6 Lessons on Starting Up From Norm Brodsky

"One of the most common mistakes you can make in business is to assume that potential customers think the way you do," advises Norm Brodsky. Consider Justin Esgar, who created an iPad app that allows you to sign PDFs on your iPad in hopes of helping to reduce the amount of paper in the world. He had been pitching his product as a way to go green, says Brodsky, but for most people, the real benefit has to do with the time and money it can save. "Not that Justin shouldn't continue to tout the green virtues of his product, but he'd probably sell more copies if he focused instead on the time-saving features that almost any professional with an iPad would gladly pay $3.99 for." (For more, read "How to Keep Your Message Clear," April 2011.)

Generating publicity is key to getting the word out about your new business, but it oftentimes isn't enough to reach your target market. A mention in your local paper might not result in the surge of traffic you'd expect, probably because the article isn't targeted at a specific market, says Brodsky. Instead, he suggests, "make a list of the 10 categories of people most likely to want [your] services, along with ideas of how to reach each category." For example, if you're trying to target people planning to move, you could talk to moving associations about getting on their websites. "But building a business takes time," advises Brodsky. So don't be discouraged if your idea doesn't go viral overnight. (For more, read "Reaching Your Target Market," March 2011.)

Novice business owners often find themselves spending their cash on building their inventory, which is a mistake, says Brodsky. The real problem isn't in the cash flow but the business model that requires you to have inventory in the first place. When you find yourself in this situation, Brodsky suggests selling off any excess inventory and using the cash to pay down debts. (Search "sell excess inventory" online, and you'll find a slew of services catering to that need.) Then, consider an on-demand business model. Sure, you might not be able to fill every order, but running out of a product from time to time isn't necessarily a bad thing. (For more, read "Are Your Credit Card Bills Out of Control?," April 2011.)

When winging it is no longer enough to build your company, it's time to learn your numbers. "You really can't know what's happening in your company or make consistently good decisions without mastering the numbers," warns Brodsky. And there are many ways to acquire that knowledge. Brodsky suggests four. Familiarize yourself with the accounting software you use. Hire an accounting person who could also serve as a tutor. Sign up for an introductory accounting course. And read Financial Intelligence and Financial Intelligence for Entrepreneurs. "They provide the best, clearest guides to the numbers that I know of," he says. (For more, read "Understanding Your Company," February 2011.)

The classic mistake is to set pricing based on what you feel you need to earn rather than on how the market values your service, says Brodsky. "Competition generally determines the price you can charge. So the first step should always be to find out what competitors are charging." Call up other providers, posing as a customer, and get estimates. Contact state and national trade associations for information. And always gauge your customers' reactions to the price you give them. If they're response is along the lines of That's all?!, tell them you charge extra for X, Y, and Z. "Whatever approach you take," says Brodsky, "the rule is the same: You don't set the price; the market does." (For more, read "Solving the Pricing Riddle," September 2010.)

Though Brodsky is often sharing his thoughts and opinions with the many entrepreneurs who come to him looking for direction, he makes sure they understand that the decision is theirs and theirs alone. "Otherwise," says Brodsky, "they won't take responsibility if they fail. They will simply blame 'bad advice' and lose the opportunity to learn from failure, which is always the best teacher." So the next time you're faced with a difficult decision, begin by asking yourself what it is that you want to be doing for the next 10 years. Be aware of the potential downside of each decision and, more important, the time, money, and energy each will require. Never lose focus of your goal. (For more, read "Building Your Business," May 2011.)