Show Me the Money illustrates why you should expect a return on your investment after the years of sweat equity and stress involved in being a business owner. Step by step, Chien demonstrates how to spend more time working on your business and not just in it. This book:
$ Empowers you to concentrate on your business
$ Shows you how to become an investor of your business
$ Prepares you to proactively select the right exit channels and recognize the right window of opportunity to cash out
$ Guides you in strategically safeguarding your return on investment
$ Teaches you business value drivers-driving the right future investors to you
$ Enables you to achieve financial independence and continue to be part of the virtual business cycle
Show Me the Money will help you avoid being the one-third of all businesses that close without the owners receiving their deserved cash and value.
Let me introduce what I call the G.U.P., my unofficial secret formula for success.
G.U.P. consists of three sets of variables that all of us must discover and use in order to obtain the successful status that represents a successful life - by one's own definition. That includes building a successful business and completing a successful exit from your business to realize your dream. This is the full cycle an entrepreneur goes through. G.U.P. helps you use your internal North Star or road map to get there. Read on to learn how to be successful and realize your dream of financial independence.
For centuries, the Chinese have believed that success hinges on three variables. All three variables must line up, just like a slot machine at a casino. When that happens, you've hit the jackpot and, in layman's terms, you're successful. This could be in any profession, any career, or anything in general that people describe as success. That is, you have to be in the right place at the right time, with the right people
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About the Author
Chien Associates LLC, which helps women entrepreneurs convert their businesses into meaningful personal wealth. She is also a Midas advisor of MidasNation and an expert columnist at WomenEntrepreneur.com. Chia-Li
(Jolly) Chien, CFP®,CRPC,PMP Founder & Chief
Strategist Chien Associates LLC Exit Planning for Women
Business Owners 13016 EASTFIELD RD, STE 286
HUNTERSVILLE, NC 28078-6637 704-706-9618
email@example.com www.chialichien.com www.showmethmoneybook.com
Read an Excerpt
SHOW ME THE MONEYRun Your Business like a Prosperous Investor
By Chia-Li Chien
iUniverse, Inc.Copyright © 2010 Chien Associates LLC
All right reserved.
Chapter OneThe G.U.P.
In Malcolm Gladwell's Outliers, he explores why some people are so successful. Many of the examples he uses are well-known figures in the modern world. Assuming that you're industrious and have the right background, obtaining success according to your own definition is not that difficult, Gladwell concludes. In line with that philosophy, let me introduce what I call the G.U.P., my unofficial secret formula for success.
G.U.P. consists of three sets of variables that all of us must discover anduseinordertoobtainthesuccessfulstatusthatrepresentsasuccessful life - by one's own definition. That includes building a successful business and completing a successful exit from your business to realize your dream. This is the full cycle an entrepreneur goes through. G.U.P. helps you use your internal North Star or road map to get there. Read on to learn how to be successful and realize your dream of financial independence.
For centuries, the Chinese have believed that success hinges on three variables. All three variables must line up, just like a slot machine at a casino. When that happens, you've hit the jackpot and, in layman's terms, you're successful. This could be in any profession, any career, or anything in general that people describe as success. That is, you have to be in the right place at the right time, with the right people.
The G Variables
[TEXT NOT REPRODUCIBLE IN ORIGINAL SOURCE.] (At the right time) [TEXT NOT REPRODUCIBLE IN ORIGINAL SOURCE.] (In the right place) [TEXT NOT REPRODUCIBLE IN ORIGINAL SOURCE.] (With the right people) Bill Gates, founder of Microsoft, for example, clearly had the G Variables all lined up. He was in the software industry at the right time and he happened to be in the right place. And he surrounded himself with the right people to make Microsoft possible.
Why do I call them G Variables? The G stands for God-Given Variables, because you have very little control over the right time, the right place, and the right people. Does that mean you don't have to bother to work hard? No, because if you're willing to put forth the effort to reach your vision, you'll learn to manage and work within the G Variables.
In Chinese culture, we believe there is a god who watches you from three feet above your head at all times. This god ultimately can make the G Variables line up in your favor if you put forth the necessary effort.
The U Variables.
However, if you want to have a successful business, there's a set of U Variables you must line up before you can declare mission accomplished. I call them the U Variables because they have everything to do with you. You must start with yourself, within your own profession and with your money.
The U Variables
[TEXT NOT REPRODUCIBLE IN ORIGINAL SOURCE.] (Yourself) [TEXT NOT REPRODUCIBLE IN ORIGINAL SOURCE.] (Your own profession) [TEXT NOT REPRODUCIBLE IN ORIGINAL SOURCE.] (Your own money) Like the G Variables, the U Variables must line up like a casino slot machine for you to win the grand prize. Consider again our example of Bill Gates as discussed in Outliers - he was in business, he spent more than 10,000 hours on his programming before he received his first contract (while still in high school), and he used his own money to start the business. If you're thinking about starting your first business, consider the U Variables. Keeping this principle in mind will serve you well in the long run.
This is not to discourage anyone from starting a business in a profession she hasn't practiced. However, Gladwell posits that it takes 10,000 hours to gain an advantage in your profession. If you work forty hours a week, that works out to about five years. Others in the corporate world say it can take as long as ten years to reach an advantaged level.
The P VARIABLES(r)
The third set of variables enables you to consider cashing out successfully after the hard years spent growing your business. Obviously, this is not part of Chinese culture. But again, the P VARIABLES(r) must all line up for you to receive the grand prize. The P VARIABLES(r) are: Pull Marketing; systematized Processes; predictable Profits; and a Professional management team (or non-owner management team).
The P VARIABLES(r):
Pull Marketing Systematized Processes (Maximized IP) Predictable Profits Professional Management team
Gates took Microsoft through an IPO, and it became one of the world's largest companies. He obviously had all the P VARIABLES[R] in place and lined up prior to the IPO. He successfully cashed out and realized his dream. The key here was "prior" to the IPO.
In the 1930s, my maternal grandfather, a self-made millionaire, enjoyed a successful sheet music business. His retail brand is still well known today. As a matter of fact, the original retail store is still at the same location. It's hard to describe how wealthy and astute a businessman he was. I never met him, only heard the stories over and over from my mother and aunts.
Taiwan was a colony of Japan in the 1930s. Everyone in our family spoke fluent Japanese. This was the only way to keep their social status. My mother's first name is Japanese, indicating her social status when she was born. My mother even had her own servant, who served her an "English" breakfast every day, such as a sunny side up egg and toast with butter. She was treated like royalty. In second grade, at a private school with a private tutor, her life was pretty good.
As a well-known and reputable businessman in Taipei, my grandfather could sign any document, and it would be honored as a legitimate business transaction. For example, if you needed to borrow money from the bank, but got turned down, my grandfather might agree to loan you the money you needed. He could write the amount and terms on a signed cigarette paper and it would be honored as an official loan paper.
One of my grandfather's brothers had gambling problems, although, at the time, no one really knew about it. According to Mom, this brother looked like my grandfather and people often mistook him as my grandfather. One day, he got caught up in an intense betting game in which he found himself losing everything. He decided to use my grandfather's business name as a wager. He actually forged my grandfather's signature, a skill he had picked up while working in my grandfather's business. And that night, because of that moment, my grandfather lost his business. He soon suffered a heart attack, forcing my grandmother to take her six children and move into a relative's home in the country. My mom's life was forever changed. Even though my grandfather owned much property in the suburban areas, there was no way to rescue the company.
Juggling a full-time job and a part-time business
Although my mother had a very harsh life after that incident, she never forgot those business skills my grandfather passed on to her. In the late 1960s, both my parents were teachers. Their salary was good enough to live on but did not allow any extra cash to save toward the future. So they decided to start their own tutoring business right at home. I was not even in elementary school yet, and was told to behave and stay in a closed bedroom. But I often peeked to see the thirty to forty elementary school children sitting in our living room, working very hard.
They occupied rows and rows of heavy wooden desks and chairs. My mother taught them tirelessly, giving out assignments, then while the students worked, ran into the kitchen to prepare dinner. You could smell the students' sweat and delicious Chinese dishes at the same time (and that strange aromatic combination never left me). All the while, my dad tutored ten other high school students in another room.
As I entered elementary school, both my parents had grown tired of juggling a full-time teacher's job and part-time business. My dad decided to partner with two other teachers and they all signed a lease to run a prep school and tutoring center in a building in downtown Taipei. As a result, we rarely saw my dad because he was always working.
My father brought all his own clients (or in this case, students) into the partnership; however, the other two partners did not. On top of that, none of his partners had any experience in running a business. Their business only lasted a year, and my dad even lost some money due to the building lease terms. He unfortunately failed to line up the right people at the right time in the right place.
The train just stopped
In the late 80s, my parents-in-law ran a very successful Chinese restaurant business in Farmington, Connecticut. My father-in-law was approaching age sixty-five and was ready to retire. But he and my mother-in-law did not know what to do. They met with their CPA and with their attorney, trying to figure out their next step. The CPA and the attorney advised them to simply put up a for sale sign. The business had been listed for sale for two years without a buyer.
My father-in-law, by that time, felt pretty tired and really ready to retire. He was just about to close the restaurant down when one of the youngest partners decided he wanted to buy the business. This young partner was forty-five years old and indicated he didn't actually have the money to buy the business. All four partners in the business collectively agreed to invest in the business as long as they got their principle investment back. Basically, the train just stopped, and there was no interest return, no equity, basically nothing to show for years of hard work and risk assumption.
Business owners don't plan to fail, but most fail to plan
Even though all three of these businesses (my grandfathers, my parents' and my in-laws') were somewhat successful during the peak of their business cycle, all three also have one other thing in common - they did not have the opportunity to turn the value of their businesses into cash. They were not able to cash in on the value of their lifelong work, even though they deserved to be rewarded for it. They did not plan their exit.
Ideally, when you start your business, you should also have an end in mind. That is to say, decide and plan for when you want to get out, how much you want to cash out for, and how you will move on. Unfortunately, almost all business owners get so focused on running and functioning "in" their business, they do not have the opportunity to plan for how to get "out" of their business. They never take the time to work "on" their business.
In Stephen R. Covey's book, "The 7 Habits of Highly Effective People," he talks about having an end in mind and planning around it. For the most part, entrepreneurs' "end in mind" only translates to the nebulous idea of financial independence.
The good news is that you, as a successful entrepreneur, now know about and can say you have already implemented the G Variables and U Variables. Best of all, you have full control over the P VARIABLES[R]. But the secret of the P VARIABLES[R] hasn't been widely shared yet. But I plan to share them here, as taught to me by my mentor, Rob Slee, founder of MidasNation(tm).
Chapter Two- Investment 101 - Buy Low, Sell High
When I was in kindergarten, I often saw my paternal grandfather intensely listening to the stock market report on the radio. Remember, this was the 1960s, when you either got the latest stock news from your radio or waited until the next morning's newspaper. Well, he listened and charted out daily trends to determine his next stock trade. He and my dad got into many deep discussions about their hunches. I suppose my father's love of trading in the stock market really started because of my grandfather's influence.
My dad, a math major and high school math teacher, later retired as an assistant high school principal. With his background, he obviously knew the odds of beating the market and had carefully calculated his every move since his early 20s. "Buy low and sell high" was always his motto. I could not agree more with my dad. This Golden Rule of Investment 101 has been around for many years.
If you asked my dad about a stock in which you knew you couldn't get back your initial investment principal, regardless of how much the interest or dividend income were, he would probably tell you not to waste your time on that particular stock, because no one should be in the market only to lose hard-earned principal money.
Unfortunately, this same Golden Rule of Investment 101 does not translate well into the entrepreneurial world. Most business owners invest their entire life's work in their business. This includes sweat, emotional attachment, and personal capital in addition to their many years of hard work. But when they want to retire or move on, one-third of all business owners are simply forced to walk away and close down, according to Small Business Administration. My father would tell you this was a very bad investment.
In addition to this buy low and sell high Golden Rule, there is also an unwritten rule, according to my dad - know when to get out. In stock market investing, this is referred to as timing, or a having in mind a preset sell price. Your objective is to reach a certain, predetermined rate of return before you enter the market. For example, when DreamWorks first went public in the early 2000s, I bought it for around $20 per share. (This is for illustration purposes only and was not the actual price at the time.) I knew that with a small company like DreamWorks and with its many movie distributions, it would probably take about two years to reach my pre-defined goal of fifteen percent per year or about $27 per share. However, one year into the investment, the price was down to $15 a share, so I had to make a decision to either sell at that price or stick with the plan. I stuck with my plan, and by the end of two years, I got about $22 per share. Not good, but at least not a
Missing the opportunity to sell high
Vivian, a Columbia University MBA graduate was a successful Chinese restaurant chain business owner. She married into the restaurant business with her husband Jerry's family, becoming a part of their longstanding reputation and even fame in Flushing, NY and Manhattan's China town in the 1970s. Over a thirty-year period, Vivian launched many more successful restaurants and was also smart enough to acquire the real estate in which her businesses operated.
So first of all, Vivian got into the Chinese restaurant business at the right time. In the 70s and 80s, there were hardly any competitors. Practically anyone who opened up a Chinese restaurant could not only survive, but also thrive.
Secondly, Vivian was in the right place - she started out in a niche market, serving only the Chinese in China Town neighborhoods in Manhattan and Flushing, NY (in Queens). She gradually expanded her business to Long Island, serving Chinese food in a wealthy, mostly Jewish neighborhood.
Next, she assembled the right people for her team. Her headquarters were in China Town, and she employed only the best of the best talent in all her locations.
Vivian had the success formula - the right time, the right place and the right people and as a result, created a very good "lifestyle" business. When John, her only son, graduated from M.I.T. as an engineer, with plans to intern in China, Vivian felt like she needed to move on with her own life.
She began to sell off her restaurants one by one along with the underlying real estate. Due to stiff competition and a saturation of Chinese buffet restaurants, no one expressed interest in buying her restaurants. When Vivian was ready to sell, just about anyone could open up a new restaurant on the next corner. There was no demand for upscale Chinese restaurants anymore because of higher operating cost and the inability to compete with the Chinese buffet down the street. Vivian was forced to simply close most of her restaurants, making the real estate her most valuable asset.
Excerpted from SHOW ME THE MONEY by Chia-Li Chien Copyright © 2010 by Chien Associates LLC. 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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Table of Contents
ContentsWhy are you in business?....................xi
Section One - Investment Basics....................1
Chapter 1 - The G.U.P....................2
Chapter 2 - Investment 101 - Buy Low, Sell High....................9
Chapter 3 - Don't Put All Your Eggs in One Basket....................14
Chapter 4 - The Bottom Line - Profits Matter....................19
Section Two - Understanding the Privately-held Business Market....................25
Chapter 5 - Business Stages....................26
Chapter 6 - History Repeats Itself....................33
Chapter 7 - Creating a Market for Your Business....................36
Chapter 8 - Taking Your Company to the Next Level....................46
Chapter 9 - Which Exit Strategy Is Right for You?....................57
Section Three - What's in it for me? INCOME REPLICATION MODEL....................65
Chapter 10 - What Do the Next 20 to 30 Years Look Like?....................66
Section Four - Steps toward your goals -heading in the right direction....................72
Chapter 11 - Re-Conceptualize Your Business Model....................73
Chapter 12 - The Road Map....................79
Chapter 13 - Macro into Micro....................92
Chapter 14 - What If ....................100
Section Five-Business Value Drivers-The P VARIABLES....................105
Chapter 15 - Pull Marketing....................107
Chapter 16 - Predictable Profits....................111
Chapter 17 - Get the Right Professional Management Team....................118
Chapter 18 - Maximize Intellectual Property....................122
Chapter 19 - Keep Your Fingers on the Pulse....................125
Section Six -What's Next?....................129
Chapter 20 - Doing Nothing Is Not an Option....................130
Chapter 21 - Your Next Investment....................135
About the Author....................138