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A new, revised edition of the classic guide for entrepreneurs
For more than a decade, The Entrepreneur and Small Business Problem Solver has been the go-to resource for budding entrepreneurs and small business owners alike. Now in its Third Edition, this classic has been revised and updated to meet the needs of the modern reader in today's fast-paced business environment. Covering everything from getting a start-up loan to introducing a new product, this comprehensive guide shows you how to deal with the common problems every small business faces-without hiring expensive outside help.
This handy guide is packed with the kind of essential, down-to-earth advice everyone running a small business needs-whether you need help with your business plan or collecting a small debt. This new Third Edition features new information on tax law changes, technological advances, and changes in government services, and includes an entirely new chapter on Internet marketing and e-commerce. Focused on practicality, the book also features downloadable, chapter-ending worksheets that will help you retain what you learned and implement it correctly. A truly unique source for sound business guidance, The Entrepreneur and Small Business Problem Solver, Third Edition is an invaluable reference that every business owner needs.
Inside, you'll find world-class guidance on these topics and more:
Reflecting the new tax laws and changes in marketing, finance, and other vital business areas, this second edition offers more extensive advice and information than ever.
If you weren't thinking about going into business for yourself either by starting your own business and becoming an entrepreneur or by taking over an ongoing business, you wouldn't be reading this book. Just thinking about this possibility marks you as someone out of the ordinary and makes you stand out from the rest. Moreover, because of your interest, I already know a few things about you.
I know that you seek more out of life than just a paycheck. You may want to be your own boss so that you control more of your life. Or your boss at work may have rejected your ideas in the past: Later, you saw others either inside or outside your company implement the same ideas with great success. You don't want this to happen again. You want to be in charge because you know you can do better.
You may have had difficulty in getting a job that you really didn't want but had to accept to support your family or yourself. And in getting this dissatisfying position, you may have been rejected many times. You were told you were too young or too old, lacked an education or had too much education, had the wrong kind of education, didn't have the experience or had too much experience. All the time, you knew that you could not only do the job but also do it better than most others. Or maybe you have a passion for a certain kind of work, but the requirements of your current position are such that you just don't have the opportunity to concentrate on the work that you really love.
Maybe you retired after years on one job and now want to take this opportunity to do what you've wanted to do for a long time. Or perhaps you realized from the start that the corporate life is definitely not for you. You completed high school or college or dropped out from either and decided that you wanted to go a different way. Many have done this successfully, too. Douglas Becker founded Sylvan Learning Systems and owns universities all over the world, some of which offer doctorate degrees. However, Becker himself never went to college. He finished high school and founded a company teaching learning challenged kids how to learn. By the time he was in his mid-thirties, he was not only a multimillionaire but also the boss of many college presidents.
There are hundreds of reasons that motivate people to strike out on their own, and it doesn't seem to make much difference what the reason is. If you have the drive, if this is what you really want to do, you can do it and become highly successful. However, there is good news and bad news. Not everyone is cut out to be an independent businessperson or an entrepreneur. There are other perfectly good ways that you can go through life and make a contribution to society. I tell you this because while there are many real rewards to being your own boss, there are also significant challenges. One basic principle of successful entrepreneurship and small business management or in building a giant corporation, if that is your ambition, is to do so with your eyes open. Sure running your own show is great, but there are disadvantages too, and I want you to know about them before you jump into the fray. So, at the end of this chapter there is a worksheet to help you understand what you are letting yourself in for to help you make an informed decision.
Once you are ready to accept the risks, the adventure, the highs and the lows, the rewards and the demands of being in business for yourself, this book can help-a lot. The Entrepreneur and Small Business Problem Solver is designed to give you the guidance you need to deal with the myriad of problems that every small businessperson and entrepreneur faces as they first enter business and build their business over the years. The first edition came out more than 20 years ago, and more than a hundred thousand entrepreneurs and small businesspeople have used it to help build their success. However, the solutions it provides are not mine alone.
You may have noticed that many who are most successful in these types of activities-Bill Gates, Donald Trump, Colonel Harland Sanders of Kentucky Fried Chicken fame, or Mary Kay Ash who built a billion-dollar cosmetic company while giving away Pink Cadillacs, and thousands of others whose names you know and others you don't-didn't make it by working an eight-to-five job for someone else, but rather by being on their own. Their real experiences are immensely valuable, and those who would show others the way would do well to ground themselves in the experiences of those who achieved outstanding success in the past.
This third edition of The Entrepreneur and Small Business Problem Solver is not only updated with the latest cutting-edge information regarding technology and the Internet but also with the collective wisdom of hundreds of successful entrepreneurs and small businesspeople who learned what works and what does not on the firing line while risking and making fortunes.
The Advantages of Having Your Own Business
I have already alluded to many of the advantages of having your own business, but let me list them and make them explicit:
You are the boss.
You have the opportunity to become far more successful financially than you ever could become working for someone else.
You have the prestige of heading up a company and can have the title of CEO or president, a title that might take years to attain working for someone else or that you might never attain.
You make the decisions regarding hours of work, vacations, and, within the framework of the law, who you do business with and what work you will do.
As you work, you are building equity in an entity that can be sold later or passed on to your children.
The government allows you to deduct certain expenses that contribute to making a profit from your income tax. We will discuss these further in the next chapter.
Your Contribution as an Entrepreneur or Small Business to Society
However, there is more. Being an entrepreneur or small businessperson does not mean stealing or cheating someone else or becoming a robber baron. In fact, I was recently reading a book by historian Stephen Ambrose. In it, Dr. Ambrose was discussing the so-called robber barons who built the transcontinental railroad across the United States. He said that he was taught in school that these men took unconscionable profits out of the railroads, far more then they deserved, and exploited everyone they came in contact with. However, he discovered that this view was inaccurate and unfair. The U.S. government was unwilling to take the risks of building the transcontinental railroad. The American people wanted the railroad built, and they wanted it completed in just a few years. To accomplish the job, the investors had their arms twisted, first by President Lincoln and later by President Grant. These entrepreneurs took enormous risks in order to complete the job quickly. The quality was imperfect and there was corruption, however, they finished the job in just six years. No other country in the world was able to duplicate this feat. Using slave labor, it took Russia 32 years to build a similar railroad. That's not to say there aren't bad-guy entrepreneurs, but the motivation of entrepreneurs is different than what many think.
Some years ago, famed Harvard social scientist David McClelland (see his book Achieving Society of Human Motivation) did some research into what motivated different groups of people. He found that the primary motivation for managers in large firms was a need for power. He thought that entrepreneurs would be motivated primarily by the desire for money. To his amazement, he discovered that the primary motivation for entrepreneurs and small businesspeople was not money but achievement. Entrepreneurs didn't spurn money, but it was used mainly as a measurement to determine how well or how poorly the entrepreneur was doing.
Many speak about big business and corporate jobs and the creation of jobs, but most new jobs come from small businesses not giant corporations. So, as an entrepreneur or small businessperson, you make a major contribution toward eliminating unemployment, too.
Did you think that with giant new product and research and development departments that most new innovations originate from within very wealthy companies? Even this isn't so, and it probably never was. It was two brothers who owned a bicycle shop and made the first f light after they invented the first workable powered airplane. Their name was Wright. Big business and government had previously sunk a lot of money into trying to develop an airplane powered by an engine, and they had failed.
The second company to introduce handheld electronic calculators was the giant Sears, Roebuck and Co. An entrepreneur by the name of Joe Sugarman headed the first. Sugarman made a million dollars selling handheld electronic calculators through the mail before Sears and others got interested. Sugarman is probably better known for his infomercials selling BluBlocker sunglasses. Over a 10-year period, he probably made another million dollars selling them, too.
Although today there are many big businesses, including IBM, turning out personal computers, IBM had previously done a study and determined that there was a market in the United States for a total of about 1,000 personal computers (PCs). As a result, IBM forgot about PCs and concentrated on giant computers for big business. Two college dropouts by the names of Steve Jobs and Steven Wozniak built the first commercial personal computer in Jobs's garage. It was called Apple II, and it got the eventual multibillion-dollar Apple Computers Corporation off the ground. IBM had to catch up later after Apple was well established. Amazing, but true: Most innovations seem to be thought up and introduced by entrepreneurs and small businesspeople, people just like you and me.
Entrepreneurship and small business built this country and is still building it today. So as a successful small businessperson, you not only have a tremendous opportunity to become wealthy and live your dream but also to help the U.S. economy and to help limit unemployment. Innovations or new products and ideas that you come up with will contribute to society. There are few other occupations where you can help so many other people at the same time that you help yourself.
The Drawbacks of Running Your Own Show
As I said earlier, the small-business life isn't perfect. There are drawbacks, and you had better recognize them right from the start. While you have work-hour flexibility as an entrepreneur, you are probably going to discover that to become successful, you are going to have to work harder than ever before. Sure, once you've really made it, you can hire professional managers to run your company and take dream vacations whenever you like. But, that's not how it's going to be at first. More than a few small businesspeople and entrepreneurs work seven days a week.
Did you think you had a high-stress level when you worked for someone else? Wait until you feel the pressure of meeting your bills with suppliers, creditors, and employees. Wait until you have to meet a payroll. Monthly or bimonthly you're going to have to come up with the money to pay each and every one of your employees.
And did I say that you could make a lot more money in your own business? Well, that's very true, but it's probably not true at first. Many small businesspeople make less money than they made working for someone else, at least at first.
Working for someone else, your biggest risk is getting fired and being out of work. Working for yourself, you can not only lose your business and be out of work, but you can also end up in debt at the same time. You are going to take risks of one kind or another every day you are in business.
What You Need to Make a Go of It
In 1979, Tom Wolfe wrote a book called The Right Stuff about American test pilots and the space exploration program. The heroes that Wolfe wrote about in his book had "the right stuff" to become test pilots and astronauts. If you would be a small businessperson or entrepreneur, you, too, must have the right stuff. While the right stuff that you require is not the same as that required for test pilots or astronauts, it is every bit as important for success. It includes a persistence and stubbornness to stick with projects and not to give up; an ability to tolerate uncertainty and risk or to handle high levels of stress for long periods of time; not to be intimidated by others or to always believe what others tell you is, or is not, possible; to have a strong belief in yourself and what you are trying to do; and to be able to balance the time demands of a business and personal life.
I have put together a worksheet to help you decide if you have the right stuff through a simple test. If you are honest with yourself, you will know right away whether you have the right stuff, or not. (See Worksheet 1.1 on p. 9.)
Full Time or Part Time?
Many situations do not constitute a conflict of interest with your present employment, and you can work part-time and ease into the business. This has the advantage of continuing your main source of income and taking a lot of pressure off. Sure, it's a little inconvenient, and you may not be able to concentrate on your own business. You may lose some sales and need to work a lot harder after your regular work hours and on weekends. Still, many start this way and, if the business you are contemplating fits into the category where you can do this, I recommend it until such time as the sales from your business can support you independently.
What Business Are You Most Likely to Become Successful In?
We all want to get into a business that is more likely to lead us to success. If you peruse any of the so-called opportunity seekers magazines, you will find hundreds of advertisements attempting to interest you in a business with high payoff and guaranteed and easy success. My advice is to resist the temptation. These advertisements are cleverly written, and I'm sure that they have had successes among their customers. However, if you want to know which business is most likely to lead to success, follow this advice: Select a business that you know something about and that you have a real passion for.
If you don't know anything about the business, you will have to spend time and money learning it. If you really don't care for the business, and you are simply attracted by the promise of high income, you will desert this business when times get tough and you run into problems. And even though this book helps solve many of those problems, you may eventually get frustrated and quit.
Consider the four entrepreneurs I mentioned earlier: Bill Gates, Donald Trump, Colonel Harland Sanders, and Mary Kay Ash. Computers fascinated Gates from the time he was in high school. He started a computer programming business even then. Donald Trump likes nothing more than building huge commercial buildings. He lives it. Colonel Sanders spent 40 years in the restaurant business before he ever started doing anything with his secret Kentucky Fried Chicken recipe. And Mary Kay Ash not only had more than 20 years experience with direct selling but also was as passionate about starting a business where women could make good money as Gates was about computers, as Trump was about his buildings, or as Colonel Sanders was about his secret recipe for fried chicken. The success they achieved was not accidental. They got into something they knew something about; something they loved to do and were passionate about.
If you are already in business, you know what I am talking about and can skip Worksheet 1.1 or the additional self-assessment tests listed and found on the Internet. Go right onto the subsequent chapters, as you need them.
If you aren't yet in business, take the time to use Worksheet 1.1 and some of the other self-tests listed to see whether you should be getting into your own business. Recently, I met a man who works for the company that cleans my windows. He works only eight months a year and travels around the world the other four months. He is perfectly happy not having the responsibility of running the business. So, making the decision of whether you want to run the show is not a trivial one, and it could save you a lot of money, time, anguish, and personal resources.
Excerpted from Entrepreneur and Small Business Problem Solver by William A. Cohen Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Chapter 1: So You Want to Go into Business for Yourself.
SECTION I: FINANCIAL PROBLEM SOLVING.
Chapter 2: What You Need to Know about the Legal Aspects of Going into Business.
Chapter 3: Sources of Capital and How to Get a Loan.
Chapter 4: Business Insurance—What You Need and What You Do Not Need.
Chapter 5: Financial Management.
Chapter 6: Credit in Today’s Economy: When to Give Credit and How to Collect Money Owed You.
Chapter 7: Record Keeping Is Vital—What Records You Need and How to Keep Records Easily.
Chapter 8: Doing Marketing Research: Easily, Quickly, and Profitably.
SECTION II: MARKETING PROBLEM SOLVING.
Chapter 9: How to Find and Introduce a New Product or Service.
Chapter 10: How to Price Your Products and Services for Maximum Prof its.
Chapter 11: How to Build Your Business with Advertising and Publicity.
Chapter 12: How to Sell and Build Your Own Sales Organization.
Chapter 13: How to Make Money with Trade Shows.
Chapter 14: Making Money with E-Commerce.
Chapter 15: How to Develop a Marketing/Business Plan.
SECTION III: MANANAGEMENT PROBLEM SOLVING.
Chapter 16: Protecting Your Ideas.
Chapter 17: How to Recruit and Hire New Employees.
Chapter 18: How to Manage Your Most Valuable Resource: People.
Chapter 19: How to Avoid Getting Ripped Off.
Chapter 20: How to Use the Computer and Advanced Technologies to Stay Ahead of the Competition.
APPENDIX: Useful Internet Sites for Entrepreneurs and Small Businesses.