I admit it, most of my ideas stink. I am sorry for more than one of them. At the top of the heap was the home care business I started last year. It seemed like such a great idea at the time, but it resulted in nothing but a huge gaping loss of a year.
It seemed like we were filling a void. We would provide caregivers to elderly clients. Our girls would cook, clean, drive, and provide companionship. I knew so many people who wanted the service. I made lists of all our old clients we should notify of our new business. By the end of the fist month, we had 12 clients and 20 employees. It felt like we were strapped to a rocket.
But I was so short sighted. I hadn’t realized the stiff competition we would receive, not just from other agencies, but also from the staff we would hire. Yes, our employees would sell us out. They often solicited out clients and undercut our prices, going directly to work for the clients. We were just the middle men. The girls who worked for us were a commodity. As is often the case, our customers went directly to the source. As many clients as we gained, we seemed to lose the same number.
I was spending so much time! It was hurting my other business, my physical therapy clinic. I was torn between the two businesses. I spent all my time trying to make the home care business work. I advertised. I met with clients. I had staff meetings and endless phone conversations. I did everything I could to make this business work. And it did work! I found more new clients than we lost. I was able to get rid of the employees who were attempting to steal our clients. I spent more time talking to our customers and their families to remind them what our service was worth.
What a huge commitment of my time and energy! And in the end, one thing became apparent. This business would always require a huge time investment of the owner. There is no way to avoid this in a service business. The owner has to both provide value to the customer, and constantly remind the employees why it’s in their best interest to stay employees. That is all quite achievable but only with a huge effort. And the bigger you get, the larger the commitment of the owner. That’s why so many service businesses choose to stay small. Usually, the ones that succeed have huge margins. We were barely seeing a 10% profit over our employees' pay. That will never work.
So what one lesson can I pass on to you? When you have an idea, start small. When you first conceive something, it's natural to imagine as a full blown business. I can always picture the way things will ultimately be. I pictured my home care agency with 300 employees and three offices. I saw the television ads and the management staff. The problem was, I tried to make that all happen in one year.
It kills me to think of what I missed in the process. More than just the loss of all my free time and the hours I could have spent with my wife and kids. I was so busy building and then dismantling that business that I had to pass on several good business opportunities that came my way. I had been offered a very good opportunity to expand my PT practice. I also had a very interesting internet business idea come my way. Someone else is doing that idea right now. I was just too busy! I had committed every hour of my day, even the hours I did not have. I couldn’t even think about these other ideas. I was not using my creativity or breaking any new ground. I was mired in other people’s problems and hours and hours of meetings and phone time.
It's one thing to commit yourself to something you love and you feel fulfilled by. It's another to be trapped by something you feel like you are wasting your time with. It did not have to be that way. I knew by July that the home care business was not for me. But it took me until November to rid myself of it. I really should have started much smaller and limited my growth at first. Quite possibly, I would have seen the flaws in the business early on and either corrected them or bailed when it was easier to leave. Once you have 37 full time clients and over 50 employees, you can’t just close shop. You have to give everyone notice and you risk having customers not pay you. It can be very difficult to end a business without losing a lot of money.
Here is what I have learned to do: Start small. Any idea I have, I try and think of the smallest possible test business I can create. Then I test it. I see if I like the idea and the commitment it will take.
Right now, I have a new idea to make an exercise video. I have a friend who happens to be a fitness model. She is beautiful and in incredible shape. I think she would be perfect to be the star of my exercise video. I can easily picture the video being a success. We would have an infomercial, print and TV ads, and celebrity endorsement. Soon Costco would be selling our video collection and our invented equipment. But that does not mean the first step is to spend tens of thousands on a professional video company. If I did that I would be committed to tons of money. The pressure would be on from day one. I would have to succeed or drown!
Instead, I am going to find someone to make a lower budget copy of my idea. My friend has agreed to do the video for free for a large cut of the profits. So she has something at stake along with me. That’s very important! I know her pretty well; she is a master at marketing herself. The one factor that will make this idea a success is how well we promote it. I am sure with her fully on board, we can find lots of innovative and even free ways of advertising this idea. At first, we will sell the inexpensive video. If there is a demand, we will certainly re-shoot it. I could easily see us making a whole set of complimentary videos. But for now, we will make one and see how it goes.
These days, there are lots of ways to outsource your work. There are companies that will make any product for you. I know people who have their own vitamin mixes that don’t know a thing about manufacturing drugs. I have a client who sells his own brand of watches, and he has no idea how a watch is made. He went to a Swiss watch maker and contracted them to build his design. I once tried to manufacture my own line of coffee. But I wasn’t going to invest millions in grinding and roasting equipment; I was planning to pay a coffee company to create my own blend with my own label.
Have you ever heard the story of Richard Branson? He founded Virgin Air without ever buying a plane. He convinced Boeing to allow him to lease jets. Buying planes costs hundreds of millions of dollars. He leased them for thousands. Then he tested several routes he thought were needed. His low budget approach allowed him to test his idea without betting his fortune. He was correct. The London to New York route was a huge hit and Virgin Atlantic was born. There is a lesson there.
I think it makes a lot of sense these days to start micro-businesses. These are small versions of larger business ideas. It allows you to test your idea on the public. More importantly, it permits you a way to test drive your concept when it's still an easy thing to leave. You will never know the problems of a business until you are actually running it. If you make a micro-version of the company you want, just multiply all the problems you encounter by 10. That’s will give you an estimate of what it will be like when you run the full version.
There is another benefit to this concept. It allows you to try a lot more ideas in a lot less time. I was able to try only one idea last year. It filled my entire year. I want to try 10 things this year. I am hopeful that one or two of them will succeed. If not, I plan to try 20 things next year. At some point something will stick! I have no choice but to make every idea a small attempt. Otherwise I will never find success. Finding your thing takes a fair bit of luck along with all the hard work. Starting 10 businesses will increase my chances.