Sins of Entrepreneurism

The dream of business ownership is like an addiction running through the veigns of entrepreneurs.  We crave the start-up and break out into cold sweats at the very thought of a new business opportunity.  When done properly, a start-up is a wonderful thing, flourishing with profits and cash flow.  When mangled and mismanaged, the beauty tarnishes and becomes a dirty needle driving us to a metaphorical over dose.

So what happens that causes us to lose our way and take what we thought was such a wonderful idea and turn in into such a mess?  For many unenlightened entrepreneurs, they take their eye off the contest and start coveting the prize.  Instead of focusing their serious intention on building an enterprise, they lose focus and just create a job.  

For some, being self-employed is just fine.  Just understand that being self-employed is not a business.  Being self-employed is still trading hours for money.   The dream of entrepreneurship for many is realizing fame, fortune, liesure, travel and a healthy cashe of possessions.  That’s the prize for creating a well-run enterprise.   Let me say up front that I too hope to realize those prizes.  There’s nothing inherintly wrong with any of those things.  But they only come at the end, after you’ve created the enterprise.  The problem is, many hopeful entrepreneurs take their eye off the start-up and start focusing on the prize, before the enterprise is even established. For these people, the prize becomes a poison and bitter reality instead of the comfort.

For these lost entrepreneurial souls, fame turns out to be the dog remembering you, for your family has long forgotten your face since they never see you.  Your fortune becomes a huge pay cut, the result of a poorly run business.  Your liesure has been traded for living at your office.  You trade your 40 hour per week corporate job for an 80+ hour per week self-employment nightmare.  Your travel has become nothing more than a mind-numbing commute from your home to your office.  Your possessions are not exotic cars and vacation homes, but accounts payable, credit lines and inventory.   

How did you get yourself into this nightmare?  For most, the answer is in conducting the proper research, developing a solid marketing plan and testing for viability.  This simple process would have told many business owners that their business model was flawed and needed adjustment.  Unfortunately, they never really did any business planning.   By focusing on the prize and not the process, these starters never really got started…at least not properly.  The process is not complicated, but you do need to follow it.  If you don’t understand the process, get some coaching, find a mentor, or read a good book.  That reminds me, entrepreneurs can buy my new book Business Start-up 101 by visiting www.BusinessStartup101.com or Amazon.com.  If you want to chat, drop me a line.

Business Planning - What Not To Do: Part 4

Verify Viability.

The only thing worse than not doing any research is not verifying viability.  The tools available for entrepreneurs are many and can sometimes feel complex.  I meet many people developing their business plan and doing their market research without a clue of how to prepare a viability analysis.  I’ve got a very simple system called the Three Tools of Financial Viability^TM.  The tools are available to every business owner or prospective entrepreneur and are fairly simple to use.  The tools consist of an income statement projection, a cash flow report and a break-even analysis.  That’s it.  That’s really all you need to test for financial viability.

The income statement determines how much money you business will make and over what time period.  The cash flow report determines how much cash you’ll need to start and run the business according to your business model.  And the break-even analysis tells you how much business you’ll need to support the level of infrastructure you’re projecting.  Based on the level of business you can ask yourself it that actually makes sense?  In fact, you can use all three tools to determine if your model makes sense.

In the best case scenario, you’ll run the numbers through the Three Tools of Financial Viability^TM and determine if you like the results.  If not, tweak the business model so that you get a different outcome and run the numbers again.  Keep repeating the process until you like the results or determine that the model, at least in its present form, will not work.  If you like the outcome, you can start writing your business plan.

That’s really all there is to it.  Students who go through my business plan class almost always dread the discussion about income statements.  They think the process is way too complicated for non-accountants.  When I tell them that constructing an incomes statement is the easiest part of the whole class, they laugh, nervously.  Once we finish though, they all agree that they can do this too.

For more information about the business planning and start-up process, get my new book,Business Start-up 101, From Great Idea to Profit…Quick!  It’s coming out in September, but you can pre-order your copy now.

St. Joseph Job Networking Club

On August 17th I'll be speaking to the St. Joseph the Worker Job Networking Club.  They meet on Tuesdays from 12:30 - 2:00 at the John the Baptist Catholic Church, 1055 Hughes Road, Madison, AL.

I'll be talking about Understanding Entrepreneurship; what's involved in getting ready to be a business owner.  I'm not talking about business plans and bank loans.  I'm discussing getting yourself and your family ready for your self-employment.  We'll discuss family, personal finances, success thinking and action plans.

In addition, I'll let everyone know about the resources available for hopeful entrepreneurs at the Women's Business Center of North Alabama.  I'm a big supporter of the Women's Business Center since I'm on their board of directors and serve as a business coach.  In addition to the work I've been doing in Huntsville, I'm serving as the program manager for a USDA Rural Development grant to serve rural Morgan County.  We teamed up with the Rural Morgan County Industrial Development Board to bring coaching and training to rural Morgan County.

If you have any interest in learning about entrepreneurship, come join us.

Business Planning - What Not To Do: Part 3

Shortcut the research.

Does this really need explanation?  Okay, so it does.  I’ve found that ‘things that go without saying’ should always be said.

You probably know someone who tried to start a business without doing any or adequate research.  You remember them telling you about this fabulous business idea that they came up with and after researching the market, they’ve decided that nobody else has ever had the idea.  The only problem is that you know of at least two other companies who do this same idea and are doing it very well.  What was this person thinking?  They clearly didn’t do any research because the vaguest of internet searches would have turned up their competition.

On the other side of the coin, we’re not trying to solve the remaining six Millennium Prize math problems.  We’re talking about answering a couple of basic market research questions.  

1. Who is the competition and what are they do well and not so well.

2. Who is the customer and be able to describe them in demographic terms

3. What do your customers like and dislike about the product or industry and what do they really want?

4. S.W.O.T. Analysis for your company and the market.

That much research might take you a couple of days or a couple of months, depending on how much time you have to devote to the project and how complicated your market.

For more information about the business planning and start-up process, get my new book, Business Start-up 101, From Great Idea to Profit…Quick!  It’s coming out in September, but you can pre-order your copy now.

Business Planning - What Not To Do: Part 2

Just dive in.

Before diving in head first into water that may only be a few feet deep, take a step back and make a plan.  I’ve developed a process for this business planning activity that I think works very well.  It will save you time and help you define the probability of profit quickly.  You can then tweak your model until you like the outcome or dump the whole idea if it turns out not to be viable.  The process is this:

Market Analysis

  - Competition

  - Customer

  - SWOT

Marketing Plan

Viability Testing

Once you finish with your viability testing iterations, you can move on to identifying and determining some of the more mechanical processes of starting a business such as entity type, location, identification of partners (banks, insurance agents, accountant, attorney and of course consultant).  Only then should you start writing the plan.  If you do all the research and planning, writing the plan will be a snap.  The only question will be how much detail you include.

For more information about the business planning and start-up process, get my new book,Business Start-up 101, From Great Idea to Profit…Quick!  It’s coming out in September, but you can pre-order your copy here .

Business Planning - What Not To Do: Part 1

Just start writing.

Many new entrepreneurs get started by writing a business plan.  At least they try to start their business by writing a business plan.  And while this is the advice you’ll get from many coaches and consultants, it’s probably not the right way to begin.  Many get stuck after the company description part and don’t know what to write next.  And there’s a good reason why they get stuck, they don’t know what to write.  If it sounds like I'm talking in circles, it's because I am.

Business planning doesn't start with writing a business plan, it ends with writing a business plan.  That's because a business plan is a summary of all the work, planning and research that an entrepreneur has conducted.  It’s not a novel.  You can’t make up the plot as you go.  You have to know the details, before you can sumarize.  After you finish all the research and analysis, confirmed viability and are happy with your business model, THEN you start writing down your plan.

Over the next several entries, I’m going to discuss some things not to do.  I have a specific process that I recommend for entreprenturs getting started on the road to business ownership.  I’ve outlined this plan in my new book, Business Start-up 101, From Great Idea to Profit…Quick! coming out in September.  Click here to pre-order your copy. 

Business Start-up 101

My new book, Business Start-up 101, From Great Idea to Profit...Quick! is due out September 13th.  You can pre-order your copy by September 3rd and receive an autographed copy.  It's a 'how to' guide for entrepreneurs.  You don't need an Ivy League MBA to start a business, you just need to know the rules.  Business Start-up 101 will teach you the rules and help you develop your idea and prepare for success.  It's available fromwwww.BusinessStartup101.com , www.BluePointStrategies.com.  After September 3rd it will also be available on Amazon both in print and Kindle format.