🚫 How To Build A Failing Business
Warren Buffet has 2 rules:
Rule #1: Don’t lose money.
Rule #2: Don’t forget Rule #1.
It seems simple, a no-brainer even. Yet every business fails for the same reason…
They run out of cash.
So for today, I want to switch things up.
I want to talk about what NOT to do as an entrepreneur…
Here is my 3-step guide to building a failing business in 2024:
🧠 The Entrepreneur Death Trap
⛳️ A Race To Zero
🔂 The Catch-22 Of A New Business
Read Time: At least one minute, but no more than 5.
🧠 The Entrepreneur Death Trap
Every entrepreneur at some point falls into what I call “The Entrepreneur Death Trap”
AKA "shiny ball syndrome."
We love to find new opportunities and go all in, yet it’s the #1 reason most entrepreneurs never see success.
Success takes time and requires you to push past the ‘this is hard’ barrier that stops everyone else.
And nine times out of ten it’s when things are hard that we switch to new opportunities that seem easier.
Now here’s the hard part…
The longer we play the game of business, the sexier each opportunity gets.
You’ll be talking bigger numbers, faster cash, and crazier ideas.
So if I were to build a FAILING business, I would:
Look for fast cash instead of building something that adds value to the marketplace
Surround myself with people who are also caught in the entrepreneur death trap.
Constantly look for new companies to invest in
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⛳️ A Race To Zero
People buy from you for 2 reasons:
1. They trust you to give them the results they want
2. You offer the best perceived value at a fair price
Most people hear this and think they need to offer their services at the lowest price.
I mean, I know I’m not the only one who’s seen signs like this…
Or this…
Don’t get me wrong, this offer does work for some companies…
But for most, it’s just a race with your competition to see who’s willing to work the longest hours for the lowest income.
And that sounds like Hell.
Successful businesses do it differently. Notice how I said "best perceived value at a fair price."
This does not mean the lowest price on the market. This means giving so much value that the price seems more than fair.
It’s better to offer more value (resources, training, access) than any of your competition so that you can charge more than everyone else.
But since we’re building a failing business, I would make my offer something like this:
“I’ll beat any price no matter how low, and fulfill any competitor’s service not currently offered!”
🔂 The Catch-22 Of A New Business
Most businesses operate something like this:
Generate leads via ads/ outreach → Sell them on a call/ funnel → Fufill the service → Find more leads.
But for new businesses with no employees and no money to hire them…
They fall into a deadly catch-22:
The more time you spend on leads the less time you can spend on fulfillment.
BUT
The less time you spend on fulfillment the harder it is to keep clients and sell new leads.
This is why the average business owner makes less than 50,000 a year.
(That’s less than most 9-5’s but without the benefits)
Every business goes through this. However, successful businesses follow the 80/20 rule.
The 80/20 Rule: 80% of your time is spent on revenue-producing activities, and 20% is spent on things that need to get done.
However, that looks different depending on what stage you’re in:
Stage 1: No clients yet. 100% of the time is focused on selling leads.
Stage 2: Now have enough clients that fulfillment becomes difficult. Spend 20% of the time selling leads and 80% on fulfillment to retain clients.
Stage 3: Hire and train employees with money from repeat clients. 80% of the time spent on training, and the other 20% on selling leads.
Stage 4: Fulfillment is outsourced. 100% of the time on leads.
But to build a FAILING business, I would continue to trade time for cash and choose 1 of 2 options:
#1 - Stop bringing in new clients to focus on fulfillment. Eventually, revenue will stop as clients move on with no one to replace them.
#2 - Work 12+ hours trying to bring in new clients by day, and fulfill by night. Then, I’ll be mediocre at best at both activities and sacrifice real growth.
That’s it for today!
The Profit Snack Team
