Common sense wins the world: the common secret of successful people

Chapter 13 Common Sense of Entrepreneurship--Understand it and you will be successful! (1)
People are very concerned about entrepreneurship these days.Entrepreneurship requires imagination, capital and connections, but more importantly, basic business knowledge.A boss without common sense will not only fail to do business well, but may even hurt his family.Therefore, learn the common sense of entrepreneurship, step by step, don't be impulsive, and operate according to the rules, so that you can break out of your own world in the fierce competition.

What common sense do entrepreneurs most need to know?
How to choose the right industry?

For entrepreneurs, choosing an industry is the most critical first step.What project should I do and what industry should I choose?Where am I in the industry chain, what services can I provide, and where can I make money?Although every industry has the possibility of success and can make great achievements, the probability of success for different people in different industries is quite different.

So what is the right industry for you?In other words, how do you successfully find an industry that makes money instead of losing money when starting a business?This is the first question to consider when starting a business, and it is also the first piece of common sense for starting a business.If you make a mistake in this step, you may make mistakes in every subsequent step, and the probability of success is very low.

My eight suggestions:

The first suggestion: There is a huge market demand
A right industry must have sufficient market demand, which is the most important factor.If there is no market, what is the value of your business?No one buys something after it is produced, so you can enjoy it at home?In other words, the market is very small, which is also very unfavorable for entrepreneurship.A small market means that the barriers to entry are high, consumers are picky, and scale production is not possible, which is not good for the growth of enterprises.

For example, to open a car dealership in Shanghai, which car brand are you going to choose as an agent?Is it a Rolls-Royce or a Hyundai?Some people think that Rolls-Royce is so magnificent, high-end and high-end.But in fact, obviously the latter is more suitable for entrepreneurs.Because the market demand for Rolls-Royce is too small, the price is too high, and few people can afford it. Maybe only a few hundred units can be sold nationwide in a year, and the annual sales volume in the world is only a few hundred. Thousands of units.Unless you have strong capital and monopolize the agency of the brand in the Chinese market, you should choose Hyundai Motor, because most car buyers have enough spending power for a car brand worth 10 yuan.

Therefore, the wrong industry is an industry with no market demand or a small market. The first principle of the right industry is that your things are bought by people, and the demand is still large, which will give you a lot of room for growth.

The second suggestion: Enter the industry that represents the future trend and make products that will be popular in the future
Ponter asked me, "Grande, what is a trend?"
I said that the trend is that this industry will be popular in the future, and related products will be used by many people in the future. The space for popularization is unlimited, but there are not too many people using this product and service now.

Ponte said: "People like to drink milk tea now, so if I run a milk tea shop on the streets of New York, will I make money?"
People do love to drink milk tea, but does it have to be a profitable business?Conventional wisdom tells you that what people are doing must be profitable.But good business sense is this: there are already too many people doing it, so when you get in, it's probably not very profitable.

The industry that represents the future trend shows that its growth space is in the future, not today.Just like 10 years ago, you thought of the smartphone market and then developed a super easy-to-use smartphone, so now you must be a billionaire.At that time, few people used smartphones, but it was promising, because the trend was -- "People will use smartphones on a large scale."Today, if you develop a new type of smart phone, it may not be very popular, because this thing is everywhere, many manufacturers are competing, lowering each other's prices, and the technology has matured. After you enter, survival is a problem. , let alone want to develop and grow.

Therefore, finding a trending product is the guarantee of our entrepreneurial success.You have to make a wish and set a standard: "My eyes are on the future. I will make products that will be popular in the next 5 or 10 years, not now, so that I can succeed." That's right, just like Jack Ma's first When you think of doing Taobao, just like Tencent developed WeChat, it is very difficult for you not to make money.

The third suggestion: industries with few competitors

If there are too many competitors, you may die as soon as you enter, or your customers are easily robbed, or the profit margin is too small, just like a piece of cake, if you are the only one eating it, you can eat whatever you want.You can sit and eat slowly, or you can enjoy the pleasure of swallowing in one bite.But if many people are eating at the same time, and a group of people stand by with knives, staring at it, you can only rush to eat it.You have to fight to the death with your opponent in order to get a share.

The fewer competitors, the greater our chances of establishing a market advantage and making a lot of money.This is very important for novices. You just started your business and don’t have much practical experience. You will suffer a lot and fall a lot when dealing with so many competitors.Among them, 80% have no chance to stand up after falling once.

The common sense of competition in the market is: the best competition is competition without rivals.Find an industry with few competitors or even no competitors to take the first step of starting a business, and the chances of success will be greater.We can turn our attention to some newer markets, and then look for an opportunity to try it out. At this time, most people are still waiting and watching. If you take the first step, you can gain a firm foothold and harvest the first bucket of the industry gold.If you are strong enough, you can also become the designer of industry rules.

Isn't this what every entrepreneur dreams of?
The fourth suggestion: industries with less initial investment

Why the extra emphasis on this?Because the amount of initial investment represents the size of the risk.This is related to the experience of the entrepreneur. The less experience you have, the less money you should invest in the initial stage, so as not to increase the amount of possible losses.Therefore, you don't have to consider industries that require higher funds, such as real estate and financial industries.Industries such as advertising design, consulting services, and catering are all options.

In short, at the beginning of starting a business, keep everything simple, start with a small budget, and avoid failure.After we have successfully taken the first step, recovered the cost, and accumulated a certain amount of experience, we will expand the scale and increase investment.Steady operation will have the possibility of success in the later stage.Many people fail to start a business because they are blindly seeking speed and bigness. They wish to invest as much money as possible. He only needs 30 yuan, but he just invested 100 million yuan in it. As a result, when something goes wrong, all I paid for it.

I have a relative who invested in a bar in China a few years ago.He chose Hangzhou as the starting city, with the goal of becoming a first-class bar in the country and creating a bar culture that leads the trend.When he asked me to give advice, I said to him: "This plan needs at least 500 million to build a basic platform. You'd better lower your expectations in the first year, invest 100 million first, and put your first company Do a good job in the bar, and wait until the second year to stabilize and make a profit before increasing investment."
He listened and nodded, but forgot my suggestion when he went back.Within half a year, he invested more than 200 million. The bar was decorated very well. He recruited a group of talents in the bar industry with high salaries from all over the country. He spent a lot of money to invite many celebrities to stay in the venue and perform guest performances. The popularity became very popular. .But a few months later, when he settled the accounts, he suffered serious losses: "The investment was too high, the airs were too high, and the investment in the later stage remained high, so it was difficult to close." After another two months, his capital chain was broken. They can only find me again and ask me to help with financing.

This is the manifestation of a serious lack of common sense, and it is doomed to failure.For entrepreneurship, as long as the effect can be achieved, the less investment the better.Don't think that if you spend more money, you will get more benefits. This is not a truth in shopping malls.Good businessmen are good at getting the greatest return with the least cost.

The fifth suggestion: industries that are not restricted by region and location
If a business has high requirements on area and location, you'd better not choose it.For example, which kind of business is best to do, selling Peking duck or selling tea eggs?Some people like the former, but I take the latter for granted.

We can sell tea eggs at any place, such as the gate of the community, the commercial street, near the school, next to the office building, these places are all fine.If you sell for a year, you can complete the initial capital accumulation, invest 2, and you can get a 12% return in 200 months.The key is that you can do this business in any position, and you are very flexible.However, there are strict restrictions on the area of ​​Peking duck. There may only be three to five suitable places in the whole city, and only when it is opened in Beijing can it be regarded as authentic Peking duck.There are strict requirements on the region and location, and you will face a bottleneck in the selection-projects like this cannot be the choice for starting a business.

The sixth suggestion: industries with large profit margins

If the annual turnover is as high as tens of millions or even hundreds of millions, but the profit is only hundreds of thousands or millions, this kind of business is not cost-effective for entrepreneurs.Early entrepreneurs must choose industries with higher profits in order to quickly complete capital accumulation.Just like selling tea eggs, although it is a very inconspicuous project, its profit margin may be doubled.An egg costs 4 cents, and the total cost of making tea eggs is only 56 cents.You can sell it for 1 yuan at the gate of the school, 1 yuan 2 at the gate of the community, and 1 yuan 5 near the office building.A small cost in exchange for a higher return.

In addition, high profits are only the first basic condition, and the risk must be relatively low.Ponte said: "I set up a company to speculate in futures and operate stocks." Yes, financial companies are very profitable. The highest profit rate can sometimes reach four to five times. They can often spend a small amount of money to make a lot of money. Commoners become multimillionaires.But the risk is also extremely high, and once you lose, you can't bear it.This kind of business is not suitable for entrepreneurs.

The seventh suggestion: industries that require less management ability in the initial stage
Ponte asked me: "I'll prepare a high-level management team first, it should be fine, right?"
If you have natural management resources, of course it's a good thing.But management is a complicated project, and it also costs a lot.Therefore, a good entrepreneurial project must have less requirements for initial management, and will not distract your energy, so that you can put all your thoughts on sales and opening up new markets.

After completing the basic construction of the company, build a high-level management framework instead of having to arrange it in place from the beginning.It would be too much of a burden on the company if Ponter spent a huge sum of money on managers before he started making money.I have seen many entrepreneurs fail in this situation.They have established a company, and before they have sold many products or opened up a large market, they have already invested huge sums of money in management and personnel, accounting for more than half of the company's costs.The result is that no more money can be invested in market development.Before making a profit, the company's capital chain is broken.This situation must be prevented.

The eighth suggestion: industries where products are difficult to copy
Products are hard to copy, which means your advantage is hard to imitate and steal.In this way, it will be difficult for your competitors to pose a threat to you, which will make it easier to succeed and make money faster.If you create a product by yourself and it is copied all over the street as soon as it is put on the market, and they squeeze you with a lower price, then it will be difficult for you not to go bankrupt.

someone else's not yours

Some people like to imitate successful people: "I will do whatever he does, and it will definitely work. At least things that have been proven by the market will not be so bad, right?" But first, no matter how successful a successful person is, they still It's his, not yours.Only what is yours is truly yours.Second, everyone has their own different situations, and what suits him may not necessarily suit you.

This common sense is for success patterns.Any successful business model can, in principle, be quickly replicated to form a market size—this is feasible, but no one can guarantee the success of the replicators.

Mei Lin, CEO of Huen, a famous women's clothing design company in Miami, said to me: "We released a new model of OAO (OnlineAndOffline, Online and Offline) in 2010, which is a platform for free designers to participate in our design work, and to The online sale of this launch has been a huge success. It's a great fit for us, but it might not be right for another company."
Mei Lin thinks that it is difficult for other companies to copy successfully.Subsequent facts also proved her judgment. By 2014, 17 related companies in the United States had copied Huin's marketing design strategy, and some invested huge sums of money in comprehensive transformation, but in the end they failed one by one and returned to the old road.

After Dell created the direct sales model, many IT companies around the world also tried to learn from it and borrowed its model, but none of them could achieve real success.Why can Dell but others can't?

1. Brand effect unique to Dell
Dell already has a world-renowned brand with high user acceptance, which reduces its direct sales costs.The convenient purchase method can also be quickly accepted by users.Other companies lack this condition, and the cost paid is much higher, so that it is difficult to bear this high price.

2. Customized high efficiency and huge price advantage
This has brought great attraction to users, which is exactly where Dell's goal lies.They hope that they can respond quickly to market demand, spread value, and improve the company's operating efficiency, not just sell a few more computers.Driven by the direct sales model, Dell has also completed its own transformation.Other companies lack the corresponding soil to follow suit, and failure is natural.

3. According to the consumption habits of users

It is very important for enterprises to understand the habits of users, and the successful methods established on this basis are effective and long-lasting.Dell has keenly discovered that a large number of consumers are willing to contact sellers directly through the Internet and telephone instead of going to supermarkets and stores.The direct sales model designed for this group of people can certainly be successful.

In addition, no matter how good the business model invented by others is, if you do not have a well-trained executive team under your hands, it is impossible to learn successfully.No matter how beautiful the scenery you paint, you will end up with a waste product due to your poor painting skills, which will lose the value of the original work.Therefore, when Huin Design Company and Dell use their own models to develop the market, the footsteps of followers are frequently blocked, and they do not understand the difference between themselves and these two companies.

Therefore, when someone advises you to learn from successful people, the first thing you need to do is not to follow suit immediately, but to doubt and examine—this is not only an all-round "scan" for successful people, but also for yourself.See what the other party has and what you don't have, analyze the key reasons why the other party can succeed, and then see if you have it.

Entrepreneurs are most afraid of copying what others say, and following others without thinking-it is often the first to fail.I hope you can understand - before you succeed, you should work hard and focus on doing practical things, instead of talking about "what model you have created or are using".

Maybe you can successfully copy the successful model of others and achieve temporary success, but do you have both hard power and soft power?I'm not telling everyone not to imitate other people's successful models - you can imitate, but you must have your own innovation.

Reality - Chinese companies that adopt innovative models win
Based on my understanding of Chinese companies, most of the companies that can finally break through the siege and stand at the forefront of the industry rely on their own innovation capabilities-they were once imitators of advanced companies, taking "others" for their own use. But they realize at the same time: These are not their own after all.At the right time, adopting innovative ideas and completing the transformation of the enterprise, the transformation into a successful enterprise is truly realized.

Over the years, foreign Internet giants, such as Microsoft and Google, have been working hard to gain market share in China.However, under the competition of the innovative model of China's local Internet companies, almost all multinational giants have been defeated, and Google even withdrew from the Chinese market.Chinese Internet companies such as Tencent and Alibaba have developed rapidly in the past 10 years. They have established their own innovation models relying on the local market and have emerged as giant companies that cannot be ignored.A similar phenomenon is also happening in the electronics industry. Chinese companies such as Huawei and ZTE have also gained a firm foothold through their own innovation.

One of the interesting phenomena is that these Chinese companies played the role of "good students" of foreign giants at the beginning, imitating their business models to a large extent.For example, Tencent's core product QQ imitated Israel's ICQ.It's just that Chinese companies don't just rely on copying other people's models, but have carried out good local innovations.Without this innovation, I believe they would not be where they are today.

Innovating on the basis of imitation is a route that all entrepreneurs should learn and follow.

Types of innovation - you have to be innovative before you can be yours
Innovation is divided into three types: efficient innovation, destructive innovation, and sustainable innovation.

In these three different cases, efficiency innovation generally occurs under the premise that our products need to reduce costs.As costs get higher, the need to cut costs increases and productivity must increase.In the past, 10 yuan could produce a product, but now it needs to be reduced to 7 yuan, and there is a demand for innovation.

(End of this chapter)