Courtesy of Forbes
While it is obvious that no one approach GUARANTEES entrepreneurial success, it is clear from everything we have learned so far, that there is a PROVEN path that increases your odds.
As we have seen, it breaks down into the following steps. You:
- Determine what it is you really want to do.
- Take a small step toward that goal.
- Pause to see what you learned from taking that step and
- Build off that learning.
- Take another small step.
- Pause to see what you learned from step two.
- Build off that learning….
This Act. Learn. Build. Repeat approach is one that the most successful entrepreneurs use in creating their company.
Shawn Gardner, 40, is trying to join their ranks.
Shawn who works for the Saratoga, California parks department loves his job. But he realizes that these days public employees are not the most popular people around and with budget cuts always looming he figures it would be a good idea to hedge his employment bets.
“With the changing economy, there is tons of uncertainty out there. You have to be the one to plan your own future,” he says.
But what kind of future?
“I was on a winter break in 2009 and wanted to rent a snowmobile for a couple of hours,” he recalls. “Not only was the price—$325—absurd but they wouldn’t provide insurance. I had just bought a house and I wasn’t going to risk it if I got into an accident. I had a debate with the rental guy but he said nobody who rented snowmobiles provided personal liability insurance.”
Shawn did not rent the snowmobile, because of the potential risk. But on the way home he noticed how many people had snowmobiles on trailers in their driveway along with boats, jet skis and other “grown up toys.”
“I spent about six months researching all this and concluded based on the median income people couldn’t afford all the toys they had in their garages and driveways. They’d buy a boat with a home equity loan, and then all of a sudden the value of their homes fell, or they lost their jobs, or they realized they really couldn’t afford to have it.”
During the Great Recession, a lot of people sold their toys, and sales of new boats and powersport vehicles dropped nearly 50% across the industry. There’s nothing more discretionary than a boat, jet ski, ATV or snowmobile.
Clearly there was a mismatch in the marketplace. You had people who wanted to rent grown-up toys as opposed to owning them. (The upkeep on boats is substantial and even if things like jet skis are relatively easy to maintain, do you really want your money tied in owning them, if you are only going to use them a couple of times a year? (A jet ski runs about $10,000-$12,000 new and people tend to buy them in pairs.)
But while you had potential demand, potential renters like Shawn thought the average rental price was way out of line. Jet skis typical rent for more than $100 an hour.
Conversely, you had people who didn’t want to sell their toys, but they sure would appreciate some extra income.
Fun2Rent was born
Shawn saw the opportunity, and it turns out he followed our model exactly. Did he have the desire to make this happen? Yes, and yes. Not only was he worried about the security of his day job, but he is “into power sports.”
As for the small steps, he had already done some research that showed that a significant percentage of the people who owned all these toys were in over their head financially and could use the extra cash that could come by renting.
The next step was to talk to potential renters. They were interested, but it was clear there was a lot to learn before Shawn could create a successful company to fill the hole in the marketplace.
For one thing, promoting the business wouldn’t be as easy as he thought.
“Google word advertising won’t get the attention of our market, I found out. Many of our customers—both owners and people who rent—work hard for their money, and are not easily convinced that they can rent their stuff or rent from neighbor. We also discovered that we needed to build relationships. The people who rent out their stuff want to know it will be taken care of.”
That’s why offering insurance was important, as Shawn assumed it would be, but so was a rating system where people—both renters and the people renting their stuff—could comment about the person they interacted with.
Shawn also learned that these owners needed help in determining what they should charge. Obviously, people renting their stuff want to get as much as they can, but high prices scare off potential renters.
He suggests people looking to rent out their stuff look around and see what traditional rental companies are charging and price theirs at a substantial discount. Our average, he says, renters charge 50% less.
Shawn’s company, which takes a 25% commission for handling the transaction, is now in the the Beta phase and is looking to expand and is going to go through the Act. Learn Build And Repeat Model again.
We are in the middle of an experiment
From now until the end of October you have the chance to shape this space. During that time this blog will be devoted to discussing the very tangible problems you have in starting and growing your business—how to get financing; what kind of customers should you target; where and how to market, and the like.
You suggest the topics and talk about the concerns you have (and also what you have found that works well) and your peers will offer their suggestions, and raise concerns of their own. I will go through everything, cull the best answers/comments/ideas, and as a micro business owner myself (as well as someone who has been writing about this stuff for more than 30 years) will add ideas of my own.