Entrepreneurship is not always about passion!
Enter great margins and a clear advantage
We have all seen ‘em—posters on how to be an entrepreneur or how to start a business, with sayings like:
“There are many things in life that will capture your eye, but very few that will capture your heart. These are the ones to pursue; these are the ones worth keeping.”
I call it b.s.
This blog post has been stewing in the back of my mind for some time now. I came across a TED video the other day by Mike Rowe of the Dirty Jobs TV show. In this video, he very eloquently discussed how many incredibly successful entrepreneurs he has come across are, by every measure, incredibly happy and successful and did nothing but “followed their passion.”
This led me to think back over the past 20 years of my experience as an entrepreneur, and I realized that more important than following my “passion” was tapping into and being clear about why I wanted to be an entrepreneur.
I knew I wanted to be an entrepreneur starting at age 19. Why? Because:
- I wanted to be my own boss
- I wanted to not struggle with money
As I grew older, I learned that:
- I wanted to have the freedom to be active in my boys’ lives
- I wanted to be able to travel with my wife
- I wanted to not struggle with money and be able to save for our future
My belief is that being crystal clear on your why and being open minded to opportunities around you is much more important than following your “passion.” It’s really about great margins and a clear advantage.
As a side note, I want to state that following your passion is meaningful and important, but not solid business advice for a budding entrepreneur.
Here’s why: I love teaching, interacting with, leading kids and young people. I am passionate about it. I had a great time in Cub Scouts with my son, Skyler, as he’s grown up. That is a passion of mine, and I suppose some could say that is where I should invest my time and energies, but I never saw an opportunity to help get me closer to my “why” (what I want in life and why I chose to be an entrepreneur). Passion? Yes. But, passion alone is not good enough for successful entrepreneurship!
Over the past 20 years, I have started four companies, from scratch, that had nothing to do with my “passion.”
Business 1 – Security Solutions (97-2000)
We sold and installed security systems and then sold the contract to the monitoring company. We did $1,000,000.00 in sales in 1998 and employed 32 people full time.
How did I get into this business?
While I was employed at MCI Communications, I worked with a sales manager who was ambitious, arrogant, treated his people poorly, and only cared about results. He left MCI and got into home security and grew a successful business in less than a year. That was enough for me to do some simple research. What are the margins like (fabulous back then)? Would I have a competitive advantage? That was enough for me. It had nothing to do with my ‘passion.’ It had to do with helping me accomplish my why.
Why did I get out of this business?
I burned out. Literally. The margins were great, and I had some great success, but when we sold our customers to the monitoring station, we were under contract to never contact them again. This meant we constantly had to generate sales without working with our customer base. No referrals. No follow up with the customers we worked so hard to bring on board. I wasn’t building a business I could be proud of.
Business 2 – Sky Vending (2000-2013)
While running my security company, it wasn’t uncommon for people who worked for me to walk three doors down to the fast food place and get a soda. It didn’t take long before the office manager suggested getting a pop machine—which we did from a local vendor. Nice guy, but he did a terrible job servicing our account. I mean terrible. We would call him for two weeks before he would finally show up. When he did finally show up, he would bring in a couple dozen cases of pop. I could do the math and could see how much time this took. So I asked him one day, “Hey, why don’t you sell me that machine?” He said, “No, I don’t do that.” To which I replied, “Then take it out.” He came back with “$400 bucks.” I paid him $400 bucks, and that’s how I got into the vending business.
Great margins and a clear advantage (better service).
Over the next six months, I bought 8-10 more pop machines and some snack machines from this same guy (he remains a friend of mine to this day), and I got out of security all together. Eventually, I sold that business and got into what is called “bulk vending.” Bulk vending offers even better margins; it’s not back breaking or heavy, and it allowed much more time between stops. Bulk vending is basically the machines that you see in grocery stores—the ones kids put a quarter in and turn the handle.
Business 3 – Big Sky Party Rentals (2008-2013)
This one came about while I was involved with Boy Scouts. I was the program chair for a huge event called Encampment that takes place every five years. One of the attractions at this huge event was a number of inflatables, an obstacle course, a big slide, and a couple other pieces from a company here in Wichita. I wasn’t impressed that they demanded full payment and the way they handled the subject of payment before they would even schedule the event. I wasn’t thrilled with the price—which was thousands of dollars—and, for that outrageous price, we had to provide all the labor! They sent one little guy in a box truck. He gave us instructions, and we had to provide 8-10 able-bodied men to help set up and tear down. It was a phenomenal event with more than 5,000 youth and adults at the State Fairgrounds for two days—pro BMX riders, fireworks, National Guard.
When it was all said and done, the one guy they sent was extremely rude because I didn’t have the 8-10 guys ready and waiting, and told me if I didn’t produce them in short order, we were going to be charged an additional fee (that was also outrageous). I told him I would do my best, but in the meantime, I wanted to speak to the guy who had sold me on using them. He said no problem, dialed the number, and handed me the phone. It wasn’t my sales guy; it was the owner of the company. I literally couldn’t have been more shocked when the owner of that business yelled and threatened me. Needless to say, we got the equipment loaded up and avoided that additional charge.
I did a little research and found out the market was dominated by the company I had dealt with and one other company that had such a horrible reputation for poor service and safety, he had been in the news, in the paper and had been sued a number of times.
Once again—great margins and a clear advantage (I would never treat a customer that way—ever).
I started Big Sky Party Rentals just a few weeks later with a business partner, and we did almost a million dollars in sales over the next 3 years.
Business 4 – Saw Web Marketing (2011-present)
Same story, different day. Starting Saw was me seizing on opportunity. It was 2007, and Big Sky became the exclusive provider for Riverfest, the Wingnuts, Thunder Hockey, the McConnell Air Show, Wichita Play Day, and Night with Santa—just to name a few. I was honored to be named a recipient of the 40 under 40 Award by the Wichita Business Journal.
It was then I realized the majority of our phone calls came from the Internet instead of the Yellow Pages. Yet, we were ranking toward the bottom of the search results on Google. I was determined to change this.
I began studying Internet marketing. After reading and researching and asking a thousand questions, the Big Sky website made it to number one on Google. We listed #1 for 83 keywords and in the top three for an additional 41. Next, I began helping friends with their sites. In late 2011, I started Saw Web Marketing. Saw Web Marketing is a full-service Internet marketing firm, able to handle every aspect of website design, development, hosting, content creation and promotion, SEO, and social media. Opportunity seized.
Great margins and a clear advantage
I see ‘em all the time. Businesses that make no sense. For instance, an Italian restaurant just opened near my house. Only two months ago, this was a Mexican restaurant. The Mexican restaurant was only there for six months. The building housed a different Italian place for a year before that. I worry that this business was started by somebody “following their passion.” My fear is this tremendous commitment and investment came from a well-meaning entrepreneur who has always wanted to own their own restaurant, who loves to cook, and who I am sure makes an incredible manicotti.
But, they entered an industry that’s incredibly difficult to succeed in, not so great margins, in a poor location, with no clear competitive advantage.
Just like the entrepreneurs in the video with Mike Rowe, I don’t think the answer lies in following your passion for you to be an entrepreneur and succeed at entrepreneurship.
It’s hard starting a business—damn hard. If you are going to push through the challenges that come with entrepreneurship, you must be very clear on why you are doing what you are doing. And, it doesn’t hurt to have great margins and a clear advantage.
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Thanks and have an awesome day!
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