Jan
Building a $2,000,000 Better Mousetrap
Filed Under (Business Strategy) by davidguide on 10-01-2010
In a previous article I featured “Positive Cash Flow” as one of six core business principles. In this article, I cover two more of those six principles: Building Better Mousetraps and The Contrarian Business Philosphy.
Building Better Mousetraps
You have heard the old saying, “If you build a better mousetrap, the world will beat a path to your door”. That saying is the very embodiment of the driving force behind the entire free enterprise system.
That’s precisely why so many advertisements say NEW or IMPROVED, or NO ONE ELSE HAS IT, etc. I thought I understood that principle. However, the lesson I learned in 1986 gave me a deeper understanding and respect for old, time-honored expressions.
In 1985, a friend of mine from church approached me to see if I thought one of my wealthier clients might be interested in financing a new startup business. The short version of the story is that I met with Allen and two of his brothers who had an idea about starting an environmental drilling business.
At the time we met, they had not been able to raise the money to start their business. Naturally, before I would recommend it to one of my clients I needed to hear what is was all about. I ended up making the decision to finance and manage the business myself.
When we were only about five months old, a well driller who had lost his job with a competitor of ours came to our office to apply for a job. He mentioned that a particular company from California was buying the drilling company he had been working for.
After the man left our office, I immediately called the company in California to let them know that they should take a look at our company, if they had not already made a final decision to buy our competitor.
A couple of weeks later three of their top executives flew into town in the private corporate jet and when we were only six months old, we negotiated a sale for $2,000,000 net profit and closed the sale before we were even 9 months old.
That was made possible because we built a better mousetrap. We did our homework to discover what our customers wanted, but had not been getting from our competition, and we gave them what they wanted. Keep one critical point in mind. We didn’t invent the environmental drilling business (the mousetrap), we just improved it enough for customers to beat a path to our door.
In choosing your business, or improving your existing business, make certain you fully capture the power of this essential “Better Mouse Trap” business principle.
In other words, you must have a unique product or service to offer or you must have special pricing… something to cause folks to beat a path to your door. It doesn’t have to be priced low if it is unique enough and provides genuine value for the money.
All businesses must have, at their foundation, a viable product or service. It must fill a need, and naturally the more people who can benefit from your product the better.
Every great business begins by providing a good product or service that will give to the buying public what is needed in order to make their lives more pleasant, more profitable or more healthy, etc.
If your flagship product or service is a better mousetrap, your customers will actually send or bring you new customers and that is what brings the world to your business door.
The Contrarian Business Philosophy
I have learned over the years just how powerful it is to be a “Contrarian” when it comes to business.
One of the critical things I look for in a business is whether there are any signs that show whether the owner or manager is a sheep or a shepherd. Is he leading his company or is he just doing what he sees his competition doing?
I try to determine which way the herd is going and then go in the opposite direction. If a business owner isn’t creative and only tries to mimic or parrot what the rest of this industry is doing, then he is just another sheep in the herd and doesn’t really know where the herd is going.
This means he doesn’t know why he is going in that direction either. This is extremely common and contributes to many failed businesses. There is nothing wrong with following someone’s example in business. Just make sure the person you are following is creative and not simply following the herd.
The best example I can give you is a television interview with the late Sam Walton. Following a market crash, Mr. Walton was asked by a young TV reporter, “how it felt to lose over $100,000,000 in one day?”. Mr. Walton replied with a sly smile, “I haven’t lost a dime; because I am NOT selling stocks — I buying more stocks!”.
Sam Walton was a classic example of a Contrarian. While almost everyone else was selling their stocks and taking their losses, Mr. Walton was buying stocks. He knew the herd didn’t know what it was doing or where it was going. In less than sixty days, Sam Walton was actually worth more than before the crash — while others had lost much of their life savings.
The herd usually makes decisions that are fueled by either fear or greed. Consequently, during critical times they get it exactly backwards. Contrarians, like Sam Walton make decisions based on non-emotional, logical reasoning. Consequently, they get it “right” far more often, and so can you.
What’s the bottom line? Do everything you can to adopt the contrarian view. Don’t get caught just following the herd, unless you know for certain it is headed where you want to go with your business.
Stay tuned for future articles covering the remaining three principles of good business. In the meantime, be sure to visit my blog at http://www.VirtualMillionaire.com where you will find knowledge and tools for your business success.
Kelly L. Reese
Chartered Financial Consultant
Business Coach & Master Network Marketer
Discover how to create wealth with a successful home business.
