Start a successful business
Introduction
Each week I am going to write a short article that may help you start a business. It will include everything from defining a business opportunity to raising funds to hiring lawyers, doing marketing, improving products, inventing solutions, patents, internet marketing, selling to retailers and much, much more.
The idea is to make it entertaining and worthwhile for you.
Tip 1 - The first rule
"The person who gets the farthest is generally the one who is willing to do and dare. The sure-thing boat never gets far from shore." ~ Dale Carnegie
The first rule is that in order to succeed you may have to do a lot of things that you may not like to do. It's like doing the dishes: when it's all said and done you have to put your hand into the dirty icky water to clean out the gross sink drainer in order to clean it. Yuk! If you don't do it you wouldn't have finished the job successfully. So if you want to start a business you must first decide that you are prepared to do what ever it takes, no matter how much you don't like it, in order to do the job well.
It is a myth that if you "invent a better mouse trap" the world will beat a path to your door (Ralph Waldo Emerson). I do not know of a single invention or entrepreneur where success has happened without considerable effort.
So in order to ask the question "can you" and "should you" try to start a business, the question you must ask yourself is are you willing to do what ever it takes. This could mean very long hours, tremendous stress, multiple mistakes and set-backs, criticism from others, confusion, yucky tasks and a lot of what I call "potholes".
Sometimes you can drive around them but other times you're not going to be able to avoid them or you won't see them and you're going to hit them head on, get a flat tire and bump your head. What you must ask yourself is can you fix the tire, scratch your head and drive on?
Some of my most painful startup moments were the result of the failure of my judgment or lack of effort or hitting potholes. One thing is certain, if you start a business, you WILL hit potholes. In large part, your success or failure will be determined by your attitude and how you deal with those potholes. Laughter and smiling is a really good idea because it puts things in perspective so that you can move forward.
Thoreau once said if he had to live his life over again he would make more mistakes. He meant that mistakes are a great way to learn. If you learn from your mistakes then you won't repeat them. So, in your decision to start a business, you have to appreciate that you will make mistakes and hit potholes. Only you know if you have the fortitude and determination to succeed.
Tip 2 - Assess if a business will succeed
How to assess if a business will succeed or fail? These days, Wall Street financiers and bankers are considered the most depraved class of business society partly because they gamble on stocks, bonds, mortgages and currencies using other people money. They don't hold a candle to "Vulture Capitalists" who are almost legendary and comical in their incompetence and depravity.
VC's spend their time reading business plans, meeting with new business entrepreneurs and deciding if the business will be successful or not. You would think that with all their work they would be successful in most of the businesses they select. In fact they did an experiment pitting the top 100 VC's against randomness theory and randomness theory made better investments. In other words you would make more money tossing a coin to decide on an investment then listening to a VC.
So, if " professionals" can't choose potential successful from unsuccessful companies how can you? The answer-Common Sense----- which according to Henry Thoreau is "the least common of the senses".
Common sense is how we try to live. We try to not do things that don't make sense for most of the time. Occasionally we all have bouts of goofiness and make dumb decisions but MOST of the time we are guided by our common sense.
When you start a business you need 2 things in your mental arsenal-commonsense and truth. If a project doesn't make sense to you it likely won't make sense to others.
In order to know if it makes sense, you must research the truth about the business.
Find out everything you can. Learn from competitors and see what they do right and wrong. Read and research everything about the industry, the competition, and every bit of information you can find from every possible resource. Start by setting up a Google alerts account on your computer. You simply input the subject and they alert you to new information about it.
Truth can be your best ally or worst enemy. Once you do the research, really examine it. If someone has a better, less expensive product, face that reality and move on or improve your product. If you don't face it then you will likely fail and waste a lot of your life and resources.
Next week-where to find new business opportunities.
All the best,
Andrew Martin
Tip 3 - Where to find business opportunities.
When I was a teenager or in college I never could have guessed I would have one day made millions in the food industry. I wasn't eve particularly interested in food nor sales nor any aspect of the industry and knew less.
I always wanted to be an inventor. Invent something, make a lot of money and help others. Pretty simple.
I actually did invent a " Better mousetrap" literally a better mousetrap. It was called the safety set mousetrap and couldn't snap on your hands. From that I invented all sorts of things, none made money, but I loved trying.
For one of my inventions I had to buy a popcorn machine. The next thing I knew I was out of the invention business and into Popcorn. Knew nothing about the snack industry but learned fast. The point I am trying to make is that you never know what opportunity lies around the corner.
The one common element of a good opportunity is that it is usually better than the competitors. So look at any product or service and think how it can be improved. One fun place to go is the inventor's fairs. You will see some really good and not so good inventions that may or may not succeed. One might excite you so much that you decide to work with the inventor and help their business. Trade shows are where you will find hundreds of opportunities and see what is already out there and what is doing well or not.
The natural food show is one of my favorites now because you can wander around, eat and see what new foods are being invented.
On a grander scale I am Chairman of a team that monitors Sovereign Wealth funds of countries like China and the mid eastern countries in order to influence them to invest in good things for humanity rather than bad. This involves a pretty fair understanding of Geopolitics. I found and created this opportunity through research. I wanted to know how to encourage countries to help rather than hurt others.
You can find opportunities by defining what opportunity you want. In California it is called Manifesting your Dream. For the rest of us simple folk, it is simply identifying what interests you.
Think about what you are really interested in and you will find opportunities when you research that interest. More importantly you will have found an opportunity that you will enjoy and is of interest.
All the best,
Andrew Martin
Tip 4 - Cash flow
My second wife started a farm business that was based on raising sheep and cattle. She was a vegetarian, but that changed. It is a large farm with hundreds of animals and 700 acres and multiple crops like grains, fruits, vegetables, hay and much more. I believe a farm is the toughest business I have ever seen. The weather alone can ruin a crop.
She loves farming and being outside and doing anything but " book work". So she kicked and screamed whenever she had to do "cash flows". Well guess what? Now she loves them. Before she worried as she never knew how much money she had or made or was spending on what. Every month was scary, as she couldn't predict anything. Well, a cash flow is a way you can predict the future and make arrangements beforehand so you don't get whacked.
Every student, business and entrepreneur has told me the same thing-learning how to do a cash flow was the absolutely most important thing they knew. If you don't do them you should not be in business, that simple.
A cash flow is simply a spread sheet with the months across the top from today until 12 months from today. Then you list down the left side ALL of the REVENUES you estimate you may make in the 12 months and put the amounts under the appropriate month. So if you are growing corn or selling tires and you expect to make $100 REVENUES in April then put $100 under April. Revenues are the same as gross receipts which means the amount you are going to actually be paid.
EXPENSES: Now you list below your REVENUES, each and every expense you expect for each month. So if you expect to have to pay a light bill for $40 in April then put $40 under April in the expense.
Month 1 2 3 4 5 6 7 8 9 10 11 12
Revenue $100
Expense $40
Balance $60
Some months you may have a negative balance and some months you may have positive. Once you do this on a weekly basis your predictions will become more and more accurate. Maybe the light bill was $35 not $40. So now you make your future light bills $35 in the cash flow.
Cash flows show you where your money is going and where to research how you can reduce expenses or increase revenues. It takes about 2 hours a week of serious thinking and analyzing the numbers to see what they tell you.
I can say without hesitation-if you do not do this each week IT IS ALMOST CERTAIN YOUR BUSINESS WILL FAIL.
Next week is about raising money
All the best,
Andrew Martin
Tip 5 - HAPPY NEW YEAR!
Dear friends,
To start off the new year, we would like to hear from you.
Send us a question that you have in regards to STARTING A BUSINESS.
I look forward to offering further tips over the next weeks that simultaneously provide possible solutions to questions that you may have.
Send your question to tips@commonkindness.com
All the best,
Andrew Martin
Tip 6 - Raising money - "friends and family"
This is a major topic for new companies and there are a thousand ideas to be helpful to you. I will start with a story about CommonKindness.com (CK). This company is funded by a handful of people who are really special individuals. Each of them saw the vision of the business and invested time and funds because they believe in the idea. I am honored that they invested and am proud of the people involved in CK.
Most new businesses start with funds from "friends and family". The history of business is full of successful and unsuccessful companies that were funded by friends and family. They are my favorite ones to invest in because entrepreneurs are very diligent about their business when their mom's retirement funds are invested.
My mother invested in Smartfood and did everything she could to make it successful but also made sure her rolling pin was in plain sight in case I got lazy. It is very inspiring to have friends and family demonstrate their support by investing.
The idea of asking people for money is hard for some people. It should be hard as money is hard to come by and is a responsibility. If you accept someone's money it is wise to make sure they and you are happy with the terms. There are many ways to design a deal for investors. The simplest is to borrow it and give an interest rate you pay each year for x years and shares of the company. This way they get paid back their investment plus interest and get some reward when the shares become valuable. Besides, a mad momma is not a good business decision!
Tip 7 - Approaching professional investors
I believe a key to dealing with professional investors is to try and understand what they are seeking.
Ethical investors: Fortunately there are a lot of good people out there and these include investors. These are people who take pride in things like true friendships and relationships and kindness and fairness, honesty and character. How do you find them? The least obvious answer is ---- you'll never guess---yep---lawyers and accountants. They have many clients, and if someone has a lawyer or accountant they may have funds to invest. If someone is recommended by your lawyer or accountant, you listen. Now most lawyers and accountants are reluctant to give a stranger an introduction to a client---unless----you really have an investment that is worth their time.
So, how do you find the right lawyer or accountant? Think a little and do some research. Most law firms list their clients. If you have a better mousetrap you want to go to a lawyer who represents mousetrap companies. It's that simple. That lawyer will best be able to know if your mousetrap is of value or not. They likely know their clients in the mousetrap industry.
This is a true story. You can look it up in the Christian Science Monitor from I think it was 1978 or thereabouts. I actually invented a better mousetrap called the "safety set" mousetrap and it was safer! Darn good design and invention but---- the market for mousetraps was dominated by one company and they told me to eat cheese. BUT-through the process I met a great lawyer.
All the best,
Andrew Martin
Tip 8 - Other investors
Some of the best potential investors are ones who will benefit from you business. When I started Smartfood we went to the guys who would be our distributors and asked them to invest. We explained that as Smartfood grew they would benefit financially and be part of the company. We added the lead distributor to our board.
Later we offered shares to the suppliers of the popcorn, cheese, our bankers, their friends and their friends, friends, friends. It is amazing who people know. Every investors has friends or relatives. If you simply ask everyone you know who they know and so on you will eventually find investors.
Associations are another good place to look. There are hundreds of consultants who will offer to raise funds for you and then charge you fees, usually upfront and even if they raise no funds. If you are silly enough to fall for that scam then you should not be in business. There are however reputable associations for every industry. Even the Pretzel industry has an association of pretzel bakers. I know, I spoke at their convention of 40 people. Two people became friends and 2 more referred me to valuable business contacts.
All the best,
Andrew Martin
Next tip coming soon!
