Read an Excerpt
We wrote this book for the same reason you bought it: We want your business to succeed.
But what is success? How do you measure it? We believe that success in business consists of three things: profits, personal satisfaction, and longevity. Profits, obviously, are essential. But studies have shown that a profit motive, by itself, is not enough to sustain a business. If you want to be one of the 20% of small businesses that make it to their fifth birthday, you're going to need more.
One thing is certain: You're unlikely to achieve profits, personal satisfaction, and longevity if you're in the wrong business.
How do you know whether you've made the right choice? You'll have to honestly answer questions such as: Do you like what you do? Are you good at it? Is there a demand for what you're selling?
If you're unsure, this chapter can help you decide.
One other note. Some business owners mistakenly believe that perseverance will overcome all obstacles and eventually lead to success. Perseverance is essential for success, but there's a difference between perseverance and obstinacy. As Henry Ward Beecher said, "One comes from a strong will; and the other from a strong won't." To proceed when you're in the wrong business puts you and your family at financial risk.
Do You Love What You Do?
Odds are good that you love (or at least like) what you do in your business. For example, if you buy and sell troll dolls, play music, craft furniture, or give massages, you probably have more passion for it than you do for your day job (if you have one), and you probably get more satisfaction and happiness from it as well. That's likely why you started it in the first place.
It may seem touchy-feely, but your love for your business is probably a crucial factor in determining whether you will succeed. Small business can be all-consuming, and it often alternates between crisis and boredom. Only your love for your business and its core products or services will carry you through.
If you have fallen out of love with your business, there are ways to rekindle the feeling. How to Run a Thriving Business, by Ralph Warner (Nolo), offers several suggestions for maintaining and increasing your interest. Here are some of them:
Delegate administrative activities. If some activities -- for example, bookkeeping, documentation, or contracts -- obstruct your enjoyment of business, say "Hell, no" and delegate them to others. (Control freaks, this means you.) Sometimes family members can be helpful in picking up the slack, but beware, there are issues when bringing in a spouse, sibling, child, or parent. (See Chapter 3 for more on family businesses.)
Develop new business approaches. Is there a way to modify your products or services so that you find yourself re-interested in the business? Can you prune out products or services that don't excite you and keep only those that do? Implementing changes -- even as mundane as changing the appearance of your company website -- can often stimulate interest for you and for your customers.
Invest your business with a sense of purpose. It's a lot easier to stave off boredom if your business has a sense of purpose. You don't have to save the whales, but adding an altruistic element to your enterprise can keep you interested -- for example, a barbershop that decides to educate men about legitimate remedies to reverse baldness, or a coffee shop that offers fair trade blends, or a business -- like Newman's Own food products -- that contributes a portion of profits to charities.
Are You Good at It?
There's a British reality television show called Ramsay's Kitchen Nightmares, in which chef Gordon Ramsay visits unsuccessful restaurants and attempts to turn them around. The near-universal problem that Ramsay encounters is that a restaurant owner or chef is passionate about food but lacks the skills, experience, and talent to run a restaurant kitchen.
It's not enough to love what you do; you also need to be good at it. According to a happiness researcher (yes, there are experts on happiness), Dr. Ed Diener of the University of Illinois, work is most satisfying when our ability and our ambition are closely matched. What makes us miserable are contradictions. Someone who desperately wants to become a concert pianist or pro volleyball player but lacks the talent to compete at this rarified level is going to be heartbroken.
There's a big problem, though, when it comes to assessing our skills. It's difficult to provide an honesty check. Nobody wants to admit that they lack the talent or skills to produce goods or services competitively.
So how do you honestly assess whether you're good at what you do? One way is to consider whether -- if you were hiring someone to run your business -- you would hire yourself. You might ask yourself some of these questions.
What's your experience and track record? If you were in an interview for this position, what in your resume could convince someone to give you the job? What's your training? Do you have experience in this industry or business? Have you successfully run a similar business before? How is your current business performing? How is your performance compared to local competitors? What about national competitors? If, for example, you maintain an eBay store, does it perform as well or better than competitors? If you haven't competed within this industry, do you have other life or business experiences that qualify you to run this business?
Are you good with people? Commerce requires an ability to deal with people, whether they're vendors, employees, or customers. If you're a musician who's not good at dealing with fans or record companies, or if you're a chef who can't inspire and direct suppliers or your kitchen crew, then you're lacking an essential skill needed in your business.
Have you gotten positive feedback? How have customers or clients responded to your business? Do customers love your chocolate cakes, automotive detailing, or dog shampoos? Does your Amazon store get consistently good ratings? Do customers comment on your affinity for the business?
Is There a Market Demand?
Business guru Peter Drucker says that businesses exist to create customers. If you can't create customers, your business will end. If you're already generating revenue with a solid, consistent customer base, you have market demand. But if you're unsure whether market demand exists (or whether current demand will continue), you'll need to do some market research.
What's market research? It's a collection of facts about your industry, your customers, your area, and your business. It's referred to as primary research when it's gathered for a particular purpose -- for example, you survey local residents. Secondary research is information that's already been gathered about a business or industry.
It's not difficult to do primary research, and it can be very informative. You need to find people -- customers, focus groups, or a random sample of folks at a shopping center -- and ask them questions that will help you determine whether there is a market for your services or products. These surveys can also be conducted over the Internet, by phone, or by mail. Choosing the right questions requires some skill. For example, should you use open-ended questions that the person completes, or closed-ended questions that provide choices?
If you're attempting to do primary marketing research, we suggest reading The Market Research Toolbox, by Edward F. McQuarrie (Sage Publications) or Jim Nelens in Research to Riches: The Secret Rules of Successful Marketing (Longstreet Press). McQuarrie's book discusses the basics of setting up focus groups, surveys, and customer questionnaires. Nelens's book focuses on how to choose a market research firm and how to judge the accuracy of research.
If you are selling a new product, you can assess potential demand by conducting a marketability study. For $500 or less, you can submit your product for a marketing evaluation at many university marketing departments -- for example, Southwest Missouri State University.
Secondary research requires digging through Internet data or searching at your local library. You're looking for demographics in your area, trends within your industry, and economic forecasts. When you're done, you should be able to answer questions such as "Should I open a Balinese restaurant in San Diego?" or "Is there a national market for my line of vegan desserts?"
Common sources for secondary research are:
- Trade associations. Check the Encyclopedia of Associations (Gale Research), available at many libraries, or use an Internet search engine to find the group representing businesses within your industry.
- Trade publications. Check for magazines or newsletters published for your industry. For help, look in Newsletters in Print or The Gale Directory of Publications and Broadcast Media, or use an Internet search engine.
- Government websites. Tons of free information is available, for example, at the websites of the U.S. Department of Commerce (www.commerce.gov) or the U.S. Census Bureau (www.census.gov).
- Business directories. Check for information about your competition online in business directories such as Big Yellow (www.bigyellow.com) or look in print form, for example, at your local chamber of commerce.
If you're prepared to spend hundreds or thousands of dollars on research, companies on the Internet such as MarketTrends.com (www.markettrends.com) can provide customized market research.
If It's Not the Right Business
If you've decided you're not in the right business, you've got three options: continue and hope for the best, close it, or sell it. If you choose to continue, we recommend that you consider ways to increase your interest and skills in the business. You may want to consult a business coach or mentor.
If you can get out of the business before it goes under (which it surely will if you're not good at it), you can live to start a new business. Many business owners pull the plug on various enterprises until they find the right match. At the same time, just because you're not particularly good at your business now doesn't mean that you won't someday achieve competency. There's a saying that business owners are paid in two coins: money and experience. What you'll need to decide at this point is whether you can afford to educate yourself while running your business.