Sunday, November 24, 2013

So You Want to Be an Entrepreneur and Start a New Business! Do You Have What It Takes?

clip_image002This article was written by John Rau, SCORE Orange County Business Mentor

According to Wikipedia, an “entrepreneur is an individual who organizes and operates a business or businesses, taking on financial risk to do so”. Are you ready for this, that is, (1) to organize a business (or businesses), (2) to operate a business and (3) to take on the financial risk to do so?

Referring to http://www.sba.gov/content/entrepreneurship-you, the Small Business Administration (SBA) suggests that you need to have the following characteristics and skills commonly associated with successful entrepreneurs:

  • Comfortable with taking risks
    • Being your own boss also means you’re the one making tough decisions. Entrepreneurship involves uncertainty. Do you avoid uncertainty in life at all costs? If yes, then entrepreneurship may not be the best fit for you. Do you enjoy the thrill of taking calculated risks? Then read on.
  • Independent
    • Entrepreneurs have to make a lot of decisions on their own. If you find you can trust your instincts and you’re not afraid of rejection every now and then, you could be on your way to being an entrepreneur.
  • Persuasive
    • You may have the greatest idea in the world, but if you cannot persuade customers, employees and potential lenders or partners, you may find entrepreneurship to be challenging. If you enjoy public speaking, engage new people with ease and find you can make compelling arguments grounded in facts, it’s likely you’re poised to make your business idea succeed.
  • Able to negotiate
    • As a small business owner, you will need to negotiate everything from leases to contract terms to rates. Polished negotiation skills will help you save money and keep your business running smoothly.
  • Creative
    • Are you able to think of new ideas? Can you imagine new ways to solve problems? Entrepreneurs must be able to think creatively. If you have insights on how to take advantage of new opportunities, entrepreneurship may be a good fit.
  • Supported by others
    • Before you start a business, it’s important to have a strong support system in place. You’ll be forced to make many important decisions, especially in the first months of opening your business. If you do not have a support network of people to help you, consider finding a business mentor. A good starting point would be to contact your local SCORE organization and make contact with one or more counselors. A business mentor is someone who is experienced, successful and willing to provide advice and guidance.

Bizcoach (see http://www.bizcoach.org) provides some good advice for what it takes to be an entrepreneur and the qualities for success, specifically:

  • You must have a clear vision. Entrepreneurs are able to visualize exactly what it’s going to look like when it’s done. To keep the end in mind is critical in creating a path to get there.
  • You must demonstrate proactivity in the sense that entrepreneurs tend to make things happen and are impatient with indecision. They make decisions and take action to move forward.
  • You must have tenacity. Entrepreneurs are not easily discouraged and will persist in spite of obstacles. In fact, entrepreneurs enjoy the risks of failure and accept challenges.
  • An entrepreneur has the ability to multi-task, which is required to run the various aspects of any successful business.
  • Entrepreneurs recognize a need and have the ability to take action.
  • You must have a belief in customer service. Provide extra care and they will return.
  • Most entrepreneurs possess some degree of competitiveness, but you should view competition as a way to improve your business.
  • You must set and achieve goals on a regular basis.
  • You must believe in yourself in that you can do it in spite of the risks and potential obstacles.
  • You must have a passion and zeal for what you do.

Research of successful entrepreneurs has documented that successful small business people have certain common characteristics. In this regard, the following brief checklist developed by SCORE won’t enable you to predict success, but it can give you an idea of whether you will have a head start or a handicap with which to work. Ask yourself the following questions:

· Can you persevere through tough times?

· Do you have a strong desire to be your own boss?

· Do the judgments you make in life regularly turn out well?

· Do you have the ability to conceptualize the whole of a business?

· Do you possess the high level of energy, sustainable over long hours, to make a business successful?

· Do you have significant specialized business experience?

While not every successful business owner starts with a “yes” answer to all of the above questions, three or four “no’s” and undecided answers should make you think twice about going it alone right now. But, don’t be discouraged. Seek extra training and support with help from a skilled team of business advisors such as accountants, bankers, attorneys and SCORE counselors.

In summary, starting a business is not for everyone. It brings a certain level of stress and strained financial resources. There is no simple formula or set of instructions that will teach you how to become an entrepreneur. Having the characteristics and skills as cited above by the SBA and possessing the above listed qualities for success will get you on your way.

How Do I Market My Service Business?

From Success Magazine, November 2013, reprinted by permission

Today’s question: What is a good way to promote my business as an independent service professional?

Bob Serling: Great question. To answer with me, I’ve asked Robert Middleton, a leading authority on marketing for independent service professionals.

As a service professional, you have to get your name and your knowledge out there where people can see it. One way to accomplish this is by creating list articles or list reports.

Let’s say you’re a consultant on productivity. Your list report might be something like, “6 Surefire Ways to Help Your Employees Be More Productive” with effective, easy to use productivity tips. Create a press release via PR Web or PR Newsletter to market your free list report. Both are very inexpensive press release services that allow you to target the kind of publications you want. If you’ve never written a press release, you can just Google press release templates and you'll find a number of excellent templates.

Also send your press release to the trade publications for industries you specialize in, who may publish your release for free. Be sure to include your website in the report for more information. On your website, create an opportunity for people to join your email newsletter in exchange for receiving your list article report for free. That starts the whole process for you.

Robert Middleton: Think about how you package your services. In my experience, I find packaging of services is often neglected. We’re looking for leads, for people to come to our site, for people to grow our list—all to help get the word out there, but people often forget that if they don’t package their service in a certain way they will limit themselves.

Instead of selling a one-day workshop for $5,000, turn that into a nine-month program for $30,000 to $40,000. To accomplish this, write up a really good sales letter for that high-end service. As an example, I did this four years in a row for my marketing mastery program. I wrote a really detailed in-depth letter about what this program was, why people need it, what the benefits were, how it worked, how it was structured—everything they could ever want to know about it. Then I had people apply to get into the program. I got 50 to 60 applications every time I promoted it. Then I met with those people, talked to them on the phone, and sold them a $10,000 to $15,000 one-year program and filled it completely four years in a row.

Everyone is focused on getting the word out about their services, but when I look at what they have to offer, it’s often, “Well, we offer management consulting services,”  or “We offer business coaching services.” When they talk to someone they don’t have a package. I call it putting a big package on your shelf so that you can sell it. It’s like if you’re going to sell beans, you can sell a small can of beans, a medium-sized can of beans, or the extra super jumbo size.

Bob Serling: That’s a great analogy.

Robert Middleton: Create bigger programs and write a lot of copy about them, because the more expensive they are, the more you have to write, the more you have to explain, the more you have to build a case for the value of it, the better the results you can get. Not many service professionals do this. We’ve helped people do this for medium-sized businesses, small-sized businesses, corporations, all kinds of businesses, and simply upped their vision or the upped the ante, so to speak, about what they’re offering.

Bob Serling: You mentioned that when you’re selling an expensive package it requires a lot of copy. At the same time, most people are afraid of creating long copy. They think that their prospects won’t read long copy, especially when it’s online. But the fact is that when you’re selling something that is complex, people want a lot of information in order to make an educated purchasing decision.

I was talking with one of my mastermind groups and telling them that the piece I wrote for my last program, which cost $22,500, was 14 pages long when printed out. A lot of people thought that nobody would read that much copy. Actually that answer is partially true—nobody who isn’t interested will read it. So you’re doing those people a service, you’re not wasting their time. But the people who are interested will read it and they’ll read every word because they want to make a good decision for themselves.

Robert Middleton: Exactly. Sometimes they’ll read it a few times.

Funding a Start-Up Today

This article was written by Julian Hills, October 2013 in Entrepreneur Magazine, reprinted by permission

You’ve got an awesome idea, a slick name in mind and the garage space to start your dream business -- but not the cash. I'm not surprised.

Financing a small business -- especially a startup -- is an uphill battle in a crowded field. In the U.S. alone, there are an estimated 27.5 million small businesses. And nearly 80 percent of them get their money through bank loans, credit cards and lines of credit.

It’s no secret that it is harder getting money through those avenues in the current financial climate. But just because it’s a bit of a fight, doesn’t mean your great idea isn’t worth fighting for. Here are some of the ways you can finance your startup, from standing in bank lines to going online:

Bank loans. Once thought of as a go-to option, national banks are still pinching pennies -- even after the Great Recession ceased.

As the economy continues to struggle, and bank loans remain elusive, here are some other financing options:

Finance companies: These private companies provide small, short-term loans. This type of financing often comes in the form of payday loans (or cash advance loans). The individual borrows an amount of money and agrees to pay it back with the cost of fees and interest tacked on to the principal. The lender uses the borrower’s next paycheck or a portion of their income as collateral to pay the loan back. The Federal Deposit Insurance Corporation warns that payday loans could be tricky for people using the cash to start up a company, as even just a $500 payday loan could carry a $100 fee. People will occasionally use these loans to cover immediate personal expenses in the startup process.

Unsecured lines of credit: People with high personal credit scores can often get an unsecured line of credit for their businesses. But it should be noted that this option can come with hefty rates. It’s important to decide if the cash your business is projected to reel in will be adequate to pay the loan back, as failing to do so could impact your personal credit and your business credit. The U.S. Small Business Administration released a report in July noting that lending to small businesses declined last year. Business loans of less than $100,000 dipped to $138.2 billion, from $139.5 billion in 2011. Even though conditions have improved in recent years compared with 2008 and 2009 (the height of the recession), business owners still find themselves facing roadblocks from banks that continue to restrict their lending.

Community banks and credit unions may serve as your next best bet. Since many community banks avoided the housing crisis, they’ll often have money to lend without the same standards as national banks. Local small businesses are finding success with community banks if they can convince lenders they’ll make a profit and pay back the loans.

You might also tap a credit union for available funding. As nonprofit organizations, credit unions may offer better lending terms for borrowers than commercial banks.

Credit cards. Having plastic has its benefits. The perks include immediate access to needed items, cash advances when you’re low on money and a way to track spending. When financing your business with credit cards, a major consideration should be whether you can pay off the balance monthly. Credit card companies know commercial loans are hard to come by and often jack up their rates -- sometimes upwards of 30 percent.

Government assistance. The SBA offers qualified financial assistance programs. While it doesn’t loan money directly, the SBA does set guidelines for loans made by third-party lenders (essentially a commercial loan with negotiated strings attached). Businesses that go this route must first prove they could not obtain financing at commercial banks with reasonable terms.

On the upside: SBA loans are usually structured with longer terms and lower down payments, and may come with lower interest rates. On the downside: SBA-backed loans tend to have a lot of stipulations -- often requiring lots of paperwork and time, as approval can take longer than loans from private lenders.

See if your business qualifies by carefully reading the criteria on sba.gov.

Crowdfunding is a relatively new and increasingly popular option people are using to fund business ideas. Most often, entrepreneurs will use sites like Indiegogo and Kickstarter to raise money from the crowd in return for token incentives like a prerelease product or a T-shirt. This process can cut out professional investors and brokers by putting funding in the hands of regular folks. It also might attract venture-capital investment down the line if a company has a particularly successful campaign.

Another, even newer option: equity crowdfunding through sites like Crowdfunder. Rather than giving funders a T-shirt, startups can offer equity in their companies instead. Know that only accredited investors (people with a net-worth north of $1 million, minus their home's value) may participate in this type of transaction.

10 Qualities Every Leader of The Future Needs to Have

This article was written by Martin Zwilling, from his Blog, October 29, 2013, reprinted by permission

The reigning theory in business has long been that "alpha" leaders make the best entrepreneurs. These are aggressive, results-driven achievers who assert control and insist on a hierarchical organizational model. Yet I am seeing increasing success from "beta" startup cultures where the emphasis is on collaboration, curation and communication.

Some argue that this new horizontal culture is being driven by Gen-Y, whose focus has always been more communitarian. Other business culture experts, like Dr. Dana Ardi, in her new book The Fall of the Alphas, argue that the rise of the betas is really part of a broader culture change driven by the Internet -- emphasizing communities, instant communication and collaboration.

Can you imagine the overwhelming growth of Facebook, Wikipedia and Twitter in a culture dominated by alphas? This would never happen. I agree with Ardi who says most successful workplaces of the future need to adopt the following beta characteristics and better align themselves with the beta leadership model:

1. Do away with archaic command-and-control models. Winning startups today are horizontal, not hierarchical. Everyone who works at an organization feels they're part of something, and moreover, that it's the next big thing. They want to be on the cutting-edge of technology.

2. Practice ego management. Be aware of your own biases and focus on the present as on the future. You need to manage the egos of team members by rewarding collaborative behavior. There will always be the need for decisive leadership, particularly in times of crisis. I'm not suggesting total democracy.

3. Stress innovation. Betas believe that team members need to be given an opportunity to make a difference -- to give input into key decisions and communicate their findings and learnings to one another. Encourage team-members to play to their own strengths so that the entire team and organization leads the competition.

4. Put a premium on collaboration and teamwork. Instead of knives-out competition, these companies thrive by building a successful community with shared values. Team members are empowered and encouraged to express themselves. The best teams are hired with collaboration in mind. The whole is thus more than the sum of its parts.

5. Create a shared culture. Leadership is fluid and flexible. Integrity and character matter a lot. Everyone knows about the culture. Everyone subscribes to the culture. Everyone recognizes both its passion and its nuance. The result looks more like a symphony orchestra than an advancing army.

6. Be ready for roles and responsibilities to change weekly, daily and even hourly. One of the big mistakes entrepreneurs make is they don't act quickly enough. Markets and needs change fast. Now there is a focus on social, global and environmental responsibility. Hierarchies make it hard to adjust positions or redefine roles. The beta culture gets it done.

7. Temper confidence with compassion. Mindfulness, of self and others, by boards, executives and employees, may very well be the single most important trait of a successful company. If someone is not a good cultural fit or is not getting their job done, make the change quickly, but with sensitivity.

8. Invite employees to contribute. The closer everyone in the organization comes to achieving his or her singular potential, the more successful the business will be. Successful cultures encourage their employees to keep refreshing their toolkits, keep flexible, keep their stakes in the stream.

9. Stay diverse. Entrepreneurs build teams. They don't fill positions. Cherry-picking candidates from name-brand universities will do nothing to further an organization and may even work against it. Don't wait for the perfect person -- he or she may not exist. Hire for track record and potential.

10. Not everyone needs to be a superstar. Superstars don't pass the ball, they just shoot it. Not everyone wants to move up in an organization. It's perfectly fine to move across. Become your employees' sponsor -- on-boarding with training and tools is essential. Spend time listening. Give them what they need to succeed.

Savvy entrepreneurs and managers around the world are finding it more effective to lead through influence and collaboration, rather than relying on fear, authority and competition. This is rapidly becoming the new paradigm for success in today's challenging market. Where does your startup fit in with this new model?