New Entrepreneurs are Easy Prey for Dubious Merchants

In California, we have an old saying, “The only people who made money during the Gold Rush were selling shovels!” But a gold miner needs a lot more than a shovel. More importantly, he needs a map. And the folks selling shovels can’t help with that, because if they really knew where the gold was, they wouldn’t be selling shovels, they’d be mining the gold themselves.

There are way too many folks out there today selling “shovels” to the entrepreneurial “gold miners.”  They’ll help you with your website, your social networking, your on-line business, and even your pitch, as long as you make all the sales.

The idea behind the “shovel” merchants is to find folks who are excited about the possibilities, hyped up by the media, and possibly over simplifying the sales process.  If you are a new entrepreneur, you may be like the miner without the map. You’ll buy the shovel because you think if you’re going to mine gold, you’ll need it… assuming you’ll find gold, that is. The merchants will load you up with goods, services and applications you think you need …everything except the map. Bonnie has an expression we think is apropos, “If we had ham, we’d have ham and eggs, if we had eggs!”

Many of the products they’ll sell you are premature for your business development, based on faulty assumptions, or down right unnecessary.  Many require costly subscription fees and even require “experts” to run those services. Many of these services are trying to be all things to all people, so you wind up paying for services you will never need. Still, they require a myriad of plug-ins that work around their short comings. But what do the sellers care? They got your money and they’re down the road.

The map to the gold can only come from one source: another successful gold miner! In the case of entrepreneurship, this is an entrepreneur who has actually successfully started and run a business, and is now willing to share the secrets that lead him or her to the “gold.” These are the folks you should be seeking out –  especially when you’re starting out. For one thing, they can save you a ton on premature overhead and monthly fees because they too have made those same mistakes. They will help you focus on building the true client base that justifies buying any supportive services, as well as identifying exactly what kinds of services you need, and more importantly, when.

New business owners who have recently been funded are sitting ducks for the shovel sellers who prey on those looking for the “next” gold rush. Today entrepreneurship is the next gold rush. Don’t be swept up in the hype. It’s really all about getting and keeping your customers. Take a closer look at that reality first! The tools and services won’t guarantee those customers but acquiring those customers is absolutely necessary to be able to afford taking on additional overhead. And how do you acquire those customers? Talk to successful entrepreneurs who have already done so, built their business, and even monetized their brand equity. These are the folks with the gold maps!

We can’t tell you how many failed businesses we have seen that loaded up on needless overhead before they ever made a sale and just flat out, ran out of money. Today’s access to capital through crowd funding seems to exacerbate this problem. Often, neither the crowd doing the funding nor the recipient of the funding fully understand the process of achieving a positive cash flow. They are both clouded with the hype surrounding the product or service itself, and they believe taking on major overhead is a requirement for success. So they tend not to scrutinize the investments in overhead until it’s too late!

Bottom line: Buy a map before you buy a shovel!