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How to (not) build a business (Part 2)

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The Setup

Now one of the most interesting parts follows: The acquisition of firm interior, office rooms, IT, marketing, CI, websites, software, personnel and so on. This phase of initial investment is also the main field of activity of the bankrupt. We could skip the description of frantic purchases, but this process is far too exciting to not report about:

Of course, we first of all need quite extensive premises which are rented for expensive money. Then we don’t want to have to do all the work ourselves and we hire people diligently. In addition, a full-service marketing agency is hired to create a CI, a website, a state-of-the-art online store and a marketing campaign. Small things like professionally designed flyers, brochures, business cards, bumper stickers, a unique ring tone as well as advertising signs are actually not worth mentioning – but they are so much fun! And isn’t that the most important thing? That we enjoy our “entrepreneurship”?

But, aren’t we forgetting something? The (seemingly almost irrelevant) fact that we do not yet have any products, let alone paying customers. Like in a frenzy we book Google Ad campaigns and Facebook ads. The rest will happen somehow, and in an emergency we’ll tap into one of the funding pools offered everywhere or take out a loan. The famous slogan “when you build it, they will come” comes to our mind. But that was back in the 2000s, situations different in 2020.

Once the rush is over, the hangover follows – and it always looks the same: We have spent a painful amount of money on things that don’t immediately bring us revenue. Since we are not the kind of entrepreneurs who can expect annual cash injections, every expenditure hits us hard. Right from the start, we have done everything wrong that we can do wrong: We generate costs before we generate sales.

The hard way

The truth is that the path to your own sustainable company, including it’s idea, a product and the associated implementation is characterized by hard work and a lot of sacrifice. Especially at the beginning we should think carefully about whether we really want to outsource this or that task to a service provider and whether an investment is really needed.

Imposing an iron-clad savings mandate also requires us to do many things ourselves, even if this requires improvisation. But let’s be honest: Each of us can do something and can therefore contribute something to our own company. The only important thing is to make all parts of the business look equally well, even if we lack the required skills. This effect can be achieved by “learning by doing”, or with the help of friends or by outsourcing a few tasks at low cost. These tasks include all the small jobs that need to be done to get our company started: From designing the office material (flyers, letterheads etc.) to cleaning the premises and the actual work (serving customers, packing packages etc.)

Also and especially in the area of customer service, not only can a lot be saved but also a lot can be achieved: When the boss of the company personally takes care of customer matters, advises and supports his customers, this not only saves money but also leaves a lasting impression. This was the case even before the days of the internet and nothing has changed in this respect to this day.

Summary

In summary, one can say that basically every opportunity to save money should be used. In addition, one should not be too good for any work step, because especially through the combination of thriftiness and hard work one can avoid a lot of cost traps in the early years, and it also strengthens the character.

Read more in the next part of the article…

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