There are different kinds of businesses in the world. Some require lots of capital and lots work just to turn a buck. And then there are some businesses that seem to check all the boxes when it comes to being the great, simple business.
Here are a few things to look out for:
Low start up costs. This is important when you’re a new business because you want to keep your cash handy. Remember, cash is king. Most businesses go broke simply because they run out of cash to pay bills. For instance, someone who has just started a bookshop might not be able to pay the phone bill because they’ve just bought nine pallet loads of books. When we started 2Large2Email we decided to keep all the costs down as much as possible. We’re not funded by some deep pocketed VC - and actually, even if we were, it would be irresponsible not to treat it like our own hard-earned cash.
No physical product. Somewhat tied to low start up costs, not having actual physical product can reduce cashflow problems, which allows businesses to grow more steadily. I don’t necessarily mean having a services company but companies that can offer intellectual property (such as e-books, music, software) have a great advantage. Once it’s produced the costs can stay down.
Actually make some money. Strange concept huh? I have never been able to fully comprehend why the internet industry has evolved to be something that gives things away. What other industries do this? Petroleum? Grocery? Travel? I don’t think so! I’m all for offering free samples, trials and the like, but premium services and so forth can be justifiably charged for. If you offer something of value, people will respect the value and they will contribute financially. And obviously the long term benefits of revenue include profit, which is always nice.
Be scalable. If the business is going to grow, be ready to grow with it, but don’t put yourself in a position where the hundredth customer requires as much input as the first did. You need to develop systems to automate the processes of customer acquisition, processing and support as much as possible. Once this can be achieved you’re well on the way to allowing your business to work for you.
There are other factors that you can build into developing the right business strategy. Start with the basics listed above and build on them. I’d be delighted to hear ideas!
