Entrepreneurship

19

May'18

How do I start a business with no experience?

How do you start a business with no experience? Maybe you haven’t worked in a job, other than maybe a temporary job in school. Becoming an entrepreneur, doing a start-up, and being successful is not as easy as it might be portrayed in Entrepreneur or Fast Company, or Inc magazines. They highlight the .1%, not the 95% who didn’t make it. My suggestion is that you shouldn’t start a business just yet, because you really need to have a lot more experience working for someone before you start your own business. Starting a business is hard. You have to know a lot about business, taxes, employees, marketing, organization, etc. Yes, you can learn a lot about these things at school, taking the appropriate courses, but as the saying goes, “in theory there is no difference between theory and practice, in practice, there’s a big difference.” Truer words have never been spoken. Now a lot of people are going to jump all over me saying “you don’t need any experience, just do it! There are many examples of people who did exactly that and succeeded.” Right. And for every one of them, there are 100 you don’t hear about who tried …

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24

Apr'18

What Should You Know to Analyze a Financial Statement?

What do you need to know to analyze a financial statement? The answer is a little complicated. Here are the things you should know: A basic understanding of accounting. You need to be able to appreciate what the various components of a financial are, and where they come from. You need to understand the pitfalls of financial reporting, and the limitations of GAAP. A good understanding of the tools of financial analysis, how they are used and what they reveal. Things like ratios, trend lines, scatter charts, and the like are important tools, if you know how to use them. A good understanding of the industry. You need to know what is expected and what is unusual. Without some comparative information and background, your financial analysis of the company is in a vacuum, and probably meaningless. A good understanding of the business. If you don’t know anything about the business except what you see in the financial statements, you don’t know very much. When I read an annual report, I spend far more time reading the explanatory material than actually looking at the financials. I do a web search on the company, try to understand what their products are, their …

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04

Apr'18

Should I leave my low paying, meaningless job to start a business?

Oh my, some serious issues in this question! Jumping off the current boat to swim with the sharks and try to stay afloat and build a new boat from scratch is incredibly difficult, far more difficult than it looks. Look very, very carefully before you jump. The water is cold, full of sharks and unpredictable big crashing waves. Once you abandon the ship you are on, be prepared for some rough times. You may drown. You cannot start a business until you have sufficient savings, have done intensive research, have networked and made good connections, and have a backup plan. Low pay job: Ok, so make something of it. Do the best job you can, be a superstar. Be a sponge: learn everything you can and more. Prove to your employer that you are worthy of a raise. Then look around for another, better paying job. Work your way up. “Meaningless job” – there is no such thing. The meaning you have in a job is what you put into it. If you are a janitor cleaning toilets, put everything you have into cleaning them the best way anyone could. If you sweep the floors, do it with style and …

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02

Apr'18

How do I sell my consulting services?

This is an easy one! First, you have to know as much as you can about your prospective clients. What are their needs? What are the problems that gnaw at them and cause them to lose sleep? What things are just annoying and irritating that they have to deal with? Know your prospect. Understand what motivates them and where their “pain” is. Now, how will you, yes you, solve their problems in a seamless, easy, cost-effective way? What will you provide that will give them (almost) instant relief? What is your USP ( unique selling proposition)? Don’t give them some “generalities” or fuzzy answers. You have to be razor sharp on this. You have to be able to prove that you can solve their pain. Otherwise, why would they risk dealing with you? What guarantees or warrantees can you provide ( and remember, these have to be realistic… if you promise too much, they won’t believe you.) That brings us to the next issue: credibility. Why are you, as an individual, uniquely qualified to provide this “relief?” What are your credentials? What experience do you have? What references can you give? What case studies can you provide that prove your …

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30

Mar'18

Do I need a License to Start a Consulting Practice?

The answer is that as long as you are not giving advice which is regulated, you are good to go. What’s regulated? Law, medical, actuary, insurance, investments, real-estate (in some locales), engineering (in certain fields), architecture, and certain trades. If they license the practitioners, they probably regulate the advice. For example, just try to practice accounting in Texas. They will be all over you if you are not a CPA … Also, you have to be very careful that you aren’t issuing an opinion on certain things. Accounting is a clear example. If you start doing financial statements and attaching some sort of opinion that they are correct, the CPA board will be on your case. Be very cautious about anything involving other people’s money. Giving advice about loans or real estate transactions can get you in big trouble if you are alleged to be an unlicensed real estate broker or loan broker. Even if there is no regulation, you should be careful where some sort of dealer license is involved. For example, I had a client who helped people find the right car for a price. The state alleged he was an auto broker. Big cat fight ensued. He …

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28

Mar'18

How do you form a Private Company?

A private company is any company that is not publicly held, meaning that it could be a corporation, a partnership, a LLC or a sole proprietorship. Forming a sole proprietorship is easy. Repeat after me: “ I now have a company and it is named ____ (insert name)” You now are a sole proprietor. You may have to register your “fictitious” business name, you may have to obtain a business license from your City/County/State, and you may have to apply for various registrations, such as sales tax, property tax, payroll tax, etc. But you are in business. Forming a partnership is almost as easy. You and others agree to be in partnership. You are there. Of course, only a fool would do that without some sort of written partnership agreement, since people tend to have short memories about what they agreed to, and partnerships tend to end up on the rocks as the result of unfulfilled expectations and misinterpretations. Partnerships are dangerous because they expose you to the liability created by your partners, amongst other things, and if you are determined to have one, consult with an attorney, please. We don’t recommend them. After you have formed a partnership, you’ll …

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26

Mar'18

How can I be Wealthy?

Here is my perspective on it, from my experiences with many very wealthy clients: Invest wisely. To do that, you have to understand investing and investments. You must constantly educate yourself. Don’t just delegate that to some broker. Delegation without supervision is abdication. Diversify, realize that investments are like the tide, they come in and go out of fashion. Don’t try to shoot the moon, just try to earn the risk adjusted rate of inflation plus a few percentage points. Keep your overhead low. Live below your means. Flashy displays of wealth are wasteful and make you a target. The truly wealthy live comfortably, but not ostentatiously. Maintain your health. Nothing is worse than the drain that extraordinary medical expenses can place on your net worth. Yet keeping fit and eating right are relatively easy and inexpensive. Enhance your relationships. The truly wealthy person is the one with the loving family. Everyone can improve their family relationships. Focus on loving things you can do for yours. These are things that money cannot buy. Be generous, kind and giving. The truly wealthy are those who can give of themselves, and contribute a part of their wealth. The tightfisted cheapskate who never …

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26

Mar'18

A Friend as a Business Partner: Good Idea?

This is an interesting question, and the answer depends upon a lot of factors. Being in business with friends can either be the best thing you ever did, or the worst nightmare (and friend-destroyer) ever. A lot of this depends upon you and your friend’s personalities, and the way that each of you approaches business. Being in business with anyone is going to be very stressful at times. How do you resolve disagreements (and there will be many), how do you each divide the work (and there will be inequalities), and how do you each manage (management styles can be a lot different than friendship styles). In a casual friendship, lots of stuff that might otherwise cause friction and conflict gets avoided. Take that same pair and put them in a business environment and you may have a giant cat fight. I have been in partnership with “friends” and it ended badly. It turns out my friend was very insecure, and from a large corporate environment. He needed to play politics, create factions, and act like he was back in Corporate America. It’s the only way he knew how to act. I’m a small company guy. Politics, factions, rumors, “back …

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24

Mar'18

What’s the Best Business to Pursue?

The best business startup is the one that suits your skills, experience, temperament and financial wherewithal. Only you can determine that. There are so many different opportunities, the problem is narrowing the choices to ones which have a definite market demand. What is it people need, and are willing to pay for? Generally a successful business concept addresses one of three mandates: the business performs tasks that nobody wants to do (trash, cleanup, bookkeeping, plumbing) , functions which are difficult, or require specialized knowledge (computer programming, construction, dental work), or it provides recreation or lifestyle enhancement ( restaurants, entertainment, gyms, personal trainers). In order to be successful, a business must have a USP ( unique selling proposition), a well defined, identifiable and reachable prospect base, and a business model that provides for adequate profit and cash flow. “Occam’s razor” is the principal that the best solution is usually the simplest. Many entrepreneurs try to make things too complex. Pick a business that is simple, straight-forward and not too expensive to start. Do a test marketing to see if it will fly. Then roll it out. We have some excellent videos and other material at https://CEAnow.org (https://CEAnow.org) to allow you to …

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23

Mar'18

How much money do I need for my startup?

The best amount is the amount you need, plus a contingency fund. The exact amount depends upon the business and the business environment. How will you calculate the “best amount?” The answer is simple: the business plan. Business planning is a lot more than just filling in some pre-formatted spreadsheet, or completing the blanks in some downloaded business plan form. If you’ve done your business plan correctly, you will have a tool that will help you model your business under various situations. You will understand the mathematical model that describes how your activities in marketing and sales translate into cash inflow, and what amount of cash you will have as profit. You will understand your USP ( unique sales proposition), your competition, the market dynamics, and how all of the factors: personnel, material, capital and system interact to produce profits. So what you need to do is work on that business plan. We have a few interesting videos describing the whole process at CEAnow.org.

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