MBA1485 Q&A Wednesday: How do I know if my business will succeed?

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Hey oh. Welcome to the $1 RMBA show business challenges solved every day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online and today's episode is a Q and A Wednesday episode. On our Q and a Wednesday episodes, I answer a question from one of you, one of our listeners. If you have a question you want to ask, just email me over@omarr.net Today's question is from JP and JP asks how do I know if my business will succeed? This is a question many aspiring business owners ask. It's a valid one. You don't want to invest all the time. The money, the effort, the anguish in building a business if it's doomed for failure. Many of us want some sort of reassurance that things are going to be all right. In today's lesson, I'm going to get into this question, a very valid question. We'll talk about success. We'll talk about your chances of it and how much of it is in your control. You might be surprised by the answer. Let's get into it. Let's get down to business. So in today's Q and A Wednesday, JP asks how Do I know if my business will succeed? Believe it or not, the first thing you actually need to answer is, what is success? What does success mean to you? Everybody has to define their own meaning of success. For one person, a successful holiday could be doing nothing for for a week straight, just relaxing, eating, drinking, sleeping. For another person, a successful holiday means seeing all the major sights, staying up all night, doing karaoke with friends, and dancing till their feet get hurt. Another person's definition of a successful holiday could be to hit all the museums, to take as many pictures as possible and pick up the local language. So as you can see, success is not predefined, right? It's not one thing. It could be something different for everybody. So the first thing you need to do is define success. Maybe this is your third business and you've had some successes before and you're looking to have your biggest success yet. And maybe that means It's a $10 million business with 100 employees. Maybe for you, a successful business, something that supplements your income from your career. You enjoy your job, but you would love to have some supplemental cash on hand. So if you made $2,000 a month from this business, it would be a success. So step one, define exactly with specifics what success means, because that's going to determine a lot. So now you know what you're shooting for, what success looks like. We need to find out if you're able to have that success with this business. Now, part of my job as the host of the show is to be honest with you, right? You trust me enough to listen to this podcast every day to improve your business. So I have the responsibility to give it to you like it is. So here are some truths, in no random order, that I learned through my career in business. Number one, there are many external factors, meaning not in your realm of influence, that will influence will determine your success. And the number one external factor is the market you're in. Are you serving a market that actually spends money that is willing to pay for your solution, that has longevity, that is perennial, meaning is something people will always need. For example, if you're in the health and wellness industry, there will always be a need to get healthier, to feel better. That's not changing anytime soon. That's a part of human nature. That's a market that is going to help you succeed, because that's not going to change because of technology or it's not going to change because of trends anytime soon. So there is a factor of what market you're in. There's also the factor of timing. When are you getting into the market? When is your product actually being presented to customers? Sometimes people are too early with the concept of their business and people just don't get it. A lot of people don't know that it took Uber a very long time to get some traction and they were just very, very exclusive to some cities and they were very expensive. They only had Uber black because people still hadn't adopted the idea of just getting into a car of a private citizen that is not a taxi driver that doesn't have one of those taxi driver licenses. They weren't way early, but they did have to suffer a little bit at the start. Sometimes you're too late, there's too much competition or the market is already saturated. So timing is a factor. So as you can see, there can be many external factors that are a little bit beyond the scope of your influence. Now that doesn't mean you can't test the waters. You really have to validate your business ideas before you start them. This allows you to know if the market's in your favor, if you're too early or too late or just right, or if people actually want what you're selling. Idea validation is something that we always talk about the Hundred Dollar mba and it can be done very quickly, very easily and it's not going to take you so much time or you're not going to spend a whole lot of money. I remember when I had to validate some ideas for my first businesses. I literally would go to local businesses, business owners who would be my typical clients. I'm talking about like a yoga studio. I would go into a leather bag shop. This is New York City at the time. I would go to a pizzeria and I would actually ask them if they would be interested in a service that I was providing, which is web services, creating their websites. I would find out their willingness to pay, how much they are willing to pay, and their immediate reactions to what I'm trying to offer them. Are they repulsed by it or are they excited about it? If you're curious about this whole procedure about validating your business idea, we have an absolutely free course at the Hundred Dollar mba. This is not some sort of self promotion. This actually will help you validate your business idea. It's totally free. Just give your name and email address to get access. There's videos, there's workbooks, and there's a step by step guide to showing you how to validate your business ideas. Just go to 100 MBA net and you'll see a link for it right in the navigation called free course. So you want to go through this procedure to find out if there's actually a willingness to pay if you actually want to buy what you're selling and then you want to test it out in a real sale. You want to actually find clients that are happy to give you money, actually give you money in exchange for the service. You don't have to launch and go gangbusters from day one. A lot of people think when they start a business, they think of like big box corporations like Walmart or big corporations like Apple. No, you could start very small, very local, with a few clients, with a few customers. As long as you validate, you have a profitable model, that you're actually making more than you're spending. And quick tip. Never assume things will get better in the future. A lot of people, they say, well I'm not profitable now, but at scale I will no be profitable from day one. Make sure that the business you're building today, tomorrow, the next day is always profitable. Otherwise it's a quick way to go out of business. Now once you've done that, you're going to have a good idea of the profitability of this business. How willing are people going to say yes to this product or service and how likely are you going to have enough customers to hit your success goal? So if your success goal is $2,000 a month and your product is $1,000 a month, then you just need two clients a month. And if you two clients, you've already become successful. Now if your product is $10 one time fee and you're trying to get $2,000 a month, you're going to need 200 customers every single month, 200 new customers every single month. So you could see how your business model, your pricing and all that will factor in to if you're going to hit the success milestone, if you're going to be successful. So you might have to change your business model or what you charge or how you charge. And in the early days of your business you're validating. When you're making some early transactions with some early clients and customers, this is the time to do it. Experiment, try different things, find out what's going to hit the mark. Now the best thing about this whole procedure is that a lot of the feelings that make you ask the question is my business going to be successful? Is really fear based feelings or you're fearful you're going to fail and you don't want to fail. And that's natural. But as you start doing these things to validate your business idea, to actually see if you need to make some changes, you make some changes, you adapt, that fear starts to quell, that fear starts to dissipate because you start to realize, okay, I'm getting some answers now. I'm starting to see how it can be successful. And you're going to start feeling better about your business now if, when you go through this process, you realize this business is a dud, this idea is just not going to work. People don't want what I have or they don't want it enough for me to have a sustainable business. Before you toss it all away, see if you can change aspects of the product, the offering, the business, the pricing, the model that can lend itself to be successful. Let me give you an example. One of my first businesses, I used to create WordPress websites for my clients. And in the beginning I would create their websites. I would be commissioned and I would give them my fee and it was a one time fee. And I would create their website, hand it over to them, give them a quick, you know, tutorial on how to manage it and things like that and how to make some edits and how to make some changes. And then I would give it up to them and say, okay, thanks so much. I'd take the money and you know, I'd probably never see them again. And what would happen is that I would have to chase a new client month after month to try to make, you know, steady income. What I realized is this is actually not a good model because I'm not really holding on to the customers that I work so hard to gain. So I tweaked it to make the business more successful. What I did is instead of, you know, charging a lot more for the development of the website, say for example, I charged $10,000 to create their website. I charge maybe 5,000 or 4,000, but then I charged a monthly fee and that monthly fee could be like 499. And basically it's a retainer for me to host their website so that I would host them on my servers so I can make sure I have all the access and all that kind of stuff. And they don't have to worry about paying for hosting. So right there they're saving money. Number two, they can send me a message or email me if they want to make some changes or if they have some problems or they need to make an update. I would allot an X amount of hours that is included every single month for me to basically be their Website manager. We'll talk more about that in a later episode. So Instead of making one shot, $10,000, I was able to make, you know, $5,000 one shot, but then $500 every single month. So even if my client hung on for one year, I would make more money in total because that's $6,000 for the retainer for the year. So plus the $5,000 for the initial design of the website. But you could probably guess, hey, they're not going to just shut down their website. You know, their website is the backbone of their business. So I was able to keep my clients year after year paying $500 a month because I was maintaining their site. I was making all the updates, all the security patches and I became a service, sort of like a SaaS business versus, you know, in the client base business. And I didn't have to have that many clients every single month to be successful. I hit my goal faster. So I hope that example helps. I've tweaked the business idea or the business model of an idea to make it successful.

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To wrap up today's Q and A, Wednesday's episode, and today's question from JP how do I know my business will be successful? Well, the honest truth is on the onset, from the moment you have the idea, you just simply don't know. You need to find out. And if you go through the steps I mentioned today, you're going to get a good idea of if it's going to be successful or what you need to do to be successful, or if it's a dud and it's time to pivot and change and try something else. It's a good question to ask because it means you're not too cocky and overconfident to think that anything that comes in your mind or any ideas you have are going to be brilliant and successful. No, you realize that there are other factors in the world that will dictate that success that you need to kind of test the waters and see if it is going to be good for the market, good for the customer to have the right amount of customers to make this successful. All that. Thank you so much for listening to the $100 NBA show. If you have a question you want to ask, go ahead and email me over@omar00mba.net. I'll make sure I answer it right here on the podcast on Q and A Wednesday. And if you're listening right now on your phone or any device, hit subscribe on whatever app you're using to listen to podcasts. By hitting subscribe, you automatically get access to over 1400 business lessons our archives. It's the only way to get access to the archives and have a plethora of material to help your business. It's absolutely free to subscribe. You just hit that subscribe button on whatever you use. Whether it's Spotify or Apple podcasts or Stitcher Radio or Overcast or Himalaya, we're on them all. Before I go, I want to leave you with this no business idea will be without challenges. You will have challenges. So don't mistake challenges as a roadblock or a kind of a sign that says no, don't do this business. If these are challenges that you can perceive that you can overcome with some relative, you know, work and ease without killing yourself, or it's not nearly impossible, then that's okay. You're going to have a challenge. And that's kind of a rite of passage. You know, a lot of people don't start businesses because of that challenge, and you will get over that challenge and you'll be successful. Any business in history had challenges, whether it's technological challenges, economies, talent, whatever it is. So be honest with your ability to overcome that challenge if you're facing it at the start. Thank you so much for listening to the $100 NBA show. I'll check you in tomorrow's episode. I'll see you then take.

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