Now that you have considered many potential business ideas, factored in the recession into your plans, and figured out how you are going to go about hiring your staff, you are ready to start making the big bucks. Well once again it is not that easy. This is bad news for our generation because we all dream about getting rich quick but be patient. Right before you jump into that new side (or full time) business of yours there is a checklist of crucial ingredients for success that you need to look over:
- Proof of concept. Of course after your college graduation your parents will be eager to tell you how great your new business idea is. I’m sure your friends will also be the first ones to tell you that they love your new idea. In fact, you may receive praise from all of the people around you. You will probably start to think that you have the world’s greatest new idea because everyone seems to like it. The cold truth is that these people either a. don’t have the heart to tell you the truth or b. will like your new idea no matter how foolish it is. The trick is to get a third party unbiased approval of your new idea.
- Scalability. With all of the hype out there about passive income and working from home, who actually wants to work? Simply put scalability refers to reducing variable costs with each unit sold. A simple example is when you create software it requires months of research and then the only additional direct cost is the blank cd. Also when you write a blog you only have to post once and the same post can be viewed by many people all over the world. The goal is to make your product as scalable as possible.
- Selective information. I have never done a formal count but one could only imagine there are over 1283599 sites out there on every possible topic. What does this mean? Two words. Information overload. As a new entrepreneur it is important you can separate between “interesting” information and “important” information. When applying newly learned information just make sure that it truly does apply to your situation.
- Viral marketing. In a nutshell, get the word out about what you can offer! Word of mouth is all you may have when you’re a little company trying to compete in a competitive market.
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I am not really sure the usage of the word “scalability” is appropriate because it usually is used in a different context than what you have here.
Also, variable costs/unit do not fluctuate with volume (unless you are getting a bulk discount from a supplier or some sort of process improvement due to the extra volume).
Fixed costs will decrease with each additional unit, though… and therefore so will total costs.
Did you have something else in mind for scalability just so I can clear that up for myself?
Sorry for not being 100% clear with my take on scalability. It pretty much refers to having low variable costs per unit. It also requires a high initial fixed cost due to the capital needed to create the product. I used the example of software because it perfectly describes a “scalable” product. You spend the money upfront to create the product which could take many months. Once the product is created you can distribute it online for a very low cost or put it on a blank cd.
Just to show you the other side of the coin: a very unscalable product is consulting. There is no one size fits all and every business client requires your full attention and a different result. When you sell software or write for a blog you pretty much create one product that can be used by everyone. I hope this helps and if you would like to know more please feel free to email me. Also if any readers would like their input on the article please feel free to do so.
I’d be careful about who you share your ideas with. When you have a really great idea, you have to be EXTREMELY careful about who you talk to. Who can you trust? Sometimes probably not even your friends.
I don’t even like to talk too much about the business I’m in, as it doesn’t have too many “barriers to entry” and those who hear about it could easily go out there and take some of my market share.
Just be careful. If you are going to get feedback from people, be extremely careful about who you tell.
@Studenomist –
That makes a lot more sense. I think I was reading into it differently. Thanks!
@Trevor –
With a business that has low barriers to entry, do you think simply talking about it would promote more people crowding the wrecking industry?
IMO, people either have the initiative or don’t. Your friends probably see your success and if they wanted to compete could just do some google searches to find opening costs.