Business strategy for beginners

how to start your own business from home with no money how to use twitter for business a beginner's guide
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Published Date:03-07-2017
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START YOUR OWN BUSINESS Chapter 1 st ARt Yo UR o Wn BUsIn ess By Brian traCy One of your goals, in achieving all the success that is possible for you, is to earn a lot of money, and then, to hold on to it. Your financial and ma- terial goals can only be accomplished when you create sufficient value for yourself and your company, and then keep some of that value for yourself. No matter what your goals, you will either have to achieve them through working for the business of someone else, or by start- ing and building your own business. In either case, the more you know about how a business begins and grows, the faster you will be successful in whatever you do. More people are forming more businesses today than at any other time in American business history. Last year, more than 820,000 new busi- nesses were incorporated, more than 1,500,000 sole proprietorships were formed, and more than a million partnerships were established. Tom Peters, the business author, says that the primary driving forces of innovation and job creation in America today is in the small and medi- um-sized business sector. In a time of rapid economic expansion in all directions, it is easier and more possible for you to start your own business and to be successful than it has ever been before. The good news is that, every single different type of person, from every kind of background, with every limitation you can imagine, has started and built successful businesses. And so can you. 17Ul TIm ATE SUcc ESS GUId E The most important quality you need in starting and building your own successful business is courage. Like the Starship Enterprise, you have to have the courage “to go where no one has ever gone before.” You must have the courage to step out in faith, and take risks with no guar- antees of success. When you embark on your first business venture, you will feel like you are the first person who has ever done it. And in a certain sense, you are. sUCCess In A MeRICA Ivan Sergevitch emigrated from the Soviet Union to the United States about five years ago. He did not speak a word of English when he ar- rived. He had everything he owned in a cardboard box tied up with string. For his first year in America, he lived in the “Little Russia” dis- trict of New York. He made his living delivering pizzas out of a Russian pizza parlor to Russians in the neighborhood who spoke his language. But he was determined to get a piece of the American dream. Through- out his first year, he studied English as well as American business and success ideas. After one year of delivering pizzas, his English was good enough for him to get a job selling printing services to businesses. In his third year, he started his own business as a printing broker and sold one million dollars worth of printing, earning a 20% commission on sales. The next year, he sold two million dollars worth of printing and earned 400,000 dollars. In his fifth year in America, he sold three mil- lion dollars worth of printing and earned more than 600,000 dollars for himself. He now lives in a beautiful house and drives a Mercedes-Benz, his long-term goal. n o lIMI t t h Ink Ing A Vietnamese couple, who had escaped from Vietnam by boat to Thai- land, arrived in the United States a few years ago, penniless. The only person they knew was a cousin who had a small bakery in Houston. He took them in and gave them minimum wage jobs working in the bakery. But he was getting older, and he told them that if they could come up with 30,000, he would sell them the bakery. That became their goal. They lived in the back of the bakery, sleeping on flour sacks. They sent their two children to the local schools. They got up at 3 o’clock in the morning and worked 14 and 15-hour days. Between them, they earned 18START YOUR OWN BUSINESS 8,000 per year after taxes and they saved 6,000. They did this for five years until at last they had the 30,000 they needed to buy the bakery. Today, they own a chain of bakeries. They live in a beautiful home. Their children are in top universities and they are n fi ancially independent. sel F-MADe MIll Ion AIRes Fully 74% of all self-made millionaires in America today got there by starting and building their own successful businesses. And here is an important point. Not one of these people had ever owned a business before they started. They came up with an idea to produce a product or service better than someone else and then started right where they were. This is the story of virtually all business success in America. You do not need to have experience in entrepreneurship. Most people who start businesses have none. You do not need a lot of money. Most people start on their kitchen tables, or working out of their garages. You simply need to learn everything that is necessary and then apply it to your work as you go along. And what hundreds of thousands, and even millions, of other people have done, you can do as well. Perhaps the best motto for small business success is the Michael Jordan advertisement for Nike running shoes, “Just Do It” Confucius said, “A journey of a thousand leagues begins with a single step.” st ARt Whe Re Yo U ARe What does it take to start your own business in America? Absolutely nothing. You can start your own sole proprietorship, and name it after yourself, “John Jones Enterprises” right where you are, right now. If you use your own name, you don’t even have to register it. You can decide, this very minute, reading these words, that you are going to start your own business. You do not need permission or approval from anyone. Having selected the name for your business, you are ready to take ac- tion. You can now stop at your nearby bank, and open a bank account in the name of your company. As a sole proprietorship named after your- self, you can use your social security number for tax purposes. You can make a minimum deposit, order checks, and you are on your way. 19Ul TIm ATE SUcc ESS GUId E If you pick a name other than your own personal name, you will have to register it at a cost of about 25. This will assure that no one else is do- ing business under the same name, and to protect the name for yourself. You don’t even need a lawyer. You can call the appropriate government office in your city/state yourself. Remember the great philosophical principle, “If you build it, they will come.” Nature abhors a vacuum, and strives to fill it. If you take the steps to start your own company, even if you are not sure what business you are going into, you will create a natural vacuum in your personal universe. By some strange principle, business opportunities will begin emerging to fill that vacuum. Your business life will begin to change. If you have a clear idea of the kind of business that you want to start, that is even better. But the very act of starting your own company and opening a bank account for it will cause things to happen in your life that you cannot today imagine. You will create a force field of magne- tism that will begin attracting people and opportunities to you to make your business a successful enterprise. st ARt sMAll In starting your own business for the first time, it is better not to incor- porate at the beginning. If you create a corporation, which can cost you several hundred dollars, there are definite disadvantages for the first- time entrepreneur. These have to do with revenues, losses and taxes. With a sole proprietorship, you can deduct everything you invest in your business to get it going against your current income. But with a corpora- tion, you can only deduct losses against profits in the company. Since you will not have profits at the beginning, you will have nothing to de- duct your expenses from. You will be unable to deduct them from your taxes, thereby making them twice as expensive. It is best to use a sole proprietorship, or perhaps an S corporation when you begin, so that all income and losses can be deducted from your personal income. sele Ct Ing A BUsIness How do you select a business to start or go into? There are a hundred different ways. But the most important determinant of all is that you get 20START YOUR OWN BUSINESS into something that you really like, enjoy and care about. Passion is the critical factor in determining small business success. Peter Drucker wrote, “Whenever you see something getting done, you find a monomaniac with a mission.” Every business, and every product line within a business, needs a dedi- cated champion who is passionately committed to the success of that business. He or she thinks day and night about sale and profitability for that business and product. Without a champion, without a person who is passionately committed to making that business successful, the business will definitely fail. Even with a champion, there is no guarantee of success. But without someone who cares more about the business, the products and services and the customers than anything else, the business has very little chance of surviving and thriving in a competitive market. This is why it is essential that you pick a product or service that you re- ally believe in and care about. You choose an area where you feel you can really help customers by giving them a value or benefit that they cannot get from any other product or service. Many people start busi- nesses selling products that they enjoy using themselves. Other people start businesses because they are passionate about the technology or the science involved. Some people start businesses that are outgrowths of their hobbies or their other interests in life. Look for a product and service that you use personally and which you can enthusiastically recommend to others. Identify the products and ser- vices that you have the strongest feelings about. Look for something better that no one else is offering. There may be a need or demand that your current customers have that your company is not interested in sat- isfying. Many people start businesses because their current companies are not interested in their ideas and they are convinced that they can make them successful. Often people start businesses because of what is called a “significant emotional experience.” Something happens in their life that triggers a strong emotion, and propels them into entrepreneurship. Sometimes it is the unexpected loss of a job. Sometimes it is the story of another person who started his or her own business and become outrageously success- 21Ul TIm ATE SUcc ESS GUId E ful. Sometimes a person gets fed up with a low salary and limited pros- pects, and decides to ‘bust loose.’ Any one of these events can make you decide to set off on your own. FRee Do M Is t he g o Al Many people think that the major motivation behind entrepreneurship is to make a lot of money. However, interviews with thousands of entre- preneurs prove that this is not the case. The primary reason that people turn to entrepreneurship is for the sense of personal freedom that it of- fers. Many entrepreneurs don’t earn as much after taxes as they would if they were working at an ordinary job. But as entrepreneurs, they are their own bosses. They are free. They answer to no one. This is worth more to them than the security and higher pay of a corporate environment. There is an old saying, “When you start your own business, you only have to work half days. And you are free to decide whichever 12 hour period it will be.” Whatever your motivations, if you have ever thought of starting your own business, you should make a decision and just do it. Don’t pro- crastinate and delay. Get on with it, right now. You can start small, with a network marketing business. You can work part-time, evenings and weekends, offering a service out of your own home. You can work tem- porarily in someone else’s entrepreneurial business to learn the ropes. You have to get your feet wet in some way. If you are eventually going to be a big success, you have to get some entrepreneurial experience. There is no better way to learn what you need to learn except by plung- ing in and picking it up as you go along. l eARn As Yo U g o Of all creatures on earth, human beings are wonderful in that they are “learning organisms.” They are constantly taking in new information from their environments, adding it to what they already know, and mov- ing forward. You can learn at an incredible rate, depending upon the number of new experiences you have. Entrepreneurs who become successful only achieve their goals after many months and even years of success and failure. They have been through every difficulty, setback and challenge that is possible for a small businessperson to experience. As a result of 22START YOUR OWN BUSINESS these learning experiences, they become more alert and aware. They develop wisdom and knowledge. They make fewer and fewer mistakes. They do more and more of the right things and fewer of the wrong things. They not only earn more from their efforts, but they hold onto a greater percentage of their profits. Over time, step-by-step, inevitably, they achieve their goals of financial success and independence. MIn IMIZe RIsk One of the myths of entrepreneurship is that entrepreneurs are risk tak- ers. However, this is not true at all. Successful entrepreneurs are actu- ally “risk-avoiders.” Successful entrepreneurs are focused on earning a profit from their activities. They do everything possible to minimize the risks involved in earning that profit. To the degree to which they suc- cessfully control risk, they increase the likelihood of profit, and succeed at their ventures. As an entrepreneur, profit-seeking must be your central focus as well. Once you have decided that you want to enjoy the rewards of entrepre- neurial success in particular, the next step is for you to explore every de- tail of the business you are thinking of going into. You must investigate before you invest. You must accept nothing on trust and leave nothing to chance. You should talk to lots of people in that business and get lots of input. Your aim is to minimize, reduce, and even eliminate risk wher- ever possible in the pursuit of profit. Your goal is to assure potential profits are real and potential losses are minimal or controllable. Whenever a person reaches the point where they say that they can “af- ford to lose” a little bit of money, you can be sure of just one thing. They are going to lose their money, and probably lose a lot. The very attitude of being willing to “lose money” seems to assure that the money will be lost in some way. The only thing that is easy about money is losing it. Making money is hard, harder and harder still. As the Japanese proverb says, “Making money is like digging in the sand with a pin. Losing money is like pour- ing water on the sand.” When you decide to start your own business, begin by reading several books on small business formation. Some of the best books ever written are on the bookstands today. Read about every single aspect of market 23Ul TIm ATE SUcc ESS GUId E planning, market research, financing, delivery and distribution systems, people, processes, promotion, advertising and especially sales. sAles Is All I MPo Rt Ant The most critical element in an entrepreneurial business is your ability to sell the product or service in sufficient quantity to pay all your costs and make a profit. Every successful entrepreneurial business starts off with someone who is very good at sales. Without a top salesperson, no business can survive or succeed for long. Dun & Bradstreet summarized 50 years of research into thousands of successful and unsuccessful businesses recently with the conclusion that, “The reason for business success is high sales; the reason for busi- ness failure is low sales. All else is commentary.” Your ability to sell the product or service is the primary driving engine of entrepreneurship. This is because cash flow is the lifeblood of the enterprise, and cash flow comes from sales. Every business start-up is a race against time. Can the entrepreneur generate enough cash to support the business before the existing cash runs out? There must be a total, one hundred percent commitment to selling until the business gets off the ground. Otherwise, it will surely fail. All successful entrepreneurial businesses focus on sales single-mind- edly at the beginning. However, there is a common mistake that many entrepreneurs make once the business gets going. Because selling is hard work, the entrepreneur starts thinking about backing off into man- agement of the enterprise, and getting someone else to do the selling. The entrepreneur hires a salesperson to sell, and becomes the manager, for which he or she is usually not suited either by temperament or abil- ity. Now the company has an average salesperson on the outside and a mediocre manager on the inside. Invariably, the company’s sales begin to decline and the business starts to lose money. It has the worst of all possible situations. Usually, before the company hits bottom, the entrepreneur fires the sales- person and goes back to selling, where he should have been in the first place. Very quickly, the company recovers and begins to grow again. 24START YOUR OWN BUSINESS Bootst RAP Yo UR BUsIness Many people think that the key to starting a new business is to have lots of money. The primary reason that people don’t start their own busi- nesses is because they say, “I don’t have any money.” They often feel that they have to arrange all the money in advance. I heard a business professor giving recommendations to a roomful of entrepreneurs recently and I almost fell off my chair. He said, “When you start your own business, don’t put any of your own money into it. Borrow all the money from the bank. Save your own money for your personal expenses.” Nothing could be further from the truth. When you start your own busi- ness for the first time, 99% of the money you will raise will be “love money.” This is money that you provide yourself or that people lend or give you because they love you. No bank or venture capitalist will touch a new business start-up. It is simply too risky. Banks and bankers are not in the business of taking risks. They are in the business of making good loans on which they earn interest and which they are absolutely sure can be repaid. When I started my first business some years ago, I was amazed to find that no banker anywhere had any interest whatsoever in lending me a single penny for my business. Most of them treated me as though I were a combination of a failure and a pickpocket when I went into see them. I learned that this is quite com- mon. There should be a sign in every bank lobby that says, “No Small Business Start-Ups Need Apply.” Most venture capitalists today will only lend money to a company that has been in business for at least two years and that has a solid track record of increasing sales, earnings and profits. Banks will only lend money to you if you can show them that you can cover the amount you want to borrow by about five times. This means that they want you to prove that you have 5.00 worth of tangible assets for every dollar that you want to borrow. In addition, they want personal guarantees from you and your spouse that will outlive a bankruptcy and last all of your life. They will want an assignment of every single piece of property that you own, and many banks will even ask you, if you can believe this, to deposit the amount that you want to borrow in a certificate of deposit with them. 25Ul TIm ATE SUcc ESS GUId E The best and usually the only way to start your own small business is for you to accumulate the money that you need personally. You will have to use your savings, loans against your home, and money from your friends and family. When I started my first business many years ago, I learned how to sell again. I sold my house, my car, my furniture and all my investments. This is quite common. Plan to grow your business by bootstrapping, one of the most popular and powerful routes to entrepreneurial success. In bootstrapping, you pull yourself up with your own efforts. You start small and you grow on a solid foundation of sales and profits. This takes longer than if you were to start off with money in the bank, but it has one distinct advan- tage. Bootstrapping forces you to develop the knowledge and skills you need to be successful as you go along. Because you do not have money to throw at your problems, bootstrapping forces you to become more creative in generating sales and profits. You learn early on to rely on yourself and your own abilities to succeed. Your skills develop as your business grows. You learn strategies and techniques of business success that last you all your life. Many of the biggest businesses in America started on a hope and prayer, and the strategy of bootstrapping, on the part of an under-funded entre- preneur. Some examples are Ford Motor Company, Hewlett-Packard, Microsoft, Apple and even McDonalds. What thousands of successful businesses have done, you can do as well. Be Re Al Ist IC When Yo U st ARt When you begin your business, you must practice the “two times, three times rule.” This rule says that, no matter how conservative your n fi ancial projections, everything will end up costing you twice as much as you have budgeted and everything you need to do will take three times as long. For example, if you think that it will cost you 1,000 to develop a prod- uct and bring it to the market, it will invariably cost 2,000 or more. Some start-ups actually end up paying ten times what they had planned to get the first product out the door. If you think that it will take you three months to break even once you have started, you should triple that number and calculate that it will take you at least nine months. I have worked with companies that have taken three years instead of three months to get their first product to the market. 26START YOUR OWN BUSINESS CAsh Is kI ng The key to survival to any small business is cash. Cash is king. Cash is critical. Cash is everything. You must become an absolute fanatic about generating and conserving cash. You must postpone, delay, defer and abandon every conceivable expense that you possibly can to assure an adequate supply of cash. You must not spend a single penny on anything that you cannot turn quickly back into cash. When I started my first new business many years ago, I made the most common mistakes of new entrepreneurs. I went out and bought furni- ture, office fixtures, and a large photocopier and invested thousands of dollars in printing. Within 90 days, I had burned through all my savings and still had no sales or revenues. I went so broke so fast I could hardly believe it. In no time, I was selling off my possessions, taking out a new loan on my car, and borrowing money from my friends and relatives. I almost went under because I did not realize how important it was to conserve cash at the outset. Whenever a banker or anyone else looks at your business, the very first and most important number that they will turn to will be the amount of cash you have on hand. Cash is like blood or oxygen to the brain. If you have it, you can survive. If you run out of it for any period of time, you will die. Without cash, the enterprise will fail, no matter how good its prospects may be for the future. To preserve cash, never buy when you can rent, borrow or lease. Never buy anything new if you can get it used. Postpone all major purchase decisions for at least 30 days before you make them. Then reevaluate them again. Most major purchase decisions postponed for 30 days are never made at all. Never buy large quantities of stationery or promo- tional materials unless you have immediate use for them. Buy only the amount of materials that you absolutely need at the moment to conduct the business in the present. Forget all the economies of mass production and saving where you can get better prices by ordering large quantities. When you start your own small business, you will be offered a thousand different ways to waste money and a thousand different people encour- aging you to spend your money on things that are not helpful to you. You must become as careful as a miser and as crafty as a fox. 27Ul TIm ATE SUcc ESS GUId E Invest Yo UR hUMA n C APIt Al When you start your new business, the most valuable assets you have are your energy, imagination, character and discipline. This is what you use to get in there and do the work and get the results. Your assets are your abilities to make the key decisions, to get out there face-to-face with customers and make the sales. Your most valuable assets are your abilities to follow through on your commitments and promises. Ralph Waldo Emerson once wrote that, “A great institution is the length and shadow of a single man.” Even a small organization or company is the length and shadow of a single person. You are your business. The business is you. The business can never be more or less, better or worse than you are, on an hour- by-hour, minute-by-minute basis. The business is really a mirror image reflection of your character and ability. Your business tells you, and the world, who you really are. More than 30,000 businesses were studied over a twenty-year period to determine their reasons for success and failure. The statistics that emerged from these studies seem to hold true for almost all businesses over the years. In general, they found that it takes about two years for a new business to break even and start to make a profit. Most business that fail do so in the first two years. They run out of money and credit before they figure out how to earn more than they are spending. During the first two-year period, the business will suffer mostly losses that will have to be made up from the energy and resources of the entre- preneur. In the second two years, the business will start to make a profit. These profits will go into paying back the debts and losses that were incurred in the first two years. After four years, the business will start to generate net profits, having paid back all its start up cost. It will break into the clear and the entre- preneur will start to make good money. But it is only after the seventh year of entrepreneurship that the business starts to be really successful and the entrepreneur begins to make an excellent living. Most of the highest paid people in America, and most self-made mil- 28START YOUR OWN BUSINESS lionaires, are entrepreneurs who have passed the seven-year point in building and running their own businesses. They have stayed the course and paid the price of success - but it took more than seven years. Of course, it is possible to beat the odds. Everyone who got caught up in the dotcom boom was convinced that business success was achievable almost overnight. It may be possible to build a successful business in less than seven years. But beating the odds in entrepreneurship is very similar to the occurrence of miracles. It is not that miracles don’t hap- pen; it is just that you cannot depend upon them. CAReFUll Y Pl An Yo UR BUsIness In A DvAn Ce When you decide to start your own business, you may launch impul- sively because of a significant emotional experience or event in your life, like the loss of a job or the appearance of an opportunity. You may do it slowly and deliberately by spending several weeks or months in study and preparation. Whichever you choose, investigate before you invest. It is much easier to get into a new business than it is to get out of it. It is therefore impor- tant that you spend sufficient time investigating, in advance, before you commit time and resources to a particular business venture. This careful assessment can be critical to your long-term success. Remember the 80/20 Rule. This rule says that 20% of what you do will account for 80% of your results. One application of the 80/20 Rule says that the first 20% of time that you spend in planning and evaluating your business at the beginning will determine 80% of the results that you eventually get. When you decide to start your own business, you should draw up a complete business plan. There are several books on the bookstands that you can get for a few dollars that will give you all the ingredients of a business plan. There are computer programs that will walk you through the process of building a business plan. They make the process simple and straightforward. The assembling and putting together of a complete business plan is a key test of the entrepreneur. If you have the discipline to do it, you will find that it alerts you to many factors that you may not have considered. It will take a lot of work on your part to generate the various numbers 29Ul TIm ATE SUcc ESS GUId E that you will need to complete the different parts of the plan. But the contribution it can make to your success can be decisive. Inc. magazine reported on study of 100 start-ups a few years ago. Fifty of these new businesses had created detailed business plans before they began. Fifty of them had started on the back of an envelope or with little more than an idea in the mind of the entrepreneur. After five years, they returned to interview the business founders and evaluate the results. They found that most of the companies that had started without a business plan had gone bankrupt, ruining the founders and usually their families and friends in the process. On the other hand, virtually all of the companies that had started with a written business plan were flourishing. Many of the company owners made up complete business plans again every year, sometimes spending several weeks per year putting them together. Pl Ann Ing Reve Als the P It FAlls But here was the most important point. They asked the company found- ers how important the business plans had been in actually running their businesses on a day-to-day basis. The answer they received was surpris- ing. Almost all the successful entrepreneurs said that once the business plan was complete, it was usually put in a drawer and hardly referred to again throughout the year. They said that it was the exercise of thinking through the ingredients of the business plan prior to starting work that was more important than anything else. By creating a business plan, you are forced to think honestly and objec- tively about every part of the business before you begin. The business plan requires that you project sales and revenues, and then back up your projections with research and analysis. It forces you to think through all revenue and expense estimates for the year, and determine if they are realistic and achievable. The business plan will end up saving you an enormous amount of time and energy in executing it. It will do more to guarantee your success than any other investment of time you can make. Time is money, but money is time as well. If you have to work for five years to assemble 20,000 to invest in your business, that 20,000 rep- resents five years of your life. You must invest this piece of your life very carefully, and a business plan enables you to do it. 30START YOUR OWN BUSINESS A business plan begins by your defining clearly the product or service you are going to offer. You must determine exactly how much you will be able to charge for the product or service. You must calculate how much you will have to pay to make your product or service available in the first place. MARket Ing M Aste RY Before you enter the market with a new product or service, you must ask, “Why would someone switch from what they are currently using to my product? Why would they buy from me rather than from someone else?” For a new product or service to sell in a competitive market, it must have at least three factors about it that make it superior to whatever else is available. It must have three features or benefits that make it stand out from the competition. It must have a “unique selling proposition” and at least three competitive advantages. It must offer something more and better than whatever else customers are already using. A new product or service must be faster, cheaper, easier to use or pos- sess different features, factors or ingredients that competitive offerings don’t have. It must cause customers to see it and say, “That’s for me” A business plan is usually a month-by-month projection, going forward about 18 months, of how much you intend to sell of your product each month. You put these numbers along the top line. Below each of these numbers, you list every expense necessary to generate and fulfill those sales. You then deduct all your expenses from your sales figure to get your amount of profit or loss for the month. When you assemble these numbers, imagine that you are going in front of a board of bank examiners and they are going to ask you to explain and to defend every number on your plan. Discipline yourself to care- fully calculate every number and base it on the most verifiable facts and details possible. Whe Re WIll the sAles Co Me FRo M? If you project a certain level of sales, you should be able to show ex- actly where those sales are going to come from. How much advertising will you need to do and how many leads will the advertising generate? You should be able to show exactly who will call on or speak to each of 31Ul TIm ATE SUcc ESS GUId E these customers and how many sales can be expected from this prospect base. You must be able to estimate the exact amount of sale per satisfied customer and the amount of growth and net profit per sale, per product, per customer, per call. The measure of your ability as an entrepreneur is your ability to cre- ate a business plan and a budget, and then to achieve those results on schedule. Anyone can pull numbers out of a hat. But the best business people are the people who meet or exceed their numbers consistently and dependably. This is the true measure of how good you really are. First, you determine how much you are going to sell, how you are go- ing to sell it, and who you are going to sell it to. Second, you determine how you are going to deliver the product or service and collect payment for it. Third, you estimate all of the expenses involved in achieving the sales on the top line. Take every single conceivable expense, in order, from the largest expenses to the smallest, from cost of goods sold, salaries, rent, utilities and trans- portation all the way down to the cost of shipping and postage stamps. It is useless to play games with yourself, or to ignore unavoidable expenses. There is nothing that makes a business plan less believable than the fail- ure of the entrepreneur to include every expense that will be incurred. Once you have added up all your expenses, you then create a “fudge factor” of 20% of that total number. For example, if your top line sales for the month are going to be 10,000 and your total expenses to achieve those sales will be 5,000, you create a fudge factor of 20% or 1,000 and you include that as a real expense. Believe me, it will become a real expense, no matter what you do. Now you have an accurate projection of your net income for that month. You do this for every month, taking into consideration seasonal fluctua- tions, vacations, cycles and trends in demand over the year, and estimate your financial results for the next 12-18 months. Fo CUs on the nUMB eRs Every month, you review your actual figures against your projected fig- ures to see how close you were. By using a spreadsheet program like “Excel,” you can keep accurate and current books. By changing any one of the numbers in your financial plan, you can then push a button and 32START YOUR OWN BUSINESS change all the subsequent figures so they are more in conformance with your real experience rather than your projections. Over time, you will become more and more accurate at projecting ex- actly how much you will sell, how much it will cost to make those sales and how much profit you will earn each month. The better you become at making and meeting your financial projections, the better an entrepre- neur you become in every other area as well. BUYIng A BUsIness There are two more points with regard to starting a new business. The first has to do with buying an existing business. Here is the rule. No one sells a profitable business. If someone has a business for sale, it usually has a hidden flaw of some kind. Perhaps you can compensate for the flaw and make the business prosper. Perhaps you cannot. But in any case, you must find out what it is. I have spoken with many entrepreneurs who have been offered busi- nesses for sale. When they heard this rule from me they went back and investigated, seeking the hidden flaw. In every case, they found that there was something negative about the business that the seller had not told them. In one situation, the major customer for the business was closing down and fully 50% of the revenues would disappear by the end of the year. In another case, a competitor was bringing out a better product at 25% lower cost than the best product of this company and their sales would be non-existent within 12 months. Find the hidden flaw and if you can’t compensate for it, don’t buy the business at all. If someone wants to sell you a business and it has problems, offer to pay them for the business out of the profits of the business. If there are no profits, there is no payment. Anybody who is selling a profitable busi- ness will be open to receiving a substantial part of their return in the form of ongoing profits. If a person is reluctant to be paid out of profits, you can judge for yourself whether you want to pursue it. n et Wo Rk M ARket Ing The second area of starting a business has to do with network marketing. There are many outstanding network marketing companies in America 33Ul TIm ATE SUcc ESS GUId E today. Unfortunately, there are a large number of poor companies as well. Here is the rule. Everything that applies to starting your own busi- ness, in terms of business planning, selling, budgeting, projecting, and investing many months and even years, applies to building a successful network marketing business. If you are not prepared to invest 3-5 years building your business, don’t get into it in the first place. The greatest trap for would-be entrepreneurs in America is the lure of get-rich-quick schemes, easy money, something-for-nothing ideas that are advertised and promoted everywhere. There is within the psyche of most young people a passionate desire to shortcut the process of suc- cess. They are looking for a quick, easy way to jump the line and get to the head of the class without paying the full price in terms of hard work and sacrifice. Make the decision that this is not for you. Refuse to look for or listen to any get-rich-quick schemes. If it sounds too good to be true, it probably is. Walk away. The very idea of looking for something for nothing can be fatal to your future. tIM e An D k no Wle Dge Once you decide on a new business, remember that the primary sources of value in America today are time and knowledge. Time refers to the speed at which you can deliver your product or service to your customers. Knowledge refers to the intellectual content that you put into your prod- uct, service or business. This is what makes what you do more important and valuable to your customers than what your competitors are doing. By starting your new business at home, you can enjoy special financial and tax benefits. Do your homework. Find out what they are. Be perfect- ly correct in all of your financial dealings, with everyone in your finan- cial life. Be straight with your bankers, your suppliers, your customers and with the tax people. Remember, life is very long and everything you do financially trails behind you for years and years. There has never been a better time for you to achieve financial inde- pendence by starting your own business than there is today. Anything that anyone else has done, and especially something that hundreds and thousands and millions of other people have done, you can do as well, and maybe even better. 34START YOUR OWN BUSINESS You can piggyback on the knowledge and experience of hundreds of thousands of entrepreneurs who have put their best ideas and insights into books, audio programs and seminars. You can become one of the most successful business people in America by simply doing what oth- ers have done before you. There are no limits except the limits you place on your own imagination. 35

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