The Ten Commandments of Entrepreneurship: investing in unfamiliar industries

Most entrepreneurs are apt to make a fatal mistake by choosing the hottest industry at the time, blindly ignoring the hottest industry, which is not only the most competitive, but probably completely unfamiliar.

An impulsive transition decision

Before deciding to engage in food and beverage industry, Liu Yishui is actually a model for the success of entrepreneurship. At that time he has 3 underwear stores in Chongqing Yubei District, and set up a company, is called the region's underwear sales industry leader.

Dramatic changes were seen in the May 2003. At that time, he saw in the newspaper that a local famous catering enterprises in only 3 years to become Chongqing famous Enterprises 50 strong, the owner of personal earned 50 million yuan. At that time is facing the bottleneck of business operation he is very easy to be tempted. Grew up in Chongqing Liu Yishui think catering market space is very large, and in line with local consumer habits, so decided to dabble in the catering industry. At that time, he even thought that the streets of the big shops are booming business, so the success of the industry will certainly extremely easy.

An unusual project

The hot pot in Chongqing is very famous, but Liu Yishui believes that there are too many competitors, so decided to find a new product intervention. On a trip to Fujian, he stumbled upon a Taiwanese dish-ginger, who quickly decided to use the dish as the main dish of a proprietary restaurant.

Is the year September, Liu Yishui pay a high salary from Xiamen to do Ginger chef, invested more than 400,000 yuan, in Chongqing opened a Taiwan Ginger Duck hotel. This delicate Taiwanese taste makes the Chongqing people accustomed to spicy taste feel fresh. About 100 square meters of small shops, almost every day full. The first month, Liu Yishui sales amounted to more than 80,000 yuan, the second month rose to a hundred thousand of Yuan, after the general in 100,000 ~15 million.

Success seems to be within reach, Liu Yishui decided to expand the scale. To this end, he selected a famous local restaurant in a street more than 500 square meters of the first floor stores, one months later took over the second floor of the store, and again invested 500,000 yuan for renovation, and in 2004 opened the door to the guests.

To his surprise, business suddenly deserted. Whether the old shop or the new model shop, the daily guests are much less than originally expected. After offering preferential promotions and advertising campaigns and so on, Liu Yishui that the tastes of consumers had changed, and decided to change to be a popular spicy shrimp in Chongqing.

Unfortunately, the restaurant that operates the spicy shrimp in the same area is already everywhere, and Liu Yishui can not find a more powerful chef cooking, and the business has not improved. A year later, Liu Yishui finally had to dismiss the workers and close the shop door.

Comments

Blindly follow the biggest risk, in fact, it is easy for entrepreneurs to ignore investment risk. Because there are so many successful people in the market, it is easy for entrepreneurs to see the success of successful people, but not the inherent risks in the industry, especially when the entrepreneur is completely unfamiliar with the industry, the risk will be magnified.

Prescription

Before deciding to invest in a project, make sure you understand the following: how the top three of the industry is profitable. Why do people who leave this industry fail. Are you familiar with most of the products (services) in this industry? Do you have potential customer resources?

As long as you think over the above questions, it is easy to conclude that the industry is suitable for intervention. Of course, reasonable control of the size of the enterprise is also something to consider. But in any case, before looking for an entrepreneurial mindset, it should be borne in mind that the factors that determine the success of a business are always your personal, not how successful others are.