Friday, November 11, 2016

Starting a new business before writing a business plan

    I recently did a major re-write on a small book focused on a business plan. In doing it (it took several months of work) I came away impressed at how important a business plan is and I vowed that for my next project I wouldn't spend a penny until I had prepared a business plan and double checked every paragraph. Yet now I am going ahead with a new project without a business plan. What happened?

    I did not develop a sudden antipathy for business plans. Much of what I have learned over the past six months is still very much in my head. But there is one essential part of any business plan that poses a problem, particularly for the very small business or solo entrepreneur or the creative voice that doesn't quite fit into any category. The problem is research -- market research, competitors, market size, pricing within that market -- core data. Getting this information accurately is what makes a business plan worth something. This is what makes a business plan work.

    In the abstract you can think about preparing a business plan and fudge the numbers (since no one knows that they will be anyway) and do your "market research" on Google and you'll come up with fillers for the blanks in your plan but you'll end up with a very risky plan. It may fool a few loving relatives but not a banker or serious investor and, should you try to implement it, the fooling will stop very quickly. Just pray that you are working with someone else's money, not your own.

    It's that section called "market research" that's the killer. Here, accurate information is really important. If you don't get it right your quest may be hopeless so let me explain why, for my new project -- The Green Wave Newsletter -- I am going forward without a business plan, even though I believe business plans are very important.

This is a test --
Can I find a market?

    I'm not sure how much I've ever written about testing but perhaps I'll write more about it some day. Testing is the art of getting accurate information at the lowest possible cost. Yes, information can come at a cost. You can't find it all on Google. I'll give you an example from the past.

    Back in the days of junk mail and mailing lists, the use of the right list to promote your offer would make the difference between a very profitable promotion and a failure.

    But how could you find the right list? The renters of mailing lists (they were always rented, not sold) would propose various lists to you. Their interest was in making sales, to you. But you had to sort through their proposals to find out which if any of these lists would work for you.

    So you made minimal orders of many lists, mailed your offer, and counted the results. Your results showed what lists would work and what lists would not. You had to spend money to get the information but, with the information, you could now rent the good lists and make a lot of money.

    For my new newsletter, The Green Wave, I need information. I need to find out where to promote it, what people to promote it to, and how enthusiastic they will be once they start to get their monthly issues. I need feedback.

I'll run it up the flagpole
and see if anyone salutes

    In fact, the whole project may be off course -- the frequency of publication, the price structure, the format -- feedback is really important to me and the only way to get it is to put the newsletter and promotions for it out there and see if I can begin to assemble the audience I am looking for -- people who will read it and pay to keep reading it.

Later, perhaps, a business plan

    Someday a business plan for this project may get written. And if and when it does, that "market research' section is going to be filled with some very accurate information, information I will be able to show bankers and serious investors, if I care to do so.

Monday, November 7, 2016

It's about problem solving

 I'm launching a new newsletter, really a continuation of the most recent issues of my Perfume Strategies newsletter. The theme: "It's about problem solving."

    Want to succeed with your perfume? With your business? (With your life!) -- get better at problem solving.

    Look at it this way: You have a great idea, you start putting it together, then you hit some sort of glitch -- it always happens. Your success now hinges on your ability to solve the problem that is causing the glitch whether it be money, a person saying "no" when you need them to say "yes," a technical issue which you don't understand, some equipment you need but can't come up with -- whatever. You either solve the problem or ... or you fold -- end of project.

    Sometimes problems are really small and seemingly trivial. I had one last week. I had fabricated my own instrument cable (to hook an electric guitar to an amp) and one end of the cable went bad. Bummer, especially since I had used top of the line components.

The plug at the other end went bad

    So the next step was analysis. For some time I had been aware that my soldering techniques wasn't good and, when working with electronics, that's bad.

    I had previously addressed this problem by buying a new, slightly more powerful, soldering iron. It made no difference. The solder wasn’t melting fast enough so the components were being exposed to too much heat. Bad!
Small and larger soldering irons

    But every YouTube video I watched showed equipment that looked like mine doing a good job. My (initial) conclusion: I needed an even more powerful (and expensive) soldering iron. I started looking through online catalogs thinking perhaps my wife would buy me one for Christmas.

    Then something happened. I watched one more "how to solder" YouTube video and picked up one small point I had missed. I went at it again, this time with a different roll of solder (much thinner!) and it all worked like magic, just like in the videos.

On the right: the solution

    The point I had missed wasn't the solution to my soldering problem but it quickly led me to the solution.

    My problem wasn't the soldering iron, it was the solder. Now I solder like a pro and a few rolls of the right (for this job) solder cost nothing against what would have been the cost of (another) new soldering iron.

    Problem solving isn't about throwing money at a problem; it's about thinking the problem through and filling in the "information gaps" by doing some research and sometimes with some small scale testing and experimentation. The better you get at problem solving, the more perfume you'll be able to sell and the more money you’ll be able to make.

    You can read more about my new monthly newsletter, The Green Wave, here. Cost is just 99 cents for the first three months (3 issues).