Making Your First Million.pdf - Association of Net Entrepreneurs and ...

Making Your First Million
employs a couple of apprentices plus a part-time clerical assistant. He can take the kaizen
approach of gradual, incremental improvement to lift his bottom line, and in the absence
of any obvious new growth path, this is usually the best solution. But in Rod's case, he
has identified a possible new growth path.
LPG conversions are a small part of his business. But they show potential. In Victoria,
25% of cars run on gas due to its wide availability and low price. In NSW only 4% of
cars are gas converted, partly due to the 50% higher price both for gas and the
conversion. This differential, however, is a function of supply and demand and may
disappear if the demand increases. He sees an emerging opportunity, a window that will
close if he doesn't grab it. He has a ground floor opportunity to specialize in gas
conversions and establish an unassailable reputation as the gas conversion specialist on
the Central Coast.
He decides to give it a go and applies SWOT analysis. Strengths include his long
reputation for good service, his staff, part-ownership of the building and the ability to
offer half-price motoring for customers. Weaknesses include poor location, a partner in
the building, its dilapidation, high initial cost of conversion kits for the customer, and
lack of capital. Opportunities include sales to fleet customers, lack of competition,
ecological awareness. Threats include rising gas prices or a major competitor capturing
the lion's share of the market.
Rod has a real opportunity to alter and expand his business. His present premises are fine
for his present business but they are too small to work on more than two cars at a time
and the location is poor. It will limit his growth. The building is 25 years old and looks it.
There is no concrete hardpan. Weeds decorate the borders and drive. He has the choice of
spending $100,000 tarting up the place or moving to purpose-built premises. Fortunately
his tire-retailing partner wants to expand into the front part and while the price he offers
for the freehold seems paltry, Rod is focused on his real business, which is not real estate
ownership, and opts to rent a purpose-built facility in a new estate adjoining the freeway,
using the sale money to fit-out and start advertising.
It is all too easy to become sentimental about the past and fearful of change. You can
easily go broke making big changes. The more you have behind you, the more you have
to lose. Trouble is, you can go broke making no changes. For the three years preceding
my going broke for the third time, I watched powerless as my assets dwindled to nothing,
unable and unwilling to take the hard decision to cut and run. I had a partner to consider
and we both waited patiently for things to improve. Life is short. Going broke is not
terminal unless you think it is. Often it's a necessary experience to give you the casehardening
needed to do things better next time.
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