Entrepreneurship

The Intro to Entrepreneurship class I'm in is interesting enough that it's got me thinking about it outside of class.

Today we went over a concept that applies to frambeuilding as well as a lot of other stuff.
A successful business plan requires two things:
1. It has to have value. This involves a viable target market, a product that fulfills a need or want, a functional supply chain, etc.
2. It has to defy imitation.

Without #2, it's hard to have a growth business. Folks can easily do what you do better if the market is attractive enough.
There's a few ways to get #2 if you don't have it. A patent offers a limited solution: patents are expensive and take years to get, and someone could always reverse-engineer the patented idea or make a minute change.
Another way is to add an artistic element to the product or service. An artistic product has caché; the fact that it was created by a particular artist/craftsperson gives it value. Someone else copying the product would have to build their own caché to have the same success. This is what Richard Sachs talks about all the time: it's the builder, not the bike, atho.
The last way is relevant as well. A business person's network of suppliers, distributors, and customers is proprietary and may be impossible to duplicate. The most extreme example is business in small towns; a handful of people may control so much of the local commerce and politics that breaking into that market can be impossible. On a broader level, a relationship with a supplier of raw materials may ensure the survival of a manufacturing business. This seems more akin to the relationships Shimano must have with OEMs.

Lastly, here's a great bit about small business marketing from the excellent Sweetpea Cycles blog:

[The accountant] looked over our documents slowly interpreting the numbers on the page trying to understand the story that they told, and after a long silence asked “What’s this two hundred bucks for marketing?” “Mostly website stuff,” I answered.

He took off his glasses and looked at us. “Can I offer you a free bit of advice?”

“Kids your age feel comfortable doing everything on the internet. But a lot of people my age need something to touch. You know, something to hold in their hands. You guys need to spend a little money and get some brochures or something.”

It was like the Zen Master had hit us on the head with a stick.

3 comments:

Austin said...

Ethan,

Thanks for the mention. We think a lot about what it means to be in business and about entrepreneurship. Sometimes it feels a little foolish as its just the two of us, but other times I think it makes a ton of difference.

Here are two videos that give us direction/inspiration:

Yvon Chouinard
http://tinyurl.com/2m65zp

Guy Kawasaki
http://tinyurl.com/3ap2as

Austin
Sweetpea Bicycles

Alistair said...

Ethan,

good observations. You've touched on some things that I've often wondered about when it comes to framebuilding for a living. What you've written makes sense.
Since you're in Richmond, you may find this interesting.

http://tinyurl.com/2cljow
(click on the name Kelvin Owen from the list on the left side, can't seem to link to it dirctly)
Cheers, Alistair.

Brian said...

I've been searching far and wide for a suitable definition to the phrase "have caché" as in "he has caché". But I have been unable to find one.

Seeing that you've used the phrase twice in this post, I hope you can explain it to me.

The word "caché" means "hidden" in French. But I just can't see how this fits. How can someone or something have hidden? How can you build hidden?

Please enlighten me. It's been bugging me for quite a while now. Thanks.