Habits of Unsuccessful Entrepreneurs

Here are some points to note for unsuccessful entrepreneurs

High Risk Taking
Surprisingly, good entrepreneurs are not extreme risk takers. They are attracted to situations where success is determined by skill and hard work rather than by chance. Think of starting a business as going on a roller coaster ride. The ups, downs, twists, and turns usually come in a rapid sequence; starting a business is no different. The entrepreneur is not afraid to take on a project that might fail, but s/he also works to minimize the risk.

Poor Planning
The idea of starting a business is very exciting, and many fledgling entrepreneurs rush through the process. Entrepreneurs need to spend countless hours studying information about market, marketing, finance, management, and other areas before they can open for business.

Overestimating
There is nothing wrong with optimism, but expecting sky high profits during the first month of operation is very dangerous. Wise business owners keep their sales projections reasonable and know their limitations.

Impatience
Unsuccessful entrepreneurs become discouraged if they don’t show a profit after the first month. Smart business owners appreciate the amount of time a business needs to grow.

Ethics in Business

Ethical business practices have always been crucial to building sustainable relationships with staff, customers and suppliers. Thus, in the past decade we have seen a huge upsurge in consumer, regulator & society demands for ethical practices, products and services.

The University of Nottingham has put online a student guide to the "Ethical Matrix" approach to making those often tricky ethics decisions. Their model is based on a food production [farming] example, but incorporates the recurrent ethical issues of...

** Fairness [justice]
** Freedom of Choice
** Mutual Well-being

This guide is freely available at this link.

Avoid "Pay Only Shipping" Scam

A person wrote, he thought he knew better, but when he saw a company recommended by major network TV stations and search engines, he thought the deal must be legitimate. He paid $3.99 to pay the shipping cost for the free product the company offer. That $3.99 gave the company his credit card number. Later he found out the free product would cost him over $49 a month if he did nothing. So, he immediately canceled his subscription to their product.

Three weeks later, he found out they sold his personal information, along with his credit card number, to another company that signed him up (without his permission) to, not one, but two subscriptions to their online product and service. Since he didn't know about this and couldn't cancel it, they charged his card. He now is in the middle of trying to get charges refunded, etc.

He did only one thing right. He gave the original company a new email address that no one else had. So when he found out the second company had the new email address, he knew immediately where they got it from.

His advice is stay to away from anything that looks too good to be true!

Why do people envy entrepreneurs?

Here are some notes from what others say:

1. While normal, boring corporate men and women are forced to be in at 9 a.m. and out by 5 p.m., hard-driving entrepreneurs can get in as early as they want—and stay as late as they like. They don't have to wait for the cleaning staff to open up in the morning. They've got the keys!
2. The entrepreneur is respected for a level of dedication that might, in other settings, appear excessive. Bob may be scraping down a day-old doughnut at midnight, but if he's an entrepreneur, nobody's going to say, "Boy, what a wonk Bob is for letting his life decay to the point that he can't allow himself a decent dinner." The lucky entrepreneur has the freedom to work 80 or 90 hours a week, and nobody's going to think less of him.
3. Busy entrepreneurs don't get depressed by the monotony of 5 percent salary increases. Their lives are far more adventurous! Yes, while the rest of us are making do with tedious, regular wage increases with no significant upside potential, they can dream about going from, say, $5,000 today to $1 million in the blink of an eye! In fact, with economic growth in the future almost a sure thing, a double-digit salary increase for the lucky entrepreneur is practically guaranteed.
4. The hungry entrepreneur isn't forced to endure those interminable business lunches, eating rich food and drinking outlandish beverages, while business acquaintances massage one another's already plump egos. A sandwich at your desk? Delicious!
5. Speaking of meals, entrepreneurs don't have to suffer through the tedious task of filling out expense-account forms upon returning from lunches and dinners. Their private funds are their expense accounts, a convenient arrangement that eliminates whole levels of paper work.
6. Entrepreneurs don't have to waste a lot of office space on such frivolities as big, fussy executive bathrooms. In fact, every place they go immediately becomes the executive bathroom—just because they're in it!
7. Organizational types who carry beepers, portable faxes and cellular phones everywhere like strolling gypsies are widely viewed as weenies so terrified of failure they need to be in touch with their superiors every single minute. Not so for the crafty, high-tech entrepreneur. Just watch him set up his entire office in your outer office, while he waits for his unscheduled appointment with you. He's on the ball!
8. Entrepreneurs can concentrate on what's on their plate at the moment, and not get diverted by a lot of incoming calls. No frivolous bleats from importunate vendors, inquisitive headhunters or obnoxious customers ringing up out of the blue. They can work in peace for hours on end.
9. Most of us don't have the time to stay in touch with former business friends as much as we would like. But entrepreneurs suffer no such deprivation. They stay in constant touch with the folks they once knew on the inside.
10. Once or twice a year, corporate drones have to pack up informal clothing and haul themselves off to some remote location—like Bermuda or Marco Island or Hilton Head—and indulge in days of eating and drinking and retreating. Thrifty, practical entrepreneurs are never forced to indulge in that kind of foolishness. If they want to get together with employees for a little no-agenda interfacing, they can invite them over to the house for a nice, festive barbecue. Nobody has to fight over the tennis courts, the burgers are delicious, and when people start bobbing for apples, things go nuts. And there's no chance that anybody from sales, marketing or even public relations will drink too much and make an inappropriate remark to someone of the opposite sex—not when everybody has to drive home in a couple of hours without smacking into a tree or something.
11. The organization person has precious little time to spend with the family, doing things that really count. The happy entrepreneur can literally mint quality time, bringing his or her brood together on a toasty evening to help build value wife and husband stuffing envelopes with promotional fliers, while the kids are having the time of the lives learning to type and input spreadsheet data. On a sunny Saturday, when most young people are out wasting time at malls and pizza joints, the entrepreneur's offspring are learning project-management skills. What more precious asset can a parent bequeath?
12. Entrepreneurs are able to develop a visceral feeling for the value of each and every dollar that passes down the pipe to the bottom line, a quality that is most valuable in the 90's. Every time they write a check, no matter how small, every time they buy something, no matter how insignificant, it means more to them personally than any purchase—no matter how large a corporate vice president will ever approve.
13. The entrepreneur never has to deal with petty, incomprehensible changes in the company's health and retirement benefits not to mention tons of other dumb, bureaucratic stuff. Come to think of it, it's a rare entrepreneur who even thinks about a retirement package at all. No, there's too much going on right now for the entrepreneur to worry about such bogus and non business like concepts as "the future."
14. The entrepreneur rarely has to worry about downsizing, about laying off loyal people who have been with the company for years and years. There are no such people! <
15. In big institutions, you never get to do anything for yourself. There's always somebody in the way who insists on performing some crucial function. Entrepreneurs, free, from layer upon layer of inefficient support staff, are blissfully free to answer their own phones, make their own reservations, butter their own muffins, and fill out their own magazine renewals.
16. In short, entrepreneurs are the masters of their own fate. If it runs, they made it walk first. If it ain't broke, they don't have to fix it. Talk about a feeling of mastery normal people can only dream of! Go ahead! Talk about it! Then do it!

Business Culture

A business culture can be loosely defined as the atmosphere that permeates a business. Business culture is a business’ ‘feel’ or how it is sensed. Since we cannot accurately define business culture many owners and managers think it is all hot air. Think again. Just because we cannot define something precisely does not mean it does not exist. (As an example think of the word peace.)

Yet business culture is becoming more recognized as a real business concept. Think of businesses that you know. Do these businesses have a ‘feel’ about them? Is this ‘feel’ positive or negative? There is something to business culture. The following are some observations about business culture:

1. If you do not know how your business culture is perceived, ask your employees.
   
2. If you do not believe your employees ask your customers.
3. Look at your people throughout the day. Are they smiling?
   
4. Good employees do not want to work in a bad business culture. Minimal employees do not care. If the culture is bad enough even good employees won’t care.
   
5. Employees take pride in working in a business with a good ‘feel.’ It makes them feel welcome and a part of the business. A good ‘feel’ motivates employees to a higher level of commitment.
6. If you have difficulty hiring good people think about your ‘draw’ potential. It may be your business culture is unappealing.
   
7. Management has the responsibility for developing a good business culture. Management is often responsible for developing and keeping a bad business culture.
8. A good business culture promotes high productivity. High productivity is very difficult in a bad business culture. Employees feel that in a bad business culture no one cares so why should they?
   
9. A bad business culture develops a bad reputation. For obvious reasons most businesses would prefer to not have a bad reputation. Bad business culture is often more visible to outsiders. Insiders have often adjusted to the status quo.
10. Vendors, associates and other non-customers can also spread the word about bad business cultures.
11. Customers see bad culture. Clearly. The employee frowns, the bad attitudes, the grumpiness, the stress and strain, neglect of phones, bad manners, etc. If given a choice they will chose to go elsewhere.

Just because we cannot define or measure business culture does not mean it does not exist. We humans are cultural beings and we do not normally live in isolation. Most humans have a sense of intuition that feeds perception. Perception often becomes reality.

Owners and managers that ignore the cultural aspect of business are making their jobs much more difficult.

Causes of Business Failure

The purpose look at the weak spots is examine the points where you and I are likely to fail to be forewarned is to be forearmed. Learn from the mistakes of others - there is no need for you to make any of your own!

Always break big problems into smaller ones and then take care of each small problem first - never take on the whole problem at once. Never be afraid to ask the help of your colleagues or staff - your in this together.

We will see some of the common causes of planning failure: no plan at all, halfway commitment, overdone, over-engineered, overly complex, ambitious, rigid, or precise plans.

1. No plan simply means either no awareness of or just no consideration of the planning process. It may also mean the lack of a key component of the plan.
2. Only partial commitment to the plan. Plans are created investing time, money and other resources if what follows is poor commitment the plan however perfect is bound to fail.
3. The over-engineering or overly complex program is possibly the most costly error of all. Most managers have the habit of moving from one extreme to the other: either no planning is done or too much is done. Here a large dollar investment is made most often too large. The plan becomes so complex that no one understands the plan. The program gets hopelessly grid locked. It becomes too big too expensive and more trouble than its worth. Not much happens but a lot of money is spent. Managers become disillusioned the n angry and soon look for someone to blame.
4. Often a mistaken belief creeps in, that a highly developed mechanical method is somehow so brilliant that it will operate all by itself.
5. Overly ambitious, unrealistic goals often suffer the tragedy of excessive expectations no matter what good results come out of the planning process these are never enough
6. Plans that are too rigid almost always fail. Plans should be short, simple, understandable, and practical. They should allow for management to speed up or slow down. Use the plan simply as a tool be prepared to change it whenever the situation demands.
7. Another frequent error is expecting all parts of the program to work out exactly as anticipated. They seldom do. Few wars, business ventures, poker games come out exactly as planned. Accept this and work for the best plan that you can achieve with available information.

Steps for part time business or 2nd income

1. Select a hobby

   Select a hobby you'd like to convert into a profitable business or a passion that you'd like to learn more about. That doesn't mean you won't have bad days if you're doing work you love. Everyone has days when they want to throw up their hands even though they love what they do. But if you don't love it and are just doing it for money, it won't last long.

2. Do your homework

   Research, research, research. Read books and talk to people who have worked in the industry you're considering. If you want to open an eBay store, talk to people who have successful eBay stores. Talk to people who have started similar businesses, read about the industry, and do some research.

3. Do some financial analysis

   Get a sense of how much income you can make in the first year or two, and what kind of financial investment and return you'll need to make. Start your business debt free with an emergency fund in place. It's easier if you can start part-time and get the kinks worked out while you still have other income. If you're going to quit your job and walk out, you definitely need substantial savings. You have to think about how long it will take from starting your business to the time money will start rolling in and plan accordingly. Never use credit cards for a business loan or to float you through hard times. It's a good way to cause your business to fail. Saving up for purchases is key—pay with cash. Make sure your business can pay its own way. Don't go out and purchase a bunch of new equipment and supplies in hopes that the business will succeed. Start off small.
   

4. Prepare a business plan

   Prepare a plan to determine how much money you will need to make before you can quit your job, and how long it will take you to reach that goal.

5. Be honest

   Be careful not to inappropriately use your employer's time and resources for your own business.

6. Don't show or tell

   Avoid telling your boss and friends before you are ready.

7. Take care of your current job seriously
   

   Keep your standards of performance up to protect your primary source of income.

8. Take care of your family

   Take an occasional break from your work and devote yourself fully to your spouse and family.

9. Set up a budget
   

   Budget money to help take care of your kids and housework, if you won't be available.

Take Care of Your Health

Most people work hard and willing to spare their health trying to achieve wealth. Then they retire and spend their wealth trying to get back their health. They can not really enjoy their wealth. Some may not even to become rich. Their poor health has prevented them to work.

Dinimishing Marginal Return

In economics terms, there is diminishing marginal return. This is related to the law of diminishing returns: each additional hour of effort, each extra worker is adding less output to the final result. By the end, you are spending lots of time on the minor details. You may not even need that extra worker!

80-20 Rule

Why Is This Useful?

Originally, the 80-20 rules referred to the observation that 80% of Italy’s wealth belonged to only 20% of the population. The 80-20 rule helps you realize that the majority of results come from a minority of inputs. Knowing this, if…

• 20% of workers contribute 80% of results: Focus on rewarding these employees.
  
• 20% of bugs contribute 80% of crashes: Focus on fixing these bugs first.
  
• 20% of customers contribute 80% of revenue: Focus on satisfying these customers.

The examples go on. The point is to realize that you can often focus your effort on the 20% that makes a difference, instead of the 80% that doesn’t add much.

Opportunity Identification

Some points on idea identification and attractiveness

• Repeat business, not one-time sell.
• Prefer rental or leasing business.
• Built-in sense of urgency.
• Health or financial loss from lack of action on customers’ part is ideal. I prefer automatic shipping, for example having a book-of-the-month, so that customer needs to:
• Business instead of a practice. Not built on a person’s talent, but on an organization’s.
• Regional or national potential, rather than local.
• The less labor intensive, the better; however, labor is better than capital expenditures.
• Already a market – other companies doing it.
• Demographics or lifestyle changes creating the need, and thus, the market.
• Emotionally appealing to the customer – there’s got to be sizzle.
• The numbers need to work so there is real money to be made.
• The more unregulated, the better.
• Odds of success are stacked in your favor, not against you.
• A proven team, not an untried idea. A great team is more important than a good idea.
• Success is not built on one client, one product, or customer.
• Payment at time of service or before, to eliminate large accounts receivable, accounts receivable aging, collection problems, or costs of bad debt.

"Buy 1 and Get second one for 50% less" or "Buy 2 and Get 1 free"?

What is the deal?

This is a plan to entice customers to buy 2 of a product, when all they really needed were 1. But what about the company's profit margin?

Suppose shampoos sell for $2.00 but cost $0.80, with $1.20 profit for the company. You can buy one shampoo, giving the company $1.20. Or, you can buy 2 shampoos, and get one free. That cost the company 3 x $0.80, = $2.40. But you paid $4.00, so the company makes $1.60 in total profit. That's more than the first case.

Yes, in the 2nd case, the company is only making $1.60/3 = $0.53 per shampoo. In the first case, they make $1.20 per shampoo. But in terms of total profit, the 2-for-1 deal is better. If I give you the chance to get 100% profit on a dollar, or 10% profit on a100 dollar, what do you choose? Definitely on 10% profit on a 100 dollar because you make $10 as opposed to only $1 on 100% profit on a dollar. Total profit ends up at the bottom line.

This is similar to buying in bulk. When you buy in bulk, the company gets less profit per item. But, the total profit is certainly higher. In addition, there is a certain fixed cost to create a unit. The marginal costs of additional products may be minimal, so the company can afford the low profit per unit, because the cost-per-unit is small as well.

They say that when you buy bottled water, you are really paying for the plastic (since the water costs only a few cents). Thus, the cost of the extra water in a large bottle really isn't important.