How do you "scientifically" create a business?

Further down the forum, Boyd raised the EXCELLENT question of, how do you "scientifically" go about creating a business?

Don Alm then gave a great answer, in his post here

http://www.sowpub.com/cgi-bin/forum/webbbs_config.pl?read=9625

Here's a quote from Don's post....

The TWO MAIN benefits to doing "advertising type" products is....the cost to create a "Sample product" is very low and your potential customers are easy to find....just walk down the street and go into their stores or offices....show them your sample...explain why it will benefit them...tell them the price and ask them to buy...collect a deposit and go to the next store.

I think there's one "golden rule" I've noticed about many successful entrepreneurs.... That "golden rule" is - they do all that they can to reduce their "risk"! That is, the chance that they'll lose money is often a small one....

If you look at Don's idea, you can see that Don fits this mold too! He says, with the kind of advertising products he likes to deal with, that.... the cost to create a "Sample product" is very low and your potential customers are easy to find. Or (my translation), the risk is small!

There are many ways you can reduce your risk as an entrepreneur....

One way - keep the "startup" costs low! Some people think they have to do the opposite.... And they spend big, big, big! But that means that if their business flops, they also lose big, big, big! So if you can keep it "lean and mean" then that's one way to keep the "risks" low....

Another way that people keep the risk low is to always have a "way out" if the business is not successful.... Richard Branson did this when he started Virgin Airlines. When negotiating to buy a plane from Boeing for his fledgling airline, he was able to negotiate a clause that he could sell the plane back to Boeing if his airline didn't work out, for the same price he bought it at! That means, if his business didn't work, he already had a guaranteed buyer for the plane, which meant his losses would be kept to a minimum (since the bulk of the expense was buying the plane).

Donald Trump says something like, "Take care of the downside, and the upside will take care of itself." I think this is at the "heart" of the way many entrepreneurs approach business....

If you've set things up so you'll have huge losses if you don't succeed, then you essentially only have "one shot" at success - it's "make or break"!

But, if you've arranged things so you don't have huge losses if you don't succeed - then you can afford to "try, try again" until you get it right! I think this is truly the way many successful "serial entrepreneurs" (those who have successfully started multiple businesses) operate.... They know how to keep any potential losses low, so they can keep trying over and over until they hit the "jackpot". :)

There's quite a lot that could be written on this topic. I think I've only barely scratched the surface of it.... :)

- Dien Rice