High risk business ventures do yield high return results for a handful of companies. But it ends in total failure for almost everyone else. A better system for aspiring entrepreneurs is to realize that success doesn’t require having a brilliant society-changing concept.
You can start a sound new business with a simple strategy reaching only a local market. Who’s knows where such a low-cost, limited risk venture might lead? You might end up with something bigger than you imagined. But at least you succeed with a business you can control on a small scale.
Take, for example, the story of John Schnatter. He started a business in an established market using limited capital. He opened a pizza business in Muncie, Indiana. His innovation—if you can call it that—was to simply make a better tasting pizza using fresh ingredients. He raised $1,600 to get started with some used restaurant equipment.
The pizza business is certainly not a novel concept. Schnatter picked a business with a known market of customers that could succeed on a small scale in Muncie. Equally important, Schnatter’s new business was launched with minimal capital. But he was able to raise much more capital for his company’s subsequent expansion. You know Schnatter as “Papa John” and his company is Papa John’s Pizza, which is worth $650,000,000.
However, Schnatter did not need the current 3,100 Papa John’s locations in order to succeed. Even if the fresh ingredients pizza concept had not caught on, Schnatter would have still received rewards from owning a successful local business. He might have sold his company for a few tens of thousands. Then, he would have come away with business experience and some startup capital for his next venture. Moreover, selling out a local business is a lot easier than cashing in on a large scale blockbuster.
A new business doesn’t require global appeal. New corporations that aim for local success succeed with little risk. Like John Schnatter, focus on better execution in an already established market. Offer something a little more appealing to existing consumers that requires limited capital investment and you are a likely business success.
Customer service, quality, order fulfillment, and cost control logistics are examples of innovative ways to improve upon simple types of businesses. Attaining financial independence by owning your own business is a better goal than becoming an entrepreneurial superstar.