The premier guide to success in owning your own business

On this page I will be keeping a diary of thoughts and stories that will be used in the book I am writing.  This will be rough ideas an unedited manuscript which will then form the basis of the book.  Please feel free to email me any comments or thoughts you have about ant thing you read on this page. (see email link above)

Please note that this website is not intended for "most people". It is written for those who want to stand out as entrepreneurs. If you are such a person, we strongly advise that you give serious thought to all of the suggestions about how to improve your business and financial profile, your money in particular.

1/11/2007

What you never hear in business school is that opening a business is a balancing act what should you invest in in the microcosm of your business.  What controls can you pay for and what assets can you afford to lose money on while building your market share.

Ask yourself --- What caracteristics am I willing to pay a premium for when I am hiring an individual?

Responsibility

Salesmanship

Administrative experience

Knowledge of a particular trade

General Business Knowledge

Knowledge of an office or the type of business you are engaged in

Ability to learn

While employees are the key to the sucess of your business, they are extremely ex[ensive for a start up entrepenuer.  Also just because someone made a large amount of money in one field or one type of business does not mean that they will be sucessful for you.  Also you might have to lose money for a substantial period of time while training the person and building up thei r knowlegde, skills ,accounts etc.  Then there is no guarantee that they will stay with you after you made such a large investment in them.

Hiring

A few things to think about before you hire someone

In most businesses an employees are the most expensive entity in the business

They are time consuming to manage

They can work against you--  Steal from the company, file law suits, take clients, badmouth the company

They can be vindictive when fired

They can black mail the company and other employees

When you lay off or fire employees they can claim unemployement insurance which will raise your unemployment rate.  So in essence when you fire your employee in New York you have to pay them 1/2 their weekly salry up to $405 for the next six months, unless you want to waste your time disputing that they were fired for cause.  Which by disputing it further increases your risk for a frivilous law suit.

There  is an emotional attachement to people that makes you keep them longer than they are needed and try to find work for them.  The attachement often prevents the owner from disciplining people and firing people who should be terminated.

Employees deliberately make more work for themselves and stretch out jobs to remain employed.

Employees have an agenda which is often times different from that of the company's.  They want to make as much money for as little work as possible and the company wants them to work as much as possible for as little pay as possible. (A good case can be made for paying commission and bonuses as much as possible)

The abouve reasons make a good case for using machines as much as possible and employing people as little as posssible.

THerefore before you hire do the following

1. Make up a production level the the emloyee will need to reach before they are making money for the company

2. Make a benchmark as to when the employee shaould reach this point.

3. Constantly ask yourself is this employee an asset or a liability

4.Get workers compensation , disabilitry insurance and a payroll service to make sure you are in compliance with the applicable laws

5. Don't pay your employees off the books-   You are setting yourself up for black mail and losong control and power over your employees

6. Hire Slow and Fire fast

7. Make a detailed profile of the ideal candidate

8. Look at them not as something to get the immediate job done but as an asset that will grow in value the longer they remain employed by the company or look at them as a liability and ask your self will they get better or worse.  Remmeber the longer the employee stays that is not making money the larger your investment in that employee abd the more you willl lose if they quit or you are forsed to fire them. 

9. Market using mass media, classified ads and job seach websites for the perfect candidate.  Msot jobs the ideal candidate is 1 out of a thousand so yu must agressively market and look for this person.

10 ( Depemding upon the level of skill required for the job and if they are a long term or a short term employee thiss and some of the other techniques may be more or less apllicable)  Have a long detailed job application-- to make your copany look professional and give the appearrance that you are selective and they are lucky to have been selected

11.  Make them interview with several people in the company to get their opinion of the candidate

12.  Have a detailed set of questions and recoed resposes

13. Have computer litateracy test and other job skill tests

14.  Create a file on candidate and see how their job performance matches your interview questions and your initial evaluations

15 If possible give them free training to get the job or a trial period and other test to make them work to see if they really want the job.  People who don't really want your job can show up waste your time an quite 2 weeks later.  Make them invest to get the job.  Give your self more time to evaluate their work before you committ to choosing them as a candidate.

16. check references

17. Run criminal and other back ground checks

Analyze Expenses

Periodically go through your expenses and analyze them to see if they are competitive and if we need the service.

Constantly ask yourself the question "If someone came to me today and asked me to buy this good or service would I say yes?"  This is a good way to evaluate recurring costs.  The reason is we have a psycological attachement to past costs for the following reasons: we don't want to admit a mistake, we are lazy, it is unconfortable to tell some one we have developed a realtionship with that it is no longer needed.

Don't sign long term contracts unless you absolutely have to.  Sometime people are overly optimistic and the prospet of saving a few dollars buy locking in a long term contract may sound appealling, however especially if you are a new business thei is a bad idea because the market is constantly changing, your business plan is constantly changing.  After you are established you can analyze the possibility of a long term contract but certainly not in the beginning.

Anylize and shop around for prices on telephone services and vissa matercard machines.  You would be surprises by ho much verizon wants to negotiate the price after you left the.  Once again beware of the long term contract. 

December 1, 2007

There is an inverse relationship between the amount of capital required to have a business make a profit and the level of skill required to perform the service the business renders 

November 14, 2007 ( 15 min)

Spin / misinformation and hype versus real value of a product

People speak about making or losing money in business as if it is an entity as a whole, however what they really should do is set up an accounting system that collects data into the smallest cost effective structure possible.  each product, each employee should ideally have its own profit and loss statement.

You mathematically divide your business into different profit centers and then ask the following questions of each profit center:

Is this profit center making or losing money?

Will this this profit center make money in the future?

Does this profit center create traffic that aids other profit centers in making money?

Does this profit center create traffic that aids other profit centers in making money?

Based upon the answers to these questions management can prioritize where it will focus its resources and which profit centers should be expanded and which reduced or terminated.

November 12, 2007

The most successful business people are obsessed with their business.  How do we create fanatic dedication.  Like anorexia the person obsesses and can't stop thinking about their business.  What fuels this?  Socialization- upbring, pier group

example 12 step program for alcoholism

Going to the gym as opposed to working out at home

Need a pier group

November 10, 2007 (Time spent 2 hours)

Look in the mirror and repeat "I am exactly where I deserve to be".  Make no excuses blame no one but yourself.  You are a product of your hard work, your due diligence and your cumulative lifetime of learning.  You are a product of your laziness and your vices.

The above paragraph while maybe not absolutely true holds a great deal of truth.

When going into business list your assets and liabilities on a sheet of paper.  Which ones can be changed.

Example

Person A List

Assets                                                               Liabilities  

Age 23                                                             Age 23

Personal Attractiveness                                  Single mother

Outgoing Personality                                       3 children age 1 & 3 

Government assistance programs                   Not with children's father

Job paying $7.15 per hour in shoe store       Drinks alcohol 5 days per week 

$10,000 in savings                                          Smokes Marijuana regularly

Boyfriend helps pay rent                                 Low credit score 530 

Boyfriend is 24 and earns $15000 annually

Boyfriend is security guard in mall

Parents willing to lend $5,000                         Dropped out of High School at 16

                                                                                            Friends and family doesn't have a careers

                                                                          Government Assistance programs

Anyone is capable of enhancing their financial situations and becoming more successful.  Most people are capable of becoming wealthy.  However are most people willing to mold and shape their life in that direction,  to discipline themselves and focus on their goals.  When you go back to your lists of assets and liabilities which ones are you capable of changing.

"Every battle is won or lost before it is ever fought" Sun-tzu

Business is a battle.  Business is a war.  As a business counselor a person with situation above might approach me at one of my classes or lectures and say "I want to start my own business.  I am a good cook and I want to open a restaurant.  Do you know any way I can get a loan?  I have applies several places and even asked friends but everyone except my mother has turned me down"

Note the following:

One of the issues in life is that people, especially people with knowledge often do not tell you the truth.  The reason for this could be any number of reasons but some examples would be:

They don't want to offend you

They are making a profit from lying to you

The real truth is politically incorrect and they are afraid of negative repercussions or being labeled a bad heartless person

As a result many people just agrees and emphasizes with the person who seeks their advise.  The person seeking advise walks away from the conversation not accurately being able to see the future and created a financial disaster for themselves.  Then this person concludes that business is hopeless and they should give up and remain poor and struggling. 

The answer to this persons question is not one that she wants to hear and if I was totally straight with the person they would probably get angry and not like me for telling them the truth.   

But a person educated in business would size up the situation and think 

"Every battle is won or lost before it is ever fought" Sun-tzu

Look at this persons personal balance sheet.  While no one can predict the future with a 100% accuracy --- an wise business person can see a disaster is about to occur.  The bank is a professional lender, and with all their statistics they have said no to the loan it is for a reason,  This project is a disaster. 

Politically incorrect /harsh reality solution--

(This person could be a strong financially secure person in 5 to 8 years with a 99% probability of success)  Lets first attack the liabilities on the balance sheet.

( No brainers but difficult to do)

1.   Give up the drugs and alcohol

2. In order to do that you have to change your situation and who you associate with and call friends.  People will make all the excuses they want saying how they are independent thinkers and not influenced by others, but if you look at the statistics we most definitely are a product of our friends family and social environment.  Make friends with people who are more talented and successful than you are.  It may be difficult at first, it may even be a slightly embarrassing and humiliating experience in the beginning but in time you will learn their ways.  Watch and study.

3.  The cold hard truth---- You have to give up your cXXXXXXX.  ( Perhaps to the XXXXXXXXXXXX)  I would like to say there is another way but business and success are mathematical.  It is like trying to climb a mountain with a 100 pound weight on your back.  You can say all you want that you will be able to work hard and get your own business and be financial successful but the hard statistics say you probability of failure is almost certain.  even all other tax laws and government programs are design with this awareness in mind.  The XXXXXXXXX take up all of the XXXXXXX's time energy and money. 

We live in a capitalistic society, which means we have to accumulate capital in all its forms cash, job skills, time, education businesses

4. Use your credit responsibly. Borrow money and pay it back on time, No excuses.  Go a professional financial adviser regularly just like you go to a doctor and have a relationship with him.  Have him help fix your credit.  There are no quick magic bullets, but in time your credit will be strong (See chapter 18 on credit)  

The ideal hierarchy for investing in your life

1. School

2. Job skills

3. Business

4. Rental Property

5. Personal Residence

6. Retirement Accounts

Don't put the cart before the horse

inner game

July 8, 2008

Every day in my professiona we see entrepeneurs and want to be entrepeneurs sit accross the desk and tell us their business plan.  They tell us what it is, how far they have progressed in it and what they plan to do in the future.  They also give us their hoistory of past achievement their creit rating anfd their fianancail assets.  Often they even ask us to borrow monwy or in vest intheir project or become partners with them. 

I evaluate them and I even consider investing in them, however I must confess that to this day I have not invested in them.

These are some of the personality types and business types I have seen many have more than one trait (If you fall into these categories please don't be offended, but rather be aware of how a bank or professinal investor will evaluate your business and the likelihood of them failing investing in you) :

The global megalomaniac

The financial mess 

The bad credit no capital looking for a grant or a loan

The initial sucess and then over ambition drives them to over extend

The person who loves their titles and names and feeling important more than their money

The person who looks sucessful and important on the outside but is broke

The person with it all together, but carries a fatal flaw- Elliot Spitzer, Bill Clinton, Rush Limbar

Usually sex, drugs but possibly greed and over ambition  and I am sure if we think hard enough there are others that fall into this category.

The nature ofthe beast is hard to escape becqause when we take away the fasade every onr of us is the beast.