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Business Advice: Keep Trying Until Something Works (posted 3/25/14)

While giving a talk to a group of start-up business owners, the question arose, "In your experience of owning businesses and counseling small business owners, what is the one most important thing they need to do?" Without thinking, I blurted out, "Keep trying until something works." My answer was spontaneous but it revealed some deep-seated feelings about start-up businesses and small businesses in general. Small businesses don't just grow; they evolve. Frequently they evolve in directions the owner never expected.

There are two reasons behind this phenomenon. The first is Murphy's Law. Things don't work out as you plan them. People who you thought would turn from prospects into clients, patrons, or customers don't. They talk a good game but they never buy. Perhaps your bank loan doesn't get approved. (Banks are famous for mouthing soothing, non-committal phrases which you mistakenly interpret to mean agreement.) Maybe the location you picked out is no longer available, or the prospective partner you were talking with gets cold feet. Expect the unexpected. As Murphy said, "If anything can go wrong, it will."

The second reason businesses evolve in unexpected directions is because a new opportunity presents itself. You get a chance to buy a bankrupt business for pennies on the dollar. A prospect turns you on to a new market for your product or service. A market you've been ignoring turns out to be just right for you. Here's an example:

When my partner and I first started our plastics business, we thought we had found a hole in the market to fill. We were both mechanical engineers by training and plastics experts by experience. We felt there was a real need for a company that could competently design and build research vessels, laboratory devices, and test equipment from clear plastic.

We had seen a lot of poorly-designed equipment that failed because the shops producing the equipment had no real understanding about the behavior of plastic materials under stress. We pictured ourselves sitting around a conference table in fine leather chairs, smoking cigars, and sipping brandy discussing technical matters with fellow engineers, guiding them in the proper design and application of plastics. HA! The reality was that most of our discussions were in the alley behind our business, making sketches on the back of an envelope, and sipping lukewarm coffee from a paper cup while our prospect smoked a cigarette.

We did get some technical and design business but when Ronald Reagan won the White House in 1980, he cut many of the Jimmy Carter-style federal grants and programs, which funded the type of research that used our products. We were now starving and had to do something different.

We began producing vacuum-formed plastic components for medical and electronic manufacturers. That worked but we had to keep finding new customers. Small, start-up companies would use vacuum-formed pieces for their initial production.

If their product was successful they would then switch to injection-molded components, which had significantly higher tooling costs but had far lower unit costs. If their product was unsuccessful, they'd just go out of business. Either way, we'd lose the customer.

Then we looked at making plastic skylights for residences. We did a market survey; it looked promising. So we spent some money on a prototype tool. Then we went out surveying again; this time with samples of our proposed product. We were ready to take advance orders so we could tool up for full production. In the nine weeks following our initial survey, two new players had jumped into the market and driven down prices by 15 percent. This wrecked havoc with our profit projections. Based on this new development, we chose not to enter the market. Good thing we didn't, too. Both competitors went out of business within two years and dragged three other companies down with them.

We also tried our hand at selling plastic signs, nameplates, and badges through stationery and office products dealers, but it was a market with limited profit potential. Then, we fell backwards into the display market.

A friend of ours at Quality Plastics, a plastic injection-molder, was asked to bid a plastic point-of-purchase display job for the phone company. He passed the bid request on to us. We quoted the job. Two weeks later we got a call from Pacific Northwest Bell saying, "Congratulations. We don't know who you are but you were the low bidder of 21 other bids and you've got the job. Oh, by the way, we're increasing the quantities we need by 50 percent. We need delivery in four weeks." Holy cow! The first thing I did was race back to my office and recheck the quote. I was sure we had made a big math error and were going to lose our shirts on the job. Well, there was no math error and we made a nice profit on our work. We thought we might be on to something here and started chasing more display work.

Our display business grew and grew. It became a nice, profitable business segment for us. Over a period of a few years we junked the skylight tools, got rid of the vacuum-forming machine, sold the sign and badge-making portion of our business and quit making laboratory tanks and vessels. When we sold our company nine years later, about 90 percent of our business was display-related.

While we tried many things, we never bet the farm on any one thing. We held back capital and energy in order to have a reserve so we could try something else in case things didn't work out. You can't keep trying until something works if you run out of money. We were careful. We never jumped into a market until we tested the water with our toes first. We tried to find low-cost ways to test new products and new markets.

Do you think this story is unique? Well, it's not. It happened again, when I started my next business. I decided to start a video production company specializing in making business videos as a training and sales tool. During a sales call, the prospect would explain their ideas and needs. As often as not, I'd suggest using a brochure, a series of printed case studies, a slide presentation, or a direct mail piece. This is not a great way to sell video services - telling customers that they shouldn't buy them! If your business is video production, you certainly shouldn't use this technique! In reality, I had evolved into a marketing consultant. People were paying me for my marketing advice. When I'd be out pitching my marketing expertise, I'd end up working on employee problems, productivity issues, financing requirements, or customer service needs. I had evolved again into a business management consultant. I continued consulting for the next 18 years until I retired.

I've seen accounting firms turn into computer consultants; automobile restorers who closed down their restoration facility and concentrated on remanufacturing electrical parts for old cars; hobby shops that evolved into manufacturers and importers of fine, fully-built models of cars, trains and planes with a nationwide distribution network; restaurants who bolted the front door and focused on their outside catering service; a supplier of automotive original equipment parts who told Ford and GM to take a hike and began producing items for gift shops - at much higher margins.

Baseball legend Babe Ruth struck out 1,330 times, but he kept trying. Abraham Lincoln was defeated six times in his quest for political office before becoming president of the U.S. Thomas Edison tried thousands of filaments before finding one that was satisfactory for use in a light bulb. He kept trying until he found one that worked while learning something from every unsuccessful attempt.

Wal-Mart started as a Ben Franklin five-and-dime franchisee. Banking giant Citicorp began as a private credit union. Phillip Morris started as a retail tobacconist in London. They manufactured their first cigarette seven years later.

Boeing made furniture and speedboats while developing a commercially acceptable plane. Marriott Corporation began as an A&W Root Beer stand. Nordstrom was, at first, just another little shoe store in Seattle.

None of these business transformations took place overnight. All of these companies evolved into something else gradually. They were presented with opportunities and took advantage of them. Or they were given a lemon and chose to make lemonade.

Those who own and operate so-so, ho-hum businesses always scoff at these nimble and successful entrepreneurs and say, "Aaaahh, they were just lucky."

Richard LaMotta, who founded Chipwich, Inc. (maker of ice cream sandwiches made with chocolate chip cookies) in the early '80s, said it best. "There's no such thing as luck or timing. You create it yourself. Preparation meets opportunity - that's what you call luck. Keep your eye out for new opportunities for your business. Be prepared. Luck will follow."

---- More of my business advice can be found here. ----


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