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START YOUR OWN BUSINESS
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
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-
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
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
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
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
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
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
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
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.