The first time I consciously decided to start a business (computer sales & repairs), I held an amazing amount of misconceptions. They could all be summarized as “money simultaneously grows on trees and is brought in by the wheelbarrow by customers eager to purchase my wares”. You’ll have to forgive me, as I was still well in high school.

To my credit I knew that I had to work hard, but somehow in my mind there was a nice thick line drawn directly between work and success. If I worked hard through the night, slept through class, and put every ounce of strength that I had into the business, then profits and growth were my divine right. I was half correct of course, as rarely is an easy way of making money simply handed out on a silver platter. But somewhere I had made a terrible mistake in the formula and got half of it wrong. It turns out that you can toil endlessly in the fiercest conditions known to man, but if what you produce is of value to few then your rewards will be proportionally small. That big thick line does exist, but it’s actually drawn between success and value.

The Real Reason Why a Business is Successful and the Consequences of Using the Wrong Formula

The principles here can apply to VC-funded start-ups with $6 million in the bank too. However today is all about small business, the kind that I have started several times, and which can turn pizza money into a high income or reduce your income to not being able to afford pizza.

In my case I had worked very hard, but most of that time had been spent on an unadvertised company website that nobody would visit, writing paragraphs extolling company virtues that no one cared about. I had spent virtually no time on the things that would have mattered, such as handing out fliers door to door or networking (unless you counted trying to sell $2000 machines to penniless high school friends). I also firmly butchered the notion of “you gotta spend money to make money”, holding dearly to my heart the belief that effective marketing had to be paid for and by not having money I had no chance against the competition. I was terribly wrong again; my current venture has still spent less on marketing than what I had proposed for the computer sales business, but it’s making thousands in profit per month and growing quickly. I wanted fancy business cards, full color fliers, expensive newspaper ads, and everything else that other companies had, except that I didn’t have $100K in starting capital. Boy, what was I thinking.

So a high school kid knowing nothing about business failed. Big surprise…

Except that I’m not the only one that got the formula wrong, and I was certainly not the oldest! When statistics like 90% of small businesses fail in the first five years abound and examples of basic business mistakes can be found by walking a mere block through any downtown, it doesn’t take much to see that a whole lot of business owners are getting the fundamentals wrong too. Rational, intelligent, and well-intended people, who when reading this article may think “wow I would never be that stupid”. The problem is that until you look back at the situation and write down what it is that you did, the mistakes aren’t nearly so obvious.

Having realized that my original “work very hard” formula was wrong, I’m now convinced that following the correct one with just as much passion and dedication can lead to highly predictable success. The real trick is to provide value, as much and as often as you can. The more value that you provide, the more profit will follow. It is your duty as an honest, ethical and smart business person to come up with ways of providing value and providing that value to as many people as it will benefit. Uncoincidentally this is a recipe for making a whole bunch of money. Convinced and ready to begin?

You are going to start a successful business, and you will do so with the correct time-tested formula used by everyone from BMW to Walmart to As Seen on TV products. You are on a mission to consciously provide value, over and over again, and you will apply this philosophy to all aspects of your business. Your product, be it a commodity like a computer part or something entirely unique and handmade, will be put forth in a way that puts your customer’s needs front and center.

Your business will be delivering something useful to solve a problem. But you won’t stop there. You will find the best way to provide it to the people that need it. Your marketing, your sales, your shipping, and your customer service will be just as focused on the customer and the value that you can provide as the product itself. It’s all equally important, because you are only providing value if people know about your valuable product and have an easy way of obtaining it. The truer this sentence is for your business, the better off it is (so long as you don’t have a business model that actually loses money… which happens far more than you might think).

Starbucks didn’t hit its culturally engraved status because its staff is able to provide the extremely unique and skill-heavy service of making a cup of coffee and charging an arm and a leg for it. The people that disagree with this are (shockingly) not the owners of mutli-million dollar coffee businesses themselves. There’s something more to it, and thats the entire Starbucks experience created around it. An experience that does indeed provide people something they desire and thus value that they will pay for. They took a commodity and turned it into a highly profitable business. What you might not know is that they weren’t even the first ones. Decades prior Second Cup, another highly successful coffee store, had revolutionized coffee too by providing a good cup of coffee to people on the go. Prior to that coffee purchased by the cup was a throw-in at diners and tasted like it. Just because someone has already done something revolutionary doesn’t mean there’s no room for you to up the ante.

As a small business starter who probably has little or no money this doesn’t apply to you. You can’t possibly be able to provide value on that level. You can’t come up with a product that customers will happily buy and give you rave reviews for. Providing excellent value won’t allow you to compete against the big established company. Oh wait that’s me from high school talking. Yes you can provide value and yes you can get a business going on next to nothing. Just by sticking to the fundamentals and getting them right you can leap ahead of most of the competition by creating a profitable business. The entirety of the business model for my new venture has been to fill in as many gaps between website clients and website development companies as possible, thus providing genuine value that gives clients a reason to choose me. I do all this through a sustainable business model that I’m constantly evolving to become a more efficient value generator. It’s worked very well, growth is incredible, and my initial investment was the cost of a business registration and a few phone calls. Nothing I’ve done has required advanced calculus, divine wisdom, or a pile of money. So what’s stopping you from doing the same in your business and succeeding?

Oh and by the way, none of this is original or new. Materials with insights into all manner of the value-oriented philosophy are widely-available. I first came across it myself after buying Jay Abraham’s Getting Everything You Can Out of All You’ve Got, and I’ve seen it in countless other places too, including business class. It is not a lack of knowledge of this concept that is the problem, it is a lack of business owners seeking and implementing it.

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This entry was posted on Friday, August 4th, 2006 at 8:23 am and is filed under Tilted Pixel, Business, Entrepreneurship, Achievement, Business Strategy, Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.