Published on March 3, 2014
STREET SMARTS: AN ALL-PURPOSE TOOLKIT FOR ENTREPRENEURS 2014 #BookCLUB Love Learning Empowerment
WHAT IS YOUR LIFE PLAN? Business is a means to an end. Do a life plan before you make a business plan.
(3) PRIMARY ENTREPRENEURIAL QUESTIONS TO ASK: What is the goal of the business? Is it viable? What does it take to be successful?
START WITH A PLAN “Most people are scared going into their first business, which is a good reason for having a business plan. It helps to demystify the process.” Initial general business plan should be: Nothing elaborate A modified down-and-dirty income statement A cash flow statement A reasonable expectations of sales by month for year
BUSINESS PLAN PHASE I: What is the concept? How are you going to market it? How much do you think it will cost to produce and deliver what you’re selling? What do you expect will happen when you actually go out and start making sales?
BUSINESS PLAN PHASE II: The idea is to spell out as clearly as possible how much you think the business is going to work. What you’re going to sell? How much you’re going to charge? Who your customers will be? How you’re going to reach them? How long it will take to close a sale?
“By viability, I mean the point at which the business is generating internally the cash it needs to pay its bills. It can survive on its own. A business plan is essentially your best guess as to how you’re going to get there.” VIABILITY
SUCCESS INSIGHTS Resilience is “the ability to bounce back from failure to turn around a bad situation to profit from your mistakes.” Resilience is a necessary requirement for success in business. “You’ll never stop making mistakes. So be resilient! You’ll do fine as long as you’re open to the lessons it’s trying to teach you.” “People believe that to be successful, all you have to do is generate sales. In fact, what you need is the right kind of sales. The wrong kind can drive you straight into bankruptcy.”
MOST CRITICAL STEP? Determining gross profit. Cost of gross goods Sales Gross profit Single most important # in any new business.
GROSS PROFIT DETERMINES: Amount of capital needed Volume of sales Overhead you can afford Time it will take to determine viability Viability itself
STREET SMARTS WISDOM “Your capital is limited. Nobody starts a business with unlimited capital.” “People on their first business venture are always overoptimistic.” “For most start-ups, time is survival.” “There are two reasons for building in a reserve. First, things always cost more than you anticipate, and profits are always less.”
Why should we give our talents away? WE’RE SMART ENOUGH TO TAKE CARE OF OURSELVES.
SELF-WORTH IS A REQUIREMENT “Anytime you work for someone else, its total insecurity.” “Security is NOT the job. It’s the confidence you feel in yourself.” “There’s no such thing as job security anymore. The ONLY security is in YOUR own sense of selfworth and YOUR knowledge about how to earn a living.”
THE BOTTOM LINE: POINT ONE “Don’t let your emotions lead you into hasty decisions that will make it more difficult for you to achieve your real goals.” POINT TWO “Make sure you understand what cash flow is and figure out in advance where its going to come from.” POINT THREE “Control the sales mentality and balance it with a business mentality before its too late.” POINT FOUR “Learn to anticipate and recognize the changes in your business by developing a good feel for the numbers.”
STREET SMARTS WISDOM “The most valuable business lessons we can learn come from facing up to our weaknesses.” “Take calculated risks; calculate the danger of a decision.” “Aside from resilience and the ability to learn from mistakes, what an entrepreneur needs most is a capacity for discipline and focus.” “You need to be both focused and flexible.” For people who’ve never built a business the secret to success lies in spotting great opportunities. “You need to focus relentlessly on building the base.” “In a start-up there are TWO limited resources, time and money, and you can’t afford to waste either one.”
“For most first-time entrepreneurs – especially those who’ve never run a company before – the chances of surviving are much greater if you build the business yourself, from the ground up.”
MISTAKES ENTREPRENEURS MAKE WITH BANKS 1. 2. 3. 4. 5. 6. 7. Submitting financial statements late Running on uncollected funds Being unresponsive Neglecting the relationship Failing to keep the bank adequately informed Ignoring the rules Arguing when your wrong
THE BOTTOM LINE: POINT ONE “Those who persevere win. Be resilient and welcome failure. That’s how you become a better businessperson.” POINT TWO “You learn by refusing to make excuses and looking deep inside yourself for the reasons things have gone wrong.” POINT THREE “Focus and discipline are more important than identifying opportunities, but they have to be balanced with flexibility.” POINT FOUR “The solutions are seldom right in front of you. You need to learn how to spot them out of the corner of your eye.”
STREET SMARTS WISDOM “Sales are nice and profits are nicer, but businesses live or die on cash flow.” “Where most first-time entrepreneurs trip up is in failing to understand that most sales almost always mean less cash flow – and less cash flow means trouble.” “Negotiating is a fundamental business skill; it is a giveand-take.” “It’s important to remain flexible after you’ve built your company. No niche lasts forever. If it’s a profitable one, it’s going to attract competitors sooner or later.” “Small customers are the backbone of a solid, stable, profitable business – especially a service business.”
A good reputation is the most valuable asset you can have in business. THE MOST VALUABLE ASSET
BUILD A GOOD REPUTATION: What people think of the way you do business How they assess your character as a business person Compete fairly Run a nice, clean operation Treat your employees well Speak with respect about competitors
STREET SMARTS WISDOM “Listening is a lost art. You can gain a competitive advantage just by listening carefully to what your prospects and customers are saying.” “Showing is more effective than telling when it comes to signing up new customers. Let them experience what you have to offer.” “Winning is not just about closing the sale. You win when you close the sale at the same time lay the foundation for a good relationship that allows you to keep the customer for a long, long time.” “The name of the game is customer retention.”
THE BOTTOM LINE: POINT ONE “Customers don’t like feeling like they’re supporting your lavish lifestyle. Don’t give them reason to think they are.” POINT TWO “Make a habit of having small price increases on a regular basis so that you aren’t forced to have a big increase later on.” POINT THREE “Your company is probably your most valuable personal asset. Don’t undermine its value by letting your margins erode.” POINT FOUR “Beware of the rules you make. They may inadvertently force your employees to provide poor service to customers.”
STREET SMARTS WISDOM “Bigger is not always better. Small companies have some advantages that large companies can’t match.” “Your company’s culture can be your most powerful tool for finding and keeping great employees. Don’t miss the opportunities to shape it that arise everyday.” “Expenses have a natural tendency to creep up over time. If you want to control them, you need to get everyone involved in the effort.” “The harder someone pushes you to make a quick decision, the more insistent you should be about taking your time.” “Enthusiasm is the lifeblood of a business. Be generous with it.”
STREET SMARTS: AN ALL-PURPOSE TOOLKIT FOR ENTREPRENEURS Believe in your self-worth today! Love Learning Empowerment
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