Monday, March 14, 2011

Courage to do Business and your Business Model

9 out of 10 businesses fail. (Scared already?)

The book E-Myth has an antidote to reducing the odds, so go read that book. Robert Kiyosaki, in his book Cashflow Quadrant: Rich Dad's Guide to Financial Freedom, provides a great perspective on that statistic: It is not to discourage you to start a business, it is only to set your expectations. He says, you can also look at it this way: That if you want to have a successful business, then you have to start with at least 9 others knowing the 10th (or thereabouts) will strike you gold. Look at the 9 others as the preliminary/necessary steps to your successful 10th.
Your business model is how you intend to get a share of the pie.
I am surrounded by many people who have also started their own businesses, people who have seen theirs fly, seen their businesses fail. I have known people who in the face of failure have managed to regroup, start again, struggle and succeed again. Business is for the committed, focused and creative. But most of all, it is not for the faint of heart.

(But do it anyway!)

Because of Guy Kawasaki, I have acquired the habit (and the vocabulary, woohoo!) of evaluating business models. Put simply, a business model is how a company intends to make money. It's how you intend to get your share of the pie. It is not what one's business is per se (e.g. flowers), but how one intend to make money off that (e.g. supply flower arrangements to... mortuaries and memorial parks =P).

For example:
The business model of Paypal is provide a way for sellers to receive payments and buyers to send payments, and charging a minimal fee for the service. The business model of Google and Facebook for a while was nowhere to be found, because they weren't making money (and didn't know how they could make money from their websites!), until they eventually figured it out (or asked for help): Yes, we should sell advertising! (D-oh!) 

And therein lay their gold. (billions of it!)

I like the business model of Groupon. It really fascinates me. You know what it is? (Here's my blog about that.)

But how about you - you who have an existing business or are planning to start one - do you know your business model? 

Book Recommendations:
The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It
Cashflow Quadrant: Rich Dad's Guide to Financial Freedom
The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything
The PayPal Wars: Battles With Ebay, the Media, the Mafia, And the Rest of Planet Earth
Pro PayPal E-Commerce (Expert's Voice)
The Dragonfly Effect: Quick, Effective, and Powerful Ways To Use Social Media to Drive Social Change

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