Starting their own business is a dream for almost every person in this world. You work for yourself, you don’t have the nagging boss behind you, you set your own goal, and if you strike it good, you will get lots of money. Speaking of money, my father and I had a little conversation about setting up a business. We talk about how my friend wants to open up an upscale escort/transportation business with little start up capital.
Now here are some problems we encountered during the conversation. With a small start up capital, does the bulk of the resource goes to the core of the business? And if it isn’t does the core of the business is allowed to expand later in the stages of its life cycle?
Now we know about product life cycle, where a product is devised, introduced, then it matured and then it finally falters. With a small start up capital, will the product/service being introduced has its core business 100% developed? To put it simply, my friend’s idea about starting up the escort/transportation business requires a hefty sum of money. However, because he didn’t have enough start up capital (he does actually, but he didn’t want to put all his eggs in one basket) he wants to introduce the business concept incrementally. Personally I thought that this is a bad idea… And why is that?
Here is the thing, my family ran our own business, and what we learn through the years is that customers only remembers us for the smallest mistake or the slightest lack of feature from our product/service. Here in my country, we have a saying that goes like this (loosely translated to English): a drop of coffee on a glass of milk and you throw away the milk jug. It means that people will judge us for the smallest mistake we made, not how many good deed we had done.
Back to the business part, what that old saying means is that we have to establish the core of the business 100% instead of introducing an incremental increase for a period of time. My friend’s business proposal for example, the escort/transport will first use cheap vehicles that contains only the essence of the true core business, then down the line he will introduce the more expensive vehicle. Now the example seems a bit convoluted, let’s talk about automotive service workshop.
Inside a workshop, we usually finds oil changing service, tire changing/balancing/spooring, engine maintenance, engine repairing, and the likes. How about if we open up an automotive service workshop providing only engine maintenance and engine repairing, but we put up general service workshop sign in front of the shop. People off course will be upset because your core business which is general repair is not fulfilled. If you has only limited start up capital, do make sure that your core business is intact, up and running. Use less man power, provides no-frill waiting room, whatever you do, don’t do the other way around. The waiting room on a service workshop acts as a support for the core business, and that should be the least thought out aspect of opening up a business.
Now people sometimes confuse what is the core business and what is the supporting factor. This is actually basic marketing once again, one of the 4 Ps, product. According to value based management.net, a product must have functionality, quality, appearance, packaging, brand, service, support, and warranty. When I helped a lecturer wrote a book for his professorship he divides product into three separate category, the core, the secondary and tertiary. The core is what defines the product itself, its function. The secondary defines the name, the specific category it places and the tertiary defines the supporting factor of the product such as warranty, after sales service and the likes.
Well, enough for the product description, I will write a separate article for that one. Back on topic, if you open up a business, you need to make sure that the core business is intact and fully running. Do not sell a broom without the whisk that’s for sure, and thus when you open up your business, always starts with your core business intact from introduction phase up to maturity in its life cycle.