I find lots of guides, advice, strategies these days on how to start a business with little or no money and they all almost revolve around eCommerce or internet marketing models.

No doubt that there are a percentage of people that actually make enough to quit their job, most just end up in failed, wasted time. One of the reasons is that the web is very competitive now to get traffic. The other is maybe lack of experience. I notice when you see Gurus like Tai Lopez showing you how he got $50k in sales in one day, what you don't see is how much money was spent on PPC. An amount that could be more than some people's annual salary!

That's not to say you can't make money online. You can! But it's more work than just setting up a simple dropshipping website.

Though that's not the crux of my post today. I have had 10 years of entrepreneurial experience where I sold my first startup for 6x return on my capital. In another venture, I had also lost $650,000 of angel investor funds. Then I had some nice income generating ones. Through it all, I learned a good amount of "what NOT to do" and am today still learning "what to do right". Learning never stops!

Here's my 5 tips for those that want to start a real business

1) It's ideal to have dual income in your family and supporting spouse, parent, etc. When you are starting up a biz the old school way, you jump in with two feet and most times the first trickle of profits only start to come in 4-6 months in an ideal situation. For some businesses, it takes longer but perhaps the profits are larger. Make sure that you can support yourself during this time. Sure you could have a warchest saved for expenses for 8 months but this puts unnecessary pressure on your decisions. You keep watching the clock VS. if a spouse is supportive (and knows the end goal, financial freedom), you can make business decisions without the pressure of "do or die" choices which end up usually being the wrong decision.

2) Sales IS the lifeblood of the business. When I started my second business (which was a b2b business), I spend 90% of my time on product development, employee management, branding, etc except going out there MYSELF to get sales, close deals. We hired sales reps instead to go out but no one sells better than the person who believes in the product. Yourself.

3) DO NOT find a great product, then launch the biz to find demand. Instead, find where demand is FIRST then find a product/service or develop a better one. I also learned this expensive lesson the hard way in my second business. We were leaders in the industry, ahead of the curve. This was in 2005 when digital signage advertising was still in its infancy. Plasma screens were expensive! And ad agencies still have not yet figured out if it was better than captive audience type of media (like elevator ads). It was after the business shutdown after money was depleted that I watched a documentary where someone said "don't be an industry pioneer, if you do, make sure that you have a deep pocket. A really deep pocket". Because you have not just one but two tasks. Product acceptance (convince them they need this product) and then brand choice (convince them yours is better than the competition).

4) The greatest challenge for most startups is getting customers to know your business exist. Whether you are starting a brick and mortar or an online business, the most difficult task you have is to find customers or have customers find you. Obviously if you have $10,000 of Adwords budget, you would have no problem getting traffic for your online store. Or if you opened a retail store where there is high foot traffic (but pay high rent as well). I have to admit, when limited to a small business budget, this is even a challenge for me today. PPC? For clicks in my industry (business brokering) the suggested bid by Adwords is upwards of $60 per click! *glup* While the payoff for each client engaged is high, fancy spending $6,000 to try if this works? It'll probably be more when doing a/b testing, ad testing keyword sifting etc. Ask yourself this question the next time you want to engage a PPC "guru". If their PPC or SEO is so good, why haven't they built a multi million dollar website yet? And if they have one, how to they find time to help you?

5) Be willing to share profits with 3rd party to boost your sales. When I was a younger entrepreneur, I had an accounting background. So naturally, I knew my costs and did pro forma projections. I saw the margins and thought wow if I hit this sales volume THAT would be my profits. I went to market trying to get to customers direct so that I could rake in all the profit margin. It's a bad decision. You want to work with the value/supply chain. Here's an example: suppose you manufactured a soap product. You have a 2000sqft warehouse where you make them with 1-2 staff but could easily scale up. If you sold direct to consumers, you probably only had the resources to sell locally. Drug stores, smaller supermarket chains, etc. But if you worked with a regional or national distributor who took 10-20% of the margins, they would have multiple warehouses to help you store products and deliver them when is needed. They are also already on the approved vendor list of major supermarket chains. For online business, consider working with affiliates. For service related businesses, consider offering generous referral commissions.

Hope this helps!
 

tess dvow

Member
these are some great insight you have shared here i like your content so much i even shared it on my twitter every new entrepreneur should read this out before starting out. i would also like to add one thing here:

i have witnessed many startup company launching wrong sort of business and that's probably because they fail to understand their audience it's very important as startup owner you should have a clear idea about what problems are your product going to solve and accordingly how you're going to be marketing those products
 
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Pawan_Kumar

Member
Hi Dan Anderson,

First of all, I want to say thank you. You have shared good information. I read your post very carefully and I got to learn a lot about what things should be taken before opening a new business. You have a very good experience in the business. The tips you shared are very beneficial for the new generation of young people who want to start their business.
 
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