How To Kill Your Business Before Starting It?
I want to tell you the story of my good friend Mat who made a costly mistake that sadly most people make. This one mistake can plague your business and kill it even before you start it. In order not to repeat Mat's mistake, you need to hear this podcast.
It's a story that illustrates a problem that I see very often. So my friend Matt wanted to start a business and he was looking for options. So he started looking into stuff, you know, pretty much everything. He wanted to sell competitive stuff.
But anyway, one day he was with his girlfriend and they went to this sports store. He saw this pair of sneakers. All right. And he fell in love with those sneakers. He was a dude. That's it. These are your sneakers. I want them there. It's so awesome. Everybody will want them. Let's get a truckload of these sneakers and then we're going to resell those sneakers. And it’s going to sell like gangbusters.
So they had some savings. So they took all their savings from the bank. And so they combined their savings and they found a store and stuff, you know, to be able to get the shoes. And they ordered a truckload of shoes. Right. They were like, oh, man. Send us 300 pairs of these shoes. We're going to sell so many. It's going to be biblical!
So they had a 12 month lease on the place and they needed insurance and they installed security. But I mean the kind of security that would fit Mission Impossible. And it cost a lot of money for it. So they put the shoes and everything. You know, they arrange the store and stuff.
And then at the grand opening, they're like, man, we're going to make a killing with these shoes, because I absolutely love the shoes and everybody is going to like them.
How To Kill Your Business Before Starting It?
All right. So well, what happened was that they opened and nobody showed up. Like nobody. Right. And even the people who showed up and checked out the shoes and then they left. So they ended up spending all their savings on their first business. So it was their very first business.
And yeah, they were broke, you know. So pretty much everything they had was there. So once they were broke. Secondly that they had all these shoes to get rid of. You know, to get their money back. And third, they had the lease now. So they had to pay for that. That then pays for the next twelve months, which is the problem when you're broke and when you're counting on the sales to pay for the place.
So, you know, long story short, it didn't end up really well for his business. And at that point, he invited me to see him. He was like, dude, can you help me? Because I have this business that I started and we haven't sold anything and we're in debt and everything. Is there anything you can do for me to help me?
And so, you know, me, I kind of knew what the problem was, but I wanted him to understand what the problem was. So I said ask him questions. Oh, okay. Just random questions before just to get him to think about how he approached stuff. And then I asked him one question.
I was like, well. So what did you start with? Why did you start with the product or did you start with the client? When you decided to start a business with these shoes, why did you start? Because you liked the product or did you start because you knew that people were going to buy this product? And he said, wow, I started because I absolutely love the product.
And you just assume that people will buy it. And I said, well, that's your problem here. So it's not like I had the solution for him. I had an explanation, you know, which he wasn't happy about. It was like, this not a solution? What do you want me to do? You know, but I'm giving you the explanation so that you don't do the same thing again afterwards.
Right. So this is the one thing you shouldn't do. Just because you like a specific item or whatever doesn't mean everybody will like it. Everybody is different. And your preferences and stuff, don't assume that people are going to like it. So that's the one mistake.
The second mistake and the biggest mistake is don't start a business in a in the market where you haven't established with certainty that people are already actively buying that stuff and that people want to buy it. You have to establish that, you know, people are already actively buying this this product there before you start investing all your savings and stuff, because you could very well end up in a situation where you bought some stuff for nothing.
OK, so what's the deal? How you how do you ascertain this thing? Well, you do market research. If people are advertising for this product, if they are, it means that they're obviously getting something out of it. If you see a lot of ads, then that means that there is a lot of money there because otherwise people wouldn't invest in those ads. So there is a market for it.
And the last thing you want to do is to spend your time doing something you hate. All right. I'm against that kind of stuff. So this is why my advice is this:
The first one is go in a market where you're passionate. If I go in the basketball niche, I'm like, I'm super passionate. Now I can do the research for hours. Right. If I was doing the research on art and I like 14th century poetry, it will bore me to death. I'm saying just to anticipate the possible hardship that could come down the road, because it's going to be bumpy a little bit.
The second reason why I think when you are passionate, it can it can help you is that you are part of the demographic. So you have a good idea what people like. And you know the lingo. Right.
The story is that you need to start with the client first before you find the product. OK, before you decide what you're going to sell. So you need to have a vague idea of what you want to sell.
So where you want to sell needs to be the idea. Doesn't need to be the deciding factor. Like bam, that's it, let's go in and invest all our money, OK? It's the idea. All right. And then you'll validate the idea by making sure that if you actually decide to invest your time in that, you're going to be able to sell that stuff, which wasn't the case for my buddy Matt.