Page 35 - The Bootstrapper Bible

ChangeThis Yahoo, Yoyodyne, HeadSpace, iVillage—each of these Internet marketing companies came at the marketing equation from a different angle. Each looks for a scalable, protectible model that will allow it to extract excess profits. But many Net businesses (and businesses in the real world) ignore this critical rule: Just because itʼs cheap to start doesnʼt make it a good business. Learn how to detect the factors that change a business from profitable to unprofitable. This is a big danger for the bootstrapper. You donʼt have anyone telling you you canʼt start a business. And if youʼre investing your time and just a little of your money, thereʼs not much to stop you from giving it a try. You donʼt need anyoneʼs approval! JUST BECAUSE IT’S CHEAP TO START DOESN’T MAKE IT A GOOD BUSINESS Soon after Staples started opening office supply superstores, an acquaintance of mine de- cided that heʼd start his own business. The idea was simple: He would go to larger companies and offer to sell them office supplies at a low price. Heʼd make the purchases at Staples and mark up the prices for his customers. At the beginning, there was enough difference between what these organizations were used to paying for office supplies from their dealers and what Staples was charging that he could make a small profit on every sale. But my friendʼs idea fails most of the business model tests. The biggest problem is that once he took the time to teach these customers that price is the most important thing to look for when buying office supplies, theyʼd find out about Staples and switch. | iss. 6.01 | i | U | X | + | h 35/103 f