A Cash-flow Positive Business of your Own – Must Do #5

We’ve discussed the importance of using other people’s money to invest in your company, keeping your fixed costs as low as possible, keeping the ratio of direct costs to indirect costs very high, and having a profitable business model. Now, here is the final thing you must do to have a cash-flow positive business.

5. You want an impregnable niche.
You want to be in a space that is so “you” that nobody else can get into it. In Chicken Soup, nobody could compete with Jack and Mark. We took the leadership role; and although a couple of companies tried to beat us up, they couldn’t touch us. We owned the niche of self-help books that touched your heart.

How many of you would like to own the concept of YouTube or Google?

The way you get a niche is by going for something very, very narrow. Being all things to all people is not having a niche, and it is a formula for a business that will not make money. It will never make money. You cannot manage it; you cannot finance it. You don’t know who to hire, people get distracted, and you lose money. You want to have a narrow concept.

In Japan I started a company that was the first company in Japan to do high-energy, high-entertainment training. We have audio and video equipment. It is a mix between a rock concert, a Broadway musical, and having your own TV station.

But once you have the niche, you own it. It is a very narrow kind of thing.

To give you a final example, there is a piece of equipment called the video toaster. The video toaster is from the very early days of computers. The creators offered the first hardware and software that would allow you to do broadcast quality video production on a PC. They owned the space for 15 to 20 years, completely owned it. Nobody could compete with them for that time because they had taken this completely narrow space and said, “We are going to be the people who do video production on the computer.” And they still own probably half the market for personal computer video production.

It is amazing what you can do by occupying a very narrow niche; it is hard for people to come in and compete with you in that space.

If you do these five things, your business will absolutely pay you every time.