Business: An Entrepreneur’s Business Plan – Ebook PDF Version
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preface Welcometothenintheditionof SmallBusiness:AnEntrepreneur’sBusiness Plan. Wecreatedourbookforthethousandsofdreamerslikeyouwhowantto createtheirownventures.Mostfirst-timeentrepreneursstartoutwithlittlemore thananidea.Bycombiningyourtalents,passions,andideaswithapractical approach,wewillshowyouhowtotakeyourideaandformitintoafunctional BusinessPlanandsucceed.
Everygreatadventurebeginswithamap;thus,thisbookservesasyourmap andnavigator.TheActionStepsprovideyouwithdirectionandtaskstoaccomplishalongtheway,whilethevignettesprovideafirsthandlookatthetrials,tribulations,andsuccessesoffellowentrepreneurs.
IncompletingtheActionSteps,youwilllearnhowtodevelopaBusinessPlan fromtheinceptionofanideatoidentifyingandlocatingTargetCustomersand determininghowtomarkettothemsuccessfully.Holdontight,fastenyourseatbeltandpreparetoembarkonyourgreatentrepreneurialadventure!
■ ORGANIZATION TargettheChaptersthatCalltoYou
TheActionStepsarespacedoutacross15chapters,fromChapter1, “Your GreatAdventure,” toChapter15, “PullYourPlanTogether.”
• Chapters1,2,and3askyoutofocusonyourselfandyourideas,whilealso researchingtrendsandfutureopportunities.Ifyouarejustexploringentrepreneurship,concentratefirstonthesechaptersandtheaccompanyingAction Steps.Remember,youaredesigningnotonlyyourBusinessPlanbutalsoyour lifeplan.
• Chapters4,5,and6helpyoulocateseveralofthekeystosuccessinsmall business:yourTargetCustomer,knowledgeofyourcompetition,gapsinthe marketplace,andfindingtherightlocation.
• Chapter7helpsyoureachouttoyourTargetCustomerwiththevastarrayof promotionaltools.
• Chapter8plungesyouintonumbers determininghowmuchyouwillneedto startupandhowmuchyouwillneedtokeepgoing.Chapter9, “Shakingthe MoneyTree,” helpsyoufindthemoneytotakeyourdreamfromthedrawing boardtoreality.
• Chapter10focusesoncopyrights,trademarks,andpatentstohelpyoukeep controlofyourintellectualproperty.Thisisespeciallyhelpfulifyouareacreativepersontryingtopeddleaninventionorsellabook.
• Chapter11helpsyoubuildawinningteamtoaccomplishyourdreams.
• Chapter12guidesyouthroughinsurance,taxes,andethicaldilemmas.
• Chapter13offerstipsandadviceifyouwanttopurchaseanongoingbusiness.Ifyouwanttojointhefranchisemovement,readChapter14first. TherearefranchiseesaroundeverycornerintheUnitedStates,butnotallof themarehappywiththeirlot.Ifyourgoalistobeahappyfranchisee,
completeaBusinessPlanforyourspecificfranchiselocationtodetermineifit willliveuptothehype.
• Chapter15asksyoutogatherallofyourActionStepstogethertoformulate thebasisofyourBusinessPlan yourbusiness’slaunchingdocument.
• AppendixAisaFast-StartPlanwhichworksforasmallbusinesscomprisedof anownerwithnoorfewemployees,orwhereadditionalworkiscontracted outandthelossofinvestmentwillnotsinktheship.Considercompletinga Fast-StartPlanearlyontodetermineifyourideawarrantsyougoingforth.
• AppendixBshowcasesAnnie’sBusinessPlanProposalforachocolateand candystorelocatedatSeaWorld.
• AppendixCcontainsformstoassistyouinyourentrepreneurialplanning:personalbudget,SmallBusinessAdministrationloanforms,andotherhelpfuland timesavingdocuments.
ActionSteps Morethan70ActionStepstakeyouthrougheveryphaseofastart-up,fromthe initialdreamtodevelopingmarketinganddistributionstrategiesandfinallyto buildingandimplementingthecompletedBusinessPlan.
EntrepreneurialVignettes Throughoutthetextwepresentyouwithcasestudiesfullofstrategiesandrealworldapplicationsthatprovideinsightintoentrepreneurialmindsandventures. Wehavemodifiedmanyofthestoriesforsimplicityandclarity.Manyofthevignettesarebasedonentrepreneurswhohavesharedtheirstoriesovertheyears.
BusinessPlans FeaturedBusinessPlansinclude Yes,WeDoWindows:AFast-StartPlan (locatedinAppendixA),applicableforverysmallbusinessesrequiringminimal capital,and Annie’ s (foundinAppendixB), anin-depthBusinessPlanProposal forachocolatestoretobelocatedatSeaWorld.
EntrepreneurialLinks Recognizingthattheentrepreneuriallifecanbelonelyandscaryattimes,we encourageyoutoreachouttoavailablecommunity,government,andentrepreneurialresourcesforsupport,guidance,anddirection.FromStanfordUniversity entrepreneurialpodcaststotheAngelCapitalAssociation,weencourageyouto seekoutlike-mindedindividualsdreamingthesamedreamasyouandorganizationsthatwillfosteryourdream.
GlobalResources ToencourageentrepreneurstoreachbeyondtheU.S.market,weprovideglobal statisticsandresourcesthroughoutthetext.
Passion Ineachchapterwehighlightapassionateentrepreneur,onewhoexhibitshisor herenthusiasmforproducts,locations,ormarkets.Notallentrepreneursare passionatesolelyaboutmoney;infact,feware.Manyaredrivenbytheirdedicationtohelpothers.Thus,wehighlightentrepreneurslikeMelissaMarksPapock,
founderofCabanaLife,whodevelopedalineofsun-protectiveclothingfor womenandchildrenafterbeingdiagnosedwithmelanoma.Andanotherpassionateentrepreneur,EileenParker,founderofCozyCalm,afirmthatprovides weightedblanketsforpeoplewithsensoryprocessingissues.
■ NEWANDREVISEDFORTHENINTHEDITION Newresourcesandwebsiteshavebeenaddedthroughoutthechapters.Approximately40percentoftheentrepreneurialvignettes,EntrepreneurialResources, PassionateEntrepreneurs,andGlobalVillagehighlightshavebeenupdatedor replacedwithnewinformation.
Toreflectthechangesinoursociety,wehavehighlightedsocialandhybrid entrepreneursthroughoutthebook,suchasGabriellePalermo,oneofthefoundersofG3Boxwhosefirmfocuseson “theconversionofsteelshippingcontainersintolow-cost,modular,andmobilemedicalclinics.”
Chapters2and3highlightmanynewtrendsandopportunitiesforentrepreneurs.Wefeaturesuchhottopicsaswatershortages,risingnaturalresource prices,andthemobilegeneration.Wealsoexploresuchlargeandforcefulmarketsasagingbabyboomers,millennials,andtheiGeneration.
Chapters4and6expandtheuseofdataforproductpositioningandlocation decisions.CompetitiveanalysisandstrategyhavebeenexpandedinChapter5, allowingthereadertoutilizetheresearchinformationgainedinChapters2 through4anddevelopmorethorough,competitiveplansandstrategiestomeet hisorherTargetCustomers’ needs.
Wediscussthemeldingofpromotion,distribution,andlocationdecisionsas theweb’simpactispartofalmostallentrepreneurialdecisionstoday.
Chapter10hasthemostcurrentinformationavailableonpatents,trademarks,andcopyrights.
Chapters13and14recognizeandaddressthelargenumberofentrepreneurs whodecidetopurchaseanongoingbusinessorfranchise.Wehaveincluded morein-depthinformationonfranchisebrokers,aswellassocialnetworking franchisingwebsites.
■ PLANNINGFORSUCCESS ThereasonwewrotethisbookwastoprovideyouwithaBusinessPlanworkbook.Wesupplythesteps,andyousupplytheeffortandhardworktocharta courseforyourdreambusiness.WritingaBusinessPlansharpensyourfocus. Whenyousharpenyourfocus,youseemoreclearly.Seeingmoreclearlyraises yourconfidence.Inthebigworldofsmallbusiness,asinlife,confidencehelps youkeepgoingwhenthegoinggetstough.Thereisanadageinthebusiness world:Ifyoufailtoplan,thenyouareplanningtofail.
BeforeyouwriteaBusinessPlan,youshouldstudytheform.Fromtheoutside,aBusinessPlanlookslikeastackofpaper:fortheshortplanitisathin stack;forthelongplan,itisathickstackboundtogethertolooklikeabook. Howeverthickthestack,yourplanwillbeadocumentwithabeginning,middle, andend.Butinrealityyourplanhasnoendpoint;asourworldmovessorapidlytodayyourBusinessPlanwillbecomealivingandever-evolvingdocument.
Therearetwogoodplansinthisbookthatserveasaguideandmanymore goodplansfloatingoutthereincyberspaceforyoutopursue,andweleadyou tothose.Wehavetriedtoprovidecurrentmaterial,butInternetsiteswillcome andgo,andgovernmentprogramswilltakenewforms.Becauseofthedynamic natureofbusinesstoday,weurgeyoutokeepcurrentbycheckingboththe Internetandourwebsitefortheirvastresourcesat http://academic.cengage .com/management/ryan
Becauselawsandtaxissuesareconstantlyinflux,alwaysconsultyourlegal counselandtaxadvisorsratherthanrelyingonlyonthematerialcontainedinthis textoronanyInternetsite.Allformshavebeenprovidedasexamplesonlyand shouldnotbeusedwithoutbenefitoflegalcounsel.Oursocietyishighlylitigious, andyoumustbediligentifyouwanttostayoutofcourt.Neverskimponlegalfees! Wehopeyouopenoneofthethreeentrepreneurialdoorways:startingyour ownbusinessfromscratch,franchising,orbuyingabusiness.Weencourageyou tofindsuccessalongwithover200,000fellowbuddingentrepreneurswhohave followedtheActionStepsprovided.Goodluck!
■ INSTRUCTOR’SRESOURCEMATERIALS Instructor’sManualandTestBank TheInstructor’sManualincludesteachingaidssuchaslearningobjectives,lectureoutlines,andsuggestionsforguestspeakersandclassprojects.TheTest Bankisfulloftrue/false,multiple-choice,andshort-answerquestions.
VoxantNewsroomVideos VideosegmentsfromVoxant’sNewsroomarelocatedat http://academic .cengage.com/management/ryan andincludecontentfrommajorcontentproviders,suchasCBSandReuters.Questionsforeachvideoareincludedinthe Instructor’sManual.
PowerPointSlides ThePowerPointpresentationiscolorfulandvariedandwasdesignedtohold students’ interestandreinforceeachchapter’smainpoints.ThePowerPointpresentationisavailableonlyonthewebsite.
Website
Visitourwebsiteat www.CengageBrain.com ,whereyouwillfindacomplete listingofthe “EntrepreneurialLinks” andmargindefinitionsfoundinthetext; linksonmanagementtopics,careers,andtimemanagement;andothervaluable resourcesforboththeinstructorandstudent.
AccessingCengageBrain 1.Useyourbrowsertogoto www.CengageBrain.com.
2.Thefirsttimeyougotothesite,youwillneedtoregister.It’sfree.Clickon “Sign Up” inthetoprightcornerofthepageandfillouttheregistrationinformation.(After youhavesignedinonce,wheneveryoureturntoCengageBrain,youwillenterthe usernameandpasswordyouhavechosenandyouwillbetakendirectlytothecompanionsiteforyourbook.)
3.Onceyouhaveregisteredandloggedinforthefirsttime,gotothe “SearchforBooks orMaterials” barandentertheauthororISBNforyourtextbook.Whenthetitleof yourtextappears,clickonitandyouwillbetakentothecompanionsite.Thereyou canchoseamongthevariousfoldersprovidedontheStudentsideofthesite.NOTE: IfyouarecurrentlyusingmorethanoneCengagetextbook,thesameusernameand passwordwillgiveyouaccesstoallthecompanionsitesforyourCengagetitles.After youhaveenteredtheinformationforeachtitle,allthetitlesyouareusingwillappear listedinthepull-downmenuinthe “SearchforBooksorMaterials” bar.Whenever youreturntoCengageBrain,youcanclickonthetitleofthesiteyouwishtovisitand godirectlythere.
CourseMate MakethegradewithCourseMate+LivePlan!Thisinteractivewebsitehelpsyou makethemostofyourstudytimebyaccessingeverythingyouneedtosucceed onlineinoneconvenientplace,whileproducingahigh-impactbusinessplan goodenoughtopresenttoinvestors.LivePlanbusinessplansoftwarefromPalo AltoSoftwareisautomaticallyincludedwiththisversionofMANAGEMENT CourseMate,givingyoutheabilitytocollaboratewithyourclassmates,receive videoguidancealongtheway,andproduceacompleteprofessionalbusiness plan.LivePlansoftwareisusedbyrealentrepreneurs.MANAGEMENTCourseMatealsoprovidesaninteractiveeBookautomatically,thatgivesyoutheoption tosavemoneybygoingalldigital(withtheoptiontoupgradetoprintatany timeforadiscount).Numerousinteractivelearningtools,suchasquizzes,flashcards,videos,andmore,helpyoumastertoday’smanagementconcepts.
Acknowledgments Firstandforemostwewanttothankthethousandsofentrepreneurswehave metwhosegrit,determination,passion,andhardworkhaveservedasaninspirationtous.Manyoftheirpersonalstorieshavebeenwoventhroughoutthis book.Inaddition,wehaveattemptedtoaddressmanyoftheproblemsand issuestheyhavefaced.Thus,manyofthestoriesthroughoutthetextarecompositesofentrepreneurswehavemetinourjourneys.
JanGalati,anentrepreneurialaccountant,reviewedandimprovedChapter8 andprovidedsteadysupportandguidancethroughoutthetext.Larry Drummond,aseniorhumanresourceprofessional,providedinsightandhis expertiseforChapter11.PatPerkowski,ownerofFashionForwardProductions,editedandgreatlyenhancedmanyofthechaptersbasedonher25years asanentrepreneur.DorisWeinbaum,whosebusinesswasforsaleandsold duringthewritingofthetext,offeredgreatinsightforChapter14.Additional readers,KelseyGalati,DannyDoyer,andKaitlinGalati,buddingentrepreneurs, andstudents,revisedandenhancedmanyofthechapters.
CaseyCampbell’ssteadymood,excellentresearchcapabilities,andorganizationalskillssupportedthesuccessfulcompletionofthetext.Iamincredibly indebtedtohimandappreciatehiseffortsmorethanIcansay.
Withoutthesupport,patience,andlovefrommysons,thejourneywouldnot havebeenaseasyorassweet.Ialsowanttothankmyparents,Andrewand CarolynHiduke,forraisingmeandteachingmetheimportanceof “hardwork andcommitment”
Manysayit “takesavillagetoraiseachild.” WellIsayit “takesavillageto writeabook” andIamforevergratefulformyvillage.
Wealsowanttoextendathank-youtothereviewerswhoseinsightfulcommentshelpedtoshapethisedition:
LouFirenze
NorthwoodUniversity–Midland
MarkZweig UniversityofArkansas–Fayetteville
CathyLewis-Brim
WarnerSouthernCollege
CarolCarter LouisianaStateUniversity
DennisPitta UniversityofBaltimore
IappreciatealltheeffortsofMicheleRhoadesandmyDevelopmentalEditor, TedKnight,whohasguidedmethroughouttheprocess,easingmyfears,prodding me,andmostimportantlysupportingme.
GailHiduke
YourGreatAdventure ExploringtheRightFit LearningObjectives • Discovertherightcomplementary entrepreneurialfitforyou.
• BeginfillingyourAdventureNotebookwith ideasandinformationtobuildBusinessPlan.
• Understandhowtousetextandaccessvast entrepreneurshipresources.
• Reviewthethreedoorwaystoentrepreneurship.
• Identifyvariousentrepreneurialtypes.
• Determinewhytoday’seconomicand technologyclimateisanadvantageous timetostartabusiness.
• Understandyourfinancialandfamilysituation.
• Makeboldassessmentofyourpersonal strengthsandweaknesses.
• Brainstormaclearpictureofsuccessinsmall business.
• Investigatethepracticesoffinancially successfulbusinessesinyourcommunity. Evaluatethosewhodidnotsucceed what contributedtotheirfailure?Forthosewho succeeded whatcontributedtotheir success?
• Expandyourknowledgeofsmallbusiness throughinterviewi ngsmall-business owners.
• Designyourownentrepreneuriallifestyleto includeyourrealisticexpectationsofthetime andenergyyouarecommittedtodevoteto yourvisionasanentrepreneur.
ACTIONSTEP 1 AdventureNotebook Ifyouareatypicalcreativethinker andentrepreneur,youprobablywrite 90percentofyourimportantthoughts onthebackofanenvelopeorenter themonatabletorsmartphone.That mighthavebeenokayinthepast,but nowthatyouaredoingthisforreal, becomingorganizedwiththeright toolsisparamount.Storinginformation canbedonewithanorganizeror desktopfoldersforyourideasand BusinessPlan.Thisdatabecomes your AdventureNotebook.Keep trackofsmallitemssuchasarticles, advertisements,andbusinesscards. YourAdventureNotebookwillbecome theheartofyourBusinessPlan,andit shouldinclude:
1.Twelve-monthcalendar
2.Appointmentcalendarwithremindersonyoursmartphone,asmissinganappointmentcanimpact yoursuccess
3.Listofpriorities
4.AllActionStepswith#5infront
5.Anidealist continuetoadditems tothisthroughoutyoursearch
6.A “ neweyes ” listforkeepingtrackof successfulandnot-so-successful businessesyoucomeacross,plus notesaboutthereasonsfortheir successorfailure
7.Alistofpossibleteammembers
8.Articlesandstatisticsyougather thatserveassupportivedatafor yourBusinessPlan
9.Alistofhelpfulwebsites
10.Alistofexpertswhomightserveas resourcepeoplewhenyouneed them,suchaslawyers,CPAs,bankers,successfulbusinesspeople,and soon
11.Alistofpotentialcustomers
12.Alistofnamesandphonenumbers ofcontactsforgoodsandservices
Entrepreneur Avisionaryself-starter wholovestheadventureofanew enterpriseandiswillingtoriskhisor herownmoney
AdventureNotebook DreamtorealitywithcollectionofActionStepsand information
ActionSteps Activitiestoprepareyou towriteaBusinessPlan
BusinessPlan Aworkingblueprint outliningfinancesanddirectionfora newstart-uporexpansion
Lifeisshort,andyouonlygoaroundonce.Makesureyouareachieving whatyouwant,havingfun,makingmoney,andbeingthebestperson youcanbe.Howdoyoudothat?Somepeopledoitbygoingintobusinessforthemselvesandifyouarethinkingaboutowningyourownbusiness,thisbookisforyou.
Trythislineofthought:Whatdoyouwanttobedoingintheyear 2020?In2030?Whatisthebestcourseofactionforyouright now?Whatmightbethebestbusinessforyou?Whatareyourstrengths? Whatdoyouwantoutoflife?Whatareyourdreams?Andmostof all,whatareyourpassions?
Thisistheageofthe entrepreneur. AccordingtotheSmallBusiness Administration(SBA), http://www.sba.gov, thereare27to30million smallbusinessesoutthere.Eachyear,accordingtotheKauffmanFoundation,aleadingsupporterofentrepreneurship,morethanahalfamillion newbusinessesarestarted.
Ifyouarethinkingaboutstartingasmallbusiness,youareamongthe 6millionbuddingentrepreneurscurrentlydreamingthesamedream.StatisticsfromtheEntrepreneurialResearchConsortiumshowthatoneinthree U.S.householdshasbeeninvolvedinsmallbusiness.Mostnewjobsinthe privatesectorarecreatedbyfirmswithfewerthan20employees.According totheSBA,smallbusinesseshire40percentofhightechworkersandsurprisinglyproduce13timesmorepatentsperemployeethanlargefirms. Yes,itisagreattimetobeanentrepreneur.Youcouldhavethetime ofyourlife.
■ BUILDINGYOURROADMAP Ifyoufollowthe ActionSteps throughoutthebook,youareonyourwayto buildingasuccessfulventure.BeginningwithActionStep1,thebookwillguide youthroughthebustlingmarketplace throughtrends,TargetCustomers,and promotions;throughshoppingmalls,spreadsheets,websites,andhushedgray bankbuildings;throughindependentbusinessesthatareforsale;through franchiseopportunities allthewaytoyourownnewventureand Business Plan (Figure1.1).
WesupplytheActionSteps,andyousupplytheefforttochartyourcourse. WritingaBusinessPlansharpensyourfocus.Whenyousharpenyourfocus,you seemoreclearly.Seeingmoreclearlyraisesyourconfidence.Inbusiness,asin life,confidencehelpsyoukeepgoingwhenthegoinggetstough.Anditwill!
BeforeyouwriteaBusinessPlan,youshouldstudytheform.Fromtheoutside,a BusinessPlanlookslikeastackofpaper;fortheshortplan(AppendixA)itisathin stack;forthelongplan(AppendixB),itisathickstackboundtogethertolooklike abook.Howeverthickthestack,yourplanwillbeadocumentwithabeginning, middle,andendandshouldremainaliving,breathing,andeverevolvingdocument. Don’tputitonashelf.Keepitonyourdeskandrevise,revise,andrevise inthe planningstageandmoreimportantly,whenyoubecomeoperational.
TargettheChaptersThatCalltoYou
TheActionStepsarespacedoutacross15chapters,fromChapter1, “Your GreatAdventure,” toChapter15, “PullYourPlanTogether.”
EntrepreneurialRoadMap • Chapters1,2,and3helpyoufocusonyourselfandyourideas;theyexplain howtodevelopandtestyourideasinthemarketplacebeforeyouriskyour money.Ifyouareexploringentrepreneurship,concentrateonthesechapters andtheaccompanyingActionSteps.Remember,youaredesigningnotonly yourBusinessPlanbutalsoyourlifeplan.
• Chapters4,5,and6helpyoulocateseveralofthekeystosuccessinsmall business:yourTargetCustomer,therightlocation,andgapsinthe marketplace.
• Chapter7helpsyoureachouttoyourTargetCustomerwithpromotionaltools.
• Chapter8plungesyouintonumbers howmuchyouwillneedtostartupand howmuchyouwillneedtokeepgoing.Chapter9, “ShakingtheMoneyTree,” helpsyoufindthemoneytotakeyourdreamfromthedrawingboardtoreality.
Microbusiness Verysmallbusinessin termsofemployeesbutnotnecessarily revenue
• Chapter10focusesoncopyrights,trademarks,andpatentstohelpyoucontrol yourintellectualproperty.Thisisespeciallyhelpfulifyouareacreativeperson tryingtopeddleaninvention,App,orbook.
• Chapter11helpsyoubuildawinningteamwithinformationonthehiringof bothfreelancersandemployees.
• Chapter12guidesyouthroughinsurance,taxes,andethicaldilemmas.
• Chapter13and14offertipsandadviceforbuyinganexistingbusinessor franchise.Ifyouwanttoentersmallbusiness,ineitheroftheseways,wesuggestyoureadChapter1firstandthenChapters13and14beforereadingthe otherchapters.TherearefranchiseesaroundeverycornerintheUnitedStates, butnotallofthemarehappywiththeirlot.Ifyourgoalistobeahappyfranchisee,completeaBusinessPlanforyourfranchisetoseeifitlivesuptothehype.
• Chapter15asksyoutogatherallofyourActionStepstogethertoformthe basisofyourBusinessPlan yourbusiness’slaunchingandworking document.
• AppendixAisaFast-StartPlanforasmallerbusinessthathasanownerwith fewemployees,orwhereadditionalworkiscontractedoutandthelossof investmentwillnotsinktheship.Ifyourbusinessisa microbusiness,read Chapter1andthenreadAppendixAbeforecompletingtheActionStepsas manywillnotbeapplicabletoyourventure.
• AppendixBshowcasesAnnie’sBusinessPlanProposalforachocolateand candystorelocatedatSeaWorld.
• AppendixCcontainsformstoassistyouinyourentrepreneurialplanning: personalbudget,SBAloanforms,andotherhelpfulandtimesaving documents.
Alongthewayyouwillmeetfascinatingpeopleandhopefully,haveafew adventuresandfun.Furthermore,bycompletingtheActionSteps,youwillbe drawingacustomizedroadmapforyourpersonalandsmall-businesssuccess. TheelementsforyourcompleteBusinessPlanwilldevelopalongthewayand hopefullyilluminateanopportunityforentrepreneurialsuccess.EachActionStep drawsyoudeeperintoyourbusinessandwilllightthewaytoyourfinalplan. AdjusttheActionStepsasneededtosuityourideaorindustry.
Youwillstartyourjourneybytakingacarefullookatyourselfandyour skills.Whatkindofworkpleasesyou?Howsecureisyourpresentjob?How longdoesittakeyoutogetorganized?Whatinternaldrivemakesyoubelieve thatyouareanentrepreneur?Whatdoyouvalue?Howdoyouliketowork? Withwhomdoyouliketowork?Whatcustomersorclientswouldyouliketo workwith?Whatareyourtalents?Whatdoyouwanttoaccomplish?
Brainstorm Unlockyourbrainto possibilities
Next,youwillstepbackandlookatthemarketplace.Whatishot?Whatis coolingdown?Whatwilllast?Wherearethelonglinesforming?Whatarepeoplebuying?Whatisasustainablebusinessmodel?Whatdistinguishestheupand-comersfromthedown-and-outers?Youwill brainstorm abusinessthat willfitintoanindustryniche,tossaroundnumberstogetafeelforhowthey turnintoprofits,andkeephavingfun.
ThenitwillbetimetoprofileyourTargetCustomer,assessthecompetition, figureoutcleverpromotionalstrategies,testyourproduct,andscoutlocations. Bythattime,youwillknowwhereyouaregoing,andyouwillfeelthatyou areincontrolofyourowndestiny.
Next,youwillmoveontopricingstructures,cash-flowstatements,distributionstrategies,andbuildingawinningteam.BythetimeyoureachChapter15, youwillhavegatheredenoughmaterialtowriteacompleteBusinessPlanfor showcasingyourbusinesstotheworld thatis,tobankers,vendors,lenders, venturecapitalists,creditmanagers,keyemployees,family,andfriends.
Yourfinishedplanwillbeaworkingandever-evolvingdocumentforyour business.Itwillprovideawalk-throughofyourindustry,generateexcitement
inpotentialinvestors,demonstrateyourcompetenceasathoughtfulplanner,and underlinethereasonscustomerswillclamorforyourproductorservice.Your planwillalsoserveasameansofchannelingyourcreativeenergies.
Weareallfamiliarwiththeentrepreneurswhostartedbusinesseswithan ideawrittenonthebackofanapkininarestaurantandwerefundedbywealthy venturecapitalistsbeforeeverwritingaBusinessPlan.Butrealistically,most entrepreneursneedtodoresearchtostarttheirbusiness.
Inthefast-pacedtechnologyfieldmanycompanieshavebegunandsoldfor billionswithoutshowinganyprofitandoftentimesnotevenknowingwhattheir revenuemodel wouldbewhentheystarted.Thetruthisformanyhighflying firmstherearefewmetrics,distributionmodelsevolvedaily,andcompetition popsupovernight.Thus,forthosefirmsdevelopingaBusinessPlanposeshuge challengesassupportdataisnotavailable.Ifyouareenteringoneoftheseareas, youwillneedtokeepabreastofchangesonadailybasisinyourindustryandbe willingtochangeyourplanatamoment’snotice.
Althoughthetexttakesyoufrommarketingtolocationchoicetopricing,the realityisthatallofthestepsoftheBusinessPlanwillforceyoutoreviseyour initialassumptionsasyoutestoutyourideasinthemarketplace.Andeven thoughtheActionStepsappeartobeseparate,theinformationyougainfrom eachstepmustbeintegratedintoyourevolvingBusinessPlan.Mapoutyour strategyinnumbersandwordsforyourplanandrealizetheywillcontinueto evolvethroughoutthestart-upphaseintothefuture.
Wecallitaroadmap,butthinkofitasaLosAngelesroadmap;always changing,withroadblocks,trafficjams(toomanycompetitors),andfortunately newroadsandthusopportunitiesforyou!Thebookservesasaguidebooktoa BusinessPlan,butwerecognizethevastchangesandencourageyoutoalways useoutsideinformationandlinkstokeepabreastofchangessoyouwillknow whennewroadsareopening.
Onereasonyouarereadingthisbookisthatyouarecreative.Youliketo build,topullthingstogether,toplantseedsandwatchthingsgrow,todevelop projects,toproduce.Whenyourmindisracing,youprobablycomeupwith moreideasthanyoucanprocess.Thatiswhenyouneedaplantokeepyour entrepreneurialenergiesontrackwhilethecreativesteamrises.Perhapsyou havealwaysdreamedofworkingforyourselfandbeingyourownboss.Well, youcanrealizethatdream ifyouareprepared.
Preparingyourselftakestime,energy,andthewillingnesstoreachouttothe largerbusinesscommunitywithinwhichyouwilloperate.Onceyoubegin,and onceyoupossessbasicknowledgeaboutyourindustryandmarkets,youwillreach outtoentrepreneurs,associations,inventors’ forums,andwebsitecommunities.
Throughoutthetext,wehighlightmanyEntrepreneurialResources websites,books,associations,andprogramsthatprovideexcellentsourcesof informationandassistanceusuallyavailableatnoorlowcost,whichareonly thetipoftheiceberg.Oneofthischapter’sResourceshighlightsseveralstudent entrepreneurialorganizationswhichoffercollegestudentsanopportunityto learnandgrowwithothersontheircampus.Showyourtenacityandsearch outthebestsourcesforyourselfandyourbusiness.Youwillbegladyoudid.
KeyPointsfromAnotherViewattheendofeachchapterrepresentadditional entrepreneurialinsighttoguideyouinyourquestandprovidesupportforyour endeavors.AllfeatureboxesandKeyPointsareintegralpartsofeachchapter.
Wehopetokick-startourreadersintothinkinginternationallybyhighlighting globalinformationwithintheGlobalVillageboxes.Theopportunitiesarelimitless, yetfewentrepreneurstaketheglobalpath.Beapioneerinyourindustryormarket, andreachouttothealmost7billionpeoplewholiveoutsidetheUnitedStates.With today’stechnology,reachingacrosstheoceanisaseasyasreachingacrossthetable. Doyourhomeworkandyoumayfindaglobalbusinessaviableoption.
Revenuemodel Formbusiness willtaketogeneratesales,income andprofits
Prepareyourselfforlongandoftentimesverylonelyworkdays.You are the businessoftentimes;soyouwillhaveverylittledowntime.Limitedresourcesdo notallowforadditionalpersonnel.Youwillhavetodealwithphysicalandmentalstress,crashingharddrives,loanturndowns,andsoonaspartofyourlife earlyinyourbusiness.Yourpersonalvisionwillhavetodriveyouthroughthe toughtimesifyouaretosucceed.
ThusthroughoutthetextandespeciallyinthePassionfeatures,wehave highlightedentrepreneurswhoarepassionateabouttheirproductsandservices, employees,markets,orideasanddreams.Readtheirstoriesandsearchyour soul.Believeinyourselfandyourpassions,becausethosebeliefsandhardwork leadtoentrepreneurialsuccess.Answerthequestionsinthefollowingpassion features.Andbegintoaskyourself,DoItrulyhavewhatitisgoingtotake? AmIwillingtotakecalculatedrisksandfollowmypassions?
■ JUMP-STARTWITHENTREPRENEURIALLINKS TheInternet’sresourcesarelimitedonlybytheamountoftimeyouhaveavailable.AsyouworkthroughthetextandActionSteps,youwillaccessawealthof information,askquestionsofexperts,communicatewithfellowentrepreneurs, anddiscovermarketingandfinancialresourcesontheInternet.Throughoutthe text,wewillhighlightmanyusefulsitesandencourageyoutoreachoutfurther withTwitter,Facebook,andLinkedIn.
Resourcesforentrepreneurscontinuetogroweachdaybutbelowwelist someofourfavoritesites.
WebLinkStartingPoints • FastCompany http://www.fastcompany.com
• Inc. http://www.inc.com
• Entrepreneur http://www.entreprenur.com
• Sprouter http://www.sprouter.com
• EwingMarionKauffmanFoundation http://www.kauffman.org
• Under30Ceo http://www.under30ceo.com
• SmallBusinessAdministration http://www.sba.gov
• NationalFederationofIndependentBusiness http://www.nfib.com
• StartupAmericaPartnership http://www.s.co
• Alltop http://www.alltop.com
Asyoumovethroughthephasesofthebook,addressingpersonalassessment, trends,productdevelopment,socialmedia,distribution,numbercrunching, legalissues,andwritingaplan,weencourageyoutoexpandyourinformation byexploringwebresourcesateachstepofyourBusinessPlan.
Also,theweboffersnumerousexamplesofBusinessPlans somefree,some forsale onhowtoblueprintyourbusiness.
Thisbook,onlinesources,andfellowentrepreneurswillshowyouhowto sharpenyourvisionsothatyoucanwriteyourpersonalBusinessPlanyouneed tosucceedinafast-changingworld.Tojump-starteachdayandkeepyour entrepreneurialfocus,signupfordailyupdatesfromthemanysitesaboveand onesspecificallyaimedatyourindustry.Also,considerwatchingandlearning dailyfrominterviewswiththegreatestentrepreneursatwebsitessuchasInc., FastCompany,andStanford’sEntrepreneurshipCorner.
Thechapter’sEntrepreneurialResourcehighlightsStart-upToolsfromStanfordUniversityProfessor,SteveBlank’swebsite.Blank’sbook, TheStartup Owner’sManual:TheStep-by-StepGuideforBuildingaGreatCompany and hiscourseatStanfordareleadingthe “leanstart-up” revolution,which
BasicBusinessPlanOutline SBAElementsofaBusinessPlan
Agendashouldincludeanexecutivesummary,supportingdocuments,andfinancialprojections.Althoughthereisnosingleformula fordevelopingabusinessplan,someelementsarecommontoall businessplans.Theyaresummarizedinthefollowingoutline:
1. Coversheet
2. Statementofpurpose
3. Tableofcontents
I. TheBusiness
A.Descriptionofbusiness
B.Marketing
C.Competition
D.Operatingprocedures
E.Personnel
F.Businessinsurance
II. FinancialData
A.Loanapplications
B.Capitalequipmentandsupplylist
C.Balancesheet
D.Breakevenanalysis
E.Pro-formaincomeprojections(profitandlossstatements)
F.Three-yearsummary
G.Detailbymonth,firstyear
H.Detailbyquarters,secondandthirdyears
I.Assumptionsuponwhichprojectionswerebased
J.Pro-formacashflow
III. SupportingDocuments
A.Taxreturnsofprincipalsforthelastthreeyearsandpersonalfinancialstatements(allbankshavetheseforms)
B.Forfranchisedbusinesses,acopyoffranchisecontractand allsupportingdocumentsprovidedbythefranchisor
C.Copyofproposedleaseorpurchaseagreementforbuilding space
D.Copyoflicensesandotherlegaldocuments
E.Copyofresumesofallprincipals
F.Copiesoflettersofintentfromsuppliers
SamplePlans
Oneofthebestwaystolearnaboutwritingabusinessplanisto studytheplansofestablishedbusinessesinyourindustry.
Source: Formoreinformation,see http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/SERV_WRRITINGBUSPLAN.html (AccessedJanuary10,2008).
recognizesandaddressesthat “Customerdevelopmentoperatesatdifferent speedsforweb/mobilestartupsversusproductssoldthroughphysicalchannels aswebproductsobtainfeedbackfaster.”
KnockingattheEntrepreneurialDoors Therearethreedoorwaystosmall-businessownership.Doorway1isbuyingan ongoingbusiness:Yousearch,locateabusinessthatyoulike,andbuyit.Sounds prettyeasy,doesn’tit?Abusinessbrokerwillmakeitsoundeveneasier,so beware!
Doorway2isbuyingafranchise:Youfindalogoyoulike onewith nationalvisibility andbuyit.Inexchangeforyourmoney,thefranchisormay ormaynotsupplyyouwithinventory,advice,training,buyingpower,ashorter learningcurve,andaproductorservicethatiswellknowninthemarketplace. Soundsprettyeasy,doesn’tit?Aslickfranchisorwillmakeitsoundeveneasier. Inadditiontofranchising,manymoreindividualswillreachoutandbecome partof multilevelmarketing businessopportunities.
Doorway3,isstartinganewbusiness,onethatiscompatiblewithyourinterests,skills,andpassionsthatarealsobackedupbycarefulresearchthatdemonstratesstrongcustomerneed,willingness,andabilitytopurchase.
Enteringtheworldofsmallbusinessbyanyofthesedoorwaysdemandsa carefullydesignedBusinessPlan wordsandnumberswrittenoutonpaperthat guideyouthroughthegaps,competition,bureaucracies,products,andservices.
WhatAboutTheseThreeDoorways? Manyentrepreneursentertheworldofsmallbusinessbybuyinganexistingbusinessorinvestinginafranchiseoperation.Upongainingsomebusiness
Multilevelmarketing Salesperson receivescommissionsonpersonal salesandsalesofthosetheyrecruit
experience,manyoftheseindividualsdecidetostartatotallynewbusinessfrom scratch.Fewentrepreneursarehappywithjustonebusiness.Theystartup,they sell,andtheystartupagain.
Nomatterwhichdoorwayyouchoose,youwillneedaBusinessPlan.Ifyou buyanongoingbusiness,youmayinherittheseller’sBusinessPlan.However,it isadvisabletowriteoneofyourown.Asktheseller,againandagainifnecessary,forthedatayouneedtobeginwritingyourownplanbeforeyoufinalize thesale.Donottakeanyfiguresasfactswithoutinvestigating:Doyourown research.Checkouttheseller’sclaimsofhugepotentialprofitsandendlessgoodwillbeforeyoucommittoapurchase.
Ifyouinvestinafranchise,youwillbebuyingaBusinessPlanfromthefranchisor.Butuntilyouseeit,youwillnotknowforcertainwhatadditional researchisneededtodeterminehowthefranchisewillfitwithyourlocalcustomersandcommunity.
WritingaBusinessPlanisalotcheaperthanplunkingdownmoneyona franchisethatmaynotbesuccessful.Ifyoustartyourownbusinessthrough anyofthethreedoorways,aBusinessPlanisanabsolutemust.Thatplanstands betweenyouandsuccessorfailure.
Yourlifeneedsfocusandpurpose.Wantingsecurity,honesty,excitement, substance,andsuccessareanaturalpartofyourmakeup.Decidingwhichroad totakewillbeworthwhileifyoukeepyoureyesandearswideopen.
Personalfinancialsecurityobtainedbyemploymentinlargecompaniescontinuestowane.Manypeoplearerecognizingthatself-reliancethroughoneofthe
Entrepreneur ’ s Resource SteveBlank’sStartupTools@steveblank.com
Atreasuretroveofhundredsandhundredsofresourcesandlinksawaits you!ThefollowingareonlyatipofBlank’siceberg!
Founding/RunningaStartupAdvice
MarketResearch
WebPrototyping,Testing,andBuildingTools
EntrepreneurialGroups
BusinessModelCanvas/CustomerDevelopmentTools
WebsiteSetup
“HowBigistheMarket” Tools
“DoIContactCustomers?” Tools
ProductLaunchTools
TraditionalMedia
SEOandAnalyticsTutorials
AnalyticsTools
SearchEngineOptimizationTools
OnlineMarketingSuites
E-mailBlasting
Surveys
Collaboration
On-lineCommunities
WebsiteTools
CloudServicesandTools
ProjectManagement
FindaCo-founder
MarketResearchResourcesOnline
AdviceonRaisingStartupCapital
Blank‘slinkswillbeofspecialinterestandassistancetoreaderswhoare developingweborcloudbasedbusinesses.
threedoorwaysoftenprovidesthemostsecureandrewardingcareeroption.The textiswrittentohelpyoutakecontrolofyourbusinessandpersonallifeand alsoprepareyoutoenteroneofthethreedoorways.
■ THEAGEOFTHEENTREPRENEUR Ifthebusinessworldischangingfasterandfaster revvinguplikeahigh-speed motor whatdoyoudo?Iflifeisnotwhatyouimagineditwouldbewhenyou wereinhighschool,whatdoyoudo?Ifthebigfirmyoutargetedasyourdream employerisbusydownsizing,ifthejobyoutrainedforisnowobsolete,ifthe positionyounowhaveisspoiledbyofficepolitics whatdoyoudo?
Ifyouhaveagreatideaforaproductbutyouremployerdoesnotbelievein it,whatdoyoudo?Ifyouhavefoundagreatlocationforasmall,uniquerestaurantonyourlastvacationtoSunValley,whatdoyoudo?Ifyousawagreat productonyourtriptoHungaryandthinkitwouldsellwellinCedarFalls, Iowa,whatdoyoudo?
Theansweris:Startupabusiness.Figureoutwhoyouareandwhatyou wantfromlife.Thinkwithyourpencilandspreadsheetswhileyoufigureout howmuchyouarewillingtopayforthe “goodlife.” Howmuchtimeareyou willingtospend?Howmuchmoney?Howmuchsweat?Howmuchriskcanyou handle?
WhatTypeofEntrepreneurDoYouWanttoBe?
Forsome,becominganentrepreneurisalifelongdream;forothers,itisbuyinga job.Itistheexcitementofanunlimitedincomeorawaytopaythebills.Itisthe dreamofneverhavingabossorthedreamofbeingtheboss.Itisthedesireto leavealegacy,thejoyofproducingtheperfectproduct,anopportunityto changetheworld.Becominganentrepreneurismanifestingthedesiretolive outyourdreamsandpassions.
ThreetypesofentrepreneursdesignatedbyRishiAnand,FounderandManagingDirectorofVentureGiant.com,follow:
1)TheLifestyleEntrepreneur:
Thisissomeonewhohasdecidedtobuildabusinesstomakealivingandtosatisfy hisorherownpersonalmotivations.Thisentrepreneurwouldliketocreateasuccessfulcompany butbuildingacompanytobelistedontheNASDAQwoulddefinitely NOTbeadrivingforce.Insteadthisentrepreneurwouldbemorelikelytobe “income statementaffluent” overanyoftheothertypesofEntrepreneurslisted andthe choiceofbusinessesheorshewouldchoosetobeinvolvedwithwouldgenerallybe non-scalable,butusuallycashgenerativebusinesses.
2)TheEmpireBuilder:
Thisparticularentrepreneurwouldbeclassedas “balancesheetaffluent.” Thisentrepreneurbuys butdoesnoteasilysell,usuallystubbornlychoosingtogo “long” on allofhisinvestmentsandbusinessdecisions.Thisentrepreneurwouldnotreallyconsidersellingorexitingfromhiscompany,unlessitwasabsolutelyessentialorinvolved membersoftheboardphysicallydragginghim/heroutoftheirpresidentialchair.
3)TheSerialEntrepreneur:
Itisfairtostatethatthisentrepreneur’smainmotivationwillbethecashpayouton theexitorsaleoftheirventuresothattheyareabletomoveonandbuildtheirnext company.
Source: RishiAnand, “WhatTypeofanEntrepreneurAreYou?” Under30CEO, March27,2012,from http://under30ceo.com/what-type-of-an-entrepreneur-are-you Reprintedwithpermission.
ACTIONSTEP 2 WhyDoIWanttoBean Entrepreneur?
1.Reviewyourcurrentjobsituation. Areyouhappy?Areyouexcited aboutgoingtoworkeachday?Is theresomethingelseyouwould ratherbedoing?Ifmoneywere noobject,whatwouldyoudo?
2.InyourAdventureNotebook,make alistofallthereasonswhyyou wanttobecomeanentrepreneur.
3.Assesshowthosereasonswillfit intoyourdesiredpersonal,family, financial,andprofessionallifestylesandyoursocial,spiritual, andegoneeds.Spendafewminutesnowandmany, many hours throughoutthenextfewmonths reviewinghowvariousbusinesses fitintoyourprioritizedlist.What doesn’tfit?Whatdoes?
4.Makealistofallthereasonsyou donotwanttobecomeanentrepreneur.Reviewthelist.Whatcan youdotominimizetheseissues? Whenyouhonestlyreviewthe advantagesanddisadvantagesof beinganentrepreneur,youwill seethattheyoftenareflipsides ofeachother.Forexample,many peoplewanttobecomeentrepreneurstobetheirownbossonly tofindouttheynowhavemany bosses employees,customers, suppliers,andinvestors.
5.Besuretolookrealisticallyatyour listsandkeeprefiningthemasyou seekfulfillmentofyourpassions anddreams.Asyouexplorevarious businesses,continuetoreturnto youranswers,andfocusonwhether yourselectedbusinessideaswill meetyourpersonalgoalsaswell asyourentrepreneurialfocusand passion.
Inadditiontothetypesabove,therearemanyothertypesofbusinessowners includingreluctantentrepreneurs,whocometoowningtheirownbusinesses oftentimesoutofnecessity,suchasBernard’sMcGrawfounderofBernard’s CreoleKitchen:
AfterHurricaneKatrina’sdevastationinNewOrleans,Bernard,hiswife,andsix sonsevacuatedtoTexas.Backhome,Bernardhadbeencateringmanagerforthe BayouBaglery,whichclosedafterthehurricane.Withnohomeorjobtoreturnto inNewOrleans,Bernarddecidedtosethisfamily’srootsdowninSanAntonio, anddowhatheknowsbest:CreoleCooking.
Bernard’sfirstrestaurantwasinarun-downshackonthecity’sSouthside.Hesoon hadaloyalfollowing,aswordspreadabouthisdeliciousfood.HewontheSanAntonio Critic’sChoiceAward,theBluePlateAward,andtheTalkoftheTownAward.
WhilestudyingBiblicalTheologyatTheBaptistUniversityoftheAmericas, Bernardfinallyreceivedthebreakhedeserved.Thecollegeaskedhimtorelocate “Bernard’sCreoleKitchen” intheirdiningarea.
BernarddecidedtoformallyfinancehisbusinesswithaloanfromACCION Texas-Louisianaandstartbuildinghiscredit.Withhis$4,265loan,hestockedhis newlocationwithsuppliesandhiredthreepart-timeemployees.Henowhasa guaranteedamountof85studentsaday(plusadditionalstudentswithoutmeal planswhopaycash),andarestaurantwithaseatingareaforhisregularcustomers.
Bernardrememberstheloveandgenerosityhereceivedduringthestruggleof startinganewlifewithlessthanasuitcaseofbelongings.Evenwithhisdemanding scheduleofrunningabusiness,Bernardhasstillfoundtimeduringhisdaysoffto feedhomelesspeoplewithaprogramhestarted, “GumboUndertheBridge” .
Source: Accion.From www.accion.org/page.aspx?pid=4014,(AccessedMay14,2012). Reprintedwithpermission.
Othersbecomeaccidentalentrepreneurs,suchasthethousandsofindividuals whohavesolvedaproblembywritinganAppandfoundthemselvesinbusiness! JosieRietkerk,ownerofCaterinas,openedherfirstretailstoretokeepaneyeon herthreeteenagers.Nowthoseteensaregrownandtwoofthemhelprunfour stores.ChrisMcCormack,plantedavegetablegardenforhisparentsandsoon hadabusinessbuildingandplantinggardensforothers.Thesearethegood typeofaccidents,thoughsomearewaymoreprofitablethanothers!
Strivingtosolvesocietalproblemsthroughentrepreneurshipandaffect sustainablesocialchangepropels socialentrepreneurs likeDalePartridgeand AaronChavez,foundersofSevenly:
Confrontingtheirownlackofactivismandtheneedforsocialchange,theydreamed ofmotivatingpeopletocareabouttheplightofthoselessfortunate.
Convincedthatpeoplewouldtakeactionifgiventhemeans,theyestablishedSevenly toaddresssevencauses:hunger,water,slavery,aid,disaster,medicalandpoverty.
Theydonate$7fromeveryfairtradeT-shirtpurchasetoitscharitypartnerofthe week;itraised$175,000initsfirstsixmonthsofoperation.Everyweek,Sevenlypartners withadifferentcharity,creatingaspecialT-shirtthatrepresentstheircause.Eighty-five percentofitssalesaredrivenfromsocialmedia,whichSevenlycreditswithitssuccess.
Source: ElaineMurphy&SarahVaughn, “40UNDER40:DalePartridge&Aaron Chavez,” 01May2012, www.ocmetro.com,(AccessedMay14,2012).Reprintedwith permission.
Onemoretypeofentrepreneur an intrapreneur isactuallybornwithinan organization.With3M’sArtFryandSpencerSilver,creatorsofthePost-Itnote, beingtwoofthemostfamousintrapreneurs.Thementookadvantageof3M’s “bootlegging” policy,whichencourages3Memployeestouse15percentof theirtimetodeveloptheirownideas.
Yourjobsituationcanchangequickly;yourlifesituationmaychangeor yourpersonaldesiresmaychange.Thus,youmaybebecomeanyoneofthe abovetypeofentrepreneurs.TakeamomentnowandcompleteActionStep2 asyoudelveintoyourentrepreneurialmotives.
Socialentrepreneur Solvingasocial problemthroughentrepreneurship
Intrapreneur Entrepreneurwithina largecorporation
■ REVUP Smallcompanies,thosewithfewerthan100employees,employoverhalfofthe private-sectorworkersintheUnitedStates.Start-upsproducenewjobs,and thesejobsarecreatedbyanabsolutelyuniquepartnership themarriageof money,risk,andhardwork.Themoneycomesfromsavings,friends,family, creditcards,secondmortgages,bankloans,angelsandventurecapitalists.
Hardwork,faith,andpassioncomefromthedrivingforceoftheentrepreneurandfromthosewhotrusttheentrepreneur.Entrepreneurshipshouldgrow andblossomwiththefields biotechnology,nanotechnology,surveillancetechnology,organicagriculture,greentechnology,andothers sotheyareripeand readyfortheharvest.Plantearly.
YouareintheAgeoftheEntrepreneurandmoneyandyourbirthdatearenolongerbarriers.Infact, “AccordingtotheGlobalEntrepreneurshipMonitor,peopleover theageof35madeup80percentofthetotalentrepreneurshipactivityin2009.”
ReadytoStart? First,youneedtobecomeorganized,startingwithyourAdventureNotebookin ActionStep1.Somepeoplebelieveorganizationstiflescreativity.JanWilkeswas likethatuntilshesawthevalueofusingherAdventureNotebookindeveloping anewInternettravelbusiness RomanticCaliforniaEscapes.
RomanticCaliforniaEscapes FromAdventureNotebook toInternetTravelBusiness Duringherfiveyearsworkingasatravelagentforthreedifferenttravelagencies,Jan keptrecords,listingwhatseemedtobeimportantelementsofthetravelbusiness,her contacts,newsandmagazinearticles,ideas,competitors’ ads,websites,andbusiness cards.HerInternetgurufriend,PatPerk,tiredofworkingforotherpeople,enthusiasticallyagreedtobeherpartnerinstartingupanewcompanyoftheirown.
Afterreviewinghernotes,Janlookedforagapinthemarketplace.Sherealized thatmanyofherclientswerelookingforshortbreakawayescapes.Withbothhusbandandwifeworkingfull-time,week-longescapesweremoreandmoredifficult forherclients.Therefore,PatsuggestedtoherpartnerthattheytapintotheInternet byfocusingonusingwebsitesthatofferedweekenddiscountsoncars,hotels,andairfareswithinCalifornia.
Afterextensiveresearch,JanandPatrepackagedthesedealsintogreatCalifornia weekendescapes.Byaddingextrassuchasdinners,flowers,theatertickets,andlimousineservices,RomanticCaliforniaEscapesemerged.Theextrasaddedvaluetothe tripsandremovedalltheplanninghasslesthatbusycouplestodayhavelittletimeor inclinationfor.
Next,JanandPatdeterminedhowbesttoreachtheirmarket.TheywerefortunateinthatJanhadretainedmostofherpastclients’ phonenumbers,homeaddresses andemailaddresses.SheandPatsentemailpostcardsofbeautifulCaliforniascenes announcingtheirnewonlineservice.UponregisteringonlineforweeklyemailspotentialcustomerswereofferedachancetowinawonderfullyromantictriptoBigSur’ s PostRanchInn,oneofthemostexclusiveprivateresortsinCalifornia.Surprisingly, 30percentresponded.Onceonline,respondentswereaskedtofilloutdetailedquestionnairesabouttheirtraveldesiresforweekendescapes.
Knowingmostofhercustomersonapersonalbasis,Jandecidedtopickupthe phoneandspentthreeweekendstouchingbasewitheachofherclients.Theywere thrilledwithherbusinessideaandprovidedfeedback,whichimprovedheroriginal businessidea.Intoday’shigh-techworld,oftentimes,personaltouchworksreally wellasitisunexpectedandgreatlyappreciated.
EveryTuesdayat5p.m.,RomanticEscapestweeted,e-mailed,andpostedtheir weekendescapesonFacebook.Thus,WednesdaythroughFriday,JanandPatwere busybookingtripsasmanypersonalemailswentouttocustomersaswellasgeneral listings.Withinsixmonths,theywereprofitableandclientsquicklybecamerepeatclients.SalesrapidlyincreasedduetostrongwordofmouthandFacebook,where
clientswereencouragedtoposttravelphotos.Romancewasintheair,andmoney wasinthebankforPatandJan.
BycompletingtheActionStepsinthetext,wehopeyouwillfindaprofitable nicheinthemarketplacelikePatandJan.
WhyTodayIstheDaytoBeginYourVenture Technologytodayallowsbuddingentrepreneurstoappearonequalfootingwith thebigguys.Withtoolssuchascloudcomputing,webdevelopmentonlinetools, webanalytics,accesstoaffordablephenomenalsoftwaredevelopers,softwarefor salesandprojectmanagement,onecanliterallybeginabusinessovernightifone chooses.Barrierstoentryaren’tjustfalling;theynolongerexistformanytypes ofnewventures.
WithSkypeandsmartphones,weincreaseourproductivityandcanoperate anywhereanytime.OneentrepreneurjustspentsixweeksvacationinginEurope withherchildren,pullingintoacaféforalatteandafewhoursofwork eachday.
Wordofmouth,whilealwaysoneofthemostimportantformsofmarketing, isonhyperspeedwithsocialmediapropellingstartups.Clientcontactandcustomerdevelopmentareenhancedbytwo-wayconversationsheldonline.Developingyourwebcontenttoadvertise,woo,andmaintaincustomersiseasierthanever asdesignfreelancersandcodersfromaroundtheworldarejustaclickaway.
PayPalandSquareallowforpaymentcollectioneasebeyondbelief.Allowing entrepreneurstocollectfundsimmediatelyanyplaceanytime! Thechangingworldandeconomyopenendlesspossibilitiesandtechnology opensthegateswideforentrepreneurstoactnow!Followonewriter’squestto beanentrepreneurusingtechnology,hardwork,andintuition.
MarketertoWriter
Whensheturned30,SallyHoneycuttBinsontookagoodlookatherlife.Sallylived inCharleston,SouthCarolina;shehadafinejobasamarketingdirectorofarestaurantchainandearnedagoodsalary.Herhome sunnywithaviewofthewater waswonderful.ButSallypaidapriceforthe “goodlife” withendlessmeetings, squabbleswithherboss,andlotsofairmiles.
Toplotherfuture,Sallydrewamindmap(Figure1.3).Whensheputherself insideabubbleinthecenterofthepage,shedidnotgetanywhere.Whensheadded “writing” insideabubble,shefoundanewcareer:writer.Sallyhadadegreein Englishliteratureandreadconstantly.Knowingshewantedtowritefull-timeeventually,Sallycreatedahomeofficeandbegantowrite.Herfirsteffortswererejectedby agentsandpublishers.
SallythenresearchedherlocalbookstoreandAmazonlistingsandwasstruck byhowlargetheromance,mystery,andscience-fictionsectionswere.Usinghermarketingbackground,shetookafewbookstoremanagerstolunchandasked:What wasselling?Whatdidreaderswant?Whatdideditorswant?Whichbooksreceived themostpromotion?Shealsospentmanyhoursresearchingbooks,reviews,and readershipstatisticsonlineatAmazonandPowell’ s.
Armedwithinformationaboutbooksalesandtargetreaders,Sallyenrolledina writingcourseatherlocalcommunitycollege.Theinstructorwasapublishedauthor. Withhisguidance,Sallystudiedthemysterygenre.
Beforeshebeganwritinghersecondbook,Sallycheckedoutwebsitesforanythingrelatedtomystery.AtMysteryNet.comshefoundasiteformysterieswithinformationonwriting,selling,readers’ groups,andwebzines.Sallyjoinedtwo organizations:MysteryWritersofAmericaandSistersinCrime.AcontactfromSistersinCrimeconnectedSallytoseveralliteraryagents.
ABookIsaProduct Beforeshedevelopedherproduct,sheengagedinintensiveresearchanddevelopment (R&D)byanalyzingtenmysterynovels.Usingtheanalyticaltechniquesshelearned
MindMapforMysteryWriterSallyHoneycuttBinson inherwritingclass,Sallydiscoveredthesecretofmysterywriting:concealandthen reveal.Followingherinstructor’sadvice,thesettingofherfirstmysterywasalocationSallywasfamiliarwith:anislandoffthecoastofSouthCarolina.Becauseshe couldrelateeasilytoherowngender’sthinkingpatterns,Sally’smaincharacters werefemale:thesleuth,thevictim,andthekiller.
Inoneyear,Sallyhadamanuscript.Althoughheragentconnectionsthrough SistersinCrimedidnotworkout,SallydidfindanagentthroughtheInternetand mailedaplotoutlineandthefirstthreechapters.Theagentsoldthebooktoapublisher.Andwhentheroyaltycheckswereenoughtoprovideherwithsixmonths’ financialsecurity,Sallytenderedherresignation.Bythen,hersecondbookwas underway: MurderonAmeliaIsland.
■ WHATISYOURCURRENTFAMILYANDFINANCIALPICTURE? You’velookedatwhyyouwanttobeanentrepreneurinthisdynamictime,now youneedtoassessyourcurrentfinancialsituationtoprepareforyourfutureas onebycompletingActionStep3.Whatareyouworth?Whatmoneydoyou haveaccessto?Isyourfamilydreamingthesamedreamasyou?Ifso,great.If not,askwhatthey are willingtodotohelpandwhat are theywillingtogiveup? Anessentialelementtoachievingasuccessfulentrepreneuriallifestyleis familysupport.Spendagreatdealoftimeunderstandingtherealisticdemands onyouandyourfamilyfrombothtimeandfinancialstandpoints.
ACTIONSTEP 3 ReviewYourFinancialand FamilyPicture
Sitdownwithyourfamilytodiscuss howstartingyourownbusinessmay affectthefamily’sfinancialfuture. CompletethePersonalFinancialStatementandPersonalBudget,whichcan befoundinAppendixC.Youwillneed thesefigureslatertodetermineyour financialneedsandalsotoassessthe financialcontributionyouwillbeable tomaketoyourbusiness.
Aftercompletingtheabove,considerthefollowing:
1.CanIliveonless?Howmuchless?
2.WhatcanIcutfrommybudget?Go througheachlineiteminthebudgettoassesswhereyoucancut expenses.
3.HowlongcanIcontinuetocutmy budgetbeforeIfeeltoodeprived? Howlongbeforemyfamilyfeels deprived?
4.Yourpersonalfinancialstatement willshowyourassetsandliabilities.Whichofyourassetscan youaccesseasilyandturninto cashandwhatamountofyour networth(assetsminusliabilities) areyouwillingtoputatrisk?
5.Discusswithyourfamilythetime andmoneysacrificesthatwillbe involvedindevelopingyournew venture.
6.Meetwithafee-onlyfinancialplannerandyouraccountanttodiscuss youruniquefinancialissuesif needed.
Abusinessisaliving,breathing entity,andittakestimeforthegolden eggtohatch.Bepreparedtowait awhile.
Thefollowingwebsiteswillassist youinpreparingbudgetsandwill answermanyquestionsaboutfinancialplanningissues.
LearnVest Mint
Kiplingers
Reviewyourcurrentfinancialpicture.CompletethepersonalfinancialstatementandbudgetinAppendixCanduseMint.comtotrackyourexpenditures. Sitdownwithyourfamilyandreviewhowtoreduceexpenses.Formany,shorttermfinancialpainisworthlong-termgain;forothers,itisnot.
Ifyouareriskingalargesumoffamilymoneyand/orgivingupasubstantial salary,considermeetingwithaprofessionalfinancialplannerfirst.Fee-only plannerswillmeetwithyoutodiscussyoursituationwithoutthepressureto purchasefinancialproducts.Inaddition,aplanningmeetingwithyouraccountantmayalsoproveveryhelpful,assomebusinessescanbestructuredtoprovide taxbreaks.
Amajorimpedimenttoentrepreneurshipistheabilitytoobtainaffordablehealthinsuranceforyouandyourfamily.Thisissueshouldnotbe takenlightlyandshouldbeaddressed before youtaketheleap.Checkout COBRAinsurancefromyourcurrentemployer,yourspouse ’ sinsurance, associations ’ insuranceofferings,andprivatehealthinsurancethroughan HMOorPPO.
Also,lookintopolicieswithlowerratesthatprovidecatastrophiccoverage. eHealthInsuranceonlineprovidesquotesandifyouareahealthy25yearold, yourpremiumsmaybeintheareaof$100to$200amonth.
Manyentrepreneurshavefoundworking20hoursaweekatoneofthe fewfirmsthatprovideinsurancetopart -timeemployeesisonealternative. Forothers,theirspousecarriesafamilypolicy.Youmustbewillingtobe creativeandworkhardonthisimpor tantareatoprotectyourselfandyour family.Newlawsimpactinghealthins urancewillbeimplementedoverthe nextfewyearssostayabreastofchangesandforfurtherinformationread Chapter12.
Believinginyourdreamsisanimportantpartofbeinganentrepreneur. Yourgoalsandloveofwhatyoudowillmakethesacrificesworthitasyou reachforthepossibilities.Livingathomeforanextrayeartosavecash,workingapart-timejobtosupportyourfledglingbusiness,ormovingtoalessexpensiveareaofthecountryallbecome realisticoptionsifyoubelievein yourowndream.
AmilyaAntonetti,founderofSoapworks,andherhusbandwerewillingto leavetheirjobs,selltheirhome,andriskeverythingfortheirdreamofproviding hypoallergenic,nontoxiccleaningproducts.Rememberthatmoststart-upbusinessesfailduetolackofadequatecashflowandfunding.So,whatareyouwillingtogiveupforyourdreamsoyouwillhavethefundstomakeyourdreama reality?
Besidesinsuranceandfinancialplanning,youneedtobeawareofyourcredit scoreanditsimplicationsforborrowing.PleasereviewtheinformationinChapter9 dealingwithcreditandyourcreditscore.
■ WHATDOESITTAKETOBEANENTREPRENEUR? Tofindoutifyouhavewhatittakes,firstprofileyourselfasanentrepreneurin ActionStep4,andcompletethequestionnaireinthePassionfeature.Youwill notbeaperfectfitonanyquestionnaire,becausethereisnosuchthing.
TheassessmenttoolsinActionStep4andothersonlineaddressmanyissues toconsiderbeforeenteringtheworldofentrepreneurship.Taketimetoexplore theseissuesandshareyourresponsesandconcernswiththosewhoknowyou wellandwantthebestforyou.
Entrepreneurshiprequirespersistence,hardwork,commitment,reliability, decisiveness,risk,andfailuremanagement.Asanentrepreneur,yourchallenges willincludebalancingfamilyandwork,maintainingfocus,reachingemotional
PASSION DoYouHavethePassiontoBeanEntrepreneur?
Thereisnoone “perfect” entrepreneurialsetoftraits,buttherecertainlyare traitsalongwiththeinnerstrengthtobelieveinyourselfandyourpassions, whichareimportanttoyoursuccess.Takesometimetoanswerthefollowing questionshonestly.
1.Doyoutrulybelieveinyourideas?
2.Areyouorganized?
3.Canyouhandlepressureandstress?
4.Areyouareasonablerisktaker?
5.Areyoucreativeandcanyoushareyourcreativeexcitementwith others?
6.Canyoumakelemonadeoutoflemonsandrollwiththepunches?
7.Doyoudreadroutinedays?
8.Areyouself-confident?
9.Areyoureliableandreadytoworkreallyhard?
10.Areyouwillingtofightforwhatyoubelievein?
11.Areyouabletomakedecisionsonyourown?
12.Areyoucomfortableworkingwithnewpeopleandnewideas?
13.Areyouaself-starter?
14.Whenyouloose,canyoudealwithitandmoveon?
15.Canyoucontrolyouremotionsandtemper?
16.Doyouhaveaneedtoachieve?
17.Canyoulaughatyourself?
18.Areyoudisciplined?
19.Doyouhavelotsofideasandseesolutionstoproblems?
20.Canyoulivewithoutperfectionandexternalrecognition?
Bepassionateaboutyourproductsorservicesandemployeesandyou willbeonestepclosertoentrepreneurialsuccess.
andmonetarygoals,anddealingwiththeinitialexhaustion,loneliness,and stressinherentinalmostanyentrepreneurialventure.
Inadditiontoastrongworkethicandtheabilitytohandlestress,anentrepreneurmustpossessbasicbusinessskills.Lookingaheadyouwillneedtoassess yourstrengthsandweaknessesintheareasofsales,marketing,financialplanning,accounting,personnelmanagement,technology,andsoon,asshownin Table1.1.
Ifyoufindyourselfquestioningyourabilitiesinanyonearea,searchoutcollegeclasses,books,onlineclasses,andmentorstofillyourskillgapsbeforemakingtheentrepreneurialleap.Also,theKeyPointsfromAnotherViewfeatureat theendofthechapterexploresthevariousrolesyouwillplayasan entrepreneur.
Wearingmanyhatsisachallengebutnecessaryforalmostallearlyentrepreneurs.WoodyStingley,founderofanindustrialproductsfirm,sharedhow duringhisfirstyearinbusinessheworkedalleveningdevelopingnewproducts,sleptinhisofficeforafewhours,wokeupwashedhisface,puta cleanshirtandtieonandcalledoncustomersallday.Justtorepeatagain andagain.ManyyearslaterWoodywas very happyhehadworkedsohard earlyon!
ExploringyourpassionsandneedsinthisfirstchapterstartsyouontheBusinessPlanjourney.Toobtainthemostfromthistextrequiresthatyoucomplete theActionStepsimmersingyourselfinanewandexcitingventure.Evenifyou donotendupfollowingthroughwithyourBusinessPlan,youwillhavelearned theprocess.
ACTIONSTEP 4 Self-Assessment Completethequestionnairesin Table1.1andthePassionfeature. Withyourentrepreneurialjuicesflowing, goonlineandaccess:theSBA’sSmall BusinessReadinessAssessmentTool andtheUniversityofPennsylvania’ s AuthenticHappinesssiteforseveral differentcharacterandstrengthstests, Afterwards,youshouldbeableto answerthefollowingquestions:
1.Whatareyourpersonalstrengths?
2.Whatskillshaveyouacquired throughtheyears?
3.Whatareyougoodatdoing?
4.Whatmakesyouhappiest?
5.Whattypeofbusinessesmightofferyouthefulfillmentyoudesire?
6.Whatpersonalitytraitswillhelp youinyourownbusiness?
7.Whatpersonalitytraitsmighthinderyouinyourownbusiness?
8.Whatdoyouvalue?
9.Whatareyourfinancialdreams?
10.Whatareyourpassions?
InActionStep5,youwillbe pullingtogetherallyourinformation. Keepyourinformationcurrentand continuetorefineyouranswersas youcontinuetoworkonyourBusiness Planandtalktoothers.
StrengthsandWeaknessesSkillChecklist Thechartbelowwillhelpyouidentifyyourstrengthsandweaknessesandwillgiveyoua betterideaofwhetheryouarereadytobecomeasmall-businessowner.Examineeachof theskillsareaslistedinthechart.Askyourselfwhetheryoupossesssomeoralloftheskills listed.Rateyourskillsineachareabycirclingtheappropriatenumber,usingascaleof 1through5;use1forlow,2forbetweenlowandmedium,3formedium,4forbetween mediumandhigh,and5forhigh.
Skills
Sales
• pricing
• trackingcompetitorsbuying
• salesplanning
• negotiating
• directsellingtobuyers
• customerservicefollow-up
• managingothersalesreps
• trackingcompetitors
Marketing
• advertising/promotion/publicrelations
• annualmarketingplans
• mediaplanningandbuying
• advertisingcopywriting
• socialmediamarketingstrategies
• distribution-channelplanning
• pricing
• packaging
FinancialPlanning
• cash-flowplanning
• monthlyfinancials
• bankrelationships
• managementofcreditlines
Accounting
• bookkeeping
• billing,payables,receivables
• monthlyprofitandlossstatements/balance sheets
• quarterly/annualtaxpreparation
Administrative
• scheduling
• payrollhandling
• benefitsadministration
PersonnelManagement
• hiringemployees
• firingemployees
• motivatingemployees
• generalmanagementskills
PersonalBusinessSkills
• oralpresentationskills
• writtencommunicationskills
• computerskills
• word-processingskills
• faxande-mailexperience
• organizationalskills
StrengthsandWeaknessesSkillChecklist (continued)
Intangibles • abilitytoworklongandhard
• abilitytomanageriskandstress
• familysupport
• abilitytodealwithfailure
• abilitytoworkalone
• abilitytoworkwithandmanageothers
Total
Afterratingyourselfineacharea,totalupthenumbersandapplythefollowingratingscale:
• Ifyourtotalislessthan20points,youshouldreconsiderwhetherowningabusinessistheright stepforyou.
• Ifyourtotalisbetween20and25,youareonthevergeofbeingready,butyoumaybewiseto spendsometimestrengtheningsomeofyourweakerareas.
• Ifyourtotalisabove25,youmaybereadytostartanewbusiness.
Source: ReproducedwithpermissionfromCCHBusinessOwner’sToolkit™ , http://www.toolkit.cch.com, publishedandcopyrightedbyCCHTax&Accounting.
Oneneverknowswhentheentrepreneurialpassionwillstarttoburnagain, andwhenitdoes,youwillknowtheprocessandbeabletofollowyourdream throughwithaBusinessPlan.Keepyourmindopenasopportunitiesabound.
“Successfulfounderscanbegregariousortaciturn,analyticalorintuitive, riskaverseorthrillseeking,” accordingtoAmarBhide(HarvardSchoolofBusiness),whoalsobelievesthatthereisno “ideal” entrepreneurialpersonality. Thus,oneseesMarkZuckerberg,SteveJobs,RichardBranson,andBillGates, allwildlysuccessfulbutabsolutelynotallthesamepersonality!
Theentrepreneurwhosucceedsisonewhoworksincrediblyhard.ButJeff BezoshasjokedinthecaseofAmazon.com’ssuccess, “halfofitwastiming, halfofitwasluck,andtherestofitwasbrains.Thefactofthematteris,the oddsarestackedagainstanystart-up.Heavilyso.There’sahugeamountof luckandtiminginvolved.”
EntrepreneurialSuccess Startingabusinessallowsyoutodesignyourownsuccessfullifestyle,which ActionStep5asksyoutodo.WarrenBennisandPatriciaWardBiederman, authorsof OrganizingGenius (PerseusBooks),developedafour-questiontest aimedatanyoneseekingsuccess.Thequestionsare:
1.Doyouknowthedifferencebetweenwhatyouwantandwhatyouare goodat?
2.Doyouknowwhatdrivesyouandwhatgivesyousatisfaction?
3.Doyouknowwhatyourvaluesandprioritiesare,whatyourorganization’ svaluesandprioritiesare,andcanyouidentifythedifferences betweenthetwo?
4.Havingmeasuredthedifferencesbetweenwhatyouwantandwhatyouare abletodo,betweenwhatdrivesyouandwhatsatisfiesyou,andbetween yourvaluesandthoseofyourorganization,areyouabletoovercomethose differences?
Source: FastCompany, http://www.fastcompany.com/magazine/09/one.html (AccessedMay9,2012).
Bennisconcludesthatthekeytosuccessisidentifyingtalentsuniquetoyou andthenfindingtherightarenainwhichtousethem.Manyentrepreneurial
ACTIONSTEP 5 “Inc.Yourself”
Mindmapyourwaytoapictureof whatyouwantyoutobecome,your product yourself.Thereisnosuch thingasawrongideaorawrong direction.Sofaryouhavelookedat whyyouwanttobeanentrepreneur andwhatsuccessmeanstoyou,and youhavereviewedyourskills,accomplishments,andpassions.Itisnow timeforyoutomindmapthelife you want.
1.ReviewyouranswerstoAction Steps2through4anddefinesuccessforyourselfbyreviewingthe checklistbelowandalsoaddany additionalitemsthatsignifysuccesstoyou.
SuccessChecklist A.Doyoumeasuresuccessindollars?Ifso,howmany?
B.Whatotherwaysdoyoumeasure success?
• Beingabletoenjoyacertain lifestyle
• Dealingwithfriendlycustomerswhoappreciateyour service
• Power,recognition,and/or fame
• Beingabletoliveandwork whereyouwant
• Providingemploymentand trainingforothers
• Beingthebestbusinessin yourarea
• Havingtimetoenjoyyour childrenandhobbies
• Participatinginteamwork
• Buildingalegacy
• Earlyretirement
• Makingpeople’slivessafer andbetter
• Helpingothersdirectlyor indirectly
2.Drawacircleinthemiddleofa pieceofpaper.Writeyourname insidethecircle.Closeyoureyes forafewminutes,andallowyour imaginationtotakeover.Thinkof yourselfasaproduct.In5to 10years,whereandwhatdoyou wanttobe?Whatdoyouwant personally,socially,spiritually,financially,andasalifestyle and whatareyourmaterialwantsand needs?
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