I was watching a British made series about entrepreneurship on the weekend. The focus of this episode was a pair of couples who started a hotel.
They invested a lot of money into the hotel (furniture, renovations, etc). When they opened for business they seemed to have one problem: no guests!
Only after they were bleeding so much cash that they almost had nothing left did they realise that they had to get moving on marketing and getting guests into their hotel.
Lesson learned?
The first thing you need to do before starting any business or venture is to ask yourself:
“How do we sell this?”
Only once you’ve figured out how to do this, should you even consider moving onto the next phase of your business.
I recently read the latest shareholder letter from Warren Buffet to the shareholders of Berkshire Hathaway. In it he writes something to note:
“…if a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area’s premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership’s moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can’t name its CEO.”
Here’s a good question to ask yourself to determine if your business is a great one: “Will your business endure if you or your star employee/figurehead is not there?”
