Show notes from podcast episode 36.
I recently read The Dip by Seth Godin. A short book (about 75 pages) that took me just a few hours to read. I took some notes and did some thinking and writing. Let’s talk about how it relates to entrepreneurship.
Everything in life has a dip. At first itís fun and exciting. You make a lot of progress really quickly. The learning and early achievements keep you engaged.
Then the dip happens. The learning slows down. The excitement wears off.
There is a dip with everything in life – especially the things worth doing. Think about a new relationship and the excitement and bliss that comes along with that. Then once the new wears off relationships take work and dedication like anything else. Think about weight loss. Losing that first 10 pounds is easy and exciting. Sometimes you can do this in a week or two. Losing that last 10 pounds can take months of sacrifice. Picking up any hobby. Doing any job.
As weíve talked about there is no perfect opportunity. There is no home run. There is no open uncontested market where we have a red carpet laid out in front of us to success. It takes hard work for a long time to grow something special and build the life we want.
The dip is incredibly real in entrepreneurship. Once the fun and excitement wears off it becomes work. SEO takes a long time to kick in. Word of mouth marketing takes momentum and a solid customer base before it starts to work. You may need some degree of volume before you reach profitability. Itís a long term game and it isnít always fun.
Winners know when to buckle down and push through the dip and when to fold the cards and move on. Winners know when to turn down opportunities. Winners have the guts to stick with the right stuff and give up on the wrong stuff and the logic to make good decisions on which is which.
Its all about consistent delivery over time. Joe Pulizzi, the author of epic content marketing talked about the content marketing timeframe. The amount of time between when you start delivering consistent valuable content to when you can monetize it. The shortest time frame is 9 months. The average time frame is 15-17 months. You have to add value first and build that base before you can profit.
Business is no different. You are going to have to work hard for 9 months before the traction starts to pick up. Before the SEO kicks in. Another year before the word of mouth marketing takes off. Another year after that before you can build out systems and step away and start spending your time doing what you want. Its a long game.
Dan and I didnít pull any money at all out of Storage Squad for the first three seasons. We put every dollar back in. We did a food budget for $5 per day when we were living in his uncle’s house in Chicago working for a year. We slept in warehouses or on friendís couches because we couldnít afford hotels while we were on the road.
Things move very very slowly for a long time and then they all happen at once. Its crazy how this works. You might be working on several different business deals at once and they all move very slowly. Some fizzle. Some continue to develop. Working hard on processes or just simply putting your nose down and working for a little while to push through when all of the sudden a lot of big things happen at the same time. I think this is common among entrepreneurs and most people feel like they have big wins suddenly and in rapid succession when you least expect it.
How do you know when you should push through?
Before you start you need to do a thorough market analysis to verify that the customers are plentiful and the competition is weak. Iíll quickly go over the basics:
Make sure competitors are out there doing exactly what you are thinking of doing. This means there is a market for it. This means customers exist. If there are no competitors you have a new idea. New ideas are risky and I donít like spending a bunch of time and money on something that is risky. You are stuck trying to convince customers that they need what you are offering. You are creating a market. That takes money and risk and I donít like it.
Make sure the competitors have more customers than they can handle. The best way to do this is call them on the phone and find out their lead time. You can get a feel very quickly for their volume. Luckily – most in person services are growing as companies and people outsource more and more. This is a good sign. Check this box.
Find some flaws in the competitors that you can gain a competitive advantage on. My favorite here is online presence, content marketing and customer service. You need to be able to be more accessible, have more eager professionalism and less lead time. People are willing to pay more for service tomorrow vs next week. Make sure there is a hole there.
If you havenít done this market analysis stop now and go do it. You canít make an accurate decision without it.
Is the light at the end of the tunnel worth working towards? What are the odds of success?
This is why I hate new ideas. The gains can be massive but the odds are against you. Working hard for years and investing money on a 5% chance of success is not a game Iím interested in playing. That light at the end of the tunnel is not worth working towards – Iím quitting and moving on.
Do you understand that value isn’t the same as money?
The hard and important work is understanding value. Itís easy to ignore value because we canít see it, touch it or count it. It isnít liquid this very moment. In order to trade it for money we need to nurture it and invest in it and make it legible to others. The successful entrepreneurs know this all too well. They know how to recognize it. They know how to measure it. They know how to grow it. They know how to invest in it and build it.
What is your definition of success?
How much money do you need to live the life you want? What is your number? Get this number and work backwards. Can this business achieve this for me? Professional track and field. If the answer is no Iím quitting and moving on.
How good do you need to be to get there?
This is why I donít like online businesses. You can definitely win and people do win big but its hyper competitive and you have to be in the top 1% to win. I donít like those odds.
An important part of this is that you have to realize not all value is measurable in money and this business doesnít have to be the end life goal. Too many people donít start or finish a business because they have big dreams to change the world.
Understand that your business is simply a stepping stone to what is next. You are doing the long hard work without instant gratification so you have more OPPORTUNITY later and you LEARN A LOT. Your network will grow. You will learn more about management. You will buck your 9-5. You will do something bigger and more specialized next time. You will make more money down the road. You donít need it all right now.
Not every dip is worth pushing through. Time is your most valuable asset and itís very limited. When should you give up?
The people who win in life are really good at making the decisions to give up.
How do you frame the decisions and what should you keep in mind? When the going gets tough how do you make the decision?
Set measurable goals with time stamps. Donít just fly by the seat of your pants and treat every day as a new day. Think a few years ahead and work backwards with measurable goals that you can quantify. Customer numbers. Revenue figures.
Donít be afraid to cast a wide net and specialize as opportunities develop. Look at all the side gigs Iíve explored simultaneously. Be careful not to spread yourself too thin and have the courage to say NO when your energy is best used in the most promising endeavour.
Keep your emotions out of it. It is so easy to pursue something because its your passion and not because it makes logical sense and there is market need. Be a stoic and look at things with a clear mind. This is absolutely critical. Fear, anger, greed, passion can all cloud your decision making.
Avoid the sunk cost fallacy. Donít waste another precious second if you realize the outlook is bleak and its time to move on.
Trust the process. Trust your instinct. Power through it if the light at the end of the tunnel is bright and the odds of reaching it are worth pursuing.
Embrace the struggle and realize that if it were easy everyone would do it. Itís the dip that creates opportunity and scarcity. There is a hole in the market precisely because of the dip and the long period between initial launch and profitability and sustainability.
Iím at the dip with this podcast. The excitement has worn off. The number of downloads over the last few weeks has leveled off and even dropped a little. Iím investing about 5 hours of my valuable time per week in this – so how do I frame the decision if its still worth it?
I came into this knowing that the dip would happen. That it wouldnít be fun all the time. That it would take years to gain a significant following.
I started with a goal. In 5 or 10 years I want to be a public speaker, a teacher and a writer. And I want to do this for fun and not money. Iím on a mission to spread this type of entrepreneurship to people who initially just glossed over it and wrote it off. I want to leverage this platform someday to help and influence a lot of people and help them change for the better.
What are the benefits? Iím learning a lot about myself and entrepreneurship as I study and prepare the content for this podcast. My thoughts and life goals are more organized. Iím getting better at speaking and presenting my thoughts to listeners. Iím getting better at telling stories. Iím getting more confidence. All of this translates directly to my business and personal life as a major benefit.
Iím meeting amazing people from all over the world already. Iím developing relationships with people who have a very diverse skill set and we may be able to collaborate someday.
So Iím sticking with it and fighting through the dip because itís worth it and I am certain that 3 years from now Iíll have some opportunities that will make it all very worth it.