Entrepreneur Series

WHAT MAKES A BUSINESS SUCCEED?

2008-10-14T10:29:00.000-07:00

Obviously, it is the opposite of that of what makes it fail. It again all boils down to the mindset of the owner. Specifically, however, some of the qualities that a successful entrepreneur has are:

Vision – Real entrepreneurs see what others do not. They will always see opportunities to add value to something. For example, bring a tycoon and an employee together in grass field. What do you think each sees? The employee will see only grass all around him but the tycoon sees buildings, hotels or other real estate projects.

Resilience – Every business is a roller coaster ride. There will be moments of disappointments and extreme frustrations. But a cold blooded entrepreneur will keep moving forward despite this. He does not let anything stop him from achieving his goal. He has the motto of “only losers quit”.

Expanded Comfort Zone – T. Harv Eker said that “Your comfort zone is in direct proportion to your income zone”. In pursuit of success, every entrepreneur shall encounter very uncomfortable situations (i.e. borrowing money is a very uncomfortable situation especially for people who got accustomed to the belief that you are poor if you borrow money). The strong willed entrepreneur expands his/her comfort zone such that he/she is able to do things he/she has never done before. Imagine how uncomfortable the 17 year old College dropout Bill Gates must have been when he talked to the then CEO of IBM selling a product that he never owned (the DOS). If he had not done that then we would not have Microsoft now and he wouldn’t have been one of the wealthiest men on earth.

Great money management skills –It starts with his or her habits with regards his/her personal money. The lifeblood of any business is cash. That means the business should never lose cash. A good money management system therefore ensures the business has life.

Passion – This is what keeps the successful entrepreneur up all night. Because he is too excited on what he will do next, he cannot stop thinking about it and thus he has extreme levels of adrenaline. He loves creating and it is the essence of his entrepreneurship.

Mastermind group support system – No successful businessman created his success all by himself. Business is all about teams. The successful entrepreneur surrounds himself with success minded individuals. He spends more time with fellow entrepreneurs than employees. That doesn’t mean he has no friends who are employees, but it’s just that he does not like talking about paychecks, bonuses, vacation leaves and other employment related matters. In relation to this, he keeps expanding his network as he knows that success depends heavily on his network and not his expertise. While employees constantly strive to pursue further studies just to be more specialized and increase their job rating, the entrepreneur strives to meet more and more people everyday.

System orientation and not product orientation – As Robert Kiyosaki said, there are lots who claim they can make better hamburgers than McDonald’s but they can’t make a better system like McDonald’s. Successful entrepreneurs think duplication is the name of the game. And you can only duplicate when there’s a system.

WHY BUSINESSES FAIL

2008-10-06T09:19:00.000-07:00

According to statistics, 2 out of 10 businesses will not make it to their first year anniversary. This perhaps was the reason why one of my friends, a guy who graduated with an MBA from the Asian Institute of Management and now working as a Projects Manager in a large company, asked me if I was crazy because I quit my job. Indeed the statistics are scary but hey, why focus on the 80% that failed and not on the 20% that succeeded?

I would have posted a barrage of reasons why businesses fail but as I was talking to my business mentor this afternoon, I learned that it boils down to a simple yet important factor:

The OWNER’S MINDSET

Most of those who want to start business think that what is important is capital. We can see a lot of Filipinos who work hard and earned a lot of cash abroad (i.e. those who work as a crew in cruise or cargo ships, those who are professionals in Dubai, etc) fail miserably in businesses they start. Okay, they’ve got cash but without the right business aptitude and emotional intelligence (plus financial intelligence) they are doomed to failure.

I mentioned in my first post (please read it if you haven’t) that when I was about to resign, my then officemates and boss (my beer buddies) did not want me to leave my job. They are great friends until now and I know they meant well. They suggested that maybe I could pursue my businesses while still being employed. I did not want to hurt their feelings so I just told them that my job conflicted with my time for my business. Now while this was true, what I really wanted to tell them was that if I were to succeed in my business, the first thing I should do was stop thinking like an employee. And spending 8 hours everyday from Monday to Friday (not to mention on weekends when I had to write ManCom reports and answer phone calls from the boss of my boss) put my mind deeper and deeper into the employee mindset. I have nothing against employment. As a matter of fact, I always believe it is one of the best ways to train one’s self in goal setting and achieving it. However, entrepreneurship is world that requires a mindset that is TOTALLY different from employment.

Last July, I backed out of a potential partnership with four great guys who wanted to set up a renewable energy company. I backed out because there were major items we just could not agree on. I lately realized that those guys, while they are good at the technical aspects of the renewable energy biz, were not entrepreneurs deep inside. They still were carrying the mindsets of employees. Two of them were still employed and the other two were involved in businesses that Robert Kiyosaki calls S-type businesses (or do-it-yourselfers).

What does it then take to succeed in business? I will tell it to you in my next post.

To My Fellow Entrepreneurs

2008-09-29T06:59:00.000-07:00

I observe that after my first post everybody suddenly became shy to send comments. As I mentioned in my first post, I created this blog to enhance communication and thereby we can exchange knowledge. So people, come on and share your opinions and views on entrepreneurship and business.

For those who subscribed, I congratulate you since you have shown your interest to learn. I am not saying I am an expert in business but by sharing my own learnings I can stimulate you to think.

Now, I am encouraging you to subscribe, comment and share this blog to your friends not just for traffic purposes but because it is my advocacy to promote entrepreneurship. The more entrepreneurs the better for me since there will be more people who can potentially do business with me.

As a bonus to everyone who subscribes, I am giving a free e-book titled "29 Leadership Secrets From Jack Welch" to subscribers. Yes, leadership secrets from GE's remarkable former CEO. As an entrepreneur, one of the qualities you should have is LEADERSHIP and certainly Welch has created GE into what it is now because of this quality. For everbody who subscribes it, I will be sending this free ebook through email.

Note that I will be sending more freebies in the future to my subscribers.

Cheers!

Why Build A Business? (Excerpt from “Rich Dad’s Guide To Investing”)

2008-09-24T07:12:00.000-07:00

I apologize that I have to deviate from my preset outline. I was supposed to discuss in this post reasons why businesses fail. However, when I was browsing through my knowledge "assets", I stumbled upon Rich Dad’s Guide To Investing book (I highly suggest you read the Rich Dad series) and saw this particular chapter (Chapter 30) titled “Why Build A Business?” I then found it better to share Rich Dad’s view on why set up your business prior to the article on why businesses fail. Some of the parts of this article are direct quotations from that book.

As I mentioned in my first post, Preface, I went to business for a variety of reasons. All those reasons are not just related to living a luxurious lifestyle but also for some noble reasons. No matter what the reason, business for me is the vehicle to achieve those FASTER and less EFFORT spent. Reading this book made me understand how the successful businesspersons think in terms of why they build their businesses. These reasons are not their ROOT reasons but they are the guides they followed in building truly successful ventures.

Robert Kiyosaki said that his Rich Dad had three reasons why he thought it was essential to build a business:

1. “To provide you with excessive cash flow”

An excessive cash flow will allow you to have more choices; choices that you can’t make if you have to WORK FOR money. Having a business allows you to create more businesses/assets and therefore more excessive cash flow (that is if you have built a successful business).

John Paul Getty, a great billionaire and philanthropist, wrote in his book “How To Be Rich” that his first rule is that you must be in business for YOURSELF. He implied that YOU WILL NEVER BE RICH WORKING FOR SOMEONE ELSE.

2. “To sell it”

Robert Kiyosaki further tells here that the problem with a JOB is that you cannot sell it regardless of how successful you are at it. This is another reason why a business is an asset. Aside from it putting money in your pocket (through regular cash flow), it can also be sold for FAR MORE MONEY THAN YOU INVESTED IN IT. If you CAN build a successful business, you will always have lots of money. (Note: However, let me again stress that MONEY alone may not be the root reason why successful businessmen like Bill Gates created vast wealth. They knew the importance of money but they never got trapped LOVING money. They used money for noble causes, such as Gates’ philanthropic initiatives.)

Kiyosaki had this good example of how powerful a business is:

“In 1975, while I was learning to sell Xerox machines (Kiyosaki was previously employed at Xerox Corp.), I came across a young man who owned four quick-copy print shops in Honolulu. The reason he was in the business of making copies was interesting. While in school, he had run the university’s copy shop (as the copy shop’s employee) and learned the business side of the operation. When he came out of school, there were no jobs, so he opened up a copy shop in downtown Honolulu doing what he knew best. Soon, he had four of these copy centers in four of the bigger downtown office buildings, all on long term leases. A major copy shop chain came to town and made him an offer he could not refuse. He took their USD 750,000, a giant sum in those days, bought a boat, gave USD 500,000 to a professional money manager, and sailed around the world. When he returned a year and a half later, the manager had grown his investment to nearly USD 900,000, so the young man just sailed off again, back to the islands of the South Pacific.

I was the guy who sold him the copy machines, and all I got was my small commission. He was the guy who built a business, sold it, and sailed away. I never saw him again after 1978, but I have heard that he pulls back into town every so often, checks his portfolio, and sails off again”

The lesson in the above example is that had that man chosen to struggle to find a job (perhaps outside Hawaii) he would not have achieved such lifestyle. The power of having a business is that, whatever your goal is, you can achieve it faster with less effort spent. This example shows that selling your business (and not falling in love with it) is also a very good option, if the deal is right.

3. “To build it and take it public”

This is Kiyosaki’s Rich Dad’s idea of becoming what he called an ULTIMATE INVESTOR. He further went on to say that “It was building a business and taking it public that made Bill Gates, Henry Ford, Warren Buffet, Ted Turner and Anita Roddick (of Body Shop) very, very wealthy. They were the SELLING SHAREHOLDERS, while we were all the BUYING shareholders (through the stock market). They were INSIDERS, while we were outsiders trying to look in.”

I find lots of my ex-officemates and other friends very much excited about trading in the stock market. In fact, here in the Philippines, the Securities & Exchange Commission is even giving free courses to the public to promote investing in the stock market. Now it is a good idea to invest in the stock market ONLY if the person understands the volatility of the market (look at what's happening now at Wall Street). There is, however, a better way to benefit from the stock market -- have millions of shares of stocks. To acquire this number of shares, you cannot be just the "outsider" in the company. You have to be an "insider" as Kiyosaki states. How then can you be an "insider?" There are a number of ways but the best way is build the business that you will take public.

Think now, if you currently have a business: Is your business giving you excessive cash flow? Can you sell your business for a good amount? Can you take it public or do you see it going public in the near future? Maybe this will open to you truths about the current business you have.

A.1: Starting A Business: Why Do People Go Into Business?

2008-09-22T07:33:00.001-07:00

Doing Business Is The Best Way To Create Wealth

We were shown these statistics when I attended a presentation of a certain network marketing company:

This graph presents how the wealthy in America create wealth (source: The New Interagency Report: Older Americans 2000: Key Indicators of Well Being [US Census])

A resounding 74% of the wealth in America was created through BUSINESS. For the "un-entrepreneurial", fear not, you still can be "wealthy". Well that is if you're a Michael Jordan, a heavy hitting salesperson, or if you've climbed the top of the proverbial corporate ladder and become the CEO of the company you're working for. But then again, do those other methods use LEVERAGE? I guess not.

*Side Note: I was brought up by my parents to believe that wealth could be created only if I climbed up the corporate ladder. For my parents, the only measure of FINANCIAL wealth was having fat paychecks every month, having a big house and having luxury cars. When I developed my financial literacy I realized that wealth was measured by TIME. Wealth is how much time it will take you to live the lifestyle that you want without having to physically work or depend on others for money. Wealth, therefore, is FINANCIAL FREEDOM.*

Now the above statistics do not only hold true for the US but for any other places as well. Here in the Philippines, we all know who possess the majority of the wealth -- the Ayala's, the Sy's, the Lopezes. All of these families have created their vast billions by, what else, BUSINESS.

I have heard that the number one dream of Filipinos is to own a business. There are various reasons for this but in my observation (including of myself) some of them may be:

For extra income (sidelines)
Got laid off or in the verge of getting laid off/fired
Retired from service
Tired of working for someone else
Prestige of being the CEO of one’s own company
To pursue an idea
To invest one’s extra cash
Forced by circumstance (i.e. can’t find a good job coz of lack of education)

Many then start their businesses. They get excited and tell their friends about it. But there's just one thing most do not understand -- business is not a substitute for employment. If you're thinking that when you start a business you'll immediately get rich, think again. You should brace yourself for several months of having no regular income, if there's any at all. As I said in the Preface, may can't stomach entering business because they are too scared to lose regular salary. So if you wanna go into business, prepare for months of drought and longer working hours. It's like seven years of famine before the seven years of plenty.

If you're contemplating on having your own business what is your reason? Have you already started your business? If not, what is stopping you?

I encourage you to take part in a mini-discussion through your comments. Take note that I am not a business teacher. I set this whole blog up so everybody can share and teach through it.

In my next post (On Wednesday) I will be discussing reasons as to why most startup businesses fail. Be sure to invite your friends and family to this blog.

Contents of This Blog

2008-09-16T21:17:00.000-07:00

Two days ago I made a brief introduction of why I entered the world of entrepreneurship. I would like to thank all that read it, sent comments and subscribed. For others who haven't subscribed yet, please do so as I am doing this not just for money generation from ads (although getting some income from it is good) but because I love sharing my thoughts to people. I figured that instead of talking about it, why don't I just write about it and I can reach far more? If you read this and are interested in what I have to say then please subscribe and tell your friends about it. Also I really encourage you to pour in your ideas too or if you have similar blogs, please feel free to post your links in your comments.

Anyways, I will be publishing new posts each week on this and I hope you subscribe to my feed so you will get it by email.

Just to give you a preview of what I will be writing about and perhaps get your ideas too on what I should write about (this should be fully interactive) I present below an outline of the topics I will cover.

A. Starting a business - I will be discussing here topics such as why people go into business, what makes business succeed and fail, and how you determine if you really are fit to go into business.

B. Types of Businesses: Network Marketing - How does this type of business work? What are my personal experiences regarding it? How does one succeed in it? Is it really the PERFECT BUSINESS? Can ANYONE really do it? Please take note that I will NOT be promoting any particular network marketing company here.

C. Types of Businesses: Franchising - How does this work? Why does everyone love to have a franchise? Which franchise to choose? What are the advantages and disadvantages of having a franchise? Likewise, I will not be promoting a particular franchise here.

D. Types of Businesses: Real Estate - although Real Estate can be included in the other types of businesses, I found it better to discuss it separately as it is one of the greatest wealth builders.

E. Types of Businesses: Your Own Idea - for me this is the real deal, and personally I believe this is the most gratifying of all the types of businesses and the pinnacle of entrepreneurship. I wish to discuss how to determine what sort of business to get into. How do you know if your idea is good enough to be a business? How do you start? How do you make it succeed?

F. Partnering with Others - As I had experiences in dealing with partners in the past, I wish to share my thoughts and learnings from it. How do you find a partner? Why do you want to have a partner? How can a partnership work? What are the advantages and disadvantages?

G. Nitty Gritties of Business: Sole Proprietorship - This and the succeeding article are more of a "how to" of setting up your business. Now that you know what business to get into and prepared a Business Plan, how do you go about it then? This particular article focuses on Sole Prop form.

H. Nitty Gritties of Business: Corporation - Just like the preceding article, this discusses the "how to" of setting up a Corporation

I. Mentorship - We all need mentors. Even Michael Jordan needed Phil Jackson and his dad (bless his sould) to help him be the best he could be. In business it's the same. But how do you find such mentors? Do you need to attend seminars? Do you need to read Business Books? If you've found your mentor, how do you learn from him/her?

I will be sending out a feed every Monday and for the rest of the week we can exchange comments and learnings for each article.

God bless to all!

Preface

2008-09-15T02:49:00.000-07:00

I quit my daytime job this year to focus on building businesses. I met a lot of resistance from my family and some friends when I announced that I'd do this. My family said that my education from the finest university in the country might go to waste if I did not practice it and climbed the corporate ladder. My close friends at the office said that maybe I could still do business while I was still working.

I agree that, from the point of view of somebody who has a purely employee mindset, what I did was INSANE since I had to give up the following:

7-months of bonuses (based on my count, but it could not be far from this),
Travelling often as part of my work (sometimes I call this vacation while working),
Company outings in places where the company spends lavishly on plane fare and 5-star hotel accomodations,
Brushing elbows with high profile people and
ASSURED SALARY EVERY MONTH

What did I tell them? It varied depending on who asked and how they asked:

"I WILL NEVER GET RICH BY PLAINLY CLIMBING THE CORPORATE LADDER"
" I AM TIRED OF BEING TOLD WHAT TO DO, HOW TO DO IT, WHEN TO DO IT AND WHERE TO DO IT",
"I AM TIRED OF BUILDING ANOTHER PERSON'S (THE COMPANY OWNERS) DREAM"
"I DON'T WANT TO WASTE MY TALENT DOING SOMEBODY ELSE'S BUSINESS'

Yes, my motivation in doing it my own included the above, but they're not the main reason. My main motivations are goals such as:

Build a business school for the financially challenged,
Compose gospel songs and own a record label,
Paint on canvass and exhibit them,
Design and build a car powered by fuel cell,
Write books,
Be a public servant ,
Travel, in particular visit the Pyramids of Egypt, Jerusalem, the North Pole and Donald Trump's Maralago Estate in Miami
Achieving the visions specific to the businesses I got into

I realized that I would not achieve these goals if I was not financially free. And only by having my own (successful) businesses and investments will I be financially free. The only reason why businesses and investments are the way to financial freedom is LEVERAGE. I will not go as far as to explain what leverage is since it is not what this blog is all about. Anyways, upon having that realization, I started attending seminars, read more books, invested in the stock market, started businesses, etc. Until one day I told myself that I should do business full time. I could not exist as both an employee striving for promotion and as an entrepreneur on the way to business success. I had to let go of either one, and that one was my job. So I wrote and submitted my resignation letter (my own DECLARATION OF INDEPENDENCE) and went my way to my journey towards financial freedom.

I am still at the early stages of my journey but let me say that I have already learned so much. It's a different world. In this world I don't talk about pay raises, office politics, HR policies, etc. In this world I get to wake up whenever I want to and go to a coffee shop and say that I am doing some business (when sometimes I just get together with friends I met from business networking sites).

Please bear in mind, however, that a lot of the things I am applying in business I learned from my stint as an employee. So don't ever think I regret having worked for someone else. In fact, I recommend employment as one of the best ways to learn before you jump into setting up your own business.

In this blog I will share my thoughts on doing business and linking it with my own experience. In my next post I will present an outline of the things I wish to discuss.