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Smartest Entrepreneurs Take Little Risk!!

Maybe we’re stretching our title just a little. Many Entrepreneurs take major risks in starting a new business. However, there are others who find a way to touch into government funds i.e. SBA and actually end up with a minor financial risk to themselves. They may also touch your funds if you let them.

This is NOT all bad! Our government is an encourager to the individual who desires to start a new business. Many of our finest firms began in someone’s garage or basement. It could have been in a corner of the bedroom. Doesn’t matter!

Our country needs the RISK taker. The Entrepreneur. Most business successes are 90% perspiration and 10% inspiration. If you are willing to put your shoulder to the wheel and work hard….you have a good possibility of success.

Seek out other successful businesspersons to learn how they have managed to build their business. What were the challenges? Difficulties? Financial resources? Government programs? Ask for helpful suggestions. Recommendations. Guidance.

An old saying is very true…..YOU can IF you think you can! Believe in yourself, even when others are negative. The world is full of Nay sayers…so don’t associate with those who are in the crowd of throwing cold water on your dreams. Go for it!

Today, if I were to start a new business, I would go to work for someone already doing the same kind of business. Even in another city if necessary. I would avoid having a problem with non-compete contracts in my own city. Offer to work for FREE! It’s the best investment you can make in your own business.

In my working career, I did exactly as I am suggesting to you. It happened just slightly under different circumstances, but basically the same results. A national firm hired me to begin and build temporary help services on the East Coast. I did. Became a Regional Manager. Times got tough for the company and they decided to eliminate my salary.

It seemed like a bad decision. No job. No salary. What a lousy thing to do after four years of my time invested for this firm. You can see what’s coming already! THEY (the company) had PAID me a nice salary with benefits to TEACH me the business. Now they had FORCED me out….into my own business!

In my case, the company had PAID me to develop my clientele. You have to work really hard to find a better deal. I recommend it to you. We were back in business in six (6) weeks. I already knew the business was right for me. That’s my point in suggesting that you work IN the same kind of business.

You will learn two things very quickly. You’ll either love the business or hate it! A great way to spend YOUR vacation time. Keep your day job! You’ll get a college education about the business and know if you want to pursue it further. You may just learn enough to KNOW this business IS NOT FOR YOU!

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BUSINESS TIP: Avoid the NaySayers! Believe in YOURself. Learn the business for FREE! Work for someone else IN the same kind of business. LOVE IT and DO IT for yourself or leave it alone.

Most things in life are simple. Unfortunately, so much so that many of us fail to take advantage of our opportunities. New ones come our way everyday.  What do we do? Turn our heads and get back on the same old track.

If you keep doing the same old things over and over again…what do you get?  The very same results as before. Nothing will change UNTIL you decide to change.  You have to change the habit to change the result.

People go to “hip/hip” hooray seminars and get all excited. Speakers get folks all pumped up with enthusiasm. You can do it! In a crowd, with lots of others around us, it just seems so easy.  We tell ourselves…I’m going to make a real change in my life.

We leave the arena ready to change the world. A week later, someone asks … what happened? I thought you were going to make some real changes in your life.  Get a positive attitude.  Work smarter, not harder.  Do more business.

Your INTENTIONS were right on track. It’s just that NOTHING has changed in the way you do things. You are in the 95% group. Your old ways are just too comfortable. We easily fall back into the same old rut as before.

If you honestly expect to see a difference…then you will have to make some adjustments to your daily routine. It’s really not so difficult after you have taken the first step toward your goal.

An IMPERATIVE!! WRITE IT DOWN!

Do you have goals? Things you want to achieve? Next week? Month? Year? 5 years from now? Think about the process as a road map to your destination. The journey. The trip. Steps to reach next and next and next…..until you arrive at “the place” you want to reach. Those who write it all down get to the destination sooner.

All of us need a guide.  A roadmap. Where are you trying to go? Is your goal to make a lot of money?  Own a business? Take a vacation?  Raise a family? Get married? Be President of your club? Buy a boat? A new car? On and on the list can stretch with our wants and desires.

WRITE IT DOWN WITH EXPECTATION . . . .

A Personal Experience ….. if you will bear with me. It really does work!  I decided one year that it was time for me to be President of my National (independent) staffing organization (approx. 100 firms) and I threw in my local Rotary Club (65 members) at the same time. I wrote it down!  Be President!! BOTH groups came and asked me to be President the SAME year. Wow! It certainly made a believer out of me. YES!  I accepted both and lived to enjoy the challenge.

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Would you try to take a trip to California from the East Coast by car without a roadmap? Obviously not…unless you have made the trip before. Even then, most of us need a guide. How far would you get before the road map was an imperative for you to reach your destination? 50 miles?  Maybe a 100 miles?  However, somewhere along the way you will be LOST unless you have a roadmap.

Do you get my drift? If you have a destination to reach, then you need a WRITTEN DOWN map to arrive safely. A study was done many years ago on a group of college graduates from an Ivy League school. In a nutshell, the 3 students who wrote down their goals made more money than the 26 other students (combined) in the class. Not a bad result for such a simple ACTION.

My point ….. it is very important to spend the necessary amount of time THINKING about the direction that you wish to go. Next, transfer your thoughts to paper. Review the plan daily. Distraction is a waster. Focus is the key.

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BUSINESS  TIP:   Write down your GOALS!  It may seem a waste of time, but history has proven its VALUE.  From the brain … down the arm … out the fingers onto paper.  Review it regularly.  Think about your destination.  It gets the adrenaline pumping toward success.

Create an Environment to Succeed…..

Are you ready for a little positive thinking? You can appoint yourself to be the lead person. Set a GOAL to put a positive tone in your voice. Walk like you are going somewhere! Move quickly. Look ahead of you, not down at your feet. Let everything about your presence radiate an upbeat aura around you.

You can start this action at home with your family. Next, take it to the office where you work. On Sunday, take it with you to church. Infect your children with an upbeat attitude. There is an old saying….smile and the world smiles with you. Frown and you frown alone (this is my version!).

Do you set the pace? What are the others around you doing? Are they sending out waves (vibrations) of happiness and good thoughts? Unfortunately, too many folks are walking around with their head down and sending out the wrong message.

You and I cannot change the world….but we can certainly change things right where we are today. It begins one step at a time. Set out to give everyone you meet a good feeling. About everything! About YOU! Their work. Many folks just need a firm handshake and a smile from those around them.

Our Environment has to be nurtured with positive reinforcement. All of us have been around a negative person. Brings every one of us down to their level if we let them. You can be the light and lift others to new heights. Try it!
Each of us needs to take responsibility for ourselves. Be an upbeat person. Lift others along with yourself. Be and become the person God created you to be. Not a sourpuss, but one with vibrations of success.

Touch others you meet along the way with your enthusiasm and love of life.

None of us enjoy being around a negative person. All of us know that some folks enjoy poor health, but we don’t have to encourage them or join their down in the mouth attitude. It is our challenge to bring them UP!

Help dispel the gloom in their life. It may be real, but we can try to lift them up with our positive outlook on the future as well as today.

Nothing can be as bad as it seems at the moment. Tomorrow will be a better day. Read the newspaper and you’ll find someone worse off. Bad news sells newspapers, but you and I don’t have to join them with more bad news. Let our news be God centered, upbeat, all the time.

Sometimes I just get excited about LIFE!! God gives us every minute of every day and I don’t want to waste any of it. Precious are you in His sight! He wants the very best for you. So do I!

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BUSINESS  TIP: See the good in everyone. Be POSITIVE. Life is waiting to be discovered. Open yourself up and SEEK the best there is. Get UP every morning and THANK GOD for a NEW day. It’s a gift. Cherish it. USE it. Realize that YOU are in control of YOUR THOUGHTS!

Ownership of restricted stock in a company usually means (no one!)  can sell their stock or borrow funds using their stock certificates as  collateral without the agreement of the other stockholders.

Restricted stock means exactly that…restricted!  There is a reason for small  business enterprises to put a restriction on the stock of all the shareholders.  You want to be sure no one can put a financial obligation (responsibility) on  your future in the company.

The RESTRICTION must be clearly printed or typed on ALL stock certificates that  are issued. Otherwise, you may be in for a REAL surprise. You may never be  aware that another stockholder has failed you (not lived up to their agreement)  unless he/she defaults (fails to pay) back the loan.

You obviously know that not everyone honors his/her agreements. Some folks  never seem to worry or be concerned about the consequences of their actions.  Dishonesty or lack of integrity is not a concern to them.

A big spender or gambler who is a partner (owns stock) in your firm may just  decide to take their stock certificate/s down to their friendly banker. Reason?  It’s not important! Use their stock certificate to borrow personal funds without  your knowledge.

It seems so harmless! It is…UNLESS they cannot pay back the loan.  Then it becomes YOUR problem, too! You may need funds to finance the business.  Our friendly banker says, sorry…. tough break….etc. Your collateral (value) of  the business is now less the amount of the outstanding (personal) debt.

Your banker will not know about the restriction on your stock (unless)….the  notification has been recorded on each stock certificate. Otherwise, it may as  well not exist as a requirement in your corporate agreements. YOUR ATTORNEY  must make sure the NOTICE is recorded on EACH stock certificate. Something  like….”This stock certificate cannot be used to guarantee any loan, etc.”…

Your attorney must be top notch. Sharp. Knowledgeable. Up to date.  The very best you can find. Dollars well spent….a member of your important  ADVISORS TEAM!

You must have your OWN attorney. Only then can you expect to have someone  looking out TOTALLY for your interest. Anyone who has ever said…”whatever  YOU want will be OK with me, just let YOUR attorney write it out for us”….can  almost be assured of the SHAFT!

Is this an important concern? For you? I don’t know. Ask any wife/husband  who have been thru a divorce. You can be sure they will advise you to have your own attorney. THIS IS IMPORTANT!

The same is true for you in your own business. Even if you are a proprietor  (own it all!) you still must have professional guidance. Most of us are laymen  (not experts) in the field of legal issues. Your money is well spent when you  can sleep in peace knowing that you have done your best to protect the future  of your family and your business.

Just remember that some folks do not always follow the rules. As a matter  of fact, it is often a challenge to them to see what they can get by with today.  They have NO concern about putting YOU at RISK.

Even when you have the best lawyers with outstanding credentials…. there  are No guarantees. An agreement is no better than the parties (individuals)  who are involved and those who attest to its validity and their concurrence.

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BUSINESS TIP:  Restricted STOCK must have the NOTICE recorded directly  on the stock certificate.  This is a contractual requirement.  Your banker  needs to be INFORMED about your business.  Accept No responsibility for LOANS without personal CONTROL OF THE ASSETS. Protect your family!

Several years ago, I knew an enterprising Entrepreneur.  He was a good friend with a man and wife team who wanted their own business.   As you will recall, the Entrepreneur is the guy who comes to the rescue when others want to go into business.  Usually neither party has any money but there is always a way to make it happen.

 

This particular couple both worked for a franchise owner.  The franchisee owned several retail locations around their city.   You can imagine that our new friends would just love to own this business.
Here comes the good news!  Our business owner (franchisee) just happened to decide to sell his business.  The perfect opportunity is about to unfold.  It almost sounds too good to be true…but it really did happen within just a few months time.

 

You guessed it!  The franchise owner suddenly wanted to seek other opportunities or take a few months off.   (Watch out big time for this one!).   He wanted to sell his business and take it easy for a little while.

 

The real truth was….he could have made as much or more money working for someone else.   Why have the headaches of owning a business?/!!   However, you certainly don’t want a potential buyer to know this and be discouraged. Now it’s time to build up the VALUE of the business to make it attractive for our potential buyers.  Therefore, we paint the following scene.

 

The big dollars (profits) are just over the horizon (yet to arrive!).  Over the NEXT hill!  The business would soon be ready to explode with PROFIT. A real CASH COW!!   This picture means you pay more for the business….based on future projections.  It’s called…pay me now… and hope you can make it in the future.

 

Lights Are On!  For the franchisee . . . .

 

The franchise owner realized that SELLING his business was a good idea. He had not been as successful as anticipated as a franchise owner. He began to seek out possible buyers to whom he could sell the firm.

 

Whom better to sell the business (franchise) to than one of HIS employees? A man and wife team!!  Two ideal folks…married to each other…. anxious to make a lot of money.  Already on staff!!    It’s hard to find a better potential buyer of the franchise.

 

Major Problem .….THEY (new potential buyers) had neither MONEY nor ASSETS! No Fear……

 

Entrepreneur Arrives On Scene …. (Remember Him?)

 

Money is NOT a problem.  Go to an Accountant.   Roll out a PRO-FORMA (this means a projection of the future) for the next 5 years and BINGO!! Next step…see your friendly banker.  Show your banker the figures …..sales….expenses…PROFIT (projected).

 

Borrow the money to buy the franchise backed with collateral from another business or bring in some additional partners.   No problem here! Easy as pie in the sky.
A MAJOR problem with the deal was….the couple (man and wife team) had NOTHING invested in the new company (franchise).  They simply had ownership potential in the future based on a unique formula dependent on their success in building the business.
You obviously recognize that the business was DEPENDENT on the man and wife team.   The whole deal was put together for them.  It was BASED on THEIR commitment to be in charge of running the business.

 

After a few months of running the new business…with a LOT OF DEBT assumed by the other partners.…the NICE couple said…”see ya!” “We don’t really like this business as much as we thought.   Both of us have decided to make a career change”…..and leave YOU GUYS (the partners) …HOLDING THE BAG!!

 

Obviously, you see the problem.   We have a business WITHOUT the managing TEAM to keep it running as a profitable enterprise.  Our point is…all of us can lose our life’s savings when we invest in a sure thing (there is no such!) and fail to set up our agreements in proper form and order.  EVERYONE has to be COMMITTED and signed on the dotted line.  Pass GO…and there’s no backing out of the deal.

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ACTION TIP:  KNOW YOUR PARTNERS.  Know the REAL REASON a person wants to SELL their business.   YOU may end up WITH the NOTE!   PRO-FORMA is NOT reality . . . . it is “pie in the sky” kind of forecasting a business.    Be sure EVERYONE has a “PAIN” if they leave YOU holding the bag.

Entrepreneur Without Money Arrives …..Beware!

Actually, a lot of enterprising entrepreneurs don’t have any money. A hard reality to understand, but it is true. Often they just have a lot of moxy and/or gambler instincts.

They simply have the intestinal fortitude (guts!) to take chances. Sometimes they win and make a lot of money (usually for themselves!!). The wonderful part of their great plan is to SHARE the opportunity with others.

Maybe YOU are their prime candidate (a person with MONEY!). You have been selected to be their partner in a new business venture. It could be that you have the contacts….the know-how….etc. For some reason, YOU are important to their business success.

Your question is….are THEY important to MY success?? Ask yourself if there are any benefits to YOU in joining forces with someone else. Why do you need a partner? Can you do just as well by yourself? What contribution will a partner make to your success? Obviously, your answer may just be YES!! You need a partner!

Your next step is to….make sure (verify) the background of any person whom you would consider as a partner. None of us can LOOK at another person and have any idea of their honesty and integrity. A CON-MAN/WOMAN (we need to give women equal fare) looks like any other outstanding citizen. He/she can be handsome; well dressed; well spoken; live in a fine home; drive a big car, etc.

NOTHING is wrong yet. YOU simply need to make sure that your entrepreneur friend or future business partner is on the UP and UP (a man/woman of integrity!).

DON’T invest YOUR money just YET! Let’s take a few more IMPORTANT steps as a matter of self-protection. I would recommend that you HIRE a professional investigator to research the background of any potential partner/s in a business.

A BONUS FOLLOWS….

As you know…this newsletter covers more than business interest. Almost all of life falls somewhere in-between. You may not agree with me, but I would investigate the background of a potential marriage partner; a preacher; a choir director; an executive; and ALL other new employees being hired into my firm. Why take unnecessary chances with your life and future? He who hires well…profits well! He who marries well … LOVES life!

Understand that a DEAL (a great opportunity for YOU!) can be structured in such a way that you will think everything is OK…until you look at the fine print. Unfortunately, most of us laymen don’t understand the language. Our usual thought process causes us to believe what other people tell us. Since we are honest, we ASS-U-ME that everyone else is too!

MY POINT is to open your eyes to the reality that you must stay alert. Don’t take a NAP when you are dealing with YOUR life and YOUR money. Be sure you really know the person you’re dealing with before making a wrong decision and losing your nest egg of funds.

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BUSINESS TIP: Know YOUR partner/s. NOT everyone is HONEST. You can loose your money much QUICKER than you can MAKE IT! Protect YOUR ASSETS with your life. Don’t be fooled by TITLES. SMART folks have COUNSEL. YOU MUST HAVE YOUR OWN TEAM OF ADVISORS to guide you.

Life never seems to turn out just like you had planned. A good friend of mine worked in a small warehousing / trucking operation for many years. The BOSS owned 90% of the stock in the firm, which means he had full control. Another employee (the Manager) owned 8% of the stock. The two children of the boss owned the remaining 2%.

Basically, owning 8%, 20% or 49% of the stock in a small (closely held) company is of LITTLE value or importance UNTIL you SELL the stock or it changes hands at death.

Let me insert an important question…..try it on personally, today! If your BOSS were to die or become disabled (unable to work) TODAY….how would it affect your status in life? Your family? Could the business survive without him? This is very important if you are in a small firm and the boss holds the key to survival.

As an aside…many stocks are referred to as “phantom” stock. Usually given to employees as a means to keep them happy as “owners” of the business. In reality, the ownership control remains with the guys who OWN 51% plus of the company stock portfolio.

The “boss” (90% stockowner) spent his time running around the country, going fishing and taking care of his personal needs and wants. Every once in a while he would call back and ask the GM (general mgr.) if “they” had any money??

Then he would say, “put $1,000 in my account!” This was at a time when minimum wage was about 50 cents an hour. Owning 90% of the company was a powerful position and he could make any request and get it done…as long as the money was available.

Verbal Contracts Are Worthless

Our BOSS was really a nice guy. Honest! A real entrepreneur. He supposedly was a very generous person, too. He made some important VERBAL commitments to his General Manager/Vice President. The BOSS was considerably older than the GM/VP.

I’ll FIX everything so YOU (GM/VP) will OWN the business when I’m gone. A loyal employee…the GM/VP ran the firm for 45 years (a career lifetime!). The GM/VP would own the business when the boss kicked the bucket (died). There would not be a problem with the boss’ heirs (a son and daughter).

Do You See The Problem??

The boss (maybe!?) probably did have GOOD INTENTIONS! The boss did die and the GM/VP ended up with NOTHING more than his original 8% of the stock.

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Why Should I Own 51% of the Stock?

Why is 51% such an important STOCK OWNERSHIP percentage? Others own 49%…ONLY 2% difference. Is 2% such a BIG DEAL?? YES! YES! YES!

Obviously, your PARTNERS may be SMART, too! What IF they want to OWN 51% and let YOU be the 49% owner? DEPENDS! An old saying is….HE who has the GOLD makes the RULES. Maybe you are really getting a wonderful deal when someone offers you any OWNERSHIP in a company. It could be 25%. Maybe 10%. It all depends on many FACTORS.

What are YOU contributing to the deal? Do you have the GOLD? Expertise? Contacts? Following? Etc.? YOUR contribution may be MORE VALUABLE than the money. Without YOU…maybe there is NO company. YOU’VE got a powerful CARD to play in this equation and I would REQUIRE equity. Why 51% ownership? Its called POWER! You may never have to use it. It simply protects YOU! YOU cannot be FIRED! Own 49% and YOU can lose YOUR position without recourse. The AMAZING value of owning 2%!! More.

Do ALL EQUAL business ventures GO WRONG??

Absolutely NOT! When you are in business with PARTNERS of Equal ownership….NOBODY has control. If you need to make a MAJOR decision and cannot agree….the challenge begins.

Do not say…WE WILL NEVER HAVE A PROBLEM! Business partners is another term for Marriage! You are in bed with your business partner (not really, unless it’s your spouse!). However, be assured you will have some challenges.

Watch Out For Folks Going To Bible Study

This is an OLD experience for my family. It happened many years ago. Can it happen again?? It almost did just 3 years ago. YOU can never let your guard down when doing business. There are just too many folks ready to make the easy dollar…. AT YOUR EXPENSE.

Our primary GOAL in writing about personal and business experiences is to put YOU on guard. We want to keep you SAFE from the barracudas. They are HARD to recognize! Like a CON MAN. You never recognize them UNTIL they take YOUR MONEY….and disappear! When you are faced with major decisions, we want to be there. Those decisions that have a big impact on your success. Where financial rewards are important. YOU don’t want to get left at the starting gate by a CROOK!

Vending Service Experience

My brother had just completed 4 years in the Air Force. He and a buddy had MUSTERING OUT PAY. After receiving their final paycheck from Uncle Sam, they were ready for the world. Just outside the gate, there was a SUPER salesman waiting! If you have been in the military, you know the rest of the story (according to Paul Harvey!). A VENDING MACHINE SALESMAN! BUY 3 machines that sell coffee, hot chocolate, soup, etc. AND you’re in YOUR OWN BUSINESS!

Vending machines BREAKDOWN! If the machine fails to give coffee (10 cents!) you can bet some burley REDNECK is going to turn the machine OVER or kick it until it works. Or gets HIS money back! (The year was about 1957!) Can you imagine 10 cents for a drink?

Unfortunately, the “buddy” grew up in Idaho. HE was the MECHANIC! Got HOMESICK and we haven’t seen HIM since.

Competitor Wants to Buy our Business…..Why?

Why did he want our little business? This guy was in his own drink vending business. HE WANTED OUR MECHANIC! Obviously, buy our business and he would get the mechanic. He had a nice warehouse, his own offices, and was mature in the world of operating a business.

In his office on a Wednesday night about 6 PM we had a meeting. His phone rang. After a few minutes on the phone, he turns around and says I let PRAYER MEETING slip my mind. HE HAD TO GO! A RED FLAG said to us…don’t do it! Something is not right.

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Contracts Can Backfire In Your Face!!

Some years ago, our firm had an employee who was labeled as the MARKETING Manager. Also, the Sales Manager. Obviously, a very IMPORTANT position. YOUNG and ENERGETIC! SINGLE! A real GO-GETTER!! As you might expect, HE got engaged, then married to a NICE GAL. Intelligent. A good businesswoman, too.

Not a bad situation for him. OUR PROBLEM?? His new wife was 3 HOURS away! How can we keep THIS valuable employee? WE had NO BUSINESS in the CITY where he needed to live with his new wife. He wanted to stay in the business and we certainly desired his continued employment with us.

ACTUALLY, he had gone to SCHOOL and LIVED in the city before. An obvious benefit to him and to us. He would have FRIENDS who could be PRIME prospects to become clients/customers. We LICENSED him to do BUSINESS…be HIS OWN BOSS! He was the OWNER of the business. It would give us an introduction into a NEW MARKET. A NEW BEGINNING…. with OUR BLESSING.

We were pleased as punch. EVERYTHING was off to a wonderful beginning. The business came in and grew QUICKLY. He was the PRESIDENT and brought in the business. We gave him BACK-OFFICE support…materials; payroll; billing, etc. We had a LEGAL agreement to provide services on a FEE basis. A good deal for BOTH of us. Our fee was FAR below industry norms. Even then, we REDUCED our fees further when he had difficulty with expenses.

According to industry standards, we had set our LICENSE FEES at a discount in the very beginning. A CONTRACT was WRITTEN and SIGNED! We wanted our former employee to succeed in his new business. It was not our intention to saddle him with unreasonable expenses.

Our Generosity Backfires…

We REDUCED the LICENSE fee WITHOUT changing our AGREEMENT. It seemed like a very generous act on our part. We saw no reason to bother with re-writing the contract. We were giving him a bigger slice of the pie with no strings attached. Not a good idea!

It was a TOUGH lesson for us to learn. We had to PAY THOUSANDS of extra dollars on a BUY BACK formula when we purchased the business from our licensee. In effect we had changed the contract by our action which caused the formula to change on our buy-back agreement.

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BUSINESS TIP: NEVER do anything without YOUR attorney (legal advisor). It seemed so SIMPLE. Kindhearted. FAIR! Legal issues are LEGION. DON’T try to be your own advisor. AVOID TROUBLE WITH GOOD COUNSEL.