The “Sticky Business” Factor - Part 2
By Marc Charles
I received some interesting feedback on the topic of “sticky business” recently.
And a couple of readers wanted more clarification and specifics.
So I’ll focus on “sticky business” again. Hopefully you’ll grab something of value that applies to your venture. Maybe it’ll help reduce some of the stress of running your business so you can make more money.
If you own a “sticky business” …don’t worry.
There are advantages of making your business “less sticky”. This should make it more fun and profitable, not to mention help you sleep better at night.
In my view, a “sticky business” is one with endless tentacles, regulation, government red tape, overhead expenses, and endless paperwork.
Most “sticky businesses” are also lawsuit magnets, wasting time and money.
This doesn’t mean “sticky businesses” aren’t profitable.
In a previous essay I mentioned an entrepreneur making money hand over fist in the “stickiest business” I ever saw…..transporting hazardous (and nuclear) waste.
Another entrepreneur (consulting client) owns a chain of nursing homes. His ventures are not beautifully landscaped assisted living communities in southern Florida you see on CNBC.
No. My client’s nursing homes are in northern New England. These are the places senior citizens go when they’re out of money or have no place left to go.
I left one of his facilities in tears.
My client’s nursing homes are profitable. But he told me, “This business is a pain in the ass. There is endless government red tape, lawsuits, inspections, employee shortages, theft and a lack of professional help. I’m fed up but it’s all I know”.
My client’s business is super sticky.
Many years ago I launched a sticky business too. It was an office cleaning company in central Wisconsin. I started it from the trunk of my Plymouth Horizon.
There were five or six janitorial and office cleaning companies in the area, which convinced me there was a demand for the service.
In three years I became the second largest office cleaning company in central Wisconsin by doing a better job, focusing on people and charging less.
The business wasn’t “sticky” at first. In fact I had a lot of fun building it.
And get this…..
At first I purchased cleaning supplies, vacuums; carpet shampooers, brooms, buckets, dusters and mops for each office building so I could service my client’s buildings on my motorcycle!
When I sold the business my formula of making each office building self-contained became an industry standard.
Anyway, as the business grew it became “stickier”. As the employee headcount grew, so too did the paperwork, complaints, accounting and scheduling nightmares.
Case in point….We often received “inspections” from Occupational Safety & Health Administration (OSHA). This was to insure we complied with the US Government’s standard for employee safety and health. The inspections typically required 3-4 hours of my time and it seemed there were always fees or penalties to pay.
Another case in point….my business was audited by the Social Security Administration for “irregularities” in an employee’s withholding. We were cleared. Apparently an employee used a false social security number and tried to skip child support payments. Why an employer would be involved in this I still don’t know.
In my opinion, it’s tentacles like these which take the fun out a business and make it as sticky as pine tar.
I eventually learned to hire (and retain) great people to handle the stickiest parts of my business. And by “handle” I mean remove it from my thinking process.
But I still avoid “sticky businesses” whenever possible.
Here are some of the stickiest businesses I’ve been involved or consulted:
· Nursing homes
· Stock brokerage
· Fish and seafood
· Ski resorts
· Music festivals
· In-home hospice and medical supplies
· Online gambling
· Retail stores (clothing, electronics and gifts)
· Lottery ticket sales (online and off)
· Adult products (don’t ask)
And as I said, a “sticky business” doesn’t mean it won’t make money.
Drug trafficking is the stickiest business in the world but it’s also one of the most profitable.
I advised one of my clients (hotelier) to dump the idea of putting a water park on his property. I said it would attract kids, problems and lawsuits.
He ignored my advice and the venture was wildly successful. Years later he sold it to an investment group. My client took time out of his busy day to send me an email with the words “Ha Ha” in it…..the nerve. I’m not always right about the “sticky factor”.
Anyway, I try to steer clear of “sticky businesses” because of the potential problems, burdens and headaches. The endless tentacles, paperwork, red tape and lawsuit potential are not a good fit for me.
If you have a “sticky business” and love it, that’s okay.
But there are ways to make it “less sticky”, so you can enjoy it more if you so desire.
Here are some of the “non-stick” businesses I’ve been involved or consulted:
· Information products
· Electronic publishing (websites, ebooks, newsletters, advisories and video coaching)
· Consulting (all kinds of businesses….with a preference for startups)
· Search engine optimization
· Internet advertising
· Search engine marketing
· Game development
· Internet and Cyber Security
· Organic farming
· Affiliate Marketing
· Currency trading and Forex
· Search engine and “niche engine” development
· Book sales (moving bookstore inventories online)
· Specialty real estate (self-storage and government leases)
Another classic “non-stick” business is import export.
I realize import export market is normally seen as “super-sticky”.
But I discovered a “non-stick” angle to it. You can check it out the little-known details for this opportunity here.
The point is…
There are ways of converting a “sticky business” to the “non-stick” variety.
One way is to retain people to stress over the tentacles, headaches and paperwork for you.
For example, you can retain people (preferably from outside your company) to handle the heavy lifting, i.e. paperwork, regulations, accounting, legal issues or dealing with the government.
You could also remove yourself from the day to day operation, take less pay, and retain someone to run the business for you. I know it’s hard, especially when money is tight, but I’ve done it, as have others and you can too.
When it comes to reducing the risk of being a “lawsuit magnet”, you could sell this part of your business or revise the terms and conditions for obtaining new customers. This approach won’t work for every business but it worked for my nursing home client.
In his case I suggested rewriting the terms, policies and procedures for accepting new residents. A competent attorney (with nursing home contractual expertise) could easily rewrite policies, applications and procedures to reflect your business interests.
I also showed him the benefits of retaining a professional staffing firm.
Granted, my client’s nursing homes would probably make less profit with an expense like this but the turnover might be reduced. When hiring is done in-house there is usually a bias. On the other hand, a professional staffing firm would remove the in-house bias and possibly attract top-level professionals.
Lastly, I suggested my client sell his properties, downsize and move to areas where it’s less expensive (and burdensome) to run nursing homes, such as Florida, Texas, Nevada and Alabama (or a different country).
Surprisingly it was this suggestion that appealed to my nursing home client the most; and he quickly listed three facilities for sale.
Every business has some “sticky” aspects to it.
I enjoy discovering “non-stick” or “less sticky” alternatives so entrepreneurs can reduce stress, make more money, and have some fun doing it.
Launching, running or even selling a business is hard work. But it’s supposed to be fun too. We shouldn’t be tossing and turning at 3:00 in the morning worrying about the octopus.
On top of that, if you can avoid “sticky” problems going into a deal or business, or make the business “less sticky” this might relieve some stress and possibly help you make more money.
For a sneak peak of the new “non-stick” business opportunity I discovered click here.
Marc Charles is often referred to as "The King of Business Opportunities." He is a regular contributor to Early to Rise and The Liberty Street Letter. He's written dozens of bestselling e-books, courses, and special reports on business and moneymaking opportunities. He recently launched The China Wholesale Trader.