Once you're ready to launch, how can you make sure you start out on the right foot? In this excerpt from How to Really Start Your Own Business, experienced entrepreneurs say to stay simple and contain your costs.
- Keep the business simple. There's an inclination among start-up entrepreneurs to produce more products and provide more services than they should. This inclination stems from two factors: a desire to act on the suggestions entrepreneurs receive from prospective or actual customers along with their own boundless enthusiasm.
The problem with quickly trying to come up with a wide variety of products and services is that you run the risk of diluting your company's overall effectiveness. Rather than doing one or two things really well, you may wind up doing five or six things reasonably well -- if you're lucky. More likely, some of your products or services will be of poor quality or poorly timed.
Frank Carney, founder of Pizza Hut, explains the challenge as follows: "Keeping things simple when you first start enables you to do a higher-quality job, and it is really necessary that those very first customers get the highest quality that you can produce. What makes a business work in the beginning is word of mouth more than anything else. If you don't do a high-quality job, you don't have positive word of mouth. ... In our case, we had two sizes of pizza and one basic kind, which was thin pizza, a limited number of drinks, and almost anything that went with the pizza. So we really could concentrate on the way we were going to make pizza -- right every time, or as close to right as we could get. And to me that is simple, if you compare it to what a Pizza Hut is today. They have thin pizza, they have pan pizza, they have sandwiches, they have spaghetti. Those are just some examples of how you can take something simple and make it pretty complex. ... The lesson there is to keep it as simple as you can when you first start and emphasize the product as the main thing you are selling."
David Liederman, founder of David's Cookies, a chain of chocolate-chip cookie stores, offers similar advice. "You have to be pragmatic," he says. "We started with six cookies and were up to 22 by 1986. ... We've done what McDonald's has done. They started with the hamburger, french fries, milk shake, and soda. Years later, they were up to something like 63 products."
So start simple and, if you're successful with a few products or services, then add additional ones.
- Keep a lid on overhead. It is just as you are preparing to open your business that all kinds of potential new expenses appear. You realize you'll want more space than is afforded by your office at home, and you begin to explore renting an office. Or you decide you really must have a second telephone line. Or you come across what seems like a great deal to purchase a piece of equipment you were planning to rent. Suddenly, your budget of projected expenses is thrown out of whack. I strongly suggest you resist as many of the expense temptations as possible, at least until you have a clear sense of where the business is headed. If business isn't as strong as you had hoped, each dollar you save at the beginning will be available to keep your business alive during the tough times down the road.
This material was excerpted from Chapter 10 of How to Really Start Your Own Business, by David E. Gumpert.
Copyright © 1996 Goldhirsh Group Inc.