A New Venture Launched

 A New Venture Launched

Making the decision to go into business for yourself is the first of many crucial steps. Being your own boss is something you've always wanted to do, but you're stuck on the type of business to start. Two approaches to this question are presented here.

A Company's "Production Model"

When we first start out, the majority of us use what is commonly referred to as the "production model" in business. Every one of us has a set of skills that we can market to the world: be it cutting hair, cooking, framing houses, fixing teeth, designing buildings, etc. Each of us wonders, "What am I doing wrong?" "What do I do well?" and "How can I market my abilities?" In what ways can I put these abilities to use in the products I make?

There is a widespread misconception that businesses can only function using the production model. They take Kevin Costner's "If you build it, they will come." statement from "Field of Dreams" as a profound statement of truth. They merely rearrange the words slightly:

"If I set up my restaurant, people will come."
"If I start building bird houses, people will flock to my store."
"If I set up a lemonade stand, the neighbours will buy some."
"If I learn to be an airline pilot, surely someone will hire me."

In most cases, this is effective. Some people go to college with the intention of becoming dentists, engineers, or teachers, and those are the careers that they ultimately pursue. Some people have a passion for cooking or building birdhouses, so they open restaurants and craft stores, and you won't believe it—those places really do well.

But this simplifies marketing too much and ignores the complexities of what goes on "on the ground" when a company bootstraps.

The dental market is highly regulated to ensure that only an appropriate number of dentists graduate each year, which is a major factor in the success of these dentists' practices.

The fact that we are examining prosperous eateries and birdhouse businesses after the fact allows us to draw comparisons to them. What about all the failed restaurants, building firms, and real estate conglomerates? Their masters likely had comparable abilities and enjoyed entertaining guests in the kitchen just as much as anyone else. After construction was complete, not a single soul (or hardly any) showed up.

Entrepreneurship is clearly not a case of "If you build it, they will come." We can't always anticipate or control certain factors and variables. Now that we know this, we have no choice but to start searching for a replacement for the "production model" immediately.

An Actual Case Study

Again, I'll give you an example. A client of mine was in the music industry a long time ago, before the advent of the internet. This business had been around for quite some time, and it had grown into a prominent publisher of niche music products in the nation. Sheet music, children's music, and speciality record albums featuring a stable of relatively obscure artists were mostly targeted at the music-in-schools market.

This company, like most others, had honed its "skills" and created specialised offerings in response to consumer needs. One small issue remained. The business started losing money as a result of the shifting market conditions. It was my responsibility to increase product sales for them.

Just being a "outsider" can have its drawbacks. The market was clearly shifting, the old faithful products' sales were destined to fall rather than rise, and the only long-term solution to their problem, rather than trying to flog the old ones, was to create new products that met new demands. I struggled to maintain "true believer" status regarding the company's potential for sustained success. I got the impression that we were battling an uphill struggle.

It was inevitable that our relationship would end at this point. Helping them sell stuff was my job, not reorganising their company, as I've already mentioned. Businesses typically find it challenging to change directions, and they aren't interested in hearing this from an inexperienced youngster. We lost the account within a few months. The previous customer went bankrupt within a year or two, cutting its workforce to around a quarter of its original size.

In my opinion, this is quite common. Many businesses, if not the majority, enjoy temporary prosperity before encountering tough times and being compelled to undergo transformation. The "production model" will inevitably fail at some point, and then we will have to start thinking about other options.

The "Marketing Model" stands out as the most apparent substitute.

Most marketers, when faced with such glaring realities of business, resort to the marketing theory they learned in marketing 101. "You must begin with an analysis of your market, determine what people are likely to buy, and then develop products accordingly."

Put another way, the marketing guy (unsurprisingly) thinks that the marketing and production processes should be reversed. Marketing should be applied before a product has even left the barn to ascertain its market viability, not after the fact. Production shouldn't follow marketing; the reverse is true. Your skill set is irrelevant. Competencies can be leased or purchased. Focus on the things you have the ability to sell. After that, make a plan for making them.

These days, internet marketing is where the marketing model is most closely followed. For instance, refer to the Site Build It manual's chapter on "niche" selection by Ken Evoy. Here is a general outline of the procedure:

1. Make a list of four or five potential interests of yours. These are the kinds of businesses that you should think about starting—the ones that fit your "website concept" criteria.

2. Next, evaluate each of these possible website concepts based on the amount of traffic they could bring in, the products they could sell, and so on.

Three, pick the one that could sell the most.

All things considered, this seems like a reasonable process. However, for those who aren't in the marketing industry, it is actually quite revolutionary. A warning has been issued: "Don't get "production" underway until you make some important decisions about what people are likely to buy." Here we have the "marketing model" simplified.

Issues with the advertising paradigm

There is one glaring issue with the "pure" marketing paradigm. It works on the premise that we are all consultants gathered around a table, fully informed about every possible option. It seems the model is predicated on the idea that we can simply input the data into our decision-making system and derive the answer to "What should I do?" from it.

This is not how marketing works, even among the most dedicated professionals. Every group or individual has their own unique set of preferences, and they excel at some things while failing miserably at others. "Be sure to choose something you feel passionate about." is how Ken Evoy takes care of this in his method. It would be wise for him to include, "...and make sure you're good at it too."

Like one of those large-scale food processing machines, you load it up with all sorts of ingredients and then it spits out finished goods. In addition to product, market, and pricing statistics, we also input data pertaining to our personal preferences, abilities, habits, and experiences into our business idea processor.

And we need to make sure that every ingredient that goes into the machine is measured out correctly. What people will buy is just one factor. And it's not limited to our strengths or interests. All of these things are simultaneously relevant.

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