This is Part 4 of an article series that tells the story of what I learned from several businesses that I’ve started.
The experience of the previous two businesses resulted in my ability to create very nice looking websites. My promotional website www.Kaylib.com shows off some of my work.
When I began, I read many books about website design and learned several new website design tools. These new tools were far better than anything produced in the 90’s era of website design. Java and ASP.NET became the top technologies used by leading website designer. I took a liking to ASP.NET, which I still use today.
I leveraged everything from the previous businesses, from my suppliers to my accountant. I had everything in place. The reason I chose website design was to overcome the restrains of my previous business which failed because I couldn’t build a local customer base. With website design, I could start small and local and as I grew I could expand nationally and globally.
To gain market respect with my local competitors (which I learned the important of in my previous business) I decided to meet with the owners of the local website design shops. There were two leading shops that I wanted to talk with. I called them to setup a meeting but I was only able to meet with one them. The other was not interesting in talked to me, so I found another way in. I noticed they were hiring software developers and I had the skills they needed. This is when I learned a very good trick to learn about your competitors. I applied for an interview and during the interview I met with the owners and business manager. We talked all about their business model. I was so impressed by the information that I learned, that I decide to interview at a few others and I learned even more. During the process I even managed to gain the respect of a few of them, while discovering their primary competitive advantage.
My Website Design business has been a major success. I love the work and I love my customers. As the Internet continues to grow, every business is either in the process creating a website or upgrading their existing website. The business model provides a monthly income and a constant stream of work from the ever changing Internet and its growing supporting services.
Business Model Constraints
While meeting with my local competitors, I discovered that they were not competing with who had the better technology or even who could build a better website, but with who had a better relationship with their client base. Sure the work they did was important, but not nearly as important as the relationships and history they shared with their clients. This was my first sign of trouble, because I was a skilled developer ready to leverage my skills to compete by building a better website than the next guy.
But, I didn’t have any relationships with a client base, nor did I have time to build relationships because I was still working a day job. The only way I could grow was by word of mouth, which was slow. I needed a business partner to help me market my product. In fact, I’m still looking for this person and still growing my business primarily by word of month. With that in mind, this business continues to be a big success and is perhaps my most profitable business to date.
Primary concepts that I learned
The primary concepts that I learned from this business were;
Market conditions can change – Over the last few years, website hosting costs have drastically decreased. This change allowed several new businesses to jump into the website design marketplace by offering website templates for very low prices and force full blown website design shops to compete with them or explain to why they are providing more value. In the end, you still pay for what you get and the customers that chose to try a low cost alternative usually come back to me after struggling to get their website working with the way they want it to. This is why the relationship I have with them is most important, because sooner or later they want to do more with their website. My business moto is, 'If you can imagine it, we can build it'.
Find profitable customers - A large business can afford to have a few customers that are not-profitable, but a small business needs to take more care in choosing it's customers because a few not-profitable customers can sink your cashflow. At the same time, a small business needs to resist the temptation to say 'No' to customer requests and try to say 'Yes' to everything their customers ask for. The trick is to first filter out the customers that will not be profitable and always say 'Yes' to the requests of your profitable customer base.
The importance of direct sales – When starting a new business, it is essential to find some leverage. Most of the time, it is nearly impossible to try to directly compete in an existing market – because the competing corporations have far too much leverage over a startup. Therefore, new businesses attack new markets. New markets have few competitors but they also have few customers, which leads to a business model heavily focused on direct customer relationship building. The entire staff of a startup is usually focused on direct sales for the first few years, focusing on converting non-consumers into new customers. If you don't like to sell, then forget about starting a business. Selling is a required task for everyone working at a new business. Marketing and networking are essential.
You are the man – If you want to start a business and you don’t have a team of experts or a lot of money and you don’t have any customers, then you are the man. You yourself need to become an expert, make connections with suppliers or venders to create your product and find a way to fund your product and then find a way to sell it. It's called capitalism.
Next article: Businesses I’ve Tried and What I’ve Learned - Part 5: Infopreneur
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