their ventures? Yes, if I think about that possibility in terms of charity, but not if I think about that possibility in terms of business or making a profit.
Why is profitability part of the formula for success? Because business is about money and, if you can’t make money, your business will simply collapse in the longer or, more likely, shorter run.
But, in order to be successful in the long term, you have to be concerned about more than making money – in fact, you have to think primarily about meeting some need that is unmet. As long as that need exists, and you can serve that need profitably, your business will continue to flourish.
However, as there are so many unmet needs among our people, you have to be able to focus on only one of them to start with. Why not two or more unmet needs? Because it is very demanding to be able to meet even one need profitably, as you will realise when you finish reading this. Once you are successful in meeting a single need, you can consider whether it is right to expand beyond that – and, if so, the best way of expanding (I will tackle that subject in another letter to you, at the right time).
What need should you focus on? That is quite a complex question, but the starting point is this: if you think that you can meet that need and meeting that needs excites you, and if you think it is something that will keep you going 24 hours a day at least for the first year or two, and for many long hours for six days a week after that, then it is worth thinking about further. Because working in your own business is very much harder work than working in someone else’s business (in an office job, you can work a certain number of agreed hours, and then go home and forget your day job – you can’t do that in business because business concerns will be with you day and night).
The hard work is of course justified by the large rewards that come if you are successful, but hard work is also almost forced upon you also by the fear of failure – because when you fail in business it is not only like failing a school or college exam, you actually lose all the money that you (and probably others) have put into the business.
In striving for success, why is it important to keep the long term in view? Because you don’t want to spend one or two or five or ten years of your life doing something only to find it collapse in dust and ashes. No, you want to build something that will continue to grow and produce fruit at least for two or three generations!
That is why, if you find more than two things that could, in theory, excite you sufficiently, one criterion to help you choose between those possibilities is: which business is likely to make more profit (that means that you have to do some calculations, and we will discuss in another letter how to do that).
A second criterion is: whether you have access to the money you will need to get started in that business, and then to stay in business for a sufficient length of time to become established as a business (most business are guaranteed to make a loss for at least the first year of their existence, though the loss-making period may be as short as six months in some cases, and as long as three years in others).
Having said all that, I should caution you: most businesses – actually, about 80 per cent of businesses – fail within the first three years of starting.
That is why it is important to start not only with the right motivation, but also to start with all the necessary tools and equipment.
The first tool you need is market research or analysis, in order to be sure that you have determined the best business opportunity for yourself.
We will turn to that in my next letter.
Published in the July 2013 issue of the Forward Press magazine