Author Topic: 9 Reminders When Starting a Business in a New Field  (Read 1164 times)

Smokystache

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9 Reminders When Starting a Business in a New Field
« on: July 20, 2023, 08:33:22 AM »
I was messaging with an MMM member and thought that my individual response might be helpful to this board. For context, Iím a former college professor that gave up tenure and stability to reach out on my own. My field is psychology, but I donít do anything related to counseling or client services. In fact, most of my services would fall under tech-related marketing and lead generation.

When people hear that I left a W-2 job, sometimes they ask about how I started Ė including how did I decide what services I was going to offer and how did I find customers. So here is an incomplete, off-the-cuff list of the lessons Iíve learned (and re-learned) along my journey. This is probably most relevant for starting a single-person service-related business selling to other small and medium-sized businesses.

9 Things to Remember When Breaking Into a New Field & Starting a New Business

1) Pick an expensive problem Ė this makes it easier to create a healthy profit margin. Also, look for problems they are already talking about. Solving problems they are already aware of is much easier than convincing them they have a problem.

2) Ideally pick something that is pretty directly related to them making money/will directly increase their profits. These are easier to sell than ancillary or vague "improved customer experience" types of services.

3) Ideally pick something that reduces your effort as you scale. Letís say providing a small service takes 15 minutes a day. But to solve the same problem in Alabama and the same thing in Idaho may only take 15+1= 16 minutes. Or if you can generate software or a process to solve a problem across multiple businesses then you can reap the benefits of efficiencies of scale.

4) There are advantages to picking a topic that is so new or something that no one else understands. Then they have no idea how much effort it actually takes and you can charge based on value, not on them trying to guess how many hours you are working and multiplying that by what they think a reasonable hourly rate is. You will also have fewer competitors.

But don't underestimate the ability to take something off their plate that isn't overly complicated, but it is just a hassle to them and they have better things to spend their time on. In these cases, you must have tools that make it much easier/faster to do it and/or benefits of scaling and/or reusing something. I make a lot of money doing a task that they could certainly do themselves -- they just view it as a pain and something that gets lost in the shuffle of their more immediate work.

A third place to target is exactly what Iíve done. Perhaps there is a business in your field that offers a new solution, but they price and target the top 15-20% of the market. But they are doing well. They have validated that there is a need for the service and they have educated the market about the benefits of their solution. You can reformulate the service so that it is not quite as ďdeluxeĒ but is available at a price for the mid-range of the market. They will say that their service is superior, but you will likely find customers who want 70% of the service at 50% of the price. For example, perhaps you live in a popular retreat/vacation area. One business offers a service to pre-stock your fridge with high end groceries, high-end booze, ingredients for Símores, bouquets of flowers, candles, and they will light the candles 15 minutes before you arrive. Their cheapest option is $1200. Lots of people would love to have a pre-stocked fridge on vacation and would be thrilled with a couple of steaks, couple cases of beer, a list of potential snacks, etc. for $500 and you only promise that it will be there before they arrive. Create the second option and make sure it is at a price and process in which you have a great profit.

5) As quickly as possible, narrow, narrow, and narrow some more. Jonathan Stark has a great metaphor for niching and being highly targeted in your services and potential customers. Often we want to be able to serve the widest number of potential clients - especially at the beginning, we'll take about anything. In this way we want to be able to have access to the entire "ocean" of possibilities. But imagine trying to take a net and catch fish in the ocean --- where do you start? Yes, you have billions of potential customers, but they're spread all over. Instead, niching can be viewed as standing next to a barrel of water with 20 fish. Now you're limited on how many you can catch, but you have a much, much easier job of finding where they are and how to catch them. And you'll learn a lot as you catch a few of those fish. If you still need more customers, you can expand your reach to a few more barrels or a small swimming pool. Now youíll have more experience on what bait works and if this process is worth it. The potential of "if I just get .5% of all the fish in the sea" can seem mathematically superior. But practically speaking, we'd rather be shooting fish in a barrel.

6) By niching, you know who your customer is and, therefore, it is pretty easy to discover where they hang out. If relevant in your field, pay to attend a convention, spend all of your time walking around and talking with people about some of the biggest problems over the last 5 years. What booths are getting a lot attention/traffic. Ask the old-timers about the service/product that was most eye-catching/interesting to them. Ask the younger people what they are doing that the old-timers laugh at. Try to find journals/newsletters in that field. Read back through old issues. What are the problems that keep coming up in article after article? Read online blogs, message boards, follow key people on LinkedIn in that field, etc.

7) In can be a huge advantage to be an outsider coming into a niche. Perhaps you're looking at making something within auto body repair more efficient and they don't seem to be fully aware of all the technologies that can make billing, appointment setting, or inventory more efficient and cheaper. Or the pediatrician's office isn't aware (or doesn't have the time/expertise) for a social media strategy. Something that is a very common (even "old" strategy or tool) in one field may be the newest invention in another. But as an outsider, you will need to learn enough jargon and insider stuff to come across as someone who truly understands the field. Everyone thinks their field is different and it hurts trust to not acknowledge that.

8) Once you have an idea or two, follow the lean startup mindset. Don't worry about a business name, logo, etc. Don't even create a website. Help someone for free or a greatly reduced fee. Get experience doing it and see if it works. Ask the client if the result was helpful. Get a review and ask for referrals. Refine your process and put a value-based price on it (pricing based on how much it is worth to the client, not based on how much it costs you to create the solution).

9) If you are getting zero excitement about your service/offer, be quick to change. If you feel like youíre continually trying to justify the service to potential customers, then it isnít a great fit. It might be the wrong field or youíve overestimated the value to the customer. It doesnít really matter. Move on to the next idea. Iíve had about 3 good ideas that create 95% of my revenue and Iíve abandoned at least 7 ideas along the way.


I can only wish that Iíd followed my own advice more. Feel free to critique or clarify my ideas and add your own.

scantee

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Re: 9 Reminders When Starting a Business in a New Field
« Reply #1 on: July 20, 2023, 09:01:46 AM »
As someone who would like to transition to consulting, this is very helpful. Did you start your business while you were still working your W-2? What was that transition like? That has been a big hurdle for me because it is a challenge to carve out the time to consult and do a full-time job.

Smokystache

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Re: 9 Reminders When Starting a Business in a New Field
« Reply #2 on: July 20, 2023, 06:47:27 PM »
As someone who would like to transition to consulting, this is very helpful. Did you start your business while you were still working your W-2? What was that transition like? That has been a big hurdle for me because it is a challenge to carve out the time to consult and do a full-time job.

I was a college professor - so that had its advantages. I was able to shift my research and speaking from purely academic topics to activities that would help me gain name recognition within a specific field. My time was also somewhat flexible in that no one is looking over my should or asking me to fill out a time sheet. I was fortunate that a business partner/friend offered me a half-time position that offered some income stability while building the business.

I should probably note that I'm not a consultant that has made a living sharing ideas or strategy. I've leaned toward creating something ...  printed items and digital resources to sell, a digital media service. I've also had one long-term relationship where I created a set of educational materials and then weekly emails on their behalf. But it was always something that felt pretty tangible - at least to me.

Rightflyer

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Re: 9 Reminders When Starting a Business in a New Field
« Reply #3 on: November 30, 2023, 11:42:39 AM »
Smokeystache... this is gold.

Great (and actionable) insights.

If I could upvote it I would!

Smokystache

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Re: 9 Reminders When Starting a Business in a New Field
« Reply #4 on: December 01, 2023, 05:55:32 AM »
Smokeystache... this is gold.

Great (and actionable) insights.

If I could upvote it I would!

Ah shucks, Thanks!

 

Wow, a phone plan for fifteen bucks!