The dark side of shiny markets
As entrepreneurial folks looking for new business ideas, we have to be careful.
Why?
Because those same businesses that inspire our imaginations, that parade on our feeds, that stimulate our senses;
We have to think about why they're doing it.
If a business is working hard to catch our attention,
Chances are, it NEEDS that attention.
Because attention costs $$$
And businesses don't spend for nothing.
And a business that needs our attention
Typically needs it because:
They require a high volume of customers, or
They need to raise our perception of perceived price, or
They need to entice us away from buying from their competition
And let me tell you,
The toughest businesses to be in are the ones where:
You are CONSTANTLY in need of new customers,
You have to TEACH the customer that you're worth your price, and
You have to CONVINCE the customer that you're better than the competition because they can't actually tell themselves.
These are marketing spend black hole businesses.
These are turn your dreams into nightmares businesses.
These are competing with folks who will do it for free businesses.
So, before you see that inspiration on your screen and think, "This is my dream; let's do it!"
Stop.
And ask the important questions first:
How many clients will you need, how will you find them, what can you charge them, and how will you pay your bills in the multiple years it takes to build that pipeline?
How many people in this town will actually buy a juice from your juice bar each day, and how many would NEED to in order to make rent?
How many full dinner services will it take before you break even each week? Will you get there on 1% of the typical foot traffic in your location?
How will you borrow enough cash to buy your summer rush inventory during your winter dead season? And what is your plan for liquidating the 30%-50% of goods that don't sell?
What are the average metrics for current companies or providers in your market? And will you want to run this business when your performance is half as good as theirs for many years?
Shiny businesses are shiny because they have to be to survive.
Feel free to fall in love as a consumer.
But for the sake of your sanity,
Don't fall for ownership.
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