- 1 The Power of Broke: How Empty Pockets, A Tight Budget, and a Hunger for Success Can Become Your Greatest Competitive Advantage
- 1.1 Key Insights
- 1.2 Key Points:
- 1.3 The Main Take-Away:
The Power of Broke: How Empty Pockets, A Tight Budget, and a Hunger for Success Can Become Your Greatest Competitive Advantage
When we think of entrepreneurs, we tend to think of their success in the form of money.
But in “The Power of Broke: How Empty Pockets, A Tight Budget, and a Hunger for Success Can Become Your Greatest Competitive Advantage,” authors Daymond John and Daniel Paisner combat this traditional idea.
Instead, they suggest that successful entrepreneurs seek creative solutions to overcome obstacles, rather than just buying their way to success.
Furthermore, through these insights, you will learn to understand the new age of business and how marketing doesn’t have to cost a dime!
You will also begin to understand how searching for cheap, effective, and creative solutions puts companies and their innovative ideas at the top of their market. No company is too good, too big, or too important to think broke.
A Company’s Relationship with Money
Unfortunately, a big majority of new businesses fail during their first 18 months. And the reason for many of these failures is their lack of funds.
Most companies think that money is the solution to all of their problems. However, money, itself, is usually the problem.
“Life is a cruel teacher. She loves to give you the test first and the lesson later.”- Daymond John
Let’s look at a specific scenario involving money and a start-up business. If a hat designer raises a large chunk of money before going into business, he can hire a team, market multiple designs, and design the selling space. This is a great first step in any start-up’s journey.
And if he begins selling a lot of his items, then things seem pretty set for him. All is going well. However, if he fails to sell hats, then he is indebted to every investor, family member, and bank that loaned him the money to start.
So, what if this same designer started with only $500? His decisions would have had to been based on that small amount of start-up money.
He would have had to think creatively, utilizing free marketing on social media, having only a few select styles of hats, and working on a custom made-to-order basis, rather than stocking up his supplies.
By creating custom orders, the designer is actually learning his target audience more and he is able to give them what they want.
Money also does not always help in issues of crisis. Crisis management is important to any new business. Money can’t always buy you a way out! You must think outside of the box.
Take the airline industry for example. Although many planes fly autopilot, pilots must have the skills and knowledge to fly the plane when a crisis arises due to unforeseen emergencies. Having the training makes the pilot more equipped to deal with spontaneous issues.
Everyone Likes Authenticity
In today’s market, there is a direct path that makes it simple and easy for companies to speak right to their customers.
However, this has made it so that the marketplace is flooded with new businesses trying to sell. This new-age marketplace is full of passionate and driven entrepreneurs, which makes the competition tough.
“The easiest thing to sell is truth.”- Daymond John
Because it is so competitive, entrepreneurs must set themselves apart from the crowd.
Entrepreneurs reach customers from social media, a free platform. However, they must be strategic about what they’re posting in order to maintain followers. Companies that post just advertisements will often lose a great deal of their audience.
“It’s gotten to where an entire nation can be energized by the force of a single idea put out into the world in a passionate way through social media—at little or no cost.”- Daymond John
Insta-famous influencers gain popularity by posting vulnerable, raw, and real content. Companies, therefore, should follow their lead and do the same.
Nowadays, people know when a brand is being genuine and authentic or if they are just looking to sell you something. The authenticity of a brand is what draws customers and keeps them.
A start-up needs to have a clear voice and vision in order to come off as authentic. Every social media post must fit their brand identity.
How A Brand Grows
There are four stages a brand must go through in order to reach success.
The first step toward success is to create a product. This could be a purse, a table, a lamp, whatever you want to sell!
Next, a company must create a label. This label cannot have any significance, as you don’t want your new product to be linked to something else recognizable.
At this point in a company’s journey, customers probably won’t notice the label, and that’s ok. The label should not carry any positive or negative signs to give to a customer purchasing the product.
Next comes branding, the third stage. When the label takes on meaning to a customer, that is when it becomes a brand. The label serves as a warning to the customer about the quality of the product they are buying.
Lifestyle is the last stage of a company’s success. This is when a company expands on its brand and incorporates other products in order to fit their customers’s lifestyles.
Chances are if a customer likes one product from your brand, such as a shampoo, they will be eager to try different products you begin to offer, such as handsoaps and body washes.
Entrepreneurs Must Always Want More
Companies that are just starting out must be wise about the decisions they make. Every decision has the ability to kill a start-up business.
Money can oftentimes cause entrepreneurs to stop thinking clearly, developing a do-or-die attitude.
Even successful long-lived companies need to feel risk so that they don’t fall complacent.
“Life is like business, 20% of what happens to you is 80% of how you react.”- Daymond John
When companies become afraid of failure with the do-or-die mentality, they will do anything it takes not to fail, which isn’t always good.
A hungry entrepreneur can see the difference between an expensive solution and the correct solution when it comes to a variety of issues a company may face.
The power of broke encourages entrepreneurs to creatively brainstorm smart decisions, rather than just throwing money at the problem.
Even companies who are not broke should seek out creative solutions as if they were broke. This leads to major innovative thinking and effective solutions.
If companies and their people are not constantly moving forward, they will eventually die out.
A lot of companies fail when they rely on past successes and quit moving forward with the market.
The Importance of Goal-Setting
Entrepreneurs should set goals for their company in every single stage of their business.
Goals should be small, strategic, and have measurable steps. Companies shouldn’t have one big goal without a clear focus. Goals are used as a roadmap to get to success.
“Told myself it didn’t matter if my ride didn’t turn heads—it only mattered that it turned things around for me.”- Daymond John
Every time an entrepreneur reaches their goal, they should have another one lined up to begin to tackle.
However, just setting goals isn’t enough. You must hold yourself accountable by writing down your goals and setting deadlines.
A study by Gail Matthews at Dominican University found that people who took the time to write down their goals were much more likely to have success with those goals than people who did not.
And those that create progress charts and reports along the way, were even more likely to have success.
Keeping yourself accountable is vital to success.
Do the Research
It’s important to fully understand your market. You must know how others have succeeded and how others have failed in the past.
You must also know if products are innovative or even needed in the current marketplace. A comparison between your product and past and present products is an important factor to analyze.
Look at Starbucks as an example. This company conducted a vast amount of research to learn how to present itself to the coffee market. Starbucks decided it would be the place that coffee-drinkers could go for a meet-up or hang-out, or to do work.
However, before expanding to other countries outside the US, Starbucks did their research again. This is because markets outside the US may not have the same needs.
To adapt to China’s market, Starbucks added a lot of tea-based drinks, as tea is more of a staple than coffee in China.
Entrepreneurs must find a way to test out their products with their potential customers. This is better than a prediction from a focus group. You get real opinions and reactions, rather than hypothetical ones.
Be Willing To Work For Free
At times, entrepreneurs of start-ups will not be able to give themselves a paycheck. That is why it is crucial that entrepreneurs love what they do and will willingly do it for free if necessary.
A lot of start-ups are ideas sparked by the needs of the founder. For example, Sarah Blakely, the founder of Spanx, thought that pantyhose were uncomfortable and much too hot for the Florida heat she was living in.
One day, Blakely decided to cut the feet off of a pair of traditional pantyhose and wear the top-half under a pair of pants. What she discovered is the top of the pantyhose made her midsection look slimmer.
Blakely ran with this idea and planned for years, raising $5000 to begin manufacturing her product. She would go store-to-store advertising her product and eventually everyone had a pair of Spanx! Now, Blakely is a billionaire.
Every Opportunity Has Another Behind It
Opportunity is just as important as money. Networking with other businesses, people, and entrepreneurs, and fostering a relationship with a mentor is valuable too. Value is not always dollar signs.
Networking can lead to opportunities and future connections, so it’s important for entrepreneurs to spend time getting to know others in their industry.
The Main Take-Away:
Money does not create a successful business. The real successes rely on the idea of thinking broke or seeking creative solutions rather than relying on money to solve problems. Every company should think broke, as it leads to innovative ideas and breakthrough solutions.