Monday, May 14, 2007 at 5:56pm by Site Administrator
Life has taught me some hard lessons in business. I come from a wholly entrepreneurial family, and I’ve been the least level-headed of us, though that’s changed. So I thought I’d share with you some of what I’ve learned, in hopes that you don’t do the same thing – or at least know a few things to watch out for. The short version, for those of you that are busy, is my list of past business mistakes:
- Bulk buying.
Buying a service or product in bulk, just because you think you may need it, or because “you save money”.
- Spending spree.
Buying things now that you don’t need yet.
- Ten tons of parsley to throw away*.
Buying things you don’t truly need for the business. [*Flinstones reference, when Fred and Barney bought a restaurant.]
- Who are you?
Filling the wrong niche. Are your services or products really needed?
- Where am I?
Filling the wrong geographic niche. Maybe they’re not needed where you’re trying to sell them.
- Um, what’s that?
Not researching a market properly.
- I gave at the office.
Promoting through the wrong channels.
- The stock market fell a million points.
Not taking general economic indicators into account.
- I gave at church.
Not considering cultural/ community preferences.
- I don’t know you from Adam’s left oxen.
Assuming that people you know are going to be as excited about what you’re offering as you are. It stings, but it’s true. And some may even be jealous and try to sabotage you – especially if they’re starving musicians.
Some of these apply whether or not you are bootstrapping a business. However, some are specific to bootstrapping, because you’re working with a tight budget. A bootstrapper doesn’t go out and buy 4 weeks of advertising even if the capital is available, and even if there’s a discount for multiple weeks.
Instead, a bootstrapper buys one week of online ads, then reinvests any excess income earned that week, as a result, into the next week of ads. If the advertising seems worthwhile, then after a few weeks of proof, a block of advertising might be purchased. This is true for online or offline businesses.
This method is far cheaper, despite appearances, if the ad placement is untested. Had 4 weeks of ads been purchased upfront and the effort turned out a dud, and/or there was a cash emergency, the money would be a loss.
This is a lesson that I’ve learned the hard way twice before, in businesses that failed. In one band-booking business, I bought advertising in bulk, only to find that after committing to a half year to get a nice discount, that I couldn’t get people out to the shows, even with good word of mouth. At the time, there was a recession, and my research after the fact shows that clubgoers in smaller cities would often rather pay $10 for a DJ and recorded music than even $3 for a live band they’ve never heard.
In the next business, I spent $35,000 on a very nice, redundant audio recording setup, with 9 guitars and basses, 5 synths and various percussion items. I went crazy, thanks to being fortunate in scoring some nice contract programming/ webmastering work. So I thought I’d build up my multimedia consulting facet, in hopes of eventually expanding to digital film production.
At the time, I also spent $1500 taking a “composer” course for Film and TV soundtracks and ran into some technical difficulties. While I was sorting those out, I tried to offer my audio engineering services for free mostly to local musicians that had known me for several years. Except that with the economy the way it was after 9-11, they were suspicious of someone giving away services. Starving musicians are typically suspicious of such behavior, anyway, in my observation. For that and other reasons, I ended up selling all my equipment (or having it stolen from me by one musician) for about thirty cents on the dollar.
This latter business actually bankrupted me. Hard lessons learned. Which is why this time around, I’m bootstrapping my online publishing business the right way, and actually managing to keep things under control. Bootstrapping teaches you that control, out of necessity.
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