3 Things You Must know in Order for Your Business to Make It


I love the entrepreneurial spirit. People who can see opportunities where most can’t and have the guts to jump out into and make it happen, are some of my favorites. In my experience, most business owners start their companies without all the “facts.” While some might have a well-thought out business plan, most only have an idea, a lot of passion and energy and enough gambling instinct to pull the trigger on and move forward. But while no amount of education or research can prepare you for the real world of business, here’s a few  things you must figure out if you’re going to make it whether you’re starting a free-lance business out of your home, a manufacturing facility, or a marketing agency.

start up business rules

Who is my ideal customer? My company became a lot  more profitable once we decided what our ideal customer looked like. We realized that some of our clients were not a good fit for us and we let them go so we could pursue those whom we could serve better.  A critical mistake early in most business is finding clients anywhere you can. Whatever comes your way, you are compelled to take because, after all, it pays the bills, right? Not always. By saying yes to a client or even a industry that’s not a good fit for your product or skills might lead you down a path you don’t want to go. I helped a friend through this dilemma who was getting several requests from small business in the food industry because he said yes to an acquaintance and undercharged for the project. He was busy with requests that were far too small of projects for his business model.

What are my true operating costs? “I don’t think I can charge more than $50 per hour,” the man across the table said. “But how much does it truly cost you per hour to operate?” Unfortunately, he didn’t know the answer.  If you don’t know your true costs, you won’t be in business long.

Is my business model sustainable? I know people who have been pouring their lives in a start up that cannot pay them much, sometimes nothing at all. I remember telling someone recently, “you don’t have a business; you have a hobby.” Unless you are able to pay for your work and continue to build the business, you don’t have a sustainable model. Volume, product quality, recognition are all irrelevant at this point. If you’re not charging enough, then up your prices. If you cannot compete in the marketplace because your prices are too hight, do something else.

Have you ever started or thought about starting a business?

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  • Maurilio, I like the term “ideal customer.” I often ask clients “What’s your target market?” and they respond with something really broad like “families” or “business owners.” Asking “Who’s my ideal customer?” forces a person to narrow their focus.

    • It has helped us to move from a large pool to a more specific and better client base. It’s not only beneficial for our company, but for the organizations we serve.

  • The ideal customer thing is critical. Important to say NO from the beginning if it’s not an ideal fit but sometimes you also have to be willing to end it after it’s begun. Sometimes I’ve “thought” a client was the right fit then, after getting into the relationship, come realize they were either too needy or, despite our best efforts, out of scope with expectations versus what was agreed to on a project. nnThat’s a hard reality to face sometimes but being willing to end it before it sucks the life out of you is important. I used to let it drag me down and try to force it to work (when I knew it wouldn’t) but have learned that lesson the hard way.

    • You’re right, the wrong customer can suck the life out of you and your business.

  • Karl

    Thank you for this. After reading this post, I’m evaluating my business model.

  • Great post. Might I also suggest Avg. Lifetime Value of a Customer and Avg. Cost Per Acquisition. I suggest those because only then, can a business owner begin to evaluate the effectiveness of advertising/marketing and begin to see those as investments vs. expenses.

    • Those are great to know. The cost of acquiring a new customer and the potential annual income for them is critical information. Thanks for sharing.

  • This is very simple, yet helpful advice. I’m currently looking into starting my own freelance business, and am falling into the trap of taking anything that comes my way. Thanks for the reminder that it can be wiser to just say no.

    • Taking whatever comes your way will quickly put you in a corner you don’t want to be in and will define your business faster than any marketing message you come up with. The best thing you can do is go after the audience you want and don’t wait for them to come to you.

  • Marissa

    Maurillio (can I call you Maurillio?) what books or resources did you turn to before starting your business?

  • Good stuff. The first point seems to be where a lot of small businesses and big corporations alike have slippage. A common distraction seems to be trying to compete on the wrong fronts rather then staying focused on our niche. I have observed organizations rush to create “new markets” only because they feel threatened by their competition. Organizational change is a good thing, but it better be strategic…

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