by Catherine Hoke
Although I teach sales and entrepreneurship to accomplished former drug dealers and gang members, I often find I’m the one learning from them.
Many of these men and women — all of whom have served time in prison — have an innate sense of what makes a successful business owner, and I’m constantly surprised by the skills and strategies they used as drug dealers.
There’s no question that illegal drug dealers know how to take risks. Often, that willingness is what sets them apart, makes them successful, and ultimately lands them in prison.
But formerly incarcerated people who are committed to changing their lives and creating legal businesses have an edge over many business professionals who are terrified of failure or loss. These individuals have already lost everything, and now they’re ready to start again.
Here are five of the most important business lessons I’ve learned from them:
1. Relationships are everything.
Illegal businesses rely on relationships to get things done. You can’t advertise your products on social media or legally hold vendors responsible for delivery, so excellent people skills are invaluable.
Successful drug dealers tend to be empathetic — they’re able to recognize people’s pain points and alleviate them. They also have to be likeable since customers aren’t likely to buy drugs from someone they don’t trust.
These same principles ring true in the “legal” business world. Smart businesspeople aim to delight their customers because they know that great customer service is the key to gaining repeat business.
2. Sell more at a discount.
Drug dealers are always looking for a way to make customers feel like they’re getting a great deal. Many have told me that they frequently offered a larger amount of their product at a steep discount.
Legal businesses do this, too. (Think of the price difference between the Starbucks Venti and Trenta sizes.) This type of versioning is especially effective because it makes clients feel like you’re spoiling them.
3. Find your product’s competitive edge.
Drug dealers are always selling a commodity product. That means successful dealers have to do two things: keep their quality consistent, and get creative with their marketing, pricing, and packaging.
Running an illegal business means you can’t rely on paid advertising, so word of mouth and brand advocacy are important. Since a high-quality product sells itself, smart drug dealers keep their supplies fresh, take the stems and seeds out of their marijuana, and never cut their heroin.
For example, one of my students used to package his highest-quality products in multi-colored packages that became famous among his customers. As Jack Welch famously said, “If you don’t have a competitive advantage, don’t compete.”
4. Corner your market.
Drug dealers are experts in cornering their markets — literally. In the legal business world, cornering your market means staking out territory where there’s no competition for your loyal customers. It’s an essential business skill.
While building relationships and offering deals to customers can protect your sales territory, you’ll often need to employ methods no one expects. Come up with your own cornering strategies that take your competition by surprise.
5. Focus on the bottom line.
The former drug dealers I work with are laser-focused on making money. Even if they have other passions or ideas, earning money comes first. The nuts and bolts of building a business often distract owners, but being successful really comes down to increasing profit margins and focusing on the bottom line.
Former drug dealer Coss Marte was earning $500,000 by the age of 19 before he landed in jail. Now, he uses the same business skills to run a successful personal training company that has earned more than $11,000 in revenue and $7,000 in profits to date.
Marte and many others built successful businesses without formal training or any of the advantages that come with having a legally recognized company.
Being willing to take risks, focusing on sales, satisfying customers, and differentiating your product are business skills that are just as applicable on the street corner as they are in the boardroom. If these guys could build successful businesses when the odds were stacked against them, you can do it in your company, too.
Catherine Hoke is the founder and CEO of Defy Ventures, a nonprofit serving people with criminal histories nationally. Defy Ventures “transforms street hustle” by providing entrepreneurship training, executive mentoring, startup funding, career development, and job placement. The company hosts “Shark Tank”-style business plan competitions in which people compete for $100,000 in startup funding. Defy Ventures is currently enrolling its next class of entrepreneurs. To find out more about how the company can help you or someone you love, click here.
Courtesy of Catherine Hoke