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.

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.

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.

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.

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.

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.

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.

Many people ask: Can you start an online business to make money? A better question would be: Can you start an online business that will be profitable? Starting an online business requires patience, skill, knowledge, and belief in your ability to succeed.

Yes, it’s easier and cheaper to start an online Internet business, than a brick and mortar business. Yes, your online business will be available 24 hours a day, 7 days a week, 365 days a year (24x7x365). Yes, millions of people, around the world, will be able to access your web site. Yes, you can make a lot of money on the Internet.

Unfortunately, “If you build it, they will come” worked fine in the 1989 film “Field of Dreams”, but it will not work on the Internet without effort and dedication.

Many people assume that it is too late to start an online business, that the Internet is too competitive, all the good products and services are taken, and the skills required to succeed are too difficult to learn. These assumptions are false. Learning how to start a profitable Internet Business doesn’t have to be complicated. If you can use email and navigate the Internet you can learn basic Internet marketing skills, concepts and techniques.

If you have an idea for an Internet business, Cire Web Site Design & Hosting can help you turn your dream into a reality. They have have been in business since 1996. Cire offers affordable web site design and hosting. They will help you choose and obtain an appropriate Internet domain name for your online business.

Unlike other web design companies, Cire cares about the success of your Internet business. The knowledge, expertise and marketing experience they possess can turn your idea into a profit maker. They will show you how to get visitors to your web site, how to get listed on the major search engines, how to improve your search engine rankings, how to inexpensively accept online payments, and most importantly how to be successful with your Internet business.

Remember, this is your online business and you have to treat it as such. No one is going to do the work for you. If you think an Internet business is self sufficient or that you don’t have to put any work into it, you are wrong. It may take many months before you begin to see a profit for your efforts, but if you devote the time, money and energy into building your online business, you will succeed in reaching your goals.

This blog is dedicated to providing the knowledge to succeed and to turn your dream of a profitable online business into a reality.

Things you may not expect USUALLY HAPPEN! Here’s what happened to a good friend of mine several years ago. Timing doesn’t matter, it could happen TODAY.

My friend went out of town on vacation. Upon his return, he discovered that his “PARTNERS” had signed a MAJOR contract to PURCHASE an expensive computer system WITHOUT even consulting with him.

This is why your AGREEMENTS are so IMPORTANT and MUST be in WRITING! My point is…this can happen to you unless your LEGAL advisor has PROTECTED your best interest in the business. You DO NOT want someone making decisions for you when it is YOUR money at RISK. Even more serious is being on the hook for any borrowed funds from your banker.

Small business owners usually sign PERSONAL guarantees with their banker, which means everything YOU own backs up the company debt. Your % ownership is NOT CONSIDERED unless your legal counsel has protected YOU!

It is a MAJOR decision on your part, just as it has been in my case, to be involved with diverse ownership of your business. You could own 8%, 10% of the firm, however, if YOU sign personal guarantees for the debt of the company then you are backing up 100% of the debt, not just the 8% or 10% based on your ownership.

This is very important for you to understand in your business dealings. Do not THINK these personal guarantees don’t hold “water”. Heaven forbid, but IF your business fails and you (your company) owe the bank money, YOUR FRIENDLY BANKER changes his/her personality.

He now becomes your friendly COLLECTOR and demands full payment (immediately!). It is an amazing sight to see. But, you will not be a happy camper with this new person you are about to find on your doorstep.

Keep in mind, the bank will go after the most LIQUID ASSETS owned by you and/or the other partners. Or the easiest property to sell and convert to CASH. It makes no difference to the banker (now collector) who the fortunate one is to cough up the assets or cash from PERSONAL assets.

The bank expects to be PAID. The bank has ONE concern. Protecting their client’s (customer’s) money. You are facing tough times, yet you agreed to hold them harmless by backing up your loan with personal assets.

With good legal advice, you may be able to limit your liability to the % of stock owned rather than to the whole amount owed. You must put this in place as part of your agreement with the bank at the beginning, not after things go sour.

Obviously, NO PERSONAL GUARANTEES is the best deal of all for YOU! Seek your funds from different sources and try to find a bank that will NOT require a personal endorsement. You have served your firm well when you accomplish this goal.

BUSINESS TIP: Let your legal advisor guide you in everything you do; every paper you sign; every decision you make in business. PROTECT the INTEREST of YOUR LOVED ONES!! Do not think, NOTHING can go wrong!! Hire the VERY BEST COUNSEL. OWN 51% of the Stock in your company. THINK long and hard BEFORE accepting any less. Consider all the options available to you

If you are just starting your own business, great! If you already have a business, GREAT!! It really does not matter what stage you are currently facing. You MUST have one GOAL in mind when you begin a business.

BUILD YOUR BUSINESS TO SELL!!!

This is the ONLY good reason to start or run your own business. An ideal plan is to set yourself up to sell out and start over every 5 years until you reach the ultimate goal to RETIRE. Obviously, this is not an easy thing to do, but it certainly is a great goal to set into your business plan. Hopefully, you won’t have to face a recession every 5 to 6 years as we did in our 40 plus years business life.

What is EBITDA?? This is a formula that plays into how much you can expect someone to pay for your business in the future. Code: E = earnings; B = before; I = interest; T = taxes; D = depreciation; and the A = amortization. It says, what are your EARNINGS BEFORE INTEREST / TAXES / DEPRECIATION / and AMORTIZATION.

What is your Cash Flow? Your Receivables? Sales Dollars? Expenses? Any buyer will want to know answers to these questions. Plus many more in deciding if they want to buy your business. Another major concern is…who are your customers/clients? How many? Volume of annual business with each? Loyalty to your firm? Will you stay and run the business for the new buyer? Will you carry the note or do you require all cash? Part cash/part stock in a public firm?

You need to know that a publicly traded firm (stock on one of the exchanges) can and will (most likely) pay more for your business than a private suitor. It never hurts to let both private and public firms make you an offer to buy, as you have no way of knowing WHY anybody wants your firm. Everyone will have a different reason based on their future goals and plans in the marketplace.

Just understand NOBODY will love the company like you do today. It’s your BABY. You have raised it from infancy and your life BLOOD / SWEAT and TEARS are all tied up in YOUR value but NOT in the way a buyer will see it. Don’t get your feelings hurt in the process if you really want to sell your business

BUSINESS TIP: A smart business person BUILDS his / her business with ONE GOAL in mind – to turn their effort into VALUE $$$ for a BUYER. NEVER sell to the 1st buyer! Create an AUCTION. People buy a business for reasons YOU may never understand. NOT important! HIRE YOURSELF A DEAL MAKER!!

Obviously, all of us would quickly say YES! Such a dumb question for someone to ask us! I didn’t ask the question to make any of us look dumb, but to get our thoughts on the right track.

Certainly, we want success in all areas of life. My suggestion is that you select outstanding advisors to help you when faced with tough decisions in every area you face, particularly where you are about to make big decisions without knowledge or experience.

We are primarily concerned about business decisions in these discussions; however, some of us go into business the same way we go into marriage…no experience…no training…no education…poor role models …and then we are expected to bring happiness to another person to whom we are now married.

Usually, we try to do this by changing the other person into what we think they should be, while they are trying to do the same to us. It does not work! Most of us will never change! We don’t want to change for one thing and if we did, it would already be done.

ADVISORS are extremely important. You must have them to be successful. There are 4 important Persons you need to select BEFORE you begin your business:

LAWYER ACCOUNTANT BANKER INSURER