10 Business Lessons From My First Start-Up
The 10 Business Lessons I Learned From My First Start-Up I still use almost every day. Since then I’ve started a successful marketing research company and realized that I am a serial entrepreneur. My firm Mindspot Research has been going strong for 13 years now. This story is about my first start-up business and the initial “start-up” concept testing conducted for it.
My first start-up business was reactionary based solely on my firm opinion that college textbooks were too expensive for poor college students. I called it “The Student Book Swap.” Over the years I’ve found this to be true – inventors, serial entrepreneurs and smart people will create what they can’t find. They will look to make something possible in a space where something currently does not exist. There were no options to the student bookstore and I created a start-up business solution. And, back in the day, the internet wasn’t available – and you were lucky if you could get enough time in the computer lab to learn how to program. Since no acceptable alternatives to the high priced books existed back then it was time to conduct concept testing marketing research!
Conducting Marketing Research
Once I made the start-up decision – it was time to look for allies. To me, this meant taking on the establishment. At least, the only establishment that I knew at the time, the student book store. Was this even possible? This consideration of possibilities is called a feasibility assessment. I began asking people, “If there were an alternative to purchasing full price books at the books store would you consider it?” This was my first stab at using marketing research concept testing. Most entrepreneurs are naturals at gathering insights or finding people to gather them on their behalf.
Three out of four students interviewed in the initial concept testing were very likely to consider an alternative concept to the student book store. “Hell ya I will buy from you,” was a typical response to purchasing from the start-up business idea. The 75% positive response of “extremely likely to purchase” is what we call a strong top box score. Although I had no money or support the initial marketing research concept testing indicated it was a good idea. And for those of you who are thinking about creating something out of nothing and thinking it’s not possible without money or resources, it can be done. All it took was a good idea to create “The Student Book Swap.” Well…a good idea and networking with the right people.
Getting the Word out – Advertising
We needed to get the word out with some kind of free advertising. I arranged a meeting with the student newspaper. Prior to developing the start-up business concept, it had not occurred to me to get to know the president of the student newspaper. Fortunately, he was waiting for a protagonist to appear. Not only did he meet with me – he agreed to partner me with on the start-up business.
We negotiated an ad on the full back page of the student newspaper and he provided reporters to cover the opening and our entrepreneurial progress. Apparently there was very little oversight at the time. Because of the brazen copy, the advertising was enough to stop someone in their tracks (see photo, of course, I saved a copy). My new business partner actively participated in student theatre programs. Because of his relationship with the theatre department we were able to rent their concession stand directly across the hall from the book store.
I now realize that the college and the book store management were very gracious. They could have shut us down and they didn’t. We charged 10% of every returned book sale and worked collecting books at the end of each session. We then stored all of the books and sold them at the next session. This was a master class in life-long business lessons and here’s what I learned:
The Top 10 Business Lessons That I Learned From My First Start-up Business
1. Marketing Research: Answer these questions right away: Is there a need for it? Are people interested? How many people are interested? And are they interested enough to claim they will purchase?
2. The Value of Networking: It’s easier to turn to someone who you already know than someone you don’t. Keep your network fresh, add new contacts, and reach out to long-term relationships.
3. Scope of Work: It takes more work and time than you expect. Spend time upfront scoping your projects and initiatives to have a realistic idea of the time and money it will really take.
4. Time Value of Money: 10% isn’t that much money if you have to hold inventory until the next session starts. Clearly we needed to charge more to make it worthwhile as a for-profit venture.
5. Break-even Point: Learn how to calculate it. Fixed Costs ÷ (Price – Variable Costs) = Break-even Point in Units. You will have expenses and it is important to make sure you calculate your break-even cost and then set your profit margin to make enough to stay in business.
6. Location Matters: And it always will. Even if you are selling online being in front of your customers will allow them the opportunity to buy what you are selling.
7. Opportunity Cost: This is critical. Consider what you are giving up. Ask yourself if the desired outcome is worth it? Don’t forget that everything you get costs you something. Yes, this is always true.
8. Don’t Be Afraid to Ask: Success isn’t for those who remain silent. You will need help and Customers. Ask for help often and keep an on-going dialogue with your customers.
9. Customer Service: Customers will come back if you serve them. Make sure that providing outstanding customer service is something you are predisposed to, and if not find someone who is.
10. Experience is the Best Teacher: There’s nothing like seeing your vision actualize. It’s never going to be perfect. Perfect is the enemy of done or in this case launched. Do your best and learn from it.
These business lessons weren’t out of a book. Fortunately though, I learned these life long business lessons because of a concept that started because of books. And, The Orange County Library System (OCLS) is a Mindspot Research Client (clearly I’ve got experience) and you can borrow books from them for free.
Lynnette Leathers, CEO of Mindspot Research and Serial Entrepreneur. Other motivating business articles on the Mindless Babble Blog you may enjoy are Eat that Frog to Grow your Business and The Top 5 Reasons Polling Failed to Predict the 2016 Presidential Election.