《Must-see》What are the differences between soft aspects and hard aspects? We’ll explain it in an easy-to-understand way!

Hello. This is Kamiyama.

When starting a business or side hustle, there's one most important thing to be careful about.
By the way, it's not about high sales or market size.
Let's put aside how much money you can make for now.
Because any business, if it can be continued, will eventually sell.
It's just a matter of whether it's sooner or later.

So, what exactly should you consider?

The answer is cost.
You need to think about how to minimize costs.
In reality, businesses fail if costs are too high.
Product cost, service maintenance, fixed costs.
You need to reduce these to a minimum.

Businesses fail because of large expenditures.
Especially at the beginning, you should create a situation where you can continue without incurring costs.

Think about it for a moment.
In this day and age, what kind of companies are growing?
Google, Facebook, Tesla, and Mercari if we're talking about Japan.
All of them are companies that started with almost only labor costs as their expenses and are now growing.

In other words, they are companies that sell software.

What's the difference between software and hardware?

You need to remember the difference between software and hardware.
Businesses in the world are mainly divided into selling software or selling hardware.

Software is mainly intangible products and services that run within hardware.
On the other hand, hardware is mainly the tangible box that runs the software.

In the case of games, PlayStation 4 is the hardware, and the game itself is the software.
In the case of computers, the computer body is the hardware, and the apps inside are the software.
In the case of restaurants, the building and equipment are the hardware, and the service content and business model are the software.
In the case of classrooms, the building and facilities are the hardware, and the teaching content is the software.

Even when we say hardware and software, it's not limited to IT.
In any business, it's usually divided into hardware and software.

So, let's reconsider growing companies.
Google, Facebook, Tesla, Mercari.
All of them were originally companies that only sold software.

By the way, Tesla sells electric cars, but what they are actually selling is software.
By developing the programs inside the car, they create more fuel-efficient electric vehicles.
If the car is the hardware, then it's the part that develops the software inside.

Furthermore, the car body itself is made in partnership with various companies.
Originally, they didn't own factories and manufacture them themselves.
It's precisely because it's software that it has spread so rapidly around the world.

Now is the era for software to grow.

Software-related aspects basically only incur labor costs as their prime cost.
That's why there's not much need to calculate prime costs, and you can create a system that generates profit.
Compared to hardware, which has high prime costs, a structure that is very easy to profit from can be created.

When Google or Facebook are brought up as examples, it sounds like a big deal.
However, Google and Facebook are not software-oriented because they are big.
They became this big precisely because they are software-oriented.
Naturally, they have been competing in the software domain since they were small.
Bringing up global leaders as examples is not because they are big, but because they 'became big'.

That's why, especially when starting a business, you must compete in the software domain.
It's not something tangible, but intangible.
You should actually compete with products and services where the only cost or prime cost is labor.
And hardware can be created once you've grown larger.

Currently, even among major corporations, companies focused solely on hardware are declining across the board.

A while ago, hardware was profitable, so making hardware was enough.
But now, the structure of the times has completely changed.
By competing in the software domain, a profitable structure has emerged.

Even major corporations currently in decline should have developed software while they still had money.
If they had tried many things and created software that permeated the world, they would have avoided decline.
Ultimately, they are declining because they could only create hardware in the era of software.

If you're starting now, consider the software aspect.

Of course, if the times change a bit more, the era of hardware will come again.
Because as software evolves, hardware to support it will become necessary.
This time, society will likely see hardware sold at high prices.

However, it's difficult to compete in hardware in the current era.
If you're going to compete in hardware, you should go with the spirit of aiming for global infrastructure.
Indeed, you would need to aim for a position like Apple's iPhone.
Half-baked hardware will all be crushed and finished.

After all, it's a world where there's no need to buy new hardware.
Most desired hardware is already available, so you have no choice but to launch something revolutionary.
Moreover, if the prime cost of making hardware is also high, then starting small is simply impossible.
You need to invest heavily in development costs and proceed with the mindset of creating a revolution.

First, if you're starting small and aiming to grow big, target the software domain.
It's something that can be started with as little prime cost, labor cost, and fixed cost as possible.
As I mentioned at the beginning, 'software' doesn't just mean programming.

Service industries, for example, generally fall under the software aspect.
If it's something that can be started with just labor costs, then there are no prime costs or other costs.
Furthermore, if you start it by yourself, the risk is almost zero.
Because you can start with just your own body.
If you start with the software aspect, you can begin with risks reduced to the absolute minimum.

In this way, let's try to view business from two aspects: the soft side and the hard side.
And in today's world, let's try to start not from the hard side, but from the soft side.
Basically, if you don't incur costs, you won't go into the red.
Keeping in mind businesses that can reduce fixed costs to the absolute minimum, let's consider starting a business or a side hustle.