Go read it here and print it out for future reference. It’s that good!

I think that whenever you are looking at starting a new venture you MUST figure out how to make it fit into one of these models, otherwise your chances for success and growth are marginal.

The first model is that of Category Creators. It’s pretty self explanatory from the name, but these are companies that create an industry that never existed before. The most famous examples cited in the book are Microsoft, eBay and Yahoo. Their products never existed before and met a huge need in the market. Also, they became the defacto standard because they achieved such fast adoption and growth. Finally, the timing of their launch was perfect with market conditions and consumer demand so that they didn’t offer their product before people were ready for it.

Many entrepreneurs feel they have to occupy this space and create and next brilliant invention to solve everyone’s problems. This is mostly because it is the ‘sexiest’ model to follow after and creates the most buzz so much of the time. The problem though is that it also carries the highest potential for failure mostly due to the timing factor and meeting the market’s needs right when they are ready for them to be met.

The Niche Perfector model is defined by taking a boring or mundane business and mashing it together with another boring or mundane business with the result being something unique and different than everything else being offered in the market. The most famous example of this is Starbucks who took a very boring model of coffee shops and blended it with the cafe/bistro model known throughout France and Italy.

Another great example of this model can be seen from Cirque du Soliel. They took the very ordinary model of a three ring circus made famous by Ringling Brothers and combined it with the model of broadway and theatre shows. The result is simply spectacular! The shows are entertaining for nearly every adult category, provide a high end experience and took the pricing from $12 for a three ring circus to $90 for the hour and a half show.

The common traits of the Niche Perfectors are that they end up creating a unique experience for their customers which is unlike any other company in their related industry, thus taking them to the position of essentially having no competition. Also, they demand higher prices in nearly every circumstance because the clients value the unique experience and there aren’t alternatives, so price erosion isn’t a factor.

This model is my favorite because it can be done in nearly every existing industry and business type and isn’t nearly as risky as the Category Creator model. Also, it doesn’t require the ‘inventor’ gene that I seem to be lacking so I don’t have to create things out of thin air to have a viable business model.

Finally, the last model to follow after is the Category Killer. This is defined as the consolidator of a mature industry that competes on low price, one stop shopping and variety of products. This model is identified by the Big Box companies such as Wal-Mart, Best Buy, Costco and Home Depot. This model is not evil like so many in the media want to make them to be and are just the next logical step to move to in mature industries.

The only problem I see with creating a business in this model is that it takes significant capital to create the economies of scale to get up and running. Also, the logistics systems to manage inventory that need to be created from the get go are absolutely massive.

The two business models not worth pursuing that the majority of business owners and startup entrepreneurs fall into are ‘Me Too’ and a ‘Job.’ The Me Too model is based on copying another business that already exists and just competing by taking away market share by effective lead generation and fighting with lower price. It’s a bloody model to get into and really isn’t scalable. Also, there are usually enough of any given business type out there and the world doesn’t just need another Me Too out there struggling to stay alive. The most common Me Too businesses are restaurants, salons and car lots. There are too many of each already and most struggle to survive right from the get-go.

The Job model is typically where professionals live, but can also be other service businesses, too. I call it a job because if the business owner ever leaves, the income stops, so there is no leverage or scalability in the model. It is also the spot where ‘golden handcuffs’ show up because one can end up in this model and make a good income, but not have the true freedom of being an entrepreneur and leaving the business and still have revenue coming in. This model is typically filled by attorneys, accountants, financial planners, insurance agents, mortgage brokers, realtors, and contractors.

Most people who end up in the Job model are characterized by the need to ‘be their own boss’ and end up just owning a job.

Hill discovered that Henry Ford, Harvey Firestone and Thomas Edison all had a formal “Mastermind Alliance,” and met regularly in away-from-business locations, to creatively brainstorm about all their businesses and interests. These men enunciated to Hill the belief that putting their three minds together in harmonious, progressive thought multiplied their power exponentially. Hill subsequently found the same principle at work in other “Mastermind Alliances.”

I have used this tool numerous times in my career as an entrepreneur and believe that it has been the most effective for me in regard to breaking through bottlenecks and achieving growth. It has worked so well for me that I now lead one for other business owners and professionals to help them receive all the same benefits that I have over the years. You can read about our Mastermind Group here

If you’ve never heard of the Mastermind Concept, grab ‘Think and Grow Rich’ and turn directly to chapter 10. The first time I was introduced to this concept was through Robert Kiyosaki’s book ‘Cashflow Quadrant.’ In it Kiyosaki makes the point that the five people that you spend the most time with are who you will become like. Kiyosaki references income as a quick measurement of how similar you and the five closest people to you have become. You would be surprised as to how this theory unfolds, not just in regard to income, but in regard to every area of your life.

For one friend of mine, I am the only one in his life that is not or has not been divorced. Everyone he is close to has been divorced. For me, the people I spend the most time with are all overweight, just like me. We are all between 35 pounds (me) to 65 pounds overweight and all happen to be working on reducing that, too, independent of each other.

You get the point. So with the Mastermind Group, having other like minded, growth and freedom oriented entrepreneurs to get together and share ideas with is a powerful thing. The only thing to watch out for is to keep from turning it into the ‘blind leading the blind.’ If you are in need of consistent, effective lead generation systems for your business, make sure someone else in the group has accomplished this or can bring in someone who has so that you are not all just guessing as to how to implement this in your business.

If you want to start your own Mastermind Group, here are a few groundrules to operate by:
1. Meet regularly. Once a month works great. We also meet for a full day (9am-5pm) without interruption. Focus is key.
2. Demand attendance. If someone misses more than one meeting every six months, they can be booted.
3. Demand transparency. There is not anything you can share in the group that would be stolen or implemented in a way that hurt your business. Collaboration always trumps secrecy and isolation.
4. Be flexible. You may get it started and then realize you are not getting anything from it. Do not feel guilty for bailing on it. It needs to be a clear win-win for everyone involved.
5. Do not let it turn into a leads group or book of the month club. Focus on what is relevant for each business involved to achieve growth and breakthrough.

Since graduating with an MBA in Entrepeneurship in 2003 I have started two businesses, a handheld software company that failed to launch and the other going through major overhaul right now due to our industry, mortgage financing, being transformed through legislation and the start of a significant recession. I have dabbled with nearly a dozen other startups in this timeframe as well, some my own, and others brought to me through my network. Also, along the way I’ve spent a considerable amount of time and money studying and being mentored by many guru’s on how to grow my businesses. I estimate, conservatively, that this number is in the $75k range for just the registration fees, books, cd’s, monthly coaching, etc., not including travel and hotel expenses to attend them.

With the change going on in my current venture, Tower Mortgage, it provided an opportune time to reflect and re-evaluate my plans and what I would have done differently were I given the chance to do it all over. So with that, I came up with the top five things I wish I had known when I started this journey nearly five years ago. Hopefully you will benefit from these items as I would have and avoid learning the same lessons I did the hard way. These are not in any particular order as they are all foundational to me.

There are two things that snuck up on me that I was aware of when I started this path, but because I did not attack them head on, they slowly overcame me. They were both things that Robert Kiyosaki (Rich Dad, Poor Dad) warned of that he made mistakes with and one actually caused his near bankruptcy early on. They were having financial controls in place and not becoming a professional in the ‘S-Quadrant’.

Since I have an MBA, financials are something I have always felt strong with because of the advanced financial analysis I did in various courses, especially Advanced Financial Management. The problem was that even though I was comfortable reading a profit and loss statement or a balance sheet, I never set the systems up to have those reports readily available to me in my businesses. Because I did not have the systems in place, like an in house bookkeeper that keeps track of all income and expenses properly on Quickbooks, I could never tell exactly where we were and what trends were taking place for us to plan from. I could tell you what was in our bank account since I carried the checkbook with me and had to balance it regularly, but that is not running a company ‘by the numbers’ as the majority of truly successful businesses do.

I did have a bookkeeper, but she was outsourced and when I put her feet to the fire to get me the reports I needed, everything was completely askew. Her staff had been mis-categorizing expenses and there was no way to get an accurate view of where we were. I had abdicated responsibility instead of delegate and manage it. It was a complete nightmare getting it straightened out with a new bookkeeper and just getting our history in perspective. Then, creating the systems to manage our finances in house and have my assistant take over their entry and balancing was another mountain to climb. It took nearly a year from finding out my original bookkeeper was inept to having my assistant managing everything and being able to pull reports that are meaningful and accurate. This could have been done in a month if done properly from the beginning.

In regard to becoming a professional, my first venture with the software company did not have this as a potential problem since I was not a programmer and was managing the programming staff and handling sales. I find that running a company in which you do not know how to do the technical work is best to avoid becoming a professional. In the next venture, the mortgage brokerage, since we had no model to grow and train a sales force, I became that sales force and was the primary technician delivering advice and strategy to our clients. It is a sneaky trap, because once you get caught in it, it turns into having golden handcuffs. You can make a decent income, but to breakthrough to the other side of owning a growing business instead of merely a job, you have to choose not to produce and keep being the engine behind the revenue and start recruiting, training and managing the sales force that will become that engine. In the mortgage business, this can take upwards of six to eight months to do and very few people, myself included, can take that kind of risk since cash reserves are not large enough to justify that.

Most small businesses are run by technicians delivering the final product to the clients, like a restaurant with the owner as the head chef, a subway with the owner making sandwiches, an interior design company with the owner doing all the design and consulting, and so on. You can see this everywhere and is a trap that most business owners are not even aware of, because they just want to work for themselves and do not have aspirations of truly being an entrepreneur and owning businesses.

The third thing I wish I had done differently was take more time off for fun and relaxation. Every time I went out of town for a seminar my employees would always seem to get more work done than when I was around every day. They figured out how to solve problems that they would usually come to me when I was there because I could solve the problem nearly all the time and became a crutch for them. Whenever I did take time off, I was refreshed, reduced stress and always came back with new solutions to our problems because I was not distracted by the fires of the day.

At the beginning many entrepreneurs think they have to put in 60+ hours a week to make the business successful, but I think this is a recipe for inefficiency. By forcing yourself to get everything done in 30-40 hours, you get more done because you have deadlines and time restraints and you start doing only that which is truly important. If you do not believe me, just think about the last time you went on vacation. Did you get at least twice as much done that final day before the vacation than you do on your normal days? Case closed. Take more time off to have fun and relax.

Even though I had an MBA in Entrepreneurship I realized that I lacked a lot of knowledge and skills at the beginning. This caused me to become a sponge and soak up everything I could get my hands on. I read and read and read and obviously went to numerous seminars and networked with anyone that was more successful than me, which was just about anyone in business. The problem with this was that I did not really have a filter for what I let in and I wasted a lot of time reading from people that looking back on it, were not really all that sharp or successful with what they were speaking on. A lot of the guys I listened to were full of hype and could not give actionable advice and strategy to implement and get results from.

So here is my shortlist of people that I respect and listen to for the following areas of any business in any industry:

• Mental Strength / Toughness: Tony Robbins www.tonyrobbins.com
• Systemization / Management: Michael Gerber www.e-myth.com & Scott Hallman www.smallbusinessgrowthclub.com
• Strategy: Blue Ocean Strategy www.blueoceanstrategy.com
• Marketing / Lead Generation: Dan Kennedy www.nobsbooks.com
• Sales: Chet Holmes www.chetholmes.com

Finally, every business is kept alive by sufficient cash flow from sales. Without cash flow, every business dies. Therefore, creating a compelling competitive advantage with your product or service over every other alternative out there is a must. This competitive advantage needs to be distilled into a Unique Selling Proposition (USP) that clearly explains in one sentence why people should come to you for what you are offering instead of every other company available. Then, once this USP is figured out, you need to leverage it into at least two solid lead generation systems that produce qualified, high quality prospective clients to work with.

A great example of a powerful USP and subsequent lead generation system comes from Domino’s Pizza. Their USP was ‘Fresh, hot pizza delivered in 30 minutes or less, guaranteed.’ It was so clear that you would get your pizza fast when you ordered with them and it would not be cold and limp and they even guaranteed it. They said nothing about good or the best or the cheapest, just fresh and hot. They then positioned them near college campuses and mailed coupons and promotional flyers to homes and apartments near them. Since ninety percent of American’s eat pizza, and that number is higher with college students, they were hitting their target market. Also, college students are always hungry and do not plan out their meals very well. So getting food in under 30 minutes without leaving their apartment was a big benefit.

So when you think about your next, or existing, product or service, compare your offering to what Domino’s gave as a template. And one word of advice, nobody cares about ‘excellent service’ since it is expected all the time. Nordstrom’s could get away with leading with excellent service because they pioneered it, but that cannot be done in today’s markets.

I would encourage you to read the post and take a few minutes afterward assessing your current activities and how you may apply the concept of leverage to them to create exponentially greater gains. You can read it here: Leverage: Maximize Your Income In Minimum Time