Category Archives: business

Announcing Entrescape Online

There are a thousand good reasons to start your own business.  You may want more toys, need to build a college fund, or want to pay off debt.  You may just want to do it for the pure joy of accomplishment.  All are good reasons, but probably the best is to prepare for an uncertain future.  Rapidly changing technology can make your job obsolete almost overnight.  Companies gain and lose by the decisions of their leaders, which may not always be competent or have your best interests at heart. Last, the government has taken a radical lurch toward socialism.  Higher taxes for jobholders are a near-certainty.  Some predict consequences even more dire.

Some people I talk to think this is the time to hunker down.  I disagree.  Being frugal is fine, as far as it goes.  Investing your money is probably wiser than that jet ski right now, unless you make money riding a jet ski. Buying a used car makes sense, as does shopping around for the best deal on life’s other necessities.  None of these will save you, though, when income from your job stops coming in.

I think that this is the time to become an entrepreneur.  Forget the stereotype of the steely-jawed hero, silk scarf fluttering in the breeze or the socially-inept genius who invents the next Big Thing.  Think more in terms of the regular person, like you and me, who knows how to do some things better than other people do.  Ones who may want to hang on to that job while they build a side-stream of income.

Where to start?  Learning, that is where.  My dream is to help people who want to build a business learn how to do so easily and affordably.  Entrescape now offers a course in fundamentals for entrepreneurs.  More are being created and will be available over the coming months.  There is also a free guest login to the Entrescape community, where we will be providing a forum for questions and free limited access to course materials.  Visit us at entrescape.com and release your entrepreneurial spirit.

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The Greatest Risk of All

Risk is a funny thing.  We all seem to have a different idea of what things are risky.  When I took flying lessons, the Cessna 152 my instructor rented happened to be stressed for aerobatics.  I have never done anything quite as much fun as learning cloverleafs, barrel rolls, and loops.  Not once did I ever feel in danger.  Most people I talk to say they would have been petrified.

You know what scares me the most these days?  The idea that I might quit taking risks.  I have blown out a knee in a martial arts tournament at the age of 45, gone broke (twice), and gotten pounded in my first real estate deal.  I have accepted a job offer only to discover that the people who hired me were liars and thieves.  For heavens sake, Noel, would you just STOP IT?  Stay home for a while and make a cup of tea.  It’ll do you good.

No thanks.

My forays are nothing compared to many people.  Adventurers, great entrepreneurs, and free-spirited thinkers abound.  So do the timid–those whose idea of risk is renting a movie they may not like.  Staying huddled up in our jobs seems safe.  I have to admit that there have been times when I wanted to crawl under the bed, especially when that little voice said, “You idiot.  What on Earth made you think THAT was a good idea?”  It didn’t help that most of the people I knew agreed.

Ironically, being safe is the greatest risk of all.  Take some risks.  I don’t mean foolish risks–drunk driving is stupid no matter how you dress it up.  Car surfing, too.  (Watch Dr. G. Medical Examiner sometime on the Discovery Channel for a view into the aftermath of that kind of thing.)  Sinking all your money into an investment you do not understand also qualifies.

Flying upside down is dumb–unless you know what you are doing.  Then it is fun.  Know what else?  Flying upside down, stalling the plane out, and getting into a spin on purpose gets you ready for an emergency in which that happens for real.  Relying on a job as your sole means of income may seem safe, but that strategy may be the riskiest of all.  Get yourself in tight situations intentionally.  Make some mistakes “on purpose” and learn how to deal with them before you have to.  You’ll be glad you did.

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Terry would probably agree to go ahead and cross over J

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Double Your Money in Seven Days!

I have a challenge for you.

I want you to open a business.  Not a big one, just a little one.  In fact, I want you to invest no more than $100 in it.  Run it for seven days with the goal of doubling your money.  That’s right.  At the end, you should have $200 in your pocket.

No need to get fancy–just pick out something you like to do and figure out how to make money doing it.  You may perform a service (probably best if it is legal), make something to sell, or buy something and resell it.  Write down on a piece of paper each transaction–when you spend money and when you make money.

When you are done, and hopefully a tiny bit more wealthy, write your story in a comment.  I want readers to know that within each of us is an entrepreneur waiting to sprout.

_____________________

Terry

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Pension? What Pension?

I read something interesting yesterday in the Wall Street Journal.  Turns out that states are facing a $1 trillion gap between the money they have promised pensioners and the money they have set aside to pay them.  That does not count the massive investment losses they faced in the second half of 2008, from which they have not recovered.

Did I say “interesting?”  Let’s try “criminal.”  I, for one, have not believed states would be able to pay pensions for some time now.  Some third-grade math was all it took.  The zeros were a little hard to manage until I saw this neat little analogy on the national debt clock web site.  If you were to spend a dollar a second, it would take 12 days to spend a million dollars.  Now, how much time would it take to spend a trillion?  (I’ll wait for you while you calculate this.)

Back?  OK.  The first thing you found out was that your calculator does not work with that many digits.  If you are math-compulsive, you got out a piece of paper and started to work.  If not, you waited for my answer: 32,000.

YEARS!

In other words, don’t wait for that gap to be filled.  Ain’t gonna happen.  Here’s why.  If states start to go bankrupt, something that was unthinkable until now, the money obviously will not be there.  But the Feds!  They can save us!  After all, they can always honor their obligations–by printing more money.  There, my friends, is the real problem and a good reason to be worried about your retirement even if you are not a public employee.

Historically, printing more money has been the favored solution of governments when things go bad.  They say they won’t do that, but in the end they always do.  From Ancient Athens to Zimbabwe in 2008, the result is always the same–a swift and ugly currency crash wherein money becomes worthless overnight.  Zimbabwe’s inflation rate reached 98%…PER DAY.  That means it took slightly over 24 hours for prices to double.

There is only one solution at the national level, and that is for politicians to face up to the fact that they have promised way more than they can deliver and cut expenditures.  Whew, that was a good one.  I crack myself up every time I say it.

There are some things we can do, however.  It is sometimes said that the best attitude when going into battle is to pretend that you are already dead.  Do what I do and pretend that your retirement is already dead.  Figure out how to retire without it.  One person I heard of recently bought two haircut franchises even though she is years away from retirement.  Why?  Because people will probably buy haircuts even when they can’t afford luxuries.  And inflation?  Well, if we experience true hyperinflation, all bets are off, but she still stands a better chance than most because her prices will rise accordingly.  If none of this comes to pass, so much the better.  She will have her company retirement and her franchise income.

Learn to make money in a side business or invest in things that stand at least some chance of surviving the coming earthquake.  If you think the politicians will save you, I have a business deal I’d like to discuss with you…

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Terry is constantly amazed at how little people learn from history.  He is also amazed at what he saw in New Orleans in 1976, but that’s another story.

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Are You Using the Right Kind of Feedback?

In our local entrepreneurship Meetup group last week, we talked about goals.  This happens to be my area of research expertise, so I took the group through a goal-setting exercise.  We all left with solid goals for 2010.  There are several characteristics of good goals, but today I want to emphasize a particular one: feedback.

Feedback works to strengthen the effects of goal setting.  That is, goals without feedback do not have the same motivational power as those accompanied by regular, objective progress reports.  The mechanism responsible for the difference is goal setting itself.  When we receive feedback, positive or negative, we tend to set new goals that take our progress into account.  For example, if I want to make $20,000 more in income for 2010, and by the end of June I have already made an additional $15,000, I may want to adjust my goal upward.  Likewise, if I have only made an additional $5000, I may want to revise it downward.

It is easy in the comfort of your recliner or office chair writing out goals to think, “Well, yes.  That makes sense.  I’ll do it.”  Our subconscious minds sometimes have a different agenda, though.  Let me give you a personal example.

When my financial picture is rosy, I love to get feedback.  It is no problem for me to balance the checkbook, calculate my net worth, and make plans for increasing my wealth.  When my financial picture is thorny, I tend to put off record-keeping and planning.  The pain of acknowledging negative feedback keeps me bound up and inactive.  This is nearly always a mistake, and I would love to report that I have overcome this tendency.  I have not.  At least not completely.  Guess what happens when I let the fear of pain win?  Right.  My situation invariably gets worse.

Get used to giving yourself objective, non-judgmental progress reports.  They must be objective in the sense that they are based on facts, not guesses or fantasies.  For example, it is easy to say  you have been eating right in support of your weight-loss goal when in fact you have been a genuine threat to U.S. junk food stockpiles.  Conversely, you may think you have been pigging out when in fact you are doing fine.  Keeping records and reviewing them regularly is the only way to know for sure.

The non-judgmental part is trickier.  Sometimes we tend to draw harsh conclusions about ourselves rather than our behavior.  If I ate two pieces of cheesecake last night and had to be physically restrained from getting the third, that is not in keeping with my goal of a lean, fit body.  Saying, “That is not like me–oh well, back on course today!” is healthy.  Saying, “You worthless pig–why can’t you ever stick to your goals?” is likely to kill any motivation you had before that.  After all, a worthless pig doesn’t deserve a good life filled with meaningful achievement, right?

Building the habit of constructive feedback takes time.  When you get off course, use that information in a positive way.  Before you know it, what once was bad news will start to look like an opportunity to move closer to your goal.

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Terry writes on topics of entrepreneurship and motivation.  He is also willing to be on the cover of GQ magazine if asked.

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Start a Business NOW

There is one book you must read if you worry even a little about today’s economy.  The title is Empty Nest Egg: Why You Must Start Your Own Business NOW.  Yes, it’s my book, but if it weren’t, I would still recommend it.  Here’s why.

First, having a business to supplement your income is just plain common sense.  We all know that “things” happen.  Loss of a job, relocation of a spouse, and the child that arrived off-schedule make life interesting and scary.  Extra money never hurts.

Second, we may not have jobs if things don’t turn around soon.  You would think mine–being a university professor–would be about as stable as you can get.  Not so.  The State of Illinois is furloughing employees on some campuses to make up a budget shortfall.  I read recently that we rank second only to California in terms of how badly we have screwed up our budget.  Yours Truly is busy hoping for the best and planning for the worst.  You should too.

Third, there will come a point at which we are either no longer able or no longer willing to work.  My grandmother is 99 years old.  She is truly astonishing, getting around better than many 60-year-olds.  I kind of doubt she could get a job, though.  I remember her when she was my age, and it is a little unnerving to think how fast the intervening time has passed.  Retirement will hit us before we know it.

In my view, a time of reckoning is upon us all.  As a nation, we have chosen to pretend that we can spend without restraint, make the rest of the world behave, and protect everyone from everything.  The bill is coming due and our collectively disastrous decisions will come back to haunt us.  For those who continue to think a J-O-B is their only means of income, life may take a nasty turn.  For those who see the coming disruptions as an opportunity to prosper by starting a business, life may get much better.

_________________

Terry practices what he preaches.  After he found out about the furloughs, he checked to see if Chippendales was hiring.  No such luck, so he writes books and teaches people how to start businesses in addition to being a professor.

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Build a Business Model That Works

If you know what unique value you bring to others, it is time to turn that into a business model.  A business model is to a business as a toy jet is to a real one. The toy does not fly or drop bombs, but given sufficient detail, it gives us a good idea of how the jet functions. Your business model needs to include a description of how raw materials (even intangible ones like ideas) are turned into value-added products. Sometimes, a graphic depiction is helpful. Keep it simple, along the lines of the following:

Stuff goes in > I make it more valuable > Stuff goes out (and customers pay me for it)

For example, I take flour, sugar, eggs, and other stuff, mix it together, shape it up, and out come wedding cakes.  Separately, those things are not worth anything like what the beautiful cake is worth.  Sound silly?  Well, I have worked with any number of people over the years who have not a clue what they are really doing.  Their business model is vague, too complicated, or simply won’t work.

Start with figuring out your “input.”  In the above example, this is the flour, etc.  Where do you get it?  The store?  Do you grow the wheat and sugar cane yourself?  Raise the hens?  Once you know that, you can figure out what those inputs cost you.

Next, make those inputs more valuable.  Remember that you are the magic ingredient.  If I were to take those inputs and attempt to make them more valuable, it would look like Armageddon in our kitchen and my wife would throw me out of the house.  Wait, she did that yesterday.  Well, you know what I mean.  If you are good at that kind of thing, the result would be a picture of beauty and good taste.

Last, figure out how to sell what you make.  You might cater cakes, sell them in a store, or bake them on site.  You might deliver them in a van.  No matter how you do it, remember the customer.  The way you “harvest” the value depends on what is convenient for the people who buy.

Drawing out your business model may seem unnecessary, but trust me, this is important stuff.  Many business owners try to do it all.  Let’s say that Wilma of Wilma’s Wedding Cakes grows her own wheat, raises her own chickens, and grinds her own sugar cane.  Not only that, she delivers each cake by hand and sets it up on site.  Now Wilma is great at baking, but only fair at farming and delivery service.  She is wasting her time and energy doing things that other people could do better.  To make it work, she would have to charge much more because it costs her more to, say, deliver a cake than a delivery service.

In other words, pick out what you do best and focus on it.  There are thousands of people out there ready to do everything else.  When your business model starts to look like a clean, sensible proposition, it is time to move on to more detailed planning.

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Terry takes specialization seriously.  He won’t change light bulbs in his own house because writing is what he does best.  That is why his wife threw him out yesterday.  Since he needs a new place to live, maybe you could sign up for a course at entrescape.com.  Thanks.  It’s cold outside.

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