Tag Archives: business

How to Stop Earning a Paycheck and Start Building Wealth

Aside from the navy, the last time I had a job was in 1984-1985. I was a 25-year-old college graduate working for a real estate syndicator. It was a small firm with three full-time employees and one part-timer. I routinely worked 60 to 80 hours a week for which I was paid $1800 per month. In the year my boss made $500,000 he paid me a bonus of $1500. Two weeks later I walked into his office and quit. He cried as he told me he had big plans for me, would make me a vice president (over whom, the only other full-timer? His wife was the part-timer).

How to Stop Earning a Paycheck and Start Building Wealth

Lest you think I bear a grudge against my former employer I assure you I do not. He taught me several valuable lessons:

  1. When you work for someone you have one client who controls your financial future, especially in the short term.
  2. It is unrealistic to expect an employer to look after your own interest better than you do.
  3. Often, titles are meaningless.
  4. Working long hours is no guarantee of success.
  5. Just because someone is generous in one area of his life does not mean he will be so in others.

I spent four months getting my real estate broker's license while I started my first business designing and selling t-shirts. One month later, on April 1, 1986, I started my own real estate company and never looked back. Though I began on April Fools Day, I learned, had failures and successes, lived through a bad recession, and ultimately prospered.

After twenty years drawing a salary, and having my company pay for medical benefits, a nice car, and fund a retirement plan, when I decided to join the navy I had a valuable asset to sell: my company. Had I stayed working for someone else, while I would have gotten the salary and some or all of the benefits, it is very unlikely I would have built any wealth.

While there are many challenges to being an entrepreneur, in these times of job uncertainty which is less risky: placing your financial future in the hands of one person and not building wealth or having many sources of income so that even if you lose one or two you can replace them and continue earning while building wealth?

Question – What is preventing you from starting your own business?

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16 Skills You Need to be an Entrepreneur

Last week I blogged on how to overcome the fear of failure. Step one is to get a list of the skills you need to be successful.

16 Skills You Need to be an Entrepreneur

Here is my list:

  1. Persistence. No one said it better than Teddy Roosevelt – “Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not: the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'Press On' has solved and always will solve the problems of the human race.” While you need not be an expert in most of the others, at this skill you must excel.
  2. Honest. Also required. Do you always speak truthfully? Do you feel compelled to fudge when your ego is at stake? Can you assess matters without pretense? Will you listen to biting criticism and act on it when it is true?
  3. Balance between obstinacy and patience. Patience is a virtue except when action is needed. Can you focus your persistence on the right one at the right time? Good advisors will help.
  4. Problem solver. Whatever you think your business is or will be, almost for sure it will turn out differently. Its success will hinge on whether when you encounter problems you take them as challenges to overcome or insurmountable walls.
  5. Goal setter. When the going gets tough perhaps the only thing that will see you through is irresistible goals.
  6. Plan and Implement Tasks. Step by step you reach your goals by completing the necessary tasks. You need to create a plan and navigate through the inevitable changes.
  7. Time management. As an entrepreneur, you will always have more to do than time to do things. You will be able to take more action toward being successful if you manage your time well.
  8. Delegator. Successful entrepreneurs know what they do well and surround themselves with people who do the other things better than they do. Can you give up the authority that is necessary for a coworker to meet a responsibility?
  9. Manager. Each person you deal with is unique so you will need as many management styles as you have people to manage.
  10. Understand numbers. You do not need to be an accountant, but you have to understand what your financial people tell you and develop an awareness for when what they say does not make sense. Also, you need to be able to speak coherently to suppliers, employees, investors, and bankers.
  11. Know your product/service inside out. Michael Hyatt calls this Wow. Be an expert in the service you offer. Have a product quality second to none and be able to explain why.
  12. Compelling storyteller. Previously called being effective at sales and marketing, the advent of social media requires that you have a narrative that motivates clients, customers, employees, and investors. Do you write and speak well? Are you adept at presenting ideas in multiple ways so as to engage the greatest number of people?
  13. Skillful using social media. No matter how captivating your story, if no one hears it your business will go nowhere. Social media is the tool to spread the word. While it has a low cost of entry, it can have long learning curve.
  14. Can you talk to just one more person? When you do not know the answer to a question will you seek out people until you really understand an issue? Will you speak with one more prospect if that is what it takes to meet your goal?
  15. Good communicator. Related to being a good manager, lasting relationships are built on a foundation of solid communication.
  16. Negotiator. Roger Dawson says everything you want in life is owned or controlled by someone else. Negotiation is the means to get what you need.

When I started my first business I was competent in about a quarter of these. Classes, working with others, listening to recorded programs, and other means dramatically increased and improved my skills.

Question – What other skills do you think are essential to entrepreneurial success?

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5 Steps to Overcoming Fear of Failure

Fear of failure is one of the most common reasons that people do not start businesses. But is this fear justified?

5 Steps to Overcoming Fear if Failure

My first business lasted only three months, long enough for me to learn how difficult it would be to make money designing and printing t-shirts with slogans. Four years after starting my second business, a real estate company, I was in deep trouble. It was a day-by-day struggle to keep the doors open. But three years later the situation was completely reversed. My business lasted for 20 years until I sold it when I joined the navy.

Business consulting firm Fundera indicates 50% of small businesses fail in the first five years. Less often cited is the countervailing data that 35% of businesses are still around after 10 years. In other words, if you make it past the first five years, you have a 70% chance that you will still be in business five years later. Much better odds.

The Big Picture blogger Barry Ritholtz notes there is a difference between a voluntary closure and a failure. While the Census indicates over 90% of businesses fail, Dun & Bradstreet notes that only 10% of business closures are due to bankruptcy. While this does not mean that the other 80% do not have financial challenges, it does indicate that the business owners were able to work out a solution on their own terms.

A glance at the most common reasons for failure shows most relate to inexperience or insufficient or bad financing arrangements. Note that the second issue is often caused by not understanding the true requirements of a venture. As well, lenders want to see a track record.

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How do you overcome fear of failure? See it for what it is: an intuitive sense that you lack the knowledge and experience to succeed. How do you overcome it? Here are the steps:

  1. Get a list of the skills you need to run a business. I will be posting one next week.
  2. Inventory your skills. Be honest. If you are not sure whether you have a particular skill talk with people who do and assess yourself in comparison to them.
  3. Identify gaps. For example, if you do not know about bookkeeping where can you get this knowledge? How about the free videos online that will teach you to use QuickBooks.
  4. You do not need to be an expert in everything. Keep in mind proficiency is the goal. In many cases, you can buy the expertise you need, especially in administrative matters.
  5. Think of yourself as an entrepreneur rather than being wedded to a specific idea. In this way, the failure of a particular business becomes just a step leading to your eventual triumph.

Viewed this way, your surest road to success is to get started.

There is no better way to learn entrepreneurship than doing it. Make your first venture small, part-time, requiring little or no start-up capital. If it takes off, wonderful. If not, you have gained a lot of knowledge at a low cost.

As an entrepreneur, whenever I make a mistake I compare the loss to the cost of the Wharton Business School. Currently, at $93,000 annually, think about how much experience you can buy yourself before you would have spent the equivalent of the two-year program.

Question – What holds you back from starting a business?

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Why Stupid is the New Smart

“Smart is dumb and dumb is smart.” One of Roger Dawson’s five key principles of negotiating, this idea is broadly applicable to entrepreneurs.

Why Stupid is the New Smart

Ever notice the height measurements posted on underpasses? Did you think to yourself, “who would be so stupid as to try to drive a truck that was too tall under one of them?” Me too. But it happens. Evidently one time a truck got jammed so badly it could not back out.

The Highway Patrol, fire department, and state troopers all converged on the scene. A crowd gathered as the experts tried one scheme after another to extract the truck using its own power. Nothing worked. Finally, they concluded that the trailer would have to be dismantled. That was until they overheard the young daughter of an onlooker ask her daddy, “why don’t they let the air out of it tires?”

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Problem solving, which is the essence of entrepreneurship, is a skill that can be impeded by the belief that you are an expert. A smart person may overlook the obvious or be overwhelmed by the urge to demonstrate his intelligence rather than solve the problem. He may too quickly discard potential solutions or balk at getting started because the challenge seems too great. In all of these cases, ignorance may be bliss because it is a surer road to success.

Michael Hyatt, citing Steven Pressfield, urges you to stay stupid. Indeed, having faith in your ultimate success is far more powerful and important than colossal intelligence and profound insights.

Question – What challenges have you overcome where persistence was more important than intellect?

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Learn How to Love the Tasks You Hate

Life works the way you ate as a kid. The chicken was probably good but Brussel sprouts, are you kidding me? Yet you put up with them to get to dessert. Whatever you are doing: working, exercising, running a business, being married or in a relationship, earning a degree, you still want to rush through the meal to get to the ice cream. But your parents were right. The sugar high of the dessert cannot sustain you without the foundational elements of the meal: the soup, salad, and main course.

Learn How to Love the Tasks You Hate

I was struck by this idea while trying to expand the list of non-dessert foods my five-year-old daughter will eat. Currently, they can be listed on two hands and one foot. And she will only eat cucumbers if they are slathered in salad dressing. As I sat there frustrated she asked me what foods I hated when I was a boy. She had me nailed dead to rights.

There are three types of tasks you need to do to be successful: those you already know you like, those you already know you hate, and those you have not done because you are afraid to try. It is no problem getting motivated to do the tasks you like to do. But the other two categories are a challenge.

For tasks you dislike, you have five choices:

  1. Do not do them and be content with the level of success you have already attained.
  2. Force yourself to do them, which means you probably will not muster up much enthusiasm to do them well.
  3. Farm them out. But you'll still need to know how to do them well enough that your can train and monitor the person handling them.
  4. Make them a part of some other task you like to do. For example, when I first started cold calling one of the things I did was listen carefully to try and detect an accent and then see if I could accurately identify where the person came from and learn about other places.
  5. Do them so often you learn to love them.

For tasks you are afraid to try, identify the source of your fear. Perhaps the activity stirs up memories of a particularly difficult event in the past. Remember, your taste buds matured as you got older and you now like a broader range of foods.  So too your ability to handle unfamiliar tasks is much greater than you think. Maybe the one you are afraid to try will become a favorite. And if not, you can always use option three or four above and slather it with something you love.

There is one difference between life and eating as a kid is unlike a meal.  Without learning to do all the tasks necessary for success, thoughts of wealth, fame, or whatever else you seek may make you salivate, but you will not achieve them. Without the foundational elements that nourish and sustain you, dessert will elude you.

Question – How do you motivate yourself to do the tasks you dislike or are afraid to try? Please respond below.

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