The Virtual Entrepreneur

I’ve run into some interesting questions in the last couple of weeks that have led me to think about the fundamental essence of entrepreneurial ventures. It’s amazing how people can get caught up in peripheral issues and lose focus on what really makes business concepts viable.

 

If you’ve been following this blog for a while, you’ll be aware that my primary purpose is to promote and humanize the idea that a virtual framework for many business concepts offers advantages that are not available in a real world environment. That being said, what I am suggesting is only a framework from which to operate a business. It is not a business concept in itself. Viable business concepts are derived from connecting living entities (people or other businesses) with what they want or need. The platform from which you do this, whether it is real or virtual is secondary to the development of a viable concept.

 

This may sound obvious but I am rapidly discovering that for many people, the framework for a business is perceived to be the starting point for their entrepreneurial vision.

 

I ran into a question posed by a web developer the other day that really brought this issue into focus for me. The individual in question was clearly frustrated. He had years of training and talent in his area of expertise so he threw together a web site and “presto” he was an independent operator. Trouble was this guy was frustrated. He couldn’t make a living and he was venting that his skill had been commoditized. After investing years to become an expert, he had discovered that his skill could be replaced by assembly line developers for a couple of hundred dollars. His conclusion was that virtual businesses no longer had a future and he could have made more money driving taxis.

 

I see a different problem. To my mind this individual had failed to take advantage of one of the biggest assets of the small business which is the ability to target small niche markets that need specialized products and services. This is what I see as the real essence of business for the entrepreneur. Large businesses simply can’t afford to cater to tiny markets.

 

Some of the biggest businesses got their start as entrepreneurial ventures that focused on delivering specialized product to tiny markets. The motor vehicle started out as a novelty for the wealthy. The personal computer was conceived as a hobby project. The internet browser was created by nerds for geeks in a college dormitory.

 

For the aspiring entrepreneur getting to the essence of business is the essential first step in developing a viable business concept. It can come in the form of an “Ah Ha” moment which is an epiphany that occurs out of day to day experience or it can come from a depth of knowledge in a particular subject area but in both cases it is focused on an unfulfilled need.

 

The “What can I do” question comes up over and over in my social networks. A simple approach to finding an answer if you have the capitalization is to go the franchise route. Not all franchise opportunities are successful; however the essence of business issue has been addressed for you and beyond the business framework and marketing package that is basically what you’re buying. A good franchise has developed a product that addresses an unfulfilled need in an identified and targeted market.

 

Of course not everyone has the capital to go this route and not everyone wants to take a cookie cutter approach to address their business aspirations. These are the individuals who provide the inventive genius which has propelled us from the horse and wagon to where we are today in a mere hundred years.

 

There are two approaches you can take to finding your solution to the essence of business equation. You can be product focused or you can be market focused. In either case, the opposite component will become the main focus of the research you conduct to develop your business concept. You must leave aside all other issues until you find a way to balance the equation or you will almost certainly be frustrated when you launch.

 

I have an acquaintance who operated a very successful packaging company which was eventually sold. This individual was not ready to retire; he just got an offer he couldn’t refuse. Being entrepreneurial by nature, he wanted to set up a new venture but wasn’t sure what to do so he took the market centric approach. He visited his largest clients and asked point blank “What do you need that you can’t get?” Direct and simple. The surprising thing is that it was also amazingly effective. The answer he got allowed him to develop a simple product for which there was a known and quantifiable need. His venture has grown into a multimillion dollar international operation and if I told you the product (which I won’t), you wouldn’t believe it. The point is that if your strength lies in your connections to specific markets, you have a pathway to the second part of the solution to your essence equation.

 

The alternative to a market first approach is of course a product first approach. The product however, does not have to be what you have direct experience with. What is important is capitalizing on your expertise. Find out what separates you from your competition to address an obvious market need. I’ve taken this approach myself.

 

Back in the days of the Apple II and the Commodore 64, I was in the converting business. As a company our direct expertise was in roll form printing. Being a tech junkie, I had been experimenting with development of software to enhance our operations using personal computers. As a result, we as a company also had knowledge of programming for personal computers.

 

Our clients were using mechanical printing devices to imprint variable information on blank label stock. The process was slow, inefficient and expensive. The market was owned by one competitor and we had been banging our heads against the wall trying to make inroads.

 

Most people would not see a connection but we saw an opportunity to leverage 2 unrelated skills in a way that our competitor couldn’t match. We developed a program to imprint variable information using a PC and a dot matrix printer. At the same time, we developed a label product to fit the printer that our competition was not equipped to duplicate. The result was a complete system that was clean, efficient and so much more cost effective that within 2 years we had made conventional label imprinting systems obsolete. We sold billions of labels around the world over the 12 or 15 year life time of the product.

 

Both approaches to balancing the equation will work and chances are you have the ability to do one or the other. But whether you strength lies in your market connections or in your expertise, balancing the equation is the first thing you must do in your quest to scratch your business itch.

 

Once you think you have a solution start developing business plans, doing serious market research, exploring various business frameworks and creating financial projections but get to the essence of business first. Your odds of success will improve dramatically.