“Out in the open Wisdom calls aloud, she raises her voice in the marketplace…”
– Solomon, Proverbs ch. 1
Wendy Clark sponsored a trio of young protégés to attend this year’s annual Young Writer’s Workshop at Wizard Academy. While she was on campus with her crew, she said,
“There really needs to be a book of helpful tips for start-up business owners. The E-Myth warns you that being a good housecleaner doesn’t necessarily mean you’d be good at running a housecleaning business. And that’s quite a revelation. But there’s no book that tells a person how to make the leap from wage earner to business owner. The book is needed and needed badly.”
Will you help Wendy and I write that book of entrepreneurial tips?
Wendy and her sister Jessica overcame an impossibly vertical learning curve by pulling themselves up by their bootstraps. Their company, Carpe Diem Cleaning in Durham, North Carolina, is the classic success story. Wendy spoke to me of some powerful insights she had been forced to learn the hard way. Tragically, I’d heard them all before. Lots of times. So why hadn’t I warned her?
This is a book that screams to be written and you, mi compadre*, are going to contribute what you know. You’ll do it because it’s the right thing to do. You’ll do it because you know every strong economy is built on companies with fewer than 100 employees. You’ll do it because we’re all in this together.
I mentioned Wendy’s comment to Wizard Academy’s board of directors last Monday. Jean Backus said, “I taught basic tax tips for 10 years at Austin Community College and a high percentage of my students already had an MBA. When I asked, ‘What are you doing here?’ they always said, ‘They don’t teach this stuff in college.’”
Jean Backus promised to give us a list of time-and-money-saving tips. Likewise, Dennis Collins and Adrian Van Zelfden promised to contribute what they’ve learned in their several decades as consultants to hundreds of business owners. Doctors Oz Jaxxon and Lori Barr promised to chip in their collected wisdom as well. And I promised that you would send in at least one golden nugget.
Here are a few examples of the kinds of tips this book will contain:
1. Calculate the potential revenues available to your category in your trade area in 3 ways: (A) Make a list of all competitors in your category, estimate the annual sales volumes of each, then total the estimates for a “country boy” estimate of the marketplace potential. (B) Pull national sales volume estimates from trade publications for your category, then divide that number by the population of the nation, then multiply by the population of your marketplace. (C) Access the government NAICS numbers for your category to derive a per capita average for your state, then multiply that number times the population of your trade area. Don’t be surprised when all 3 answers fall in a narrow range.
2. Growing from 5% of your market potential to 25% of your market potential (20 percentage points) is easier than growing from 25% to 33% (8 points.) This is because you win the easiest customers first, then must face customers that are much more difficult to win. It is extremely rare for a business to grow beyond 33% of the market potential for their category.
3. Commit all agreements to writing. The clearest memory is no match for pale ink.
4. Sometimes your very best just isn’t good enough. Don’t let it get you down.
5. In most service businesses, 1/3 of revenues will go to payroll, 1/3 will go to overhead, and 1/3 will be gross profit from which taxes, etc. must be withheld. Take this into consideration when hiring and pricing.
6. A talented, hardworking tradesman, craftsman or technician, working alone, can make a lot of money. Soon they’ll have no free time and will be turning away business, so they will hire a helper. Then they’ll discover that it’s faster and easier to just do it themselves than it is to train, motivate and supervise the helper. So they’ll hire a second and third employee and work harder than ever and make less money than when they were working alone. Until that tradesman, craftsman or technician has approximately 10 employees, he or she will usually make less money than when they were working round-the-clock, alone. Be ready for these frustrations if you choose to build a service business.
7. A smart man makes a mistake, learns from it, and never makes that mistake again. But a wise man finds a smart man and learns from him how to avoid that mistake altogether. Share what you’ve learned with others and be quick to hear what they have learned and you can both be wise.
“Out in the open Wisdom calls aloud, she raises her voice in the marketplace…” – Solomon, Proverbs chapter 1
Solomon… wise man… wise-ard… Wizard Academy,
America’s Most Interesting Business School.
Good decisions come from experience.
Experience comes from bad decisions.
What has your experience taught you?
What sage advice have you received that you’d like to pass along? Send it to Jackie@WizardOfAds.com and feel good that you’re building a strong economy by helping others to succeed.
Our own Pulitzer-nominated Dean Rotbart interviews Wizard Academy’s (and Procter & Gamble’s) Mark Huffman on today’s Monday Morning Radio. Listen in as they discuss his career, insights for business owners and entrepreneurs, and his upcoming Measurement and the Mind course at Wizard Academy.
See the rest of Mark Fox’s crop circle in today’s Rabbit Hole.
*Compadre originally meant “Godfather.”
Today it means:
1. a close friend
2. a classmate
3. a companion in war
– The Urban Dictionary
I learned that it was much more profitable to outsource the parts of the business I didn’t like doing, or wasn’t very efficient at doing- bookkeeping, final editing, etc- than to procrastinate and do it badly. Utterly eye opening when my book-keeper did in 5 hours what I had been avoiding for 5 months, and did it for less than the cost of my own hourly rate.