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Free Articles:
Business Development |
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Is There An Entrepreneur in
You?
by Christine Harvey
Two questions I’m asked continually are “What kind of business
should I start?” and “How do I know I can succeed?”
Whether I answer a reader of my book $14.95 book,
In Pursuit of Profit,
or a member of our
Advanced Women’s Wealth Building Institute who’s bought an $500
‘Take The Leap –
Commercial Real Estate Investing Curriculum,’ the answer is
always the same.
There are 3 CRITICAL components to
consider…
First, what is YOUR PERSONALITY
and what kind of business suits that personality. I’ve seen hundreds
of entrepreneurs create a business that they ended up hating, simply
because they did not consider their own personality thoroughly
enough. Then they felt stuck - often worse than they did working for
someone else! Ask yourself: Can you stand the hours required? Are
you a people person, and is this a people business? Does it require
extensive selling (most businesses do,) and do you know how to sell,
and more importantly, do your like selling? An excellent tool for
determining your personality and work style preferences is the Kolbe
Profile. You can do it on-line for a reasonable price and get
immediate results. You can even test your prospective employees and
see how their profile matches or detracts from yours.
Mr. Morita, founder of the Sony Corporation, said that ‘ideas are a
dime a dozen.’ The mistake would-be business owners make is to think
that they need a good idea in order to be rich. That’s false. In
‘The Millionaire Next Door,’ research shows that millionaire
business owner are people who run a standard business, but do it
better or with a unique twist to it. So stop looking for a good
idea, and ask yourself what fits your personality in terms of a
business, and then set out to do it better or differently.
Second, COUNT THE MONEY in
advance. I can’t tell you how many people I’ve met in audiences I’ve
addressed around the world who neglected this step. What do I mean
by ‘Count the Money?’ It’s simple. Add up all the expenses, then add
up how many products you think you can sell a day. Get your monthly
totals on both and then you’ll find out if there is a profit
potential – AND whether there is enough money left for you to have a
salary! You would be surprised how many people have a serious hobby
instead of a profit. I even had a doctor tell me that he had a
$40,000 a year hobby. He explained that instead of retiring, he cut
his patient load. But since he couldn’t cut his office, staff or
insurance costs, running his practice was costing HIM $40,000. But
he loved his patients and his practice, and felt it was worth it.
Well, that a conscious decision. I want to make sure that if YOU run
into the red, you are doing it on purpose, not because you didn’t do
your numbers.
Now, let’s look at what needs to be included in your numbers.
Expenses will include rent, light, heat, insurance, tax,
advertising, paper, pens, staff, loss if in retail or the food
business, etc. Income includes the price for which you sell each
item or service, MINUS the cost of goods that you are producing or
reselling.
Let’s say that your rent and expenses are $1000 per month. Let’s
also say that you are selling only cups of coffee, to keep it
simple. If each cup was sold for $2, and the cost of the paper cup
and coffee $1, then you would need to sell how many cups of coffee
to break even? The answer is 1000 cups of coffee.
Now that you have that answer, let’s see how many cups you need to
sell each day. A 30 day month would yield 33 cups per day. Does that
seem reasonable to you for the location? If each person buys one
cup, you’ll need 30 people per day entering your shop. And that’s
before you add a salary in for yourself. You get the idea.
You can work the numbers any way you want – you can add your salary
in from the beginning of your calculations. You can be open 20 days
a month instead of thirty. The important thing is to Count the Money
BEFORE you sign the lease or quit your day job. You might be reading
this and thinking, ‘What kind of a numbskull would start a business
without doing these numbers?’ The answer is: the vast majority. It’s
easy to get swept up in the emotion and imagine all the fun and
independence you’ll have. And don’t get sidetracked by the coffee
example. Even if you are selling multi-million dollar aerospace
systems, you still have to ‘count the money,’ and compare actual
sales to budget if you are to stay in the game.
Third, but equally important, is MULTIPLE
INCOME POTENTIAL: Does this business give you the ability
to multiply your income from the time and talent you invest? In
other words, if you write a book, that’s a one time effort. But
every time that book sells, you make money. One effort, multiple
chunks of income. That’s leverage.
Compare that to selling hot dogs. One hot dog sold, one chunk of
income… Unless you can make a special hot dog process and sell the
PROCESS to
many people. That’s basically what McDonald’s does and any chain
does. They get an idea and create a process and sell the process.
Why is this important? I’ll tell you why. If you create a business
that just ‘make one thing, sell one thing,’ without any chance for
multiple chunks of income, you’ll be creating a job for yourself,
in which you are the owner. As the owner, many entrepreneurs burn
out. They feel even more tied down than working for someone else.
Why? Because they can’t quit. They can’t walk out the door and
forget it. They have rent to pay, they have customers to serve,
employees to pay.
While having your own business is tremendous for personal growth –
it challenges all you abilities and thrusts you into being an
accountant, a production manager, a sales person, a marketing guru –
it’s not necessarily the ‘heaven on earth’ you first dreamt of when
you visualized ‘freedom’ along with being a business owner.
So, how do you decide what kind of business to start, and if you
will succeed? Ask yourself this: Does my personality fit the
business, will it cash flow, and does it offer leverage? If you can
answer yes to all three, you have a good chance. If not, don’t give
up. Instead look around and choose a business that does answer yes
to all three. Years later, you’ll be happy you did!
For more information, you can listen to a
conversation between Christine and Emily Cressey:
Wealth-Creation Road Map:
Your 3-Prong Approach to Financial Freedom (on CD) |
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