What is important in business (and other endeavors)

Pardon this interruption from music, but here are some thoughts for those of you that want to build something (such as a business, a church, a studio of students, a professional performance career or similar endeavors).

In the last ten years, the shift in the way most business is done has been dramatic.  I cannot say that enough.  We are still in the middle of that shift, and I do not know how things will end up, but I want to give a few thoughts on what I have learned from ten years in the trenches (primarily internet retail as CEO of Vitabase).

So, here are some points that you must understand.

1) Whatever your niche is, it is crowded. 

I noticed the other day that we have yet another gas station going up in the little town near me.  Never mind that the town already has twice the number of gas stations it needs to service the community.  The reality is that we have way more than enough gas stations, drug stores, grocery stores, building contractors, landscapers, churches, piano teachers, health supplement stores, and for that matter, Christian pianists who are recording CDs and doing concerts.

I estimated a few years ago that Vitabase has at least 10,000 competitors online.  It is probably even more than that today.

If you are in an uncrowded niche, you are in a niche where there are no customers.  It is simple as that.  Yes, you could start a business that specialized selling green marbles.  You would be all alone in that niche, but you would not have customers either.

Competition is overwhelming, but there is a light at the end of the tunnel.  Keep reading.

2) Your biggest challenge is in finding a way to be truly unique.

If you think that you can be just another store selling the same things as your competitors, you have only two possibilities: either you will struggle along fighting for a small share of the pie or you will fail.  Neither should be appealing to you.  If you have to work overly hard for meager results, you should probably be doing something else.

The only way to compete in a crowded market is by differentiation.  Differentiation means you have to have something unique and it has to be something that people want.  Many people and companies operate under the delusion that differentiation can be as simple as things like better quality and better service.  That is highly unlikely unless your quality and service is extraordinarily better than the competition (a very difficult task).

The other problem with coming up with a differentiation strategy is that it can often be easily copied.  The easier it is to copy you, the less advantage you will have.

3) It is almost always necessary to sacrifice the immediate for the long term.

Building things requires an investment.  Often, that investment is done by giving up today’s meager profit for tomorrow’s larger profit.

That does not mean you should give up something for nothing.  When you pass on today’s profitability, you need to understand how it will benefit you in the long run.  This is easier said than done.  For example, many companies decide to low ball their competitors (cut prices) to build a customer base.  That rarely works (Wal-Mart and Amazon aside).  The customer base is loyal only to discounts and leaves as soon as prices go up.

But on the other hand, there are probably things you can do that will clearly help in the long run.  Sometimes, you can eliminate barriers to gaining the first time customer.  Or you can do strategic relationships (joint ventures) in which you give up initial profits for a chance at a bigger customer base.

4) In the end of the day, your brand is your most important asset.

If you are in the business of selling things and you have competitors, you have virtually no chance of success without a strong brand.  You do not have to spend fortunes to brand yourself like you see McDonalds and Coke doing.  But you need a strategy where you have a brand.  Your brand is not just your name (though that is important) but it is what you are known for.  For example, you cannot be just a piano teacher.  You have to be a piano teacher that is known for ……. (fill in the blank).

Before you start a business or other endeavor that is more and less like many others that your customers will have to choose from, consider these things and come up with a plan that accounts for these challenges.  If you do, you can be highly successful.  If you don’t, you can still be successful, but the odds are greatly against you.

In my years of internet retail, I have learned things (through the school of hard knocks) that has really helped me now that I am more than just dabbling in music.  If you keep up with my music, you can probably see how I implement these concepts into my strategies on this site.  My free download offer of Portraits of Hope is a good example.  I gave up short term profits (CD sales) for the chance to broaden my exposure and build my brand.

I am anxious to hear your contributions to this discussion.  What advice would you have for people that are trying to build something like an organization or business?