Lesson learned by JDS in the
Start-up of a Business Idea
When I started the business, I wanted an edge over anyone who would come into the new niche market.
I worked out that I could buy a test machine and certify each hose assembly. Only one problem that every business really has……….. Who is going to pay for the machine?
I knew then and it I know now that the Customer Always Pays… simple as that!
Am I a good enough Sales Person to get the customer to pay?
Over the years, I have had loads of people tell me that I don’t know how to sale. Funny thing is that I don’t try to sell. I have always believed that the customer buys. If you as a Sales Person add Value, the customer will buy.
Poor Sales People can usually be found selling products nobody wants or have no Value.
Great sales people do not sell. They know their Customers and they know their Products and Add Value so the Customers will buy and then Repeat Buy. Now you have a business.
Back to the problem…. the test bench was $ 5 000.00. I dodn’t have the money to pay for the test Bench.
Even worse…. I don’t have product to sell to pay for the test bench. Sleepless nights. Providence appears (hand of god) again for the commitment to the task.
I work out how I can get the high pressure hose on 60 day terms from the end of the month (=in effect, 90 days to pay) at a 50% discount on retail. In other words, buy for 50 cents, sell for a dollar.
That was step one. Next step…. test bench and…… The why?
This may be hard for readers to believe ….. I got the test bench for $ 5 000.00 and 160 day terms. It seems nobody in Australia wanted to buy test benches for testing hoses. Even better is that 26 years later, the test bench still does its job after 10’s of thousands of tests. Maybe over 100 thousand tests. We have 4 or 5 test benches today.
It has always been my reality that you don’t need money to make money!
Now to the real art of business pricing…. how do I price my products and service to pay my bills, feed my family and make a profit on each and every transaction?
In the early days of my business, it was always low volume, high costs. In this case, my pricing had to have high margin to survive. I kid you not …… I had a very simple pricing policy.
Market retail price x 1.2. In other words, if the market was used to paying $1.00, I would sell the product for a $1.20. Even better, I added service to the product by adding hose testing for $40.00 per hose test.
Here was my reasoning….. the market was used to paying $1.00. If I take all the risk out of using the Ultra-High-Pressure hose, the customer will see the value and pay me the prices charged.
I have always known that Value is Perception… I created the perception of danger in using the Ultra-High-Pressure and I sold assurance of safety by testing all hoses and equipment as an industry standard. The important lesson here is that it is a dangerous industry. People do lose their lives and limbs. Even though I create perception, danger already had to be there for people to understand the perception.
My niche market lasted 1 ½ years. My success was my undoing. Believe it or not, people started buying the test benches and testing hoses for free. Yes, the stupid marketer hit the market. “Don’t worry…. you can lose money per sale and make it up on volume”.
The companies I was buying the hose from decided they could sell cheaper than my company and make more money. After all, they were giving great terms and a big discount. They started undercutting the market. I refused to shift on price of testing or the sell price of the hose.
Again, I was lucky. The market was growing so I did lose a few customers to the bigger dealers.
Not for long
They were just sales and marketing people. Not Value Adders….. They were supply and demand sales people, they were selling a commodity. I was and always do sell Value. I can tell you for sure that companies will pay more for Value because in the long run, it is less expensive and more Cost Sustainable.
I took the time to read a book on marketing and got the concept that if the market thinks you are an Authority, they will believe you know more than anyone and you must add more Value because
After All, you are an authority.
I understood Standards and Quality, so I set about encouraging companies to have an Australia-wide Safety Standard for High Pressure Fluid Conveying.
I convinced the Australian market to create a safety standard for the new industry. I sat on that Standards Australia committee for High Pressure Fluid Conveying; and I was also a founding member of High Pressure Water Blasting Association. All because I wanted to make Repeat Sales, Add Value by being the Best at what I do and I care that people are safe. I must say that this does not mean I am the Best. It means that I’m always striving to be the best. Some days, I’m not that good. In fact, some days, I’m just plain UGLY.
UGLY is where most change happens….Good or Bad are Status Quo….Great is a fleeting moment in time that Humans can feel or apprehend and perhaps have knowledge of…… Wisdom is when you can comprehend your greatness…………. And give it to the next generation.
Lazy-ness: is Knowing and not giving your gift of the Knowing
Whilst building my company….Lessons I have learned are:
1. If I don’t want to be the best, don’t start
2. Early Business start-ups are bloody hard work and a lot of advice given is usually given by people who have not done it. (I can smell bullshit at 2 miles moving out to 3 miles).
3. If you don’t have a level of difference (niche), why would the market want to change towards your business?
4. If you don’t believe, neither will they
5. Business is about Customers, Products, Value and Profit. If any of these are missing, you will find business a thankless game.
6. Systems/Processes are really the Wealth Creators of a Business. Far more important than 1 sale is the longevity of a Business.
7. Sales are vital on a daily basis. No Sale = No Business to create wealth from.
8. Business would be easy if you didn’t Need Customers. In Business, Customers are a need. They are the oxygen of every business. Sales are the Blood Flow. The paradox is this…. biggest pain in the ass is in a business are your Customers. But without a customer, you do not have a Business.
No Customer = No Business.
Okay….. 26 years later. What are the results from a mistake made and niche created?
§ Being a part of a new billion $ industry and creating Value-Added Thinking
- Being part of a new industry standard
- Writing the procedures for Standards Australia for the industry
- Writing a 3 manual trade’s accredited program for the Fluid conveying industry.
- Building a successful franchise using the marketplace as my teacher
- Working with thousands of Humans and getting a lesson from every human that I have been involved with
- Creating a Brand that works and makes a profit
I have worked with small business owners with turnover of $20,000 a year to Corporations turning over multi-billions of dollars a year.
It doesn’t matter if it is $1.00 or $1,000,000,000.00. Business today is a Science and there are Principles that must be followed. Far too often, Humans are sucker-punched about what it takes to build a Business and be an Entrepreneur.
I believe I’m a world class Entrepreneur and I know the difference between Entrepreneur and business ownership.
For the record: in 26 years of being an Entrepreneur (Risk-Taker), I provide the following Stats:
- Happily Married for 19 years
- Great Children
- Fabulous Grand Daughter
Oh, and…..
- I have been in the same business for 26 years of Struggle and foolishness to Create a Brand
- Over $300,000,000.00 in sales over the time…Not bad for someone who does not know how to sell
- Best news is that I didn’t have to make all the sales…in fact, most sales were made By other people. I created the Space Systems/Processes for the sales to be made.
- I have worked and done business in 23 countries around the world
- I have met and worked with genius all over the world
- Money does not drive me…. It is the wonder of learning and being with humans whilst we share the struggles of everyday living in the Human Biosphere that drives me
I have been offered lots of jobs and loads of money to do the job. I’m always told, “You don’t have to take a risk of using your own money”…….. “Let us pay you. There is no need to take a risk. Let us take all the risk”.
To an Entrepreneur, risk is our oxygen and problem-solving is our love….. Loads of Money and Jobs have little meaning in my Work…The ability to make a small difference in another Human’s life is far more important to “-ME+”.
I understand that to do that, I have to fund my work that I do.
I also understand that by being a disciplined Business person, knowing that to make a difference,
I must add Value and always measure Value against Empathic-Profits made.
Stay Tuned next week…. the Struggledork will start to build the Mythical world of
EDUCTO-SPIRIT-VERITAS Corporation…. ESVC
JDS OUT!_!
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