One Saturday afternoon, a lawyer was making himself a cup of tea when he noticed a leak coming from under his kitchen sink. So he picked up the phone book and called his local plumber, who turned up within an hour. The plumber took out a spanner from his tool bag, fiddled with a pipe for a couple of minutes, then announced the problem was fixed and handed the lawyer a bill for £250.
“£250? That’s preposterous!” blurted the very agitated lawyer. “Even I don’t charge that much, and I’m a lawyer.” “No, I didn’t charge that much when I was a lawyer either,” replied the plumber.
An amusing story, yes, but not all that implausible when you think about it. This relates to our question. Why do people really go into business? Or perhaps more accurately, why SHOULD
people really go into business?
Most people, when they go into business, do so because they believe they will be successful at doing something that they know they are already good at, where they have loads of experience or which is related to their existing profession. And a very sound strategy this is too. Noone in their right mind would start up a business doing something that they knew absolutely nothing about, would they? Well, maybe we should look at business failure rates a bit closer, because they reveal that many people fail because they do exactly that – they start a business that they know nothing about. Incredibly, this is especially the case for entrepreneurs who have already run a successful business and then, in a misguided fit of omnipotence, think they can run any business in any sector, where they’ve got no experience at all.
So why would – or why should – a lawyer decide to become a plumber?
There’s a famous story about a bank robber who wreaked havoc during the 1950s by successfully knocking off banks in several American cities without getting caught. However, one day he finally ran out of luck and, when captured, was asked why he did it. His reply, so the story goes, was: “Because that’s where the money is”. See the point? And no, it’s not that you should start robbing banks.The point is that smart people who go into business, or change their business, do so because they can see an opportunity to make money, and in some cases quite a lot more money than they are currentlyearning. This principle applies whether people take the plunge in their current profession or area of expertise, or go into a different “profession” where they learn, get trained up or team up with someone who knows what they’re doing. The right formula for pursuing a successful business opportunity involves not only understanding the business you are going into and how to deliver a professional service to your customers, but also, and more importantly, recognising that there is sufficient demand and a large unfulfilled gap in the market.
In other words, it’s about working out that there’s going to be enough money in it that you will be able to cover your costs, turn a profit, and potentially grow your new enterprise.
The joke above may be a bit far-fetched, but in reality a lawyer could quite easily decide to become a plumber because there is a national shortage of them, and there is a large, regular, repeat-buying market which has to find the money to pay for the service. If you can see an opportunity where there’s money to be made, where there are people willing to spend it, and with a gap in provision of the service, then that’s a real business opportunity worth looking at.