When it comes right down to it, business owners fall into two camps: People who follow their passions, and clear-eyed folks who look for great moneymaking opportunities. Each side says its approach works best.
On one hand, following a market opportunity has glittering allure: A great opportunity can make a lot of cash. On the other hand, following your passion has romantic appeal: All day long, you're around a product or service you love.
But what are the downsides? Are people who follow their passions more likely to fail? There's no hard research to support that claim. While the steady stream of bankrupt restaurants, bed and breakfasts, and golf companies does seem to suggest that the passionate approach is weak on results, reality is far more complex.
Beating the Odds
Miles Cook looked like a failure statistic waiting to happen: a 25-year-old guy who loved motorcycles and wanted his own motorcycle dealership. At first glance, he seemed to be headed for disaster. Even the banks thought so. "I was young, and a lot of banks didn't even want to talk to me," says Cook, now 32. After five banks declined his application, Cook read an Entrepreneur article listing the top banks for small businesses in each state. Sure enough, one of those banks agreed to loan him the money for his startup. Now Cook's Rochester Motorsports Inc. in Rochester, New Hampshire, does a brisk business selling the most popular brands of Japanese motorcycles, with nearly $10 million in annual sales.
"It all comes down to passion. Blind ambition is better than 20/20 indifference," says Cook. "If you're passionate about what you do, the sky is the limit."
Business consultant Karyn Greenstreet agrees. "You have to fall in love with the product or service," she explains. Her website, www.passionforbusiness.com, offers consulting and coaching services for entrepreneurs.
However, by some reckonings, Cook was committing a big no-no by being so emotionally involved with his product. "The problem is, when you fall in love with a product or service, you tend to focus on your product," says Terry Powell, CEO of The Entrepreneur's Source, a Southbury, Connecticut, franchise consulting firm. "You don't spend enough time managing, marketing and promoting the business."
Passion and Opportunity
So why do folks like Cook succeed while scores of other motorcycle-lovers lose their shirts? On closer examination, Cook, who worked on his MBA but never finished, had the golden mean: just the right mix of passion and business acumen.
Cook didn't just love his product; he followed four focused steps to lay a good foundation. First, he worked his way through college selling motorcycles at an independent shop and racked up high sales figures. Second, he called Honda to ask if there were any dealer opening points in the area--there were. Third, Cook did his own market research by poring through census data and seeking out county figures for affluent males aged 18 to 49. Fourth, he scouted out a location himself, he says, by "just talking to people at city hall, driving around and looking."
Passion for Business
In contrast, Bill Anderson pegs himself as a guy following a market opportunity rather than his passion. Anderson, 53, owns three The UPS Store locations in New Jersey and Pennsylvania. "My business plan from the get-go was to establish [an ongoing] concern revolving around multiple units, where I would be the president and run the store through staff," says Anderson. In business since 1996, he says he's doing well, with his 12-employee franchise business bringing in $1.2 million in sales annually.
On the surface, Anderson's approach may seem analytical and a bit cold-blooded, but that's not quite accurate. While he certainly wasn't in love with the shipping business, he did understand it, having previously owned a health-care automation firm where he gained shipping experience as a customer at stores like The UPS Store. Anderson says there was a sort of passion in his decision: "I had a passion to work for myself." Even now, Anderson is energized by helping others achieve their dreams of business ownership as chair of The UPS Store's franchisee advisory council. He also sits on the International Franchise Association board.
So who has the better approach? Cook, the motorcycle lover, or Anderson, the clear-eyed shipping realist? In reality, experts say success isn't about passion or market smarts. "You have to have both," says Therese Flaherty, director of the Wharton Small Business Development Center at the University of Pennsylvania. "Yes, your business absolutely must get you up in the morning and keep you enthusiastic. But you must pursue your dream with the best tools you can get."
Emphasize Sales Growth
Julie Turner, who started out as a kindergarten teacher, knew she couldn't spot a market opportunity--but she did love working with people. When she bought her Express Personnel Services staffing franchise in 1995, she set about learning the business model through the franchise's classes, and she hired staff to do the back-office work. Now, her Fort Worth, Texas franchise boasts $13 million in revenues for 2004. She enjoys being the "face" of her business with clients and potential clients. "I love being out, meeting people, helping people find jobs. It gets in your blood," she says.
Turner, 35, says passionate types like her are one step ahead because their enthusiasm is contagious to customers and staff. Passion is hard to come by, she reasons, but expert business analysis can always be found for a fee. "Frankly, if you're not going to go out and sell, you don't have anything to analyze," says Turner. "That's how I look at it." Conversely, for analytical types who lack Turner's gift of gab, she suggests you "hire your weakness" and get a good sales staff.
Turner's enthusiasm for meeting with potential clients jibes with the first rule of business, according to Flaherty. "The biggest mistake is to not allocate time and attention to improve business and look for new sales," Flaherty says. "If you don't do that, you don't have a chance to put anything else in place."
Follow Your Nose
Following a market opportunity was the rule for "ski bum" Mark Curran, co-founder of Black River Produce in Proctorsville, Vermont. When he began the business selling produce in the 1970s, neither he nor his business partner, Stephen Birge, knew anything about their product. Rather, their passion in life was skiing. However, neither wanted to make a business out of skiing--the vicissitudes of that industry seemed too daunting. Instead, they discovered that local households and restaurants had problems finding fresh, high-quality produce. So the two went into business--making deals with nearby farmers and renting an old barn and a Volkswagen bus. "We were looking for a business opportunity," says Curran, 50. "But once we did [it], it was a passion for working for ourselves."
The first thing Curran and Birge learned was that their business plan wasn't working. Originally, Black River Produce was a retail store selling produce and vitamins, while the wholesale side of the business consisted of picking up some vegetables for local restaurants. But as the wholesale end quickly outpaced the retail end, Black River switched gears. "You have to follow your nose," says Curran, summing up his philosophy of looking for a market opportunity and pursuing it.
Black River Produce now has $31 million in revenues and a fleet of more than 30 trucks and 155 employees. Curran says Black River's success helped him realize his dream of buying a farmhouse and raising his four children near his beloved ski slopes. And he didn't mind the hard work, sometimes joining farmers in the fields to pick corn. "When Steve and I started the business, we went three years without a day off," Curran says. "But when you're working for yourself, you don't even think about it."
In any case--whether a business is based on passion or a market
opportunity--starting out with sound advice and a business plan is
say business advisors. The process of writing and researching a business plan is useful even for a part-time startup, says Linda Pinson, author of Anatomy of a Business Plan and co-author of Steps to Small Business Start-Up.
That's because putting together a business plan teaches the "business of doing business." "It reveals to [the entrepreneurs] whether this is a viable business at all," Pinson says. "It tells them what their financial opportunities are, whether the goals are realistic, when to change gears."
A greater tendency to plan and seek professional help is one market advantage opportunity-seekers have over their passion-driven counterparts.
Layla Masri sees herself as a little of both: As a marketing professional, she was passionate about the burgeoning potential of the internet, but she also saw it as a huge business opportunity. And when she started her Alexandria, Virginia-based website design firm, Bean Creative, in 1997, she sought an accountant and lawyer from the start. Equipped with a business plan and structure, she stayed the course through lean times and growing pains. "For the first one and a half years, I was trying to build Bean Creative while working full time," says Masri, 32. "It didn't give me a whole lot of time to sleep or have a social life."
When a big client--National Geographic--finally came along, she tweaked her business plan and changed Bean Creative from a part-time LLC to an S corporation. Eventually, the company had enough full-time work for her as president and her husband as vice president and head of design and programming. Bean Creative now boasts $1 million in sales and seven employees. In 2003, Masri bought her own building. The changes weren't so jarring, she says, because her business plan had called for growth all along.
"A business plan is not something you write [and] then put in a drawer somewhere," Pinson says. "A business plan is a lifetime guide for the small business. It's a guide you continually use and update."
Find the Pain
Wilson Alers, 47, has always worked in the audiovisual staging business--setting up stages and theat-rical lighting for corporate meetings, product launches and celebrity promotions. He decided to start his own business because his employer had so many unhappy customers. Alers says he saw his employer "running the business into the ground," failing to reinvest and making do with patched-up equipment. "It was frustrating," says Alers. "I wanted to do things right." So he started Media Stage Inc. in 1990 with just two employees. Now the Sunrise, Florida-based business has grown to 22 employees and $4 million in annual sales.
Like Cook and his motorcycles, Alers had more than just a passion for his service--he also had years of experience working for another company. While the decision to strike out on his own was done in the heat of the moment, in hindsight, Alers says he'd also found a great market opportunity. "At the time, we had just entered the Gulf War, and there was a downturn in the business outlook." Already-dissatisfied clients looking to save money were willing to risk their businesses on the startup.
While he was just following his gut and was sick of dealing with dissatisfied customers, Alers was also acting on a business tenet: Find your customer's pain. "Find out what segment of the market has a problem," says Pinson, "and find out how you can help them."
All in all, experts and entrepreneurs say passion--either for a product or for business--and following a market opportunity are both crucial to the startup equation. Those whose strengths lie on one side need to shore up the other side, either through discipline or hiring people to help them.
"It's the same way people muster up the discipline to change a baby's diaper. You're going to do the dirty work because you love that business so much," Greenstreet says. "It doesn't matter why you're going into business, whether it's because you love to be in business or because you love what you're selling. What matters is [that] you have some level of passion."
Do it Right
Dos for market approach:
- Do consider franchising. Franchise consultants say people looking for market opportunities are well-suited for franchising.
- Do pay attention to the "feel" of your business; if you're more of a behind-the-scenes type, hire a sales force that presents the right image to customers.
Don'ts for market approach:
- Don't rely completely on market research. For instance, if research shows a city doesn't have many pizza chains, it's not necessarily an opportunity; there may be so many independent pizzerias that newcomers can't break into the market.
- Don't get caught up in a fad, which may fizzle before you're off the ground.
- Don't become a workaholic; consultants say people who see a great market opportunity should guard against working day and night to satisfy the market's need.
Dos for passion approach:
- Do balance out gut instincts with market research. That vacant storefront may strike you as a great location, or your product may seem perfect, but do the research anyway.
- Do find employees or consultants with business acumen that you may lack.
- Do take a disciplined approach to practical tasks such as bookkeeping and maintaining a business plan and business structure; experts say passionate types tend to procrastinate on routine tasks.
Don'ts for passion approach:
- Don't look to franchising if you want to do things your way. Franchises are proven business models meant to be replicated exactly.
- Don't focus so much on your product or service that you forget long-term planning.
- Don't try to go it alone; ask for advice early on.
Judith Potwora is an Atlanta-based freelance journalist specializing in business issues.