The Big Kahuna, or, Michael Gerber's Second Standard: Who is my customer?

This is the big kahuna. The whole enchilada. The 800# gorilla in the room. Here's what he says on p. 155:

Every business has a Central Demographic Model. That is, a most probable customer. And that customer has a whole set of characteristics through which you can define him--age, sex [we call it gender], income, family status, education, profession, and so forth.

Demographics is the science of marketplace reality. I tells you who your customer is.

I cannot stress more how right Gerber is on this issue. If the customer is king, knowing who the customer is, is paramount.

Of course, we don't think quite this way anymore. What he means by "demographic" is really "customer characteristic." Somebody a long time ago heard the term "demographic" and started it and everybody jumped on the bandwagon. Gerber jumped on the bandwagon.

Demography is the study of the composition of and changes in populations over time. Historical demography, one of the sources of my intellectual property, is the study of those things in the past. Demography is that discipline from which "demographics" became bastardized.

There are only a three real demographic variables: births, deaths, and net migration. Demographers also study age at marriage, age at first birth, fertility, fecundity, as well as all those other things we now call "demographics." But no worries: common parlance now is "demographics" so that's what we use.

But no matter what you call them, the most important thing to understand is who your customer is. If he's 64, married C-level, major corporation executive living in Manhattan, that's one thing. But if she's 25, unmarried with a 10 year old son, living with her ex-boyfriend's parents in a trailer on the outskirts of Aho, Arizona, and working at the local Wal-Mart, it's something different.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Under Michael Gerber's Second Standard: An Opportunity Worth Pursuing

Under Michael Gerber's second standard of your strategic objective, you should ask what kind of business you're in. See pp. 153-154:

The product is what your customer feels as he walks out of your business. What he feels about your business, not what he feels about the commodity. Understanding the difference between the two is what creating a great business is all about.

This is another way of saying, "It's the customer, stupid."

Now since Gerber wrote this, the Internet has become big. So, people are buying on line more often, not just going into physical stores. But so what? How do people come away from your website? Mine right now is pretty crappy, because I'm not sure what I want it to be when it grows up. I have some ideas though, and I'm going to fix it pretty soon. I'm not even certain I'm going to keep it.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Second Standard of Your Strategic Objective--An Opportunity Worth Pursuing

In my own mind, when I think about starting a new business, the first question I ask myself is "Is this an opportunity worth pursuing?"

One thing you should not emulate in Gerber is his capitalization strategy. :-)

It was the first question my dissertation advisor made me answer when I started my Ph. D. dissertation: Is this a topic that matters enough to me? Do I have the passion to see it through? Can I get it up for the years it will have to commit to it to make it work? Can I endure the periods of low sales and no income to do it.

Here we have the same question. Is this an opportunity worth pursuing. In his words [p. 153]:

An Opportunity Worth Pursuing is a business that can fulfill the financial standards you've created for your Primary Aim and your Strategic Objective.

Is this sufficient for you to devote the time and energy and money you're going to have to devote to it to make it work?

Do you expect sufficient payoff at the end of it for it to matter?

Are you going to change the world, or just go across the street for a sandwich?

If you're out to change the world, and you're sure the world can be changed, and you're convinced you have the staying power, go for it.

Otherwise, you want mustard on that?

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program: Step 2, Your Strategic Objective

Gerber, p. 151-165, Lay out seven standards comprising your strategic objective. They are:

1. First Standard: Money [p. 151]
2. Second Standard: An opportunity worth pursuing. [p. 153]
3. Third Standard: When is your Prototype going to be completed?
4. Fourth Standard: Where are you going to be in business?
5. Fifth Standard: How are you going to be in business?
6. Sixth Standard: What...are you going to insist upon regarding reporting, cleanliness, clothing, management, hiring, firing, training, and so forth?
7. Seventh Standard: Other questions.

Standards 3 through 7 are laid out on p. 156. Gerber doesn't we need to stick just to what Gerber says. You need to use it as a basis for going forward. He does say that "the standards you create for your business will shape both your business and the experience you have of your business." [p. 156]

And we don't need to have all of this established before our business gets off the ground. Businesses are all a work in progress, and we figure things out as we go along. But we need to develop as full an idea of why we're in business and what the business will do as possible before we start. Gerber helps us do that.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.