Why You Should Build on What You Know to Create a Successful Business By focusing on your existing knowledge and skillsets, you'll smooth the path to business success.
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The following excerpt is from Michael Glauser's new book Main Street Entrepreneur. Buy it now from Amazon | Barnes & Noble | iTunes
During my recent bike ride across America to interview dozens of small town entrepreneurs, I discovered that most of the entrepreneurs we interviewed had a fair amount of experience with the industries their business was in. About one-third of them had worked in the same industry they started their business in. Another third had worked in a related industry. Most of the remaining third were regular users of the products or services and understood the pain points and opportunities from personal experience.
In other words, they knew the market from the customers' point of view. They knew the products' features, the competitors, and the missing pieces. Only a small percentage of the successful entrepreneurs I've interviewed over the past 20 years have started businesses in markets they knew absolutely nothing about. And these people generally become serious students of the industry. In addition, many of these entrepreneurs bring in partners who know more about the industry than they do.
You may be thinking, "I know a woman who built a really successful company, and she had no experience in the industry whatsoever." You may also be thinking, "I know this guy who had tons of industry experience, but his business failed anyway." It's a question of probabilities. The more experience you have in your industry, the more you know about the products, services, competitors, suppliers, channels of distribution, customers, and opportunities. The less you know about your industry, the more you have to learn things through trial and error. And with limited experience, you often burn through your passion, tenacity, relationships, and money before you gain traction. You can only survive so many setbacks before you self-destruct and become a statistic in the business failure column. Hence, the more you build on what you already know from your own experience, the greater your probability for success. Plain and simple!
Successful entrepreneurs who have no experience in the industry they start their business in often have a great deal of personal experience with the products, services, and problems they're addressing. Once they start their businesses, they become very serious students of the industry. They're usually humble and ready to learn at warp speed. They read books, magazines, and newspapers. They create a brain trust of mentors and advisors who know a lot about the industry. They learn all they can about their competition. And they join associations and user groups. Before long, they know a great deal about their industry -- as much as, if not more than, their competitors.
Sara Blakely, founder of Spanx, is a prominent role model who studiously learned an industry she knew very little about. Sara had a problem in her personal life: She didn't like the bulge that pantyhose caused under her skirt. In addition, she didn't like the muffin-top that formed above tight pantyhose that end below the stomach. She just wanted to look better. Knowing little about the shapewear industry, she spent hours in the library and in hosiery shops. She learned all about the products, patents, and manufacturers. She tried the products on, then designed something she'd love to wear -- seamless pantyhose with a higher waist. It was a simple solution to a problem she and her friends were experiencing.
Sara spent $5,000 starting her business. She did all her research and product development while she was still working full time. She made a cold call to Neiman Marcus, which loved her product. She didn't quit her day job until she had nearly $1 million in orders. Today, Spanx offers 200 "problem-solving products for every body type and budget," including hosiery, bras, panties, bodysuits, swimwear, and even slimming undershirts for men. Sara has completely revolutionized the shapewear industry. In 2012, Sara was named the first self-made female billionaire by Forbes magazine. All this happened because she had a personal problem, learned an industry better than anyone else, then solved the problem for herself and every other woman on the planet.
Building a business on what you know is a key factor for success. Your knowledge can come from: 1) working in a specific industry, 2) working in a related industry, or 3) personal experiences you have with products, services, or pain points in an industry. The more you know about your marketplace, the greater your probability for success. The less you know, the greater your chance for failure. It just takes too much time, energy, and money to learn everything by trial and error after you launch a business.
Think about opportunities you've seen in your jobs, during your career, and in the personal experiences you have had with various products or services. The next critical step is to find a true business opportunity within the various things you know. A strong and motivating purpose is critical to long-term business success, but a variety of opportunities can help you fulfill that purpose. The important thing is to do something you already know a lot about that's consistent with the reason you want to start your business. The questions below will help you explore experiences and opportunities in your given industry, related industries, and industries you understand as a customer from frequent exposure to the products, services, and pain points. Building on what you know will be critical to your success.
- What specific industries have you worked in during your career?
- What problems, pain points, or opportunities have you seen in these industries that could be addressed in a new business?
- What industries are you most familiar with that are related to the industries you've worked in?
- What problems, pain points, or opportunities have you seen in these industries that could be addressed in a new business?
- What specific products, services, or problems are you most familiar with due to frequent use and interaction in these marketplaces?
- Which of the products, services, or problems you listed in the question above could best be addressed in a new business?
- Of the business opportunities you listed in questions 2, 4, and 6, which ones are you most qualified to address, based on your experience and skill set?
- Of the business opportunities you listed in question 7, which ones are most consistent with a strong purpose you would like to achieve?
