Mike, Chris, and Evan are three young ambitious brothers all looking to venture into the world of entrepreneurship and start their own businesses.
Each brother is filled with optimism, boldness, and their own unique skills and experience they need to get their new businesses started. But that is where the similarities end.
You see, Mike has always been a little more of the ‘instant gratification’ type. Throughout his life, Mike has had the propensity to find the quick and easy way to get what he wanted. He loves the feeling of obtaining or achieving something quickly. Mike is not a big fan of planning or details. You could also describe him as a thrill seeker, with his love of adventure sports such as rock climbing, white water rafting, and sky diving. It is safe to say that Mike is a live for the moment kind of guy. So, when it came to starting his own business selling sports apparel and clothing, you can imagine the route he took. But more on that in a minute.
Chris, on the other hand, has always been known as the creative one in the family. He loves to tinker and is always coming up with cool new gadgets. When Chris decided to start his own business, his aspiration was to design and manufacture creative and innovative items that he has been thinking about for several years. His business would not seem like work to him at all because he would be doing what he loves. He would be living his dream. Little did he realize, the dream would actual be a nightmare.
Then there is Evan. He is the typical extrovert. Evan is such a people person, so engaging, so likable, and had knack for building and cultivating relationships. Evan’s new business would be renting houseboats in his local cottage area town. With the high demand for his product and service combined with his customer service skills he was sure to be a success.
Mike went into starting his business with the confidence, passion, and determination that all good entrepreneurs need to succeed. Every morning, he jumped out of bed filled with excitement about what he would accomplish that day. He just knew his business would be a success and he would be the next overnight success story being featured in online articles, a guest on major podcasts, and maybe he would sell his business for millions in a few years.
Mike took the route of looking for suppliers that could get him his products quickly and at a good price, a company to print or embroider his logo onto the white label clothing and apparel that he chose to sell, and an empty storefront available in a good location in town.
With his initial marketing push in the various media outlets in his area, plus the social media posts that he put out to advertise his new store, Mike saw some instant business. Customers were intrigued by the new kid on the block and came to his store to check out his products. Mike’s quick start-up tactic had worked, and he was easily making enough money in the first few months of operation to pay for his expenses and have enough profit left over to pay himself.
However, after a few months of patting himself on the back, business started to dwindle. The initial allure of his new store started to fade, and revenue started to decline. Within 6 months Mike was barely breaking even. Within 9 months, he was bleeding money. Within a year, Mike’s business had closed, and he was left scratching his head at where things went wrong.
Did he not spend enough on marketing? Did he choose the wrong suppliers? Why did his customers not get it? They were buying from him in the beginning, why did they turn on him?
Chris, being the creative one, took a very different approach with his business. He would not need a storefront. He would sell all of his new gadgets strictly online. Anyone that has been following the latest shopping trends knows that is how people purchase products nowadays. Chris would take a page out of Amazon’s book and cut out the brick and mortar costs.
He quickly set up an online e-commerce site and started to advertise his cool new gadgets. He offered a variety of unique items such as kid toys that imitate the sounds of different animals, lamps that could be turned on and off using voice recognition, alarm clocks that wake you up by squirting water at your face, and other such creative doodads.
Chris loved to design and build his various gadgets, create promo videos displaying his trinkets in action, and updating his website with new features. This did not feel like work to Chris at all.
Some family and friends first started purchasing some of his products through his website and word of mouth got around about how interesting and neat some of his inventions were. The voice activated lamps particularly seemed to be a bit of a hit with some people as he saw orders for them start to increase after a few weeks.
But Chris never seemed to see any consistency in his sales. There was a spike here and there on certain products occasionally, but not enough revenue was coming in to sustain his living expenses. In short, his business venture was not paying the rent.
After only 5 months of trying his business full-time, Chris had to take a part-time job at a local hardware store to make ends meet. After working at the store for 6 months, Chris was offered, and accepted, a full-time position at the store. He did not find the work rewarding at all, but he needed the money.
Chris kept his online business alive, but orders were so few and far between that he eventually shut it down after 2 years.
Now Evan, there was somebody that seemed to get it. His desire to build his business came from wanting to serve a need in the community. He knew that people wanted to have a way of exploring the lakes in his area without having to rent a cottage and be tied to one spot. Besides, the cottages were typically either all booked up well in advance, or not worth renting.
With his naturally engaging personality, he already had dozens of potential customers lined up to rent his houseboats once he launched his business.
Evan took some time to get his houseboat rental business up and running. Seeing the mistakes that his brothers made, he did not want his business to be a short-lived venture. Evan wanted this business to be around for many years and be one that his customers loved.
He took the time to get to understand the wants and needs of the typical houseboat renter. From the type of boats, to the packages he offered, to the processes that were involved in renting, driving, and returning the boats, Evan designed the experience to be one that his customers would resonate with and rave about.
Evan was not disappointed, and neither were his customers. For 8 straight years, Evan saw a healthy growth in his revenue and had a repeatable process for his boat rental business that made it easy for him to train new employees.
Mike and Chris were envious of their brother’s success and had to take a hard look at themselves and why their businesses failed. They both came to realize that they started their businesses for all the wrong reasons and took short sighted approaches to their business model.
Unlike Evan’s outward focus for starting his business, Mike’s focus was completely inward. His thoughts were consumed with wondering how he could start a business quickly and become rich and famous. His motivations stemmed from ego and greed.
Chris had an equally inward focus but in a different aspect. He wanted to design a business that would make him happy. He did not take the time, like his brother Evan did, to understand who his target market was and what would make them happy. He fell into the trap of believing that if you just do what you love, then you will never work a day in your life. The problem he soon found with that line of thinking was that if what you love to do is not solving a problem or adding value to people’s lives, then there will not be a market for it.
With Mike and Chris both seeing their business’s fail in a short period of time, it was clear that taking the more strategic and outward facing route (taken by Evan) was the right way to go. His business was thriving after 8 years. If only they had taken a similar path.
The 3 Little Pigs
Does this story sound strikingly familiar? It should, it is similar to the childhood story that most of us read titled ‘The 3 little pigs’.
The moral of ‘The 3 little pigs’ is that hard work and proper planning pay off in the long run. You see, Mike is like the pig that built his house out of straw. Quick and easy. Chris took some more time to understand the world of online shopping and how to create a good website before launching his business. But he did not invest the time to understand the wants and needs of his potential customers. He could be compared to the pig that built his house out of sticks. But Evan, his business is like the house built out of bricks. It had a great foundation and was solid. His business was disruption proof.
Or was it???
The Big Bad Wolf!
In the story of ‘The 3 little pigs’, the antagonist was the Big Bad Wolf. The wolf easily destroyed the houses made out of straw and sticks but could not blow down the house made out of bricks.
In the story of Mike, Chris, and Evan, there are two protagonists. One is the local government and the other is a lady named Amy.
You see, the small lake that Evan’s business resided on is connected to 4 other larger lakes. His customers could rent his boats and leisurely tour around all 5 lakes for several days and still not see everything that the beautiful scenery had to offer. Evan’s business was the first and only houseboat rental place on his small lake. Sure, there were house boat rental places on the other larger lakes but the small lake was located much closer to the nearest urban city, making it easier for people from the city to drive to Evan’s business, rent their boat, and then head out on their adventure. That is, until the 9th year into Evan’s business.
That is the year that the local governments had a dispute about the lake access. The residents of the small lake did not like the noise, the pollution, and all the extra traffic on their streets and lake caused by the people coming in from the urban center. They had enough small towns around them to draw in the tourists they needed to their local restaurants and stores and their cottages were being rented every year. Life would be better on the small lake if they could limit the urban visitors. So, the local government decided to pass a law that shut off the access from the small lake the larger lakes.
As a result, Evan’s customers could only drive their rented houseboats around the small lake. Within 8 hours they could easily take in all the sites the lake had to offer. There was no need to rent a houseboat for a full weekend, let alone a week. Evan’s business went into a deep decline.
Along came Amy…
Amy saw that there was still a need. The cottages around the small lake were still fully booked and there was plenty of people who wanted to come and visit the town and the lake for short stays. But houseboats were not the answer. After some very careful research and planning, Amy turned her large cottage into a small resort where people could come for overnight stays, enjoy great meals in the dining hall, and rent small boats for fishing, water skiing, or pleasure riding by the hour.
Amy was equally as engaging and personable as Evan so people quickly resonated with her style. Customers that were considering renting a houseboat for a weekend soon decided instead to go to Amy’s resort and enjoy all the things she had to offer to make their short stay more enjoyable.
While Evan stuck to his way of doing things, his proven business model, Amy was innovative. She kept finding new and better ways to find out what her customers wanted and found creative ways to give it to them.
Customer by customer, Evan saw his business decline. Two years after Amy opened her resort, Evan realized that his business was no longer in demand. He was forced to sell.
Hard work and planning are great. But they are not enough to build a successful long-term business.
Many new businesses fail to make it past the first few years of operation. Typically, they fail this early for a few reasons.
- The founder is inward focused, consumed more with ego, money, or fame rather than serving a need that exists in their market.
- They focus on their products or services rather than WHY people purchase their product or services.
Some companies can successfully get off the ground and make it past the first few years of start-up status. They become established businesses but fall victim to complacency or pride. They believe they have made it and have a proven business model, only to find out that someone or something disrupts their business.
These businesses typically fail for the following reasons:
- They lose sight of the purpose behind why they started. After some success the focus turns to maximizing quarterly revenues, finding efficiencies, or standardizing their processes. They are no longer the customer-centric and innovative company that they were in the beginning.
- They are not flexible and adaptable to handle major challenges that come their way. An economic downturn, a new player in their industry, or a change in customer habits disrupts their business model. They are too rigid or stubborn to adapt and customers end up leaving.
To set your business up for long-term success, it must be built on the foundation of being both customer-centric and innovative. As you find success, you must continue to strive to improve in these areas, cementing them as your foundation, not moving away from them.
Who knew as kids that ‘The 3 little pigs’ had so much insight to offer? Who knew that the big bad wolf could reveal himself in such ways as a global pandemic, a change averse culture, or creative new ideas from another entrepreneur?
Do not let this happen to you and your business. Take a lesson from ‘The 3 little pigs’.