Both historically and currently, the most successful businesses were/are involved in selling shovels to prospectors, literally and metaphorically speaking.
Back in the gold rush days of the mid-1800s the hope for gold riches was running rampant among the masses. Prospectors rushed to California in hopes of striking it rich. In order to make an attempt at these riches they needed gear. Shovels, axes, pans, food, a roof over their heads, and so on.
The business owners who really struck it rich during this time were the ones who didn’t get caught up in the hoopla of gold. They got caught up in the hoopla of selling the gold-finding-hopefulls the tools they needed to make their attempts at winning the gold lottery.
This same example can be extrapolated to virtually any business.
- Who is more successful, the real estate agent or the real estate company that the real estate agent has to pay a percentage to? We can take that up a notch. Who is most successful, the real estate company or the home builder? Let’s not take into account the past 10 years. ;)
- Is it the sports team owner or the athlete? Is it the sports drink company or the athlete? Is it the super-star athlete or the consumers he cons into buying a sports drink?
- Is it the record label or the band? Is it the company that distributes music (AmazonMP3, iTunes, et al) or is it the record company?
- Is it the oil company or the automotive company or the automotive supplier or the dealership owner or the saleperson at the dealership?
- Is it the cable TV company or the production company that creates the shows?
- Is it the deli owner or the company the supplies multiple delis with their produce/meats?
- Is it Aweber or the companies that use Aweber?
I’m not saying you can’t be successful as a “prospector.” In many of the examples above, the businesses lower on the totem poll are quite successful in their own right. You might not want to sell “shovels” and there is nothing wrong with that.
I’ve been on both sides of the coin. Being a prospector involves more nose to the grindstone hustle. You do almost everything yourself and if you don’t work you don’t eat. Selling shovels, on the other hand, is more difficult in the beginning stages, but there is more opportunity for growth. There is also more opportunity for you to step away or sell the business.
It all depends on what you want out of your business. Are you going to sell the shovels or dig the ditches? There is no right or wrong answer. There is only a right or wrong answer for you.