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Leadership
Low-Risk, High-Payoff Self-Employment
Un-MBA Ideas from the book, Careers for Dummies.
Posted February 19, 2018
First, a note: Today, the number of page views of my PsychologyToday.com articles has reached 5,000,000. Thank you for reading my work. That adds much meaning to my life.
Drawn from my new book, Careers for Dummies, this is an Un-MBA for would-be self-employed people. So much of what's taught in MBA programs about entrepreneurship is aimed at the corporate employee who wants to be intrapreneurial. But most people who want to be self-employed don't have deep pockets and so the best advice is pretty much the opposite of what they'd teach in an MBA program.
MBA programs teach you to innovate. I teach you to replicate. Innovation brings too much risk: Your innovation may not work, take too much money to develop, require money to educate the public about the need for your product, and after you've done all that, if it works well, a big company could squash you. Better to replicate a proven business, for example, a small chain of flower stands, run well, marketed well, and fairly priced. I wouldn't not want to compete on price. That tends to be a race to the bottom. I want to compete on location, quality, friendliness, and efficiency. So I'll price at the high side of fair.
MBA programs focus on complex business because they're intellectually meaty. But all those moving parts means higher risk. Keep it simple, like flower stands.
MBA programs focus on high-status businesses; high-tech, biotech, global operations. Human beings are status-oriented and so those fields tend to attract smart people. There's nothing statusy about going out of business, So choose a business in which your competitors aren't brain trusts.
Avoid trendy businesses. By the time you're up and running, the trend could be downward. Flowers aren't going out of style.
You want a business that costs little to start and run. You will make mistakes, which usually cost money. You don't want to run out of dough. So I get the shivers when I hear of businesses like restaurants or manufacturing plants. I relax when I hear about businesses that can be run from home and with few if any employees or contractors. Our flower stand example is low-cost because rent would be low or even free. I'd try to convince the building managers of high-rise buildings to allow me to put my cart in the lobby's corner for free. That enables tenants and visitors to enjoy the beauty of a flower stand, buy bouquets, and it doesn't cost the building owner a dime.
Another of a flower stand's advantages is that it's a public retail. Unlike with a business-to-business product in which everything is done behind closed doors, everything is visible in retail. So I'd visit top-Yelp-rated flower stands and incorporate their best practices into my stand: pricing, signage, flower display, product mix, logistics for arranging flowers into bouquets, how they handle busy times, etc.
I'd then find a great location. That's critical for a flower stand.
I'd buy a few hours of consulting time from the owner of one of the top-rated stands so I didn't have to learn on my own skin. I'd agree to not open a stand in a location competitive with his. I'd learn how to buy right, secrets to ethical upselling, avoiding theft, etc. I'd supplement that knowledge with Google searching.
I'd work that stand myself until I really understood the business, for example, how much of what to buy, how to best meet customer needs, where to locate all the business's components.
When the business is humming, I'd hire a friend to run the stand and I'd pay and treat the person well, both because it's the ethical thing to do and to reduce likelihood of employee theft.
Then, I'd scout out a second excellent location and when I did, I'd hire another friend or take all the time needed to find an excellent person to run that stand. I'd keep cloning the stand until I was netting $200,000 a year, perhaps a half-dozen stands. That's enough to live a plenty good-enough lifestyle. I would not get greedy and try to get bigger than that. Quality tends go decrease with size, or the business would swallow up my life.
The takeaway
By choice or necessity, many people want to try their hand at self-employment. You greatly improve your chances of success by following the un-MBA principles in this article:
- Don't innovate; replicate
- Choose a simple business
- Choose a low-status business
- Choose a timeless rather than trendy business.
- Keep expenses to a minimum: pay little or no rent. Hire minimally.
- If your business won't be online, choose a great location.
- Run it yourself until you've mastered it, then clone it in one or more locations until you're making $200,000 a year.
I give an 8-minute talk on this topic on YouTube.
This article is part of a series of simple career tips drawn from my new book, Careers for Dummies. The others are:
Tips for Succeeding on the Job
Tips on Management and Leadership
Managing Your Time and Your Procrastination
