I was an economics major in college and took a lot of business courses too. One was a class in entrepreneurship. The professor asked how much each of our new ventures would generate in its second year. Even though it was the go-go 80's, no one said more than $500,000. The professor asked why we would even want to start the business if it could not do more than $1,000,000 in the second year. We thought he was crazy. He told us that starting a business is HARD. You won't have a life, you will risk everything and you will experience the extreme of every human emotion possible. And, in the end, 80% of us would fail. So why do it unless you can earn a proper return for all of your incredible efforts?
What I took away from my professor's lesson is that, if your business is not scalable and leveragable, it is not a business it is a vocation. Nothing wrong with a vocation — many people make great livings with a vocation and are happy as clams — most doctors, dentists and lawyers to name a few. But if what you are trying to do is create a business with a brand identity that does not need you to operate (and makes money while you sleep), then your focus should be on scale and leverage.
Scale is the potential size of your business: The realistic size of the market for your goods and/or services, how much of the market you can own, the level of existing competition and what barriers to entry exist. For most of you, your core businesses are not scalable: they are intensely person, heavily dependent on your local market and very competitive.
Leverage is your business' ability to operate without your direct supervision. For most of you, this is not a possibility. Leverage is also about your brand's ability to extend itself into other related arenas using the strength of its core to gain legitimacy in the new market.
So how to find scale and leverage when your core business isn't? Think about what you know and what clients other than your core market might value your knowledge. For instance, an event planner, event designer, floral designer, lighting designer consulting with new/unexpected venues in their area to help them improve their space to make it more "event friendly". An interior designer starting an online retail shop. A Cake Maker starting a series of master classes and/or selling how-to kits online as shower gifts. A photographer doing a session for brides and grooms on taking great honeymoon shots. You get the idea.
Let your art be about the art. Just let the business be all that stems from the art, not the art itself.
{ 3 comments }
It is amazing how clarifying a post like this can be. I’m taking action on this now.
Great post once again, it helps to keep me on the right track for my companies vision!
I really enjoy your blog. Liene Stevens from The Smart Planner came to talk to us in Chicago and she mentioned your blog. This post was a great reminder of creating a job for myself vs. creating a business.