How do you "scientifically" create a business?

Hi Brian,

> Great point. Business is all about risk and
> return. Maximising return while minimising
> risk. One of the best ways I know to reduce
> risk is to leverage the success of others
> and DO as THEY DO or have done - or said
> differently... MODEL success! (There is one
> other significant one I can think of right
> now which I don't think many businesses
> fully exploit)

Yes, that's very true.

Here in Australia, there's a successful chain of stores called "Bras 'n' Things". I once read an interview with the founder of this chain of stores, Brett Blundy. He revealed exactly where he got the idea....

He was traveling in the USA, and came across a Victoria's Secret store - which is a chain of stores mostly specializing in women's lingerie. There were no stores like this in Australia....

Brett Blundy came back to Australia, and started a women's lingerie store, which he called "Bras 'n' Things." He took a good idea from one location, and implemented it in a whole different country.... He wasn't competing with Victoria's Secret, since they weren't in Australia at all. (I don't think they have any stores outside of North America, as far as I know).

Here's another way of applying this general principle too. I personally like the idea of taking something from one niche market, and applying it in another niche market which hasn't seen this approach yet.

I think Jeff Paul essentially did this.... He took general marketing techniques, and applied it to the financial planning business. That was his first big success!

Another person who has done this is Dr. Greig Roberts, with his site www.newdentistadvisor.com . He took the general concept of a membership web site, and applied it in a new place - to the dentistry industry.

Some of you may have heard of Paul Zane Pilzer, or read his books. I think he made his first fortune by taking the existing technology of CD-ROMs (I think in the late 1980s), and "blazing a trail" by using them innovatively in the education industry.

Michael Ross also writes about using leverage to reduce your risk in his excellent report, The Art of Leverage.

> BTW: along the lines of the second half of
> your message... I read but can't remember
> where... money is made when you buy... not
> when you sell. The logic is if you
> buy/invest well - even if you don't get the
> price you want when selling you still have a
> good chance of making the money. I'm in Asia
> and one of the best at this game is Li Ka
> Shing (a Hong Kong magnate who started with
> nothing and it really was nothing - not even
> a basic education - and is now one of the
> wealthiest men in the world according to
> Forbes).

I agree - if you pay too much, it can be hard to make your money back! If you pay less - everything else being equal - it'll be easier to cover that cost and make a profit in the end. :)

> Risk can never be completely removed -
> especially if you are looking to gain in
> some way. So it must be managed.

Actually, I've heard of cases where risk has been completely removed....

Specifically, there's a case of a guy who created a game. He did two main deals (if I remember right).... He did a deal with the factory to finance the manufacturing of the game themselves, and they would be paid a percentage of the profits. On the other hand, he also managed to do a deal with TV Week to promote the game, also for a percentage of the profits.

Essentially, he had arranged it so that others bore all the cost, yet in the end he would still get a percentage of the profits himself, for "setting" the whole thing up! The end result - no risk to him! If there were no sales, he made no losses, since he had no money tied up in it. But if there were any profits, he got a portion of the profits for himself too !

- Dien Rice