UNPROFESSIONALISM DISCLAIMER: I have made a small fortune from making and selling a product called “Shit the Bed Hot Sauce”. While everyone else was pretending to be as professional as possible, I stood up and said: “I’m a complete joker.” I disrupted the market and won the race. If you can’t handle swear words or straight talking, perhaps you should go read another riveting article about the workplace scourge that is “Unconscious Gender Bias”. For everyone who’s ready for a bit of tough love, read on…..
It seems the more success I have in business the more people crawl out of the woodwork and proudly announce to me: “I’ve got a great idea for a business, what do you think of this Renae….”
Well Gary, ideas are like assholes. Everyone has them but that doesn’t mean yours is special, or that we want to see it or hear it or shove money in to it.
This article is not to tell you not to “have a go” it’s to tell you politely to go back to the drawing board and think about the next 5 points before you get balls deep in to an ill thought out business.
And what a great 4 days they were….
1. Your idea isn’t good enough / you have no USP / similar businesses are closing down!
Are you taking a risk expecting people to know about the completely unique product or segment you are trying to make money off or invent?
Why would people pay you and not a bigger more established agency or provider who offers the same service? What is your unique selling point?
Are other businesses or brands you are trying to emulate thriving or going out of business?
Why would people pay more for your product rather than going to an established company with a cheaper price who will offer a solid refund policy if we need it?
If you can’t come up with some good answers here. Don’t invest too much in to this business.
2. You don’t understand the success vs cash-flow equation
Money does not fall out of the sky when you are successful in business (for the most part).
It gets sucked out of your bank account, your mortgage, your parent’s bank account, your super fund, your children’s college fund, your equity, your brother’s bank account, pay day lenders, crowdfunding lenders, your neighbours…..
Have you ever watched Shark Tank and heard how much money these businesses are turning over, yet they go on this show asking for money? If you are baffled by this, then you don’t understand the success vs cashflow equation.
It takes time to build up a stable of repeat customers who will pay off your initial investment. In the mean time you need money to pay for the products, staff and advertising to provide the goods and services to gain those customers. That takes money and your time. Success needs cash-flow (or credit flow) and time. Where is it going to come from?
A business I knew on social media went viral once. They got thousands of orders from all over Australia and the world. Three months later their Facebook page was awash with angry complaints from people saying: “You took my money and I never got my product. I’m reporting you to fair trading.” They soon went out of business and disappeared.
When people want your product but you don’t have the money to pay to make the goods you need a loan, if you can’t get one, don’t take people’s money.
If you don’t want to leave money on the table, you have to have a line of credit before the business starts pumping.
3. You don’t understand marketing is an on going cost
Relying on your friends and family to buy from you and making a few posts on Facebook or Instagram isn’t going to cut it forever.
You need to be spending to find new customers. On Facebook, Linkedin, Google Ad words, Amazon, Instagram, Radio, Reddit, face to face festivals, a pop up store with good footfall.
Wherever your audience is you need to be targeting them. Can you afford that? Can you be bothered doing that?
If you don’t know the first thing about advertising on these platforms you might want to learn before you spend anything on starting a business as this is where a lot of your money or time budget needs to go in the beginning of a business.
Yes you can build a profile on Instagram or Facebook or Twitter and get some really nice vanity metrics happening. But people rarely see something and just buy it after seeing it on socials. The theory is that people need to see something 3 times before they even consider buying. How are you going to find your new customers 3 times, and then maybe hope to make a sale off them?
Good creative constant advertising that’s how. Just because someone has bought your product before does not mean they will buy it again. You need to be constantly finding new customers and impressing the old ones.
Here’s a quick test: Are you prepared to tell every single person you meet about your business and try and sell your products to them? In the post office, the bank queue, the supermarket? I have done all of these things. As cringe worthy as it sounds, at the time I was just chatting to people and they seemed interested enough. In fact, a bloke in the post office line grabbed a bottle of my sauce off the shelf and bought it, just because I spoke to him about it. Everyone in the busy Christmas post office queue saw that interaction and heard my origin story.
Even if it’s just telling people that you run a business you have to be your own biggest advertiser at all times. If the answer to this test is: “No that’s embarrassing Renae, I wouldn’t do that,” then you are not cut out for starting your own business.
4. You are already too committed in your life to start a business
Do you have a full time job and a career you care about and have worked hard at?
Are you willing to walk away from that career and income if your business picks up?
Are you prepared to lose that income and go down to a fraction of that income if you run your own business full time?
Are you prepared to go back to a lesser job and income in the future if your business fails?
Do you have little kids that you want to see grow up? What happens if your business takes off and you get pulled away from your kids more than your 9-5 job pulls you away?
Are you captain of your netball team? Did you set some health and fitness goals you really want to reach? Do you still like hanging out with your friends? Are you willing to sacrifice all of these if your business takes off? Because the market doesn’t wait for you to lose 5kgs.
Is your spouse or partner understanding of the fact that if this business takes off they will see even less of you and they’ll have to pick up the slack at home? Cooking, cleaning, shopping, looking after the kids all weekend and even helping with the business?
Throwing everything in to a business is something I would only ever advise younger (ergo: energetic) people who own their own homes (ergo: are in charge of their own finances) to do. Do not put the financial security of your family at risk. Do not put a happy home life at risk for this “pipe dream.”
You do not want to look back and realise you missed seeing your kids grow up because you were down at the Farmers Market trying to convince tight arses who just wanted a free taste to buy your overpriced organic jam.
5. You fundamentally don’t understand business or the expression: “It’s just business”
True story: In early 2016 some friends came over and I told them how my business had raised $250,000 AUD in a crowd funding campaign a few months earlier. My friend is a very intelligent lawyer with a corporate job, her response was:
“That’s fabulous Renae!! Did you pay it straight off the mortgage?”
If that story didn’t get at least a chuckle out of you – then you fundamentally do not understand business.
When your business pulls in lots of money, you can’t just go shopping like when you do extra hours at work and get paid overtime. It means you have customers. If you’ve done your job right they will come back and want more of your products or services and for that you will need the money your business just made.
It’s not uncommon to not get paid for years when you start your own business because all profits get poured back in to the business so it can grow.
Here’s another question to see how much you understand about business. You start your business and right out of the gate you get a big juicy order, contract or client. You don’t know these people from a bar of soap but boy have they dangled a carrot! How quickly do you send them your stock / get working on their account? “IMMEDIATELY RENAE!!! If I do a good job there will be more work / orders in it for me!!”
A month later the invoice is due and they don’t pay you. So you email it again and they don’t pay you, so you ring them up and they say: “Yes yes I’ll pay you next week” and they don’t. And this goes on and on and on and you realise “Ahhh I’ve just been fucked over. There is nothing I can do about this.”
Welcome to business dickhead. Shoulda called some Trade References when you got their credit application! “Called a who? When I did a what?” – exactly.
Do you want to know my definition of business? Its doing the right thing by people while trying not to get fucked over by shit c**ts (SCs). That’s all it is. You must have integrity to build your reputation while putting measures in place that protect you from SCs.
Early Bunsters staff T-shirts. Comic Sans = don’t fuck with us
I have never been fucked over in business (unless you count that shitty PR firm who did nothing for the money I paid them.) This one time early on someone tried to not pay me for sauce but I made it clear I would be annoying him with my physical presence until I got paid. I got paid. No one ever got terms off me again. Especially not inexperienced business people or friends. In my experience friends are the worst people to “do business” with.
I sincerely believe that. I once let a friend sublet a room off me when I went travelling. This was effectively a handshake business transaction and our contract was our prior 10 years of friendship.
She didn’t pay me a cent of rent for 5 months and then when I finally got home and said “WTF you owe me 5 months of London rent that I paid while I was on holiday!?!” She tried to weasel out of paying it by saying the house was “Too cold” and “Not worth the money” THAT SHE HADN’T PAID. She didn’t think to bring this up when she accepted the room and the price, before I left the country for 5 months. SC.
I learned a long time ago that if a “great old friend” can do that to you, another business owner who doesn’t owe you shit will do the same thing in a heartbeat. SCs are everywhere in business, dressed in sheep’s clothing. In my experience, the bigger the smile the shitter the c**t.
Now if I’ve got you questioning:
“So I have to invest my own savings, work more hours, not get paid and constantly fend off people trying to fuck me over? And over the next 10 years there’s a 70% chance I’ll lose everything I’ve put in?” - Then yes my friend you are now fully prepared to start your own business!
Oh and by the way “It’s just business” is code for: “You’re about to get fucked over.”
BUSINESS = GET BROKE QUICK, GET RICH VERY SLOWLY AND RARELY!
Stop and think about all of the successful businesses you see around you, on the street and online. How long have they been in business for? Chances are you only notice the ones who’ve been there for a long time over 5 to 10 years. Your brain doesn’t notice all the ones that have closed down within 3 years (or months) of opening.
Ask yourself if your desire to start a business was built on a flimsy notion:
“I want to be more creative” = 😂 Take up painting
“I want to get to spend more time with my kids” = 😂😂 Delete social media and TV from your life
“Someone I know did it so of course I can too” = 😂😂😂 Ask 10 successful business owners if THEY think you can do it
“I want to get rich being my own boss” = 😂😂😂😂 Ask 10 rich business owners how long it took them to “get rich”
“I just want a bit of passive income so I can take more holidays” = 😂😂😂😂😂 Stop eating out and drinking in bars. Put it in a savings account.
“My idea is so great I will make tonnes of money selling it to China” 😂😂😂😂 LOL I CAN’T EVEN RESPOND TO THIS ONE 😂😂😂
Mate, I really think you might be better off just sticking to your day job and taking a punt on Cryptos. It’s a lot less work and it’s a 50-50 chance. Which are great odds compared to business.
20% of small businesses fail in their first year
After 5 years half of all business have failed.
Only 30% of all businesses make it to 10 years trading.
I’ve only been trading 7 years and I’ve already seen a lot of businesses come and go. Many don’t even get off of the drawing board.
The ones who fail quickly and quietly and get back on with their day jobs with the least amount of fuss are less scathed than those who stick it out. Stubbornness and pride do them in. They end up in a worse position, losing more and more money and have to go back to a job that is beneath them because they “took time out” and got off the career ladder.
By all means give business a bash if you have the money, time and pride to lose. But if you don’t, it’s just like gambling at the Casino or on Cryptos – don’t invest what you can’t afford to lose.
And please don’t give up your day job.