Business Plans from the Edge

When you want to start a business, start with identifying a need customers have. This is a great way to start, if you're writing a business plan for a class taught by someone who has been away from the business world for a long time.

Customers don't know their needs. "If Henry Ford has asked his customers what they need, they would have responded "faster horses,'" Ford is supposed to have said. 

Back on Planet Reality, you can't often identify customer needs. Instead, try identifying general human anxieties:

- weight loss

- taxes

- public speaking

- rejection in love

- unemployment

- being sued

- child rearing

- family time

- infertility

- companionship

- uncomfortable confrontations with neighbors

- growing influence of foreign governments

- yard work

- flatulence

- food safety (Look at the expiration date on this milk carton. Is it safe?) 

Next, try to solve the problems causing those anxieties. Or easier still, alleviate the symptoms of those anxieties. Whenever they drink alcohol, eat MSG-laden tortilla chips, or watch television, aren't they just trying to forget their problems? Come up with more substantive blocks for pain, and you will create, then dominate, a huge market. 

Clarification

We've received requests for clarification on yesterday's posting.

Fast money seeks to invest in a the next big thing, such as a dotcom, and earn a 10,000 percent return in less than one year. Slow money invests in sustainable agriculture and buying local. The returns will come, but not quickly.

As Tasch said, what if we 50 percent of all our expenditures were within 50 miles of our homes? Just think what might happen.

Financing that Venture

If you're waiting for a venture capitalist to spot your idea, you're waiting to win the lottery.

Rural entrepreneurs need to think about financing in new ways. Perhaps everyone needs to think differently about financing.

We call it Slow Money, and it might be the future. The Nauvoo Commuter has been reading about Woody Tasch and his work in evangelizing Slow Money. For a list of relevant financiers, check out SlowMoney.org Investors on their site.

Patience, young Skywalker

Building a business takes a long, long time. You have to do things better than your competitors, and then wait them out. For years.

If you dedicate 10,000 hours to just improving your ability, the time required by Malcolm Gladwell's hypothesis to reach proficiency (see Outliers: The Story of Success), you're looking at about four years of full-time work on top of the time you currently spend delivering to customers as you should.

If you live in a rural area, add an additional year or two. The market is smaller, so usually takes longer to build.

The point: just because your "idea" hasn't taken off, and just because venture capitalists are not pounding on your door, doesn't mean your concept is wrong. It might just need to simmer for a bit longer. Keep delighting your customers as best you can each day, and wait.

About this Blog

If you live in a large urban center, you may not be interested in reading this blog. If you want to work for someone else because you like other people to take responsibility, you might not find many interesting threads to read here. 

But if you are building a business or want to build one, or if you want to support others that will bring economic life to your region, then please keep reading. Pull up a chair. 

Having a Tough Time Getting Started?

That might mean you are on the right track.

"The more important a call or action is to our soul's evolution, the more Resistance we will feel toward pursuing it." So says Steven Pressfield. That is the same for your lifelong dream of learning to play the trombone as it is for starting a business.

If you don't know what "the Resistance" means, you MUST read his book The War of Art. You can order it from Amazon for about $9.00, or you can read the Kindle version on your computer for $4.00. It might change your life. (The War of Art: Break Through the Blocks and Win Your Inner Creative Battles)

I know where you live

The Nauvoo Commuter knows where you live. Let me describe what I see in your small town:

- different factions of people, some who want progress, and some who are trying to stop it
- at least one empty, boarded up building from a failed business
- roads with more chuckholes per mile compared to 10 years ago
- a few people with a plan to increase tourism into the town
- at least one feature of unique beauty, and peaceful evenings, both of which keep people happy to continue living in your town

Am I at least mostly accurate? I don't really know exactly where you live, dear reader, and I'm not peering into your windows. But I've seen so many towns that they are starting to look similar. So don't think your situation is unique. The same excuses are common.

Start with the factions. Every town has them. New comers vs. old timers, Catholics vs. Baptists, retirees vs. young families... towns naturally divide into groups of opposing parties. If not, if everyone in your town agrees on everything and they all live in continual harmony, you are required (by federal law) to contact your county administrator who will send one or more discontents to live in your town. That's not really true, but the problem is so universal that it might as well be a federal law. A branch of economics is devoted to the study of special interest groups, and the phenomena of their size and divisions (but that is getting off topic.)

So start doing something today. Right where you are. People are waiting for you to make the first move. Some may oppose you, but maybe you need some feedback. Don't let it stop you.

I can't think of any business ideas

Before you give up and apply for a job at Dollar General, step back for a moment.

Take a deep breath.

California provides 1/3 of America's agricultural output. They can create dotcom companies and still have space left to farm? And they are more productive than EVERYWHERE else?

Do you think your cost to grow a cucumber might be less than the cost to grow a tomato in California after adding shipping across the country to your grocery store?

Why Be in the Country?

So you run a business or want to run a business and you live in a rural area. Why?

You want to be near relatives so you can more easily attend christenings and barbecues?
You like clean air?
You're an introvert that likes sparse populations?
You feel stuck, and for circumstantial reasons can't move to a creative center?


The Nauvoo Commuter lived in the world's largest city for 12 years and decided his children needed a better way. He moved to the country by choice. Now I have a harder time communicating with clients in Europe and Asia. But the tradeoff is worth it. I make the best of what I have. My business tries to embrace the strengths of rural life.

The Nauvoo Commuter hopes your location choice will be a choice, not a default or refusal to choose.

Dear Mr. Handyman

Today I passed, in a remote area of western Illinois, a mobile marquis. It was the type that shops and independent churches park in front of the premises to advertise. It read:

HANDYMAN NEEDS WORK

How does that help me? I should hire him to show kindness?  The sign should have read:

HANDYMAN AVAILABLE TO IMPROVE YOUR LIFE

If you want the work, tell me how it will help me. 

Embrace Your Strengths

We've discussed in this forum the upsides and downsides of starting a business in a remote area. Your mission is to focus on the upsides.

The world is changing. The current recession was caused by political maneuverings, banker greed, personal irresponsibility, and global shifts. Because we want to assign blame, we focus on bankers as our scapegoat instead of taking responsibility. But we usually ignore the historic shifts now adjusting the global economy. Major shifts always cause major disruptions, and that is one reason for the current discomfort we are all experiencing.

We can't stop those shifts. Protectionism, stimulus, or applying for grants will not stop the march of history. We have to compete with Chinese workers. If we prohibit American companies from locating in China, then a Chinese entrepreneur will build the factory. We can keep borrowing millions of dollars every hour of the day from China to build roads and bridges and fund promising urban artists here, but those efforts won't halt the trend toward globalization.

So focus on what you do have.

Here are some of your strengths:

1) Location: the cost to transport goods will increase, so you have an automatic price advantage.

2) Services: a child working in a factory in Vietnam cannot repair HVAC systems in your town.

3) Relationships: you know the likes and dislikes and hopes and dreams of the customers in your region.

4) Infrastructure: today's pork barrel projects, paid for by the generosity of your children and grandchildren, are improving the roads and byways so you can get your stuff to market. Look on the bright side.

5) Food: people might get excited about whatever replaces the iPod. But they NEED food. And that is probably the big industry of your region. Are you letting mega-corporations take control of the production and distribution? Or are you grabbing a piece of the action?

Just Do It

The Nauvoo Commuter spent the weekend in a rural area so remote it had no internet access and only spotty cell phone coverage. It was refreshing.

The theme for today is getting off the sofa and trying something.

You can't gain six-pack abs by reading Muscle & Fitness Magazine. No one ever learned how to lead a military campaign by watching Gone with the Wind. And the way entrepreneurs hone their skills is to get their hands dirty doing business.

A related truth is that the way to learn if a business idea is valid or not is to try it out.
One of the Nauvoo Commuter's fundamental business philosophies is that an entrepreneur should test the business hypothesis as soon as possible. And that test should involve live ammunition.

In other words, don't take eight months to conduct market research, write a business plan, and write reports, only to find out the Business Concept is flawed. Just start doing something now. Grab a prototype and start hawking it. If people show interest, then you have a business. If they are hesitant, then review the price. Otherwise you may need to re-think product design or even the whole raison d'etre of the business. Most planning is just a cover for procrastination. Most research is a refusal to take responsibility.

Create a Little App on the Prairie for the iPhone

Calabasas, California is not a big town, but it is not rural, either. But three local moms have created a way for you to change the world.

Appsnminded, the company they started, can help you turn your concept into an app. And your app might literally change the world. Not all apps earn $100,000, like one that one Appsnminded made herself. But some make more.

David Sarno of the Los Angeles Times said in June that creators will earn $7 billion  this year creating apps for the iPhone and Google's Droid formats. Next year it will probably be $14 billion. And part of that could go to you. In fact, an app developed for the Blackberry format would better reach business users, if that is your target.

Want a no-risk solution? Convince Austin, Texas-based Chaotic Moon to make your idea into an app, and they'll build it for free, market it for free, then keep a cut of the profits.

You might be the one to put your town on the map.

The Upside of Rural Entrepreneurship

Yesterday we addressed the disadvantaged that plague rural entrepreneurs. They were only broad, sweeping generalizations. Today we make generalizations about some of the advantages of rural entrepreneurs.

- the ability to be involved in more fundamental commerce: food. People will always need food more than ipods. That is gratifying for those involved in the food production industry. And that is the primary industry of rural regions.

- reprieve from the full brunt of international competition. If you are creating services, or even goods, for consumption in your county, then you can worry a little less about the price of manufactured wares in East Asia. Let Pittsburgh and Houston and Detroit feel the anxiety for you. It doesn't mean you live in a no-competition bubble, but if you are profitable on a small scale, then you don't need to sell shoes to 40 percent of the planet to survive.

- living a real, connected life. Living in a large city is spiritually grating. Being jostled and called after all day can make one people weary. But where you live, out on the edge of the prairie, people are genuine and life is simple. You are connected to the basic roots of life. You are connected to basic human needs, without psychological office games. So you can understand consumers better.

So use sincerity to your advantage.

The Downside of Rural Entrepreneurship

The environment for rural entrepreneurs is different from our city cousins.

We can think positive, dream big, and arrange crystals to attract abundance from the universe. But environment still matters. It is not completely negative, but it cannot be ignored. 

Here are some concerns for rural entrepreneurship:

- We need to be geography agnostic. We can't think of a market as a location. 

- Hypothesis testing/ Concept testing is more challenging. The best way to start a business is to test out the Concept of the Business as soon as possible, preferably before money has been sunk into the idea. But customers are spread out. You can't stand on a street corner and talk to people or set up a temporary shop downtown to test the business plan's hypothesis. It takes longer. Or you may need to rely on traditional survey market research, something the Nauvoo Commuter dislikes. 

- Feedback is sparse. Cities breed creativity and exchange of ideas. They are full of quick people who provide quick feedback on a concept or on your customer service. Not so out here, on the edge of the prairie.

- Funding sources are remote. Or rather, the entrepreneur is remote from funding sources. If you're hoping one your neighbors can introduce you to a venture capitalist with appetite, you're waiting to win a lottery without buying a ticket. Unfortunately the best way to access investors is through personal introduction, and you don't know anyone who knows them. (We do have other money sources here at home, but that is a topic for another day.)

America Still Manufacturing

Think America is a "has been?" You have plenty of people with whom to share that opinion. We've been hearing about the death of America's manufacturing sector for decades.

The idea is completely wrong.

True, the U.S is offshoring or giving up low-value-added production. And the remaining sector employs fewer people. But the remaining sector still "contributes 22% of global manufacturing output and ranks third, behind Germany and China, as a manufacturing exporter, with an 8.1% market share."

That is one of the exciting facts coming from "US Manufacturing: Still the One," a report by Turner Investment Partners in Pennsylvania.

Want ore good news? "U.S. manufacturing exports increased by 60% from 2000 to 2008." And the value of manufactured exports are almost 10 times as much as agricultural exports (57% vs. 6%).

But that is still good news for rural entrepreneurs. Manufacturers are hiring fewer people, because technology has made factories so efficient, but we still have a base of potential customers that make stuff.