Is industry experience helpful or harmful to budding entrepreneurs? We share three reasons it can help and two times when it can hurt.
On The BIGG Success Show, we discuss whether or not industry experience is necessary when starting a business. Here’s a summary of that discussion.
“Stick to what you know.” You’ve probably heard that phrase before. But does it apply to entrepreneurs?
You probably won’t be surprised to hear that it’s less risky to start a business in a field in which you have experience. But it necessary?
3 advantages of industry experience
When we started BIGG Success, we were lucky. We didn’t know anything – so the doors were wide open!
Seriously, though, while there are advantages to being an outsider, you’re more likely to navigate through all the storms of your own business if you stay in an industry you know.
Today, we want to share some advantages and disadvantages that experience brings. Let’s start with three advantages that insiders bring to the table.
Experience leads to insight which outsiders don’t have. You know:
– the customers
– the competition
– where the deficiencies are in meeting the needs of the customers
– what customers are willing to spend
– the costs
– a whole bunch more!
When you’ve spent time in an industry, you develop a network you can call on for help:
– Potential customers
– Possible employees.
You’ll short-circuit many of your problems with these connections.
3) Rules of thumb
Every industry has formulas for success. With experience, you learn what they are. For example:
– How much you can expect to keep from each dollar of sales?
– What benchmarks should you use to judge your performance?
– What are the key factors that drive your business?
Experience teaches you what you can expect. Then, you can focus on actually doing it.
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2 disadvantages of industry experience
If an industry is experiencing rapid change, it may be a good candidate for new entrants. The more destructive the change – the better for you, as an outsider. Insiders may be at a disadvantage for at least two reasons.
1) Entrenched mindset
Sometimes, the executives at established companies just can’t accept that their world has changed. They keep pursuing the same failing strategies. They hope that the new way of doing things will just go away.
When you see an industry with executives who aren’t responding to new threats, you may have spotted your BIGG opportunity!
2) Sunk costs
Simply put, the existing players may think they have too much invested in the old way of doing things. So they’re unwilling to deploy money to do things the new way.
When this happens, entrepreneurs often step in with a new business model. There’s often BIGG upside when you spot a situation like this!
Like most new technology, the internet has disrupted entire industries. For example, small players may have cost advantages over the big ones for the customized products and services that customers want more and more.
There are more opportunities than ever today to start your own business. Sometimes, striking out in a new field is advantageous. However, most people who succeed BIGG do it in a field with which they’re familiar. It’s the safer path to success, but only you can decide if it’s the right one to take you to BIGG success!
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Here’s to your BIGG success!
George “The Professor” & Mary-Lynn
Co-Founders, BIGG Success
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