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Home» Entrepreneurial Advice » Starting a business – is the business you choose viable?

Starting a business – is the business you choose viable?

Posted by danfurman - June 28, 2009 - Entrepreneurial Advice, General Marketing, Success
7

My wife Maryellen bought a computer today.

Long time computer junkie that I am, I would normally be very interested in the specs, but I wasn’t. I just told her to go to Sam’s Club (she likes shopping there) and buy whatever she wanted.

Because you know what? The “specs” really don’t matter anymore.

There was a time when it really mattered. Like I said, I’m a computer junkie – I’ve built and repaired more computers than I can count. I can remember setting up a new sound card in DOS, and the absolute magic that Windows 95 was (where plug n play sort of worked!) I was always concerned with processor speed, cache, megahertz, gigahertz, RAM, Video RAM, etc etc.  (stay with me – I do have a point to make.)

But today, computer specs hardly matter anymore – almost any machine you buy off the shelf will suffice nicely. And they are now dirt-cheap – Maryellen bought a new Hewlett Packard with fairly high specs, with a beautiful 22″ LCD widescreen monitor, for about $700. Are you kidding me? At one time, I spent $500 on just a video card. And $200 for another 4 megs of RAM. And put em’ in myself…

My goodness, computers have been reduced to TV’s in terms of buying new – buy one, when it doesn’t suffice anymore, you buy another. No need to ever buy parts or fix them or such.

So how’d you like to own a computer repair shop today? (see, I told you I had a point)

Really – ten years ago, there were no less than 7 local computer repair shops in my area. Today, there might be one. And I’ll bet business isn’t so good.

Same with video rental stores – remember how many there were ten to twenty years ago? My goodness, they were everywhere… and now they’re almost all gone.

They say hindsight is 20/20, but in both of these businesses, I feel the end was clearly in sight. In fact, in one of my first business ventures back in 1991, one of the many things I did was sell local ads on the boxes you brought your videotape home in. I’d provide the video stores with my boxes (so they didn’t have to buy boxes), and also paid them a few dollars for using the boxes with the ads pasted to them (making this a no-brainer for video stores.)

So I got to know a lot of video store owners – and I remember asking a few “doesn’t this seem like a limited lifespan business?” Pay-per-view was just getting started, and if that wasn’t HUGE writing on the wall, I don’t know what is. Plus, I also knew that people would rather own many of the movies – if the price was right (and in 1991 it wasn’t, but that would soon change with DVD.)

But none of the video store owners thought their business would ever end. I know quite a few of them lost a LOT of money in the end. And really, with a little objectivity, they could have seen this coming.

And that’s my point – if you are starting a business, be truly objective in the viability of your business. Because I’m sure it sucks royally to spend 5 years building something up, and then seeing it go under a few years later.

7 comments on “Starting a business – is the business you choose viable?”

  1. Jennifer Taylor says:
    June 29, 2009 at 2:51 am

    I remember when VHS tapes were roughly 79.95 in 1988 prices.

    (What cost $79.95 in 1988 would cost $143.71 in 2008. )

    Now 14.95 isn’t usual for the price of a DVD. I wonder what brought the price down. Even VHS tapes became cheaper after a while.

    But back to “Rabbit Ear” industries. I see that with the graphic design industry. In many ways, it’s already here.

    There will always be a demand for good design, people that can convince with images but a great deal of the basic services can be done with a computer, a printer, and some basic software. A graphic designer could do it better but people are happy with the level of design they can do themselves so why pay someone to do it when this is “good enough”.

    So while graphic design will be around for a while, 1/2 – 1/3 of the work is gone due to Do It Yourself’ers.

  2. katie says:
    June 29, 2009 at 9:45 am

    I disagree with that last statement. Yes there are some places that would do that (small mom and pop business which have been already doing that), but the bigger companies won’t. (Do you really think apple would not use a designer?)

    I have been finding that in the last two years my business has picked up dramatically. If anything people are realizing that stuff is ugly when it’s not designed.

    Saying that most business’s would do it themselves would be like saying Dan’s business is going to fail too. Most people can write, so why bother hiring someone? Well I can tell you, and probably by reading this, You can see I have no writing or grammar skills. When I build websites or brochures, and my client does not have a writer I hire one. The only way a company would do it themselves would be to hire a internal designer to keep the brand consistent.

    Most people can do a lot of things, that does not mean they will do them. The video store failed because it sold a product, you can’t go out and buy talent and install it in yourself.

  3. Jennifer Taylor says:
    June 29, 2009 at 1:19 pm

    To Katie:

    Of course, there’s always going to be a demand for talent. However a great deal of the work that used to be done by designers is being done in house. Since it’s being done in house, there’s less work for designers. Since the basic bread and butter work is gone, designers are leaving the field. Maybe the dramatic rise in your business is due to other designers leaving? (And I assume you have some talent as well).

    The post is toward the design industry and isn’t related to Dan’s writing. While there are some applications that can help you write, they don’t work as well as a basic layout program. Just because graphic design is a service doesn’t mean I think other services (such as writing) will fade. Until we get Artificial Intelligences that can write in a particular style (2100 maybe), I think Dan’s job is safe.

    I agree that much of the in house design just looks bad. Yet, most will never know. Their cousin did it and to them it looks great. “Look at me! I saved money doing it in house” There’s just something about graphic design that tells people that the can do it themselves. A novice wouldn’t try to fix a car but give them a layout program. “OH yeah… I can make do this.” And they do.

    Yet they’ll never make the connection between bad design and mediocre sales.

  4. Sharon says:
    June 29, 2009 at 11:33 pm

    It’s so interesting you mention video stores. I’ve been thinking about that model a lot. Netflix has been on top for awhile but every time I go to the grocery store I see someone at the $1 movie rental stand. Now the selection there is not great, but they may find a way to change that.

    I think it’s important to realize that your market is always changing. My husband wanted a computer repair shop to build a computer for his mom instead of just buying one because she likes some outdated technology that’s hard to find. No matter what your field looks like now, things can change. Adapting is key.

  5. Dan Furman says:
    June 30, 2009 at 12:07 am

    as much as it pained me, I deleted the “free Penthouse” comment 🙂

    I do see a general trend towards mediocrity in many “art” type work, writing and design included. But it’s probably due more to an influx of cut-rate people, not an influx of in-house DIY (not design, anyway – writing perhaps). This is because bad DIY design (much like bad DIY web design) is *obviously* bad even to the person who did it, while “bad” DIY writing is not as easy to spot, especially by the writer.

    But I don’t think those industries are in any danger of leaving. Just right now, with a recession, price matters to many people, and cut rate people will find more work than usual.

    But in the end, artistic talent and excellence will always find a way. We’ll survive, because you can’t “fake it”. Unless, of course, you own a video store 🙂

    (Speaking of Netflix, they did a good thing teaming w/ X-Box – I can stream my “view now” movies through my x-box dashboard, meaning it’s simple to watch them on the TV – way cool!)

  6. Sharon says:
    June 30, 2009 at 1:37 pm

    I think any service-based industry has these problems. Interestingly though, at least in my field, the people at the top of the game are continuing to raise their prices and get more business. Maybe once the market gets flooded with mediocrity, quality stands out more, maybe it’s about perceived value. Interesting topic, clearly generating many comments.

  7. katie says:
    July 21, 2009 at 9:55 am

    See I still disagree even if it is being done in house, they need to hire someone to do it in house, creating a job.

    “The post is toward the design industry and isn’t related to Dan’s writing. While there are some applications that can help you write, they don’t work as well as a basic layout program. Just because graphic design is a service doesn’t mean I think other services (such as writing) will fade.”

    I understand that I was just using him as an example, most people can write, it just does not mean they should or they will. It’s the same with design, everyone owns a computer with a hacked copy of photoshop, not everyone knows how to work it though.

    There will always floods of people in different fields, they come in waves, the ones that don’t last are the ones who don’t have passion for the job, or just plain suck at it. It’s good that they give up.

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