The reluctant entrepreneur turning dreams into profits

Table of Contents Cover Title page Copyright page Dedication FOREWORD: IS THIS AN “INSPIRATIONAL” BOOK? ACKNOWLEDGMENTS INTRODUCTION THE REALITY OF CALCULATED RISK THE RELUCTANT ENTREPRENEUR LAUNCHING A SUCCESSFUL BUSINESS TAKES MORE THAN MOTIVATION IT’S OKAY TO BE CAUTIOUS SUCCESS IS NOT A ROLL OF THE DICE AND ONE MORE THING CHAPTER WHAT, EXACTLY, IS A RELUCTANT ENTREPRENEUR? PHILIP KNIGHT’S STORY WHAT WE CAN LEARN FROM THIS HATCHING A BUSINESS WHILE YOU KEEP YOUR DAY JOB THE MYTH OF THE “ENTREPRENEURIAL TYPE” CHAPTER THE FIRST QUESTION YOU MUST BE ABLE TO ANSWER RULE NUMBER ONE OF RELUCTANT ENTREPRENEURSHIP YOUR INITIAL CHALLENGE: GENERATING POSITIVE CASH FLOW EDUCATING YOURSELF ABOUT BUSINESS CHAPTER WHAT IT TAKES TO BE A SUCCESSFUL RELUCTANT ENTREPRENEUR THE RELUCTANT ENTREPRENEUR IS A SMART ENTREPRENEUR THE FOUNDATION OF YOUR BUSINESS: SIX STRATEGIC CHOICES YOU HAVE TO MAKE AT THE VERY BEGINNING IT’S NOT ROCKET SCIENCE CHAPTER HATCHING THE NEW BUSINESS: OVERCOMING FEAR AND TAKING ACTION YOUR FIRST THREE ACTION STEPS HOW DO YOU FIND A MENTOR? PUTTING FEAR ON YOUR SIDE CHAPTER THE MAGIC HAPPENS WHEN YOU HIRE SUPERSTARS RECOGNIZING SUPERSTAR POTENTIAL KNOWING WHAT YOU’RE LOOKING FOR HOW DO YOU FIND THESE PEOPLE? THE CARE AND FEEDING OF A SUPERSTAR HOW TO STRUCTURE A SUPERSTAR ORGANIZATION THE BEST INVESTMENT YOU WILL EVER MAKE CHAPTER MASTERING THE ART OF BUSINESS RELATIONSHIPS THE RELUCTANT ENTREPRENEUR’S GUIDE TO MAKING FRIENDS IN HIGH PLACES 12 WAYS TO GET PEOPLE TO WANT TO DO BUSINESS WITH YOU A SIMPLE TRICK THAT WILL MAKE IMPORTANT PEOPLE WANT TO TALK TO YOU HOW TO GET OTHERS TO TELL YOU THEIR MOST VALUABLE SUCCESS SECRETS— A TECHNIQUE I LEARNED FROM A SELF-MADE MULTIMILLIONAIRE NEVER PASS UP THE OPPORTUNITY TO MAKE A CONNECTION THAT CAN DO YOU SOME GOOD SEEK OUT MUTUALLY-BENEFICIAL PARTNERSHIPS IT DOESN’T TAKE MUCH TO MAINTAIN RELATIONSHIPS WITH ALL YOUR IMPORTANT CONTACTS—EVEN HUNDREDS OF THEM CHAPTER HOW TO BECOME A MARKETING GENIUS EVERY BUSINESS IS ABOUT THE SELLING THE BEAUTY OF DIRECT MARKETING MASTERING THE ART OF PERSUASION THE DIFFERENCE BETWEEN WANTS AND NEEDS THE DIFFERENCE BETWEEN FEATURES AND BENEFITS THE DIFFERENCE BETWEEN BENEFITS AND DEEPER BENEFITS THE USP: MAKING YOUR PRODUCT STAND OUT FROM THE COMPETITION HOW TO USE YOUR USP TO CREATE A SUCCESSFUL ADVERTISING CAMPAIGN RESIST THE URGE TO TRY SOMETHING COMPLETELY DIFFERENT SHORT-TERM RESULTS VERSUS LONG-TERM PROFITS CHAPTER MAINTAINING CONTROL OF YOUR GROWING BUSINESS PUSHING HARD FOR PROFITS YOU CAN NEVER, EVER STOP PUSHING ON EVERY SINGLE FRONT HOW MUCH OF YOUR PROFITS SHOULD GO INTO YOUR POCKET—AND HOW MUCH SHOULD GO BACK INTO YOUR BUSINESS? WHY YOU SHOULD IGNORE THE “EXPERTS” AND DETERMINE YOUR OWN COMPENSATION CREATE A CULTURE THAT RESPECTS MONEY KEEP YOUR EYE ON THE NUMBERS NEVER LOSE YOUR COMPETITIVE EDGE HOW TIFFANY & CO LOST THEIR EDGE— AND FOUND IT AGAIN SET HIGH STANDARDS FOR CUSTOMER SERVICE—AND MAKE SURE THEY STAY HIGH A SUCCESS TRAP YOU DON’T HAVE TO FALL INTO CHAPTER LEADERSHIP: KEEPING YOUR VISION ALIVE EFFECTIVE LEADERS MOTIVATE OTHERS TO DO GREAT WORK EFFECTIVE LEADERS FOCUS ON WORK, NOT POLITICS EFFECTIVE LEADERS UNDERSTAND THAT COMPETITION HAS ITS PLACE IN BUSINESS, BUT IT IS NOT NEARLY AS IMPORTANT AS COOPERATION AND SHARING EFFECTIVE LEADERS CARE ABOUT THEIR CUSTOMERS EFFECTIVE LEADERS MAKE FAST DECISIONS EFFECTIVE LEADERS KNOW HOW TO GET SUPPORT FOR THEIR IDEAS EFFECTIVE LEADERS KNOW HOW TO DELEGATE EFFECTIVE LEADERS DO NOT MICROMANAGE EFFECTIVE LEADERS CREATE A CULTURE OF ACCOUNTABILITY EFFECTIVE LEADERS UNDERSTAND THAT TEAMWORK DOESN’T ALWAYS WORK EFFECTIVE LEADERS ARE GOOD COMMUNICATORS EFFECTIVE LEADERS MAKE EVERY MEETING WORK FOR THEM EFFECTIVE LEADERS KNOW HOW TO NEGOTIATE EFFECTIVE LEADERS ARE CONSIDERATE EFFECTIVE LEADERS DON’T BECOME BUDDIES WITH THEIR EMPLOYEES EFFECTIVE LEADERS SOMETIMES ZIG WHEN OTHERS ZAG CHAPTER 10 BUILD YOUR BUSINESS LIKE A GO-CART BUILDING THE GO-CART, STEP BY STEP CONCLUSION APPENDIX DO YOU NEED THE MINDSET OF A CHAMPION TO SUCCEED IN BUSINESS? HOW TO USE HUMOR IN BUSINESS MUST YOU BE CUTTHROAT TO SUCCEED IN BUSINESS? THE UNEXPECTED SIDE EFFECTS OF MAKING MONEY (AND HOW TO AVOID THEM) THE TIME-MANAGEMENT SYSTEM THAT WORKS FOR ME ABOUT THE AUTHOR INDEX Copyright © 2012 by Michael Masterson All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993, or fax (317) 572-4002 Wiley also publishes its books in a variety of electronic formats Some content that appears in print may not be available in electronic books For more information about Wiley products, visit our web site at www.wiley.com Library of Congress Cataloging-in-Publication Data: Masterson, Michael, 1950The reluctant entrepreneur : turning dreams into profits / Michael Masterson p cm – (Agora series ; 73) Includes index ISBN 978-1-118-17844-7 (hardback); ISBN 978-1-118-22727-5 (ebk); ISBN 978-1-118-24021-2 (ebk); ISBN 978-1-118-26492-8 (ebk) Entrepreneurship New business enterprises–Management Small business– Management I Title HB615.M3723 2012 658.1'1–dc23 2012004737 it affords your employees Cherish the unsolicited testimonials you get from your customers, your vendors, and your subcontractors Enjoy the thought that one day you may be able to hand over your business to a child or grandchild or a protégé you care about See money for what it is—a neutral indicator of how good your business is at doing what it does, at fulfilling the promises it makes and keeping its customers engaged If the value you provide is worth the money you get for it, people will buy what you’re selling The better the value you give, the more money you will get “Time is money.” —Benjamin Franklin THE TIME-MANAGEMENT SYSTEM THAT WORKS FOR ME My business life got much better when I started to focus on long-term profitability and quality But I wasn’t able to master my time and get all my personal goals accomplished until I started writing about personal achievement That forced me to rethink everything I was doing And after several years of trying different time-management programs, I finally arrived at a system that allowed me to get everything done that I had neglected for the previous 30 years The first big breakthrough came when I accepted the fact that I had to manage my time Until I did that, I insisted I could just fine by working late at night and expecting everyone around me to keep up with me and clean up the mess I made along the way But when I began to set goals and methodically work on them, I discovered how much time I had been wasting I was able to double my productivity in a matter of months The next big breakthrough came when I recognized the importance of prioritizing my goals I developed a system—borrowed from various experts—that made a huge difference in what I could accomplish I tweaked this system every chance I got, and it seemed to keep getting better It evolved into the system I still use to this day Let’s say your main goal for the year is to get a business started Here’s how my system can help you that … Step One: You begin by breaking your yearly goal into 12 manageable, bite-sized monthly goals In this case, you would determine what you need to each month to get your business up and running, from doing the initial research to the grand opening Step Two: You break each of those 12 monthly goals into four weekly objectives For instance, if your first monthly goal in getting a new business started is to identify a good business opportunity, perhaps each of your four weekly goals would be to research at least 10 possibilities Step Three: You work your way down to the action you will take each day to fulfill your weekly objective If you have made a commitment to research 10 business opportunities each week, that means one of the top priorities on your daily to-do list would be to research two possibilities Expect to spend one full day planning out your year Once a month, you’ll sit down for two or three hours to map out your goals for the next four weeks Once a week, you’ll spend one hour establishing your goals for the next seven days And you’ll spend about 10 or 15 minutes each morning organizing your day Daily Planning: Getting the Most From Every Minute There is no better time to collect your thoughts, review your goals, determine your current responsibilities, and plan your day than early in the morning when everything around you is quiet and still This is the early morning routine that I recommend: Get Your Inputs (5 to 10 Minutes) I start the day by scanning my daily task list, which I have written the night before If for some reason I haven’t prepared a task list, I it then, based on my weekly list of objectives I then scan my emails, not responding to anything but noting responses that will need to be made and putting some of them down on my daily task list I the same with the in-box that sits on my desk Finally, I retrieve any phone messages—and if one of them requires action, I make a note of it on my daily task list I make it a point not to any work at that point (e.g., send out a quick e-mail response or return a phone message) because I know if I I’ll get bogged down in a lot of small stuff Instead, I devote this input time to finalizing my daily task list Sort and Prioritize (5 to 10 Minutes) Now comes the fun part For each task on my daily to-do list, I indicate the approximate amount of time I expect it will take to complete it I always try to be realistic in my estimations of time required Over the years, I’ve trained myself to be very conservative As a general rule, I break up tasks into 15-, 30-, 45-minute, and 1-hour increments But every once in a while I allow myself two or two and a half hours for a single task I like to prioritize my tasks in terms of their importance and urgency This idea is based on the quadrant developed by Stephen Covey in his bestselling book The Habits of Highly Effective People He identifies tasks as being either (1) Important and Urgent, (2) Important but Not Urgent, (3) Unimportant but Urgent, or (4) Unimportant and Not Urgent If we work with this idea, your daily schedule should be focused mainly on (1) and (2) tasks, because these require immediate attention or will advance you toward your ultimate goals Your schedule should contain a diminishing number of (3) tasks (since they indicate that you are not in control of your schedule), and no (4) tasks at all Start with Something Really Important (15 to 60 Minutes) Doing an important task right off the bat gives me an immediate sense of accomplishment that fills me with energy that fuels my work for the rest of the day I like to make it a non-urgent task, because these are usually the tasks that make the biggest long-term differences—and because they are not urgent, they tend to get overlooked This is how I establish my goals, focus my objectives, and set daily tasks It is not, by any means, an entirely original system It is a patchwork of systems that have been developed by others and added to by me But there is something about this particular system that seems to work very well for everyone I have convinced to try it I encourage you to try it too ABOUT THE AUTHOR Michael Masterson is not your typical businessman A former Peace Corps volunteer, he never took a class in business, rarely reads the business press, and doesn’t like to talk business But he has played an integral role in dozens of successful businesses—public and private, service- and productoriented, local and international As the primary growth strategist for one of those businesses (a former competitor), he helped grow its revenues from $8 million to more than $500 million Another exceeded the $350 million mark Eight more have grown to $10 million plus Masterson’s entrepreneurial experience is immense, even compared to other successful entrepreneurs He has owned restaurants, bars, nightclubs, and art galleries At one time or another, he has been in businesses as diverse as information publishing, investment advisories, health and nutrition, sports and fitness, public relations, career advancement, and real estate He has written more than a dozen business books Several of them were New York Times and Wall Street Journal bestsellers He has also been a regular contributor to Early to Rise, the Internet’s most popular self-improvement newsletter; M, an e-zine on entrepreneurship; and Michael Masterson’s Journal, which reached more than 900,000 readers These days, he consults for a handful of private clients and writes for The Palm Beach Letter, a newsletter for individual investors INDEX The Habits of Highly Effective People A accountability, culture of accounts payable advertising campaign, Unique Selling Proposition and advice African Business & Trade Agassi, Andre agenda Ali, Muhammad Amazon.com American Writers & Artists Inc angel investors Apple apprenticeship art gallery Ash, Mary Kay authority AWAI See American Writers & Artists Inc B balance sheet bandwagon, jumping on Barnard (The furniture shop owner) Ben and Jerry’s benefits deeper benefits versus features versus Bezos, Jeff Bloomberg, Michael Blue Ribbon Sports Bonaparte, Napoleon Bonner, Bill Boothman, Nicholas Borders Books Borders, Louis bottom-line goal Bowerman, Bill Breakthrough Advertising Buffett, Warren build on what you know business owner would-be successful business plan, foundation of business relationships getting more from maintaining rewards of business success cutthroat and mindset and business bad reasons to start own day job and educating self about financing foundation of launching learning starting success ten commandments of use of humor in C calculated risk Caples, John career-building contacts, making Carnegie, Andrew Carnegie, Dale Carson, Johnny cash cash flow, generating caution Chamber of Commerce champion, mindset of Changing the Channel charisma Cialdini, Robert Clinton, Bill Cohen, Ben communicators, leaders as compensation CEO determining own competition, cooperation versus competitive edge conceit of outside knowledge Confucius connections, making consideration control, maintaining cooperation, competition versus copy, marketing Covey, Stephen Crazy Dave Crosby, John C customer standards, setting high standards for customers respect for cutthroat, business success and D daily planning David, Larry day job starting a business and when to quit deadlock decisions, fast deeper benefits, benefits versus delegation Dell Demosthenes design, finalizing development, product differences, value-creating direct marketing Disney, Walt Disraeli, Benjamin Donatello Drucker, Peter F durable competitive advantage E Ellis, John employee-employer relationship employees, as investments entrepreneurial type, myth Esther’s Health Soup F fear, using features, benefits versus feedback Ferriss, Tim financing the business flattery Florida Atlantic University The Four Hour Work Week Fox, Jeffrey F Franklin, Benjamin G gambling Gates, Bill GE goal, bottom-line Godin, Seth Goldstein, Noah Google Greenfield, Jerry H Hahn, Fred E Hefner, Hugh Hightower, Jim Holmes, Oliver Wendell Hopkins, Claude How to Become a Rainmaker How to Make People Like You How to Make Your Advertising Make Money Huizenga, Wayne humor, using in business I Iacocca, Lee ideas generating support for selling to your organization If You’re Clueless About Starting Your Own Business Influence: The Psychology of Persuasion inspire J job, when to quit Johnson, Jeff Jordan, Michael journeyman K Kiam, Victor Kiyosaki, Robert Knight, Philip Kroc, Ray L Lastman, Pieter leadership The Leap learning the business Leno, Jay Letterman, David long-term profits, short-term results versus M Marden, Orison Swett marketing copy, writing marketing direct product Martin, Steve J Mary Kay Cosmetics master communicators master-in-training Maugham, W Somerset McDonald’s McKinley, Liz meetings Mellon, Andrew W mentor mentor, finding Metro, Marty Michelangelo micromanaging Microsoft money respecting side effects of making motivate motivating others, leaders mutually-beneficial partnerships, seeking N National Venture Capital Association needs, wants versus negotiation networking Nicholas, Ted Nike novice O O’Connor’s Pub offer, picking Ogilvy on Advertising Ogilvy, David online publishing OPM See other people’s money Optimum Selling Strategy (OSS) OSS See Optimum Selling Strategy other people’s money others, learning from outside knowledge, conceit of overwork own business, bad reasons to start owners, successful P partnerships, mutually beneficial pay, CEO Peace Corps persistence personal encounters, making count persuasion, mastering art of Pinnacle Petroleum politics, work versus Portland State University positive cash flow, generating product development product adding value to finding the right one to sell marketing profit statements profits reinvesting results versus R Ready, Fire, Aim Ready, Fire, Aim relationships employee-employer maintaining reluctant entrepreneur Rembrandt results, profits versus Rich Dad, Poor Dad Ridicule right product, finding to sell risk, reality of Robbins, Tony Rockefeller, John D Rosten, Leo C S Schwartz, Eugene M Scientific Advertising SCORE Seinfeld, Jerry selling Seven Years to Seven Figures sharing, competition versus short-term results, long-term profits versus side business day job and success side effects of making money Six Degrees of Separation Small Business Administration Smith, Rick stalemate Starbucks starting business, day job and Stern, Howard success trap success learning from others side business and successful business, launching superstar organization, structuring superstar potential, recognizing superstars finding motivating Swinmurn, Nick T T-Bone teamwork temper, controlling ten commandments of business Tested Advertising Methods Tiffany & Co Tiger brand shoes time management time-management system trade journals trade shows Tribby, MaryEllen Trump, Donald U U.S Small Business Administration Unique Selling Proposition (USP) advertising campaign and University of Oregon urgency, sense of UsedCardboardBoxes.com using fear USP See Unique Selling Proposition V value-creating differences value, adding to product venture capitalists Venture, Ken von Goethe, Johann Wolfgang W wants, needs versus Waste Management Webvan Welch, Jack White, Hugh Whole Foods Market Williams, Serena Williams, Venus Winfrey, Oprah Woods, Tiger work ethic work, politics versus worst-case scenario Y Yes! 50 Scientifically Proven Ways to be Persuasive Z Zappos ... capitalists, they pursued their dreams Only after their businesses were up and running did they gradually take on investors These were smart, sensible people who believed in what they were doing They... who don’t have the guts to quit their day jobs and risk their futures, no matter how excited they are about their business ideas In other words, it was written for reluctant entrepreneurs” like... interested in the concept He had six basic questions for me I’ll go over them here because it presents the big picture Then, we’ll get into the details One: What Does Being a Reluctant Entrepreneur