At Economics For Entrepreneurs, we are going to combine theory and thought leadership about how entrepreneurship works, with practical advice and shared experience from those who have achieved entrepreneurial success. This week we featured Per Bylund. He is an economist who observes what entrepreneurs actually do, rather than analyzing the statistics of GDP growth and macro-economic trends. He’s a research fellow in entrepreneurship at Mises Institute, a teacher of entrepreneurship at Oklahoma State University, a writer of books about firm-level economics and of a regular series of articles in Entrepreneur magazine, and he himself has been a serial entrepreneur. He has a lot to share.
Below are some of the highlights from the show, and the corresponding Customer Journey Map tool is posted here and available for download in PDF form below.
Economics can’t help entrepreneurs much by talking in abstractions about economic growth and economic systems. That’s not what you as an individual entrepreneur are engaged in. You are trying to make a living, and you are trying to create value for others via new or different services. Economics can help with applications of sound principles that help entrepreneurs build better-performing businesses.
What you are doing as an entrepreneur is not for you. It’s for the customer. They decide what is value. It’s not enough to generate an idea. The entrepreneur must ask, with objective honesty, is this valuable? For whom? How is it valuable? Value is subjective in the customer’s mind, so you have to empathize, penetrate that mind and understand it in the customer’s terms.
So don’t start at the wrong end of the process. Don’t be thinking: I want to produce something. How much can I produce it for and sell it at a profit? Rather, you should be thinking: who is out there looking for a value; what is valuable to them?
Price is determined by the customer. You can only sell a product or service for a price that is lower than its value, and value is determined entirely by the customer.
Similarly, you don’t “make a sale” to the customer. You make it a no-brainer for the customer to buy because you offer a better product or service than they’ve got today, and one that is better value for them.
Customer centricity, or customer obsession is a good path. Listen to customers, and learn what they are looking for, and what represents value to them.
Always be thinking about how to meet the future. Customer wants and needs and circumstances and preferences are always changing. Anticipating the change is the stock-in-trade of the entrepreneur. That’s not necessarily the same as innovating. You can create new value by anticipating future needs. Listen to people and look for trends.
Everyone can be an entrepreneur and it’s a very fulfilling experience. Entrepreneurship is aspirational. It’s something you do for customers, and making people better off is very rewarding. They’ll buy your products and services only if they feel that it’s a benefit for them. If you are successful, you’ve helped them. And to be successful, you must be doing something you are good at, which is another source of reward.