Small Business Partnership Pros and Cons

partnershipPartners can be both a blessing and a curse.

Many small business owners swear that without their partners they never would have gotten where they are today. Others are certain that going solo was the right decision, and a partner would just have slowed them down.

Here we try and highlight both sides of the argument for you to come to your own conclusion about what is going to work best for you:

Pros of having a Partner:

  • You can keep each other motivated on the hard days
  • There is someone else you can trust to watch things when you are away
  • Often skills you don’t have they will have, and vice versa
  • Someone else to contribute capital, credit, collateral to the business
  • A good partnership can get started faster than a single person
  • There is someone else to bounce new ideas off
  • It isn’t lonely at work, or at the top

Cons of having a Partner:

  • It takes longer to be able to pay yourself what you deserve, since you are splitting the profits
  • You can’t do everything the way you want
  • There is the constant concern that the partnership will become unequal or unfair
  • You may eventually want to go in different directions or at different speeds
  • You will be personally liable for decisions your partner makes unless you form a corporation or LLC
  • Most decisions take longer since you have to talk them over first
  • Employees can be let go but a partner you are stuck with unless you actually buy them out

To be sure, there are pluses and minuses to having a partner that you have to carefully consider. If you need a partner because they the capital or credit you lack, then you may have to live with it until you are in a better position yourself to go solo.

Or you may really need a partner to help keep you on track and motivated to continue even when it gets tough.

If you do take on a partner, and I can’t stress this enough, then you need to have a rock solid partnership agreement in place BEFORE you do anything else.

If I had a dollar for every business partnership that didn’t work out and ended badly, I’d have infinity dollars and counting.

And your partnership agreement must spell out in very clear black and white no possibility for misunderstanding how the partnership can be broken up or how one partner can leave- that includes how you value the company, what they can take with them, how they will be paid out for their share- everything.

If your partnership agreement was nothing BUT how the partnership ends you would be ahead of 90% of other partnerships. Don’t make the mistake of thinking you are the exception because you are family or you’ve known each other for years or you are married or anything else- do this or really regret it later.

Either way, as long as you know what you are getting, and giving up, by having a partner, then the decision should be easy.

26 Business Blogs You Should Be Reading Now

There is no shortage of blogs out there, but time IS short and you don’t want to waste your time reading stuff that isn’t going to benefit you. Here is a list of business blogs in no particular order that I think are worth the time and that may not be on your radar yet:

ScreenShot008Are you working on selling a product that would like to see in stores, magazines and blogs and find out how to make a much bigger splash with it than you are currently getting? Then check out Launch Grow Joy and learn from the wisdom of someone who has done it already and teaches others to do it every day. Aside from the blog there is also a podcast and even if you aren’t on the exact course this blog is aimed at there is a ton of good general information and inspiring stories here to give you plenty of reasons to keep on stopping by.

ScreenShot009If you are working as part of the freelance economy, or that is just one source of revenue for you, check out the Freelance Guerrilla blog. The best part about this blog is that it doesn’t just report exaggerated tales of success from unnamed sources but it provides real world stories about how to survive and thrive working for yourself providing skills and services to others as a freelancer. A service business is the fastest, lowest cost way to break into entrepreneurship and it can turn into serious money seriously fast if you do it right and do it smart. This is the blog to read if you are going down this path or even just considering it.

Although Blogtrepreneur sounds like it might be just for bloggers really the site is packed with all kinds of business advice that goes far and wide beyond just topics of interest to those running blogs. The founders Matthew and Adam Toren are brothers, serial entrepreneurs, investors, and mentors. For nearly 20 years, Matthew and Adam have provided instruction in management concepts, marketing, and finance to emerging and distressed small businesses. There are a ton of posts and the site has a huge backlog of information that is definitely worth checking out and checking in with on a regular basis.

ScreenShot007Are you working on launching something right now? The check out the Epic Launch Blog– this one is filled with inspiration as well as practical advice for all aspects of launching a new business that has all the right ingredients for success. There are tons of posts and many of them really dig deep to cover all sides of a question. Poke around and read the articles that apply (they’ve got posts going back to 2009!) and see what else you can learn. Chances are if you have a question about business you’ll find an answer here.

I love travel and I love being aScreenShot006n entrepreneur but I really haven’t done them together- and certainly not the way The Suitcase Entrepreneur is doing it! Natalie has been traveling the world working from wherever she finds herself without the usual constraints of an office, staff or regular work hours! If you are looking for a how to guide on being location independent, or just want to learn more about structuring something that could offer you that option down the road, then learn it from someone who has already done it!

ScreenShot005If you want an informative all around blog with an interesting voice check out Small-Bizsense. Run by Kim “The Chick Geek”, Small Business Sense shares small business ideas, tips and resources for independent Entrepreneurs and Small Business owners. I like their monthly roundup posts that often point to great posts I wouldn’t have otherwise seen and there are lots of list posts in between covering everything from productivity tips to top five business podcasts.

ScreenShot004How about this for an inspiring title: Eventual Millionaire! Maybe you are already there, but either way, you are going to learn a ton from the successful entrepreneur interviews website owner Jaime Tardy posts for your education. The interviewees are successful entrepreneurs who are sharing their ups and downs and secrets to success in their time with Jaime. She also has her own inspiring story about getting out of debt and quitting a job she hated to move on to do something she loves. It is a great site to visit for a regular dose of knowledge and inspiration!

ScreenShot003If you are working in a small town or a rural area then there is a blog just for you! It’s called Small Biz Survival and it focuses on the unique challenges facing business owners who live where the populations are small and the access to many resources other might t ake for granted are not available or hard to come by. The good news is that small towns have their own unique advantages and you can be successful if you can apply the right way of thinking to the situation you are facing. Of course, many of these lessons will apply to any small business and so I would make the stop here to check out the articles no matter your geographic location as what you find will very likely be a gem you can use!

ScreenShot016If you are thinking about joining the ranks of the work from home crowd then check out the posts at SparkPlugging. This site is all about the work at home entrepreneur and the specific business issues, ideas and inspirations they deal with. Theses days with so much of the work world accessible online almost every business owner is at least a partial work from home entrepreneur anyway so there is going to be something here for just about everyone.

If you are going more of the VC route with your startup then check out Startup Professionals Musings. This blog focuses on finding business ideas, mentors, raising capital and networking. The posts are long and deep and go into tons of detail. They are written by Martin Zwilling, CEO & Founder of Startup Professionals, Inc.; Advisory Board Member for multiple startups; ATIF Angels Selection Committee; Entrepreneur in Residence at ASU and Thunderbird School of Global Management. I am amazed that he posts as often as he does for as much as he writes but that is just another reason to make this a frequent stop on your reading list.

The Secrets of EnScreenShot003trepeneurship offers a general overview of the world of small business and offers lots of practical hands on tips to make the new owner or aspiring entrepreneur more business savvy. They post regularly and cover a wide range of topics.

The Right Stripes is a website for women launching startups. A quick review of their posts though pretty quickly demonstrate these are topics any entrepreneur is going to benefit from reading. They post regularly and cover a wide variety of topics and although some do address issues specific to women I wouldn’t let that stop anyone from making it a regular stop on your blog reading tour.

The 500bScreenShot004 is a another general business website featuring entreprenuer success stories and general business how to lessons. In their words “The 500B is a resource for entrepreneurs with tips, business insights, how to’s and more.” Although the posting isn’t super frequent the quality of the posts is top notch.

TreplifeDad is a business blScreenShot005og for “parent entrepreneurs” featuring general business and entrepeneur articles to helps with all aspects of business building and with a special emphasis on the challenges faced by parents who are also business owners. As the father of two kids myself, I get it. Gone are the days of it being all about me and what I want to accomplish- I’ve got a balancing act to do now- and I love it!

For a blog on marketing help you should check out Ginger Bread. Although there are some more general articles most of the content centers around online marketing help for business owners- things like SEO, email marketing, content marketing and using social media effectively. These are all topics no business owner in any industry can ignore these days and the posts are both regular and actionable so definitely worth a browse through.

If you have anScreenShot006 online store or are thinking about starting one or adding one then look no further than the memorably named My Wife Quit Her Job. This blog offers practical behind the curtain information on what works and what doesn’t in e-commerce based on real life examples taken from their own store. The website also offers tons of free lessons as well as paid options for training for those who want to dig deeper. If you are hoping to quit your job and open an online store, you need to reading this!

Head over to SmallBizDaily for a great collection of all kinds of business articles. The posts run the gamut from management help to business trends and everything in between. The site is updated constantly and the posts make great quick reads from a variety of area experts. The site is run by Rieva Lesonsky who, prior to co-founding GrowBiz Media in 2008, was SVP/Editorial Director of Entrepreneur Magazine. I use to see her name and read her column there all the time back when I was just an entrepreneurial sprout myself.

The Grasshopper Blog is put out by the people who provide the phone service and is owned by the company Citrix which makes all kinScreenShot007ds of cool software most of us use but may not realize. The articles on their blog are often interesting and they post a few times a week about general business topics. Although they are doing it as a service to draw traffic to their core business they are nevertheless putting out quality content I would suggest dropping in your news feed or bookmarking for regular check ins to see what they have been posting lately.

If you are lookingScreenShot008 for ideas on creating your mission, your company vision or your general business goals, check out The Thriving Small Business Blog by Patricia Lotich, the founder of TSB.  Patricia is an MBA and a Certified Manager of Quality and Organizational Excellence through the American Society for Quality which facilitates the prestigious Malcolm Baldrige National Quality Award. She writes the articles on the blog and they are gold if you are looking for help in focusing and building your business’ organization and direction. She also offers consulting if you want to get one on one help or really have someone to help you with your road map and hold you accountable for your success.

ScreenShot010Are you thinking about a franchise or do you already own one? Check out the Franchise King’s blog for tons of great tips. Even if you don’t own a franchise if you are thinking about getting into a business where franchises will be your competitors then you should check out what they are doing and gather as much information as you can. If you are going into business using this model then you definitely want to go in with your eyes open as the are as many downsides as there are upsides to franchise ownership and you don’t want to land on on the wrong side. There is also plenty of good advice that applies to business owners in general and people planning to buy a non franchise business. Business is business and everyone can learn something from the king!

Unless you plan to be solo forever (which is an option, but a limiting one in many ways) you are going to need to hire someone. That is no easy task and the cost of bad hires is significant. Before you go down that road check out the Growth Everywhere blog. The website focuses on smart hiring from the entrepreneur and growing a business perspective (as opposed the the HR perspective) and helps you figure out how to do it right from the start. They aren’t just about hiring though- Growth Everywhere is a blog on business and personal growth. On Mondays we interview world-class entrepreneurs and pull out actionable insights to help you grow. Check it out and listen to the podcast as well.

There is no business today of any size that doesn’t use some technology. The smarter you use it the more efficient you can be and the more easily you can compete and wiScreenShot011n in your field. Therefore, it makes sense that you should be reading the SmallBizTechnology blog. These guys are focused on regular business owners and how they can make the best use of technology to leverage their time and talents to the greatest advantage. Like they say on their website: “ writes about technology solutions that increase efficiency, saves money or increases the revenue of a small business. This is what makes us excited. Period.” I am a big believer is using technology to make life easier and I love being able to show clients how we can do things way easier than they are used to or than the last person was doing it. It’s an easy win for us and it makes the client’s life easier so everyone is happy.

ScreenShot012You can’t put entrepreneurs in a box but you can certainly read the Entrepreneurs in a Box blog! This blog is about, in their words “This blog is for people interested in starting a new business, or interested in increasing performances of current business, or interested in increasing business potential energy of their business…” And what is “business potential energy”? A term the blog owner has coined based on his own research and experience- pretty cool! This site is updated often and is definitely worth a visit for all kinds of interesting posts on a range of business topics.

ScreenShot013Looking for a collection of business articles by entrepreneurs for entrepreneurs? Stop by Success Harbor and take a look a their collection of posts that will give you all kinds of insights and actionable tips you can use to help grow and improve your enterprise. The website is run by George Meszarozs, who I’ve actually met before at one of his Trustegrity networking events. He is the CEO of Webene, a web design and marketing firm. He has interviewed over 150 entrepreneurs and writes about a lot of different topics for entrepreneurs from how to start a business to strategy, branding, marketing, startups, and web design and development. Nice job on the website, George!

If blogging is your thing, or if like me having a blog is just part of your overall business marketing strategy then check out Shade of Info by Andrew Warner. He writes about building your audience, increasing conversions, targeting the right reader and everything else you need to know to have a highly successful blog. Of course, virtually all of these same principles apply to marketing in general- know your audience, build your client base, target your ideal customer, etc. So I would say this is going to make good reading for a whole lot of people who could put the ideas to work in their own businesses.

ScreenShot014What is the Frugal Entrepreneur? In the words of the owner, “I decided that I wanted to create a place where other frugal entrepreneurs and small business owners could find the small business tips, tools, and resources they need to help them run their businesses.” You will also finds lots of good general business articles and resources in addition to all the free document templates that were the original inspiration for the site. The reality is most new business owners are watching every dollar and can’t afford to spend frivolously, a fact which this website appreciates and works to remedy.

The Bottom Line in Buying a Business- Five Crucial Questions to Answer Before You Make a Deal

e_stepsBuying a business can be a very good way to get into your own business.

The advantages are obvious- you get instant cash flow, customers and a way of doing business that is already well established.

The tricky part is finding a business for sale that isn’t going to be a major headache or complete money pit, which is the reason many of them are for sale in the first place.

The key is to separate the few good ones from the many bad ones, and it all comes down to some simple points to evaluate. If you can get the right answer to these questions, you are well on your way to buying a business you can make into a solid success.

Here are the five things you must find out before you make any deals:

How is the business really doing?

It is all well and good to get basic financial information from the seller, but you need to dig a lot deeper than that to really understand if the rosy picture in the financial statements they showed you are really a good reflection of how the business is actually doing. If you don’t know enough about this to judge for yourself, then by all means get help.

First, if cash is part of the equation, be very skeptical. They may tell you they are making a killing off the books, but if there is no way for you to verify this, then there is no reason to believe it. It may be true, but you’ll never know for sure. Likewise, if they are making a lot of payments in cash under the table, then you have to be very skeptical about their real profits. They may not be telling you about all kinds of other expenses they have which aren’t leaving a paper trail.

Less obvious but just as costly is the fact that if you run the business right- according to the law, it will cost you a lot more in taxes, insurance, overtime, etc. than what it is costing them to run it illegally- meaning your profits will be commensurately lower.

The best defense against this problem is to get their tax returns, and compare them with what they are actually telling you. And don’t just take the tax returns they hand you (if they aren’t willing to show you this during the due diligence period, then you should be very nervous about their honesty), get their permission to request a copy of the returns be sent to you by the IRS. That way you know it is what they actually filed, not just what they cooked up in their own fake version of Turbotax or printed reports from their fake QuickBooks bookkeeping to pull the wool over your eyes.

Also be sure to get as many years back as you can- at least three. Don’t just take the last twelve months. And request that they give you a month by month report, not just a year end summary. A lot of bad stuff can be hidden by a good couple months at the end. Request a cash flow statement as well as a balance sheet, in addition to the income statement. Just because they are showing profits doesn’t mean the business is actually making money, or even solvent.

Be clear you understand exactly what they are adding back and what they are calling personal expenses, and make sure they can back up their claims with receipts or other documentation.

If you are going to be investing a big chunk of your money, hard work and hopes and dreams into buying a business, you want to know exactly what you are getting. The numbers have a lot of information to tell you, and it is your right and in your best interest to examine them thoroughly, and ask questions about anything you don’t understand, or anything at all. How forthcoming they are will speak volumes in itself.

Can you run this business?

Most sellers, during the show and tell process, will take pains to explain how easy their job is and how there is “nothing to it”. That is true for very few businesses- nearly all have “tricks of the trade” and some literally take years to master.

If you aren’t familiar with the business you are buying into, make sure you have a very good understanding of the actual day to day aspects of the job, how much time and effort the owner spends on the business, and whether they have any special skills, licenses, relationships or other knowledge you will need in order to be able to duplicate their successes.

See if you can spend some time observing the owner at work before you close the deal, so you can see exactly what goes on. If this isn’t possible, then try and contact an industry trade group, or talk to some owners of similar businesses outside the area you would be competing in and ask them what the business is like and what kinds of things you will need to know.

The main point here is to make sure the business won’t suffer while you get up to speed in learning how to run it, since you may run out of time and customers before you know enough to make it pay if the learning cycle is particularly long or complex.

Can you improve this business?

If the answer to this is no, then you should probably keep looking. There are lots of businesses where the current owner is overpaying for services, not making any effort to market the business, has been experiencing declining sales due to poor customer service, or some other easily fixable malady.

There are also plenty of businesses where you can grab more sales quickly by expanding the product line, the store hours, adding an online component, or using any one or more of dozens of ways to grow the business.

The problem comes when you are looking at a business that is already maxed out. This may be due to intense competition, a limited market, or a capacity limitation or some other reason that would be very expensive or impossible to fix. If you can’t grow the business then chances are what you will actually face is a steady decline.

How fast it happens depends on the reason for the limit, but in any case a business that can’t grow is one to avoid, as it will quickly eat up more and more profits until it becomes a money loser, and then not only will you not be making any money, but you won’t be able to sell it, either.

Make sure, before you buy any business, you have a plan in place to grow the business, and you are sure that the changes you will put into place will definitely have a positive effect on the sales and bottom line. For example, if you plan to add a new sales rep, make sure there are customers for him to call on, and that they will be receptive to hearing the pitch. If you can’t figure out any way to grow the sales, then your best bet is to walk away from the business- quickly.

Is anything going to happen that is going to fundamentally change this business?

This is hard to know, but it requires investigation because it can make a crucial difference in your success or failure.

What are some things that could change? Your main supplier could be changing their terms, or pricing, or be about to stop carrying your products altogether. The facility could be across the street from what is about to become a nuclear waste plant, or a major highway could be coming through that would completely destroy the drive by traffic business. A huge competitor could be planning to move in down the street, or the industry itself could be about to undergo a big change.

If you are getting into a business you already know well, this is less likely to catch you off guard, though there could still be problems relevant to the specific business you aren’t aware of which will cause trouble. If you nothing about the new business, you could really be in for a shock.

The best defense against these kinds of issues is to talk with as many related people as possible. Talk to other tenants in the building, talk to the sales reps for your biggest vendors about the industry, talk to any competitors who will chat with you, and talk to some customers. Make sure you understand where the business is going, and any potential pitfalls that are coming up along the way.

This isn’t something you will ever completely cover, but often just some basic research will uncover problems if they exist. You owe it to yourself to ask around before you buy, and avoid anything that looks like it could be big trouble down the road.

Why is this business really for sale?

The issue is that despite what they may say, very often the real reason they are selling has to do with one of the reasons listed above. If you find out why they want out, you will be much closer to knowing how the business is really doing, and whether it is something you want to take on, or if it is best left alone.

These five things are ones you should delve into after a business has passed the basic level of interest. While they don’t take a long time, it does require some time and effort on your part to research, so you don’t want to go to this level of detail with all the businesses you look at, only the ones that show initial promise.

If you can satisfactorily answer the above questions about the business you are looking at buying, you can feel confident you are getting in on a good buy. If any of the above issues make you feel nervous or uncertain, it is probably best to pass on it and continue the search.

As always, if you run into questions during your search, or want a second opinion on what you’ve found, send us your question and get a quick, expert answer to your dilemma. That’s what we’re here for, after all!

The Value of Recruiting an Advisory Board When Running a Business

A board of advisers may sounds more like something you would find at a big company, but it makes a lot of sense for a startup and small businesses, too.

No matter who you are or how much experience you may already have in a particular business or industry, it never hurts to have some outside people who are familiar with your business and situation to lean on when you have important decisions to make.

If you are brand new to the business you are getting into, then that is doubly true.

I frequently check in with my trusted advisers whenever I am considering something new, looking for a quick logic check or struggling with a decision for my bookkeeping business or for any of the other side business projects I am involved with and I always appreciate their insight even if I don’t exactly follow their advice.

A board of advisers is an informal group of people who know you and your business and meet on a regular basis, and also one on one, to help you guide your business, make decisions, grow and network the business, and generally help keep you out of trouble.

Ideally, the members are made up of at least some people who know you well and aren’t afraid to give you an honest assessment of things, and some people who know the business or industry well, and can help keep you from making mistakes or having to reinvent the wheel to get things done.

Here are some things a good board of advisers can help you do:

  • Raise money and make introductions to investors and lenders
  • Introduce you to vendors and help you get better terms
  • Introduce you to key sales reps and distributors
  • Provide advice on pricing, sales and marketing strategies
  • Help you gain market exposure and make introductions to potential customers
  • Advise you on hiring, managing and growing staff
  • Provide references to service providers including accountants, lawyers and tax professionals
  • Mediate disagreements between partners
  • Offer additional credibility to the business

Not every adviser will be able to do all these things, but hopefully between them you will cover most of these topics.

A good number of advisers is between 4-8. More and it becomes unwieldy, fewer and chances are you will be missing out on some key knowledge areas. Compensating advisers can be anything from a quarterly dinner to gift certificates to an hourly consulting fee, or nothing at all. It depends on the size of your business and the specific amount of work and time you are requesting from them.

The best place to find advisers is at industry related events, industry associations, entrepreneur events, and friends in the business. Try to get a good mix, and don’t be afraid to pull in someone who is somewhat out of the box- a marketing professor from a local college, for example. Don’t just grab a bunch of your friends, unless they all happen to be business experts and are willing to overlook your friendship and give you real feedback!

It takes very little effort to approach someone and ask if they would be interested, and the feedback and help you will get will very likely repay the effort it took to recruit them many times over.

You are obviously not under any obligation to take the advice they give you, but it is often very helpful to have the informed opinion of people outside your immediate situation to help you accurately assess things and come to the best conclusion.

Take a few minutes and start a list of who would be your ideal advisers. Then, go out and make some contacts and see if you can recruit some. It will only benefit you in the long run.

Unbelievable Exercise Machine Business- Can You Make Any Money With an Ultra High End Pricing Strategy?

I was flipping through a Kiplinger’s magazine, when I came across an ad for an exercise machine promising a full workout in only four minutes.

I don’t normally pay much attention, since I generally believe that most exercise machines, like most diet pills and diet plans, are simply a way to take money from people looking for an easy way out of what is otherwise hard work. Most don’t live up to their promises of amazing results with hardly any effort, and so they sit unused.

Meanwhile, the sellers have taken their profits to the bank. That’s fine, it’s a free country and as long as they don’t violate any FTC rules on advertising or product claims, then gullible people are always going to provide a market for these kinds of products.

This particular ad caught my attention, however, because the machine was priced at $14,615. Plus, it looked like a medieval torture device, or possibly the result of an explosion in a metal shop.

Now, normally in these types of ads the price is either not shown, or shown in small type, and broken into some number of “easy” payments. But this ad glaringly displayed in large type the full price. Then most of the rest of the ad goes on to explain how no one believes their four minute claim, even though it is true.

I was interested enough in trying to discover the business plan behind this product to check out the website, to see if I could make sense of it. On the site, the founder explains how they hadn’t even turned a profit until 2001, despite launching in 1990, and then goes on to explain the high cost in terms of two people using it over 30 years, plus their offspring using it, etc. He also goes into something about how reducing the price when there isn’t a “ready market” won’t increase sales, and then compares it the price of a Boeing 747.

Clearly, he lost me. I don’t want to wait for my children to start using something before I start to see a reasonable payoff on my investment- at least not when we are talking about exercise equipment. I also don’t expect the cost to be compared to a jetliner, or even a small car. I don’t want to have to use it thousands of times for the cost per use to be under a dollar, or even under five dollars.

So is this business making any money? Well, I would guess that they only have to sell one to make back the cost of their ad in Kiplinger’s. And I would guess, even manufactured in low volume the machine itself only costs a few thousand dollars to produce. Therefore, if they could do any kind of volume at all, there would be a lot of profit in the sales.

But, how many people can spend that kind of money on exercise equipment? Very, very few. The website doesn’t even mention any financing options. And then of the people who do have the cash, how many are willing to spend it on this? An even tinier percentage, at which point I can certainly believe that they made no money with this product for the first twelve years.

For that kind of money, you can buy any exercise you want, including membership at a high end gym and a personal trainer for every workout session.

This product has two serious objections to overcome, which I think is one too many. First, you have to believe that it will do what it says, and then you have to believe that the promise if delivered is worth the extremely high asking price. That is going to be too high a hurdle for nearly every person that sees it- probably more than will ever allow this to become a viable product at this price.

A high price, or even an ultra high priced product with only one objection to overcome has a fighting chance of success. A Ferrari is a very expensive car, but it goes much faster and looks much different than your average car, so if you decide to buy it, no one has to convince you that you are getting something of value for your money. They only have to convince you to drop that much money in the first place. People may be jealous of your Ferrari, but you won’t have to convince them that you got something good for your cash.

The problem with the exercise machine is that if you ever tell anyone how much you spent on it, they will think, and probably say out loud, that you are an idiot. And that is a stigma that no product should have to overcome if you want it to be successful.

So is it making any money? Well, they wouldn’t still be selling it if no one was buying… but is it the best strategy for the most sales? Maybe not.

Finding the Right Motivation for Starting Your Own Business

The idea of starting a business is very attractive to many people. It is practically a genetically imprinted desire in the United States to want to one day own your own business.

At last report, nearly 3 out of 4 adult Americans indicated a desire to someday start their own business. I know I have always been one of them!

So there seems to be no shortage of initial motivation. The problem is getting it to the point of actually starting a business, and then keeping it up long enough to enjoy some of the rewards of business ownership.

The main reasons initial many motivations don’t translate into actually starting a business is because they are based on largely false conceptions or easily overcome problems that people simply don’t take the time to properly evaluate. The actual motivations that are strong enough to get people to be successful in their own businesses are the ones to identify for yourself and put to use.

Motivations That Don’t Usually Work

First, let’s examine the motivations that generally don’t work for getting you into your own business. The most often cited are:

  • Desire to make a lot of money
  • Desire to lead the easy life
  • Desire to not be bossed around
  • Desire to impress others
  • Desire to be like someone else
  • Desire to have more free time/no schedule

Don’t these things all happen for people who own their own businesses, and so doesn’t that make them reasonable motivations for someone just starting out? The answer is no. Why? Because these events are usually byproducts of whatever got successful entrepreneurs to where they are in the first place. They are not what got them started, or helped them get through the tough startup phase.

Lots of people want to start their own business because they keep hearing it is the best way to become wealthy. It is true that owning a business is a much more reliable route to eventual wealth than working a 9 to 5 job. It is also true, however, that there can be some very lean years, and that the money often only comes after a lot of hard low paid work in the beginning.

People who think owning a business is the way to get rich and are motivated by the wealth factor are often turned off by the idea of hard work for little money, often less than they are making now, and so they never get started.

The same idea goes with people who see business owners driving nice cars or taking vacations they themselves couldn’t afford. The thing they imagine is a gilded lifestyle with lots of downtime and pampering. The reality of starting a business and making little money for an unknown amount of time is too daunting for them to be willing to take the chance.

But what about not wanting to be bossed around? Don’t lots of people start their own businesses because they want to be their own boss? That is true, however, there is a difference between wanting to do something yourself and simply not wanting to be told what to do.

Many people resent their bosses, or dislike being given direction, but that doesn’t mean that they are in any way motivated to actually do something on their own. Maybe part of the problem is that they are getting “bossed around” because they don’t get much done at all!

An even weaker form of motivation is wanting to impress others, or to be like someone else. People who are mainly driven to try and impress others will not be able to stand up to the criticism and naysayers actual entrepreneurs deal with on a regular basis.

Most serious entrepreneurs are pretty independent people, not overly concerned with what others think of them or trying very hard to get their egos stoked. That doesn’t mean they can’t be charming and make good salesmen and be flattered by admirers, but it is true that these are not their main motivations for getting to where they are in business.

The motivation to have a free time and not have to get up for an alarm clock is maybe the least informed perception of an actual entrepreneur’s life and so is a truly weak motivation that is easily upset by reality.

While it is true that many successful entrepreneurs can take more time off and be more flexible with their schedules than many employees, it is also true that they are very hard working as a general rule, and no one has to force them to get up to go to work- they like to go and often get in earlier and stay later than the people they hire to help them.

Motivations That DO Usually Work

OK- so if these motivations, which most people claim are the reasons they want to own their own businesses, are not going to get them very far, what kinds of motivations are going to be strong enough to get someone to start a business?

These are the most common motivations for actually starting a business:

  • Did the same thing for a boss, thought they could do better
  • Saw a great opportunity and couldn’t let it go
  • Couldn’t stand working for someone else
  • Started as a hobby, grew from there
  • Didn’t have any other options
  • Fell into it and liked it too much to quit

If you already find yourself in one of these situations, you may realize you already have the motivation you need. If you haven’t started yet, it is likely not because of lack of motivation, but something else is holding you back, which you should be able to overcome.

If you don’t see how one of these may fit with your present situation, then these are what to look for in trying to get motivated. Some may be harder than others.

For example, if you haven’t seen any great opportunities come by, then you can’t just make on happen. You can learn how to spot business opportunities better, but spotting one and actually finding it motivate you is not the same thing.

You also obviously can’t make yourself fall into something you turn into a business. Usually this happens when you have a particular talent or ability to do something, and you find people keep asking you to help them out. Pretty soon, you find that you can charge them for your help, and sooner or later this becomes a full time business.

You can’t go into competition with your bosses in all cases- sometimes the requirements of starting that particular business may be beyond your means. Other times, you aren’t working in a field you would want to get into, or you may not be working at all. Some enterprising people, however, will go get a job in a field they intend to start a business in, to first learn the ropes while getting paid, and determine if they really want to go into it full time on their own. If you have an idea that fits this scenario you may want to do this because it is a fantastic way to do market research.

People who start their own business because they don’t have any other options are often hampered by their legal status, previous record, personal credit or language issues that hold them back from getting an acceptable job anywhere else. They are motivated to succeed by the fact they really have no fall back plans.

If you are starting a business because you can’t stand working for someone else, you have to realize it isn’t that you can’t stand work, or can’t stand your boss, it is simply that you need to do your own thing. You also should be OK working with people in general, and able to deal with customers, who are like bosses in some ways- if you don’t make them happy they will “fire” you by not giving you business anymore.

The difference between these motivations and the ones listed originally are that they are core beliefs that will withstand hard times and tough challenges.

The “compete with the boss”, “hobby becomes business” and “fell into it” motivations all come with a pre-existing notion that the business will work because the people involved have already seen it work, either on a smaller scale, or for someone else.

The “great opportunity” motivation usually buries itself deep in the entrepreneur’s brain beyond any doubts, so it remains there until it is either proven or some seriously powerful notion dislodges it- far beyond the normal self doubt and fears that sidetrack lesser enthusiasm.

The “can’t stand bosses” motivation works because it is based around a deep seated belief that there just is no other way. This is one I fell into. I can and have worked for other people but it never felt right and I always knew on some pretty basic level that I would be self employed. The bookkeeping service I own now is just the most recent in a long line of things I’ve tried (many of which have not worked out) rather than going back to work for someone else. Once I took my last paycheck I never looked back and never had plans to go back- it just wasn’t me.

The “no other options” motivation is based around the actuality of there is no other way. In both cases, these are not motivations that can be easily thrown off. If a person in either situation is barred from proceeding on one plan, they will simply switch tracks and keep trying. Unlike the other motivations which are built around a faith that it will work out, these two are based around a conviction that it has to work.

These are not hard and fast rules, obviously, and some people have been successful in getting into a business simply because they wanted to make a lot of money and saw that as the best way to go. For the majority of successful business owners, however, the motivation came from one of the reasons listed above that had nothing to do with wealth, free time or any other day dream type of perks associated with entrepreneurship. That doesn’t mean you can’t enjoy those perks, but if that is all that you are aiming for the chances are you are going to fall short long before you get there.

The next step for you is to honestly assess why you want to get started in your own business. If you find your reason listed in the first section, then it is time to stop and think through whether you are ready to deal with the challenges and realities of starting a business. You may want to rethink the business you want to start, and see if there is a reason in the second set of motivations that fits you, and start from there.

Being motivated by something that won’t desert you in hard times is what allows you to be persistent in your attempt to start a business, and persistence is what allows you to succeed. If you find yourself questioning your motivation, this is the first thing to work on in your quest to start a business. Once you have this figured out, the rest is almost easy!

How to Build Support for Starting Your Business Among Your Family and Friends

Having people backing you who believe in what you are doing can make a crucial difference in your overall chances for success.

If you are single and have no one depending on you, this is the easiest situation to be in when starting a business. You may or may not have your patents and friends support, but at least no one else will be financially impacted by your decision.

Things get significantly more difficult when that is not the case. If you have a spouse, they will be part of your financial decision, even if they aren’t part of the business. Having children makes the situation even more complex, because obviously you have to weigh the risks of impacting their welfare as well.

While it is nice to have friends behind you, most serious entrepreneurs will push forward even if most of their friends think they are crazy.

What happens if some or all of these people are telling you not to start the business you want to start? Is there a way to win them over, or is there a way to push forward even if they are against it? Usually, the answer to both questions is yes.

The first question to ask yourself is which people in your life do you consider it important to get support from? There is no point in trying to win over the support of people you don’t really care about convincing, or having be behind your efforts.

Convincing Your Spouse

Usually, the most reluctant person to convince is a spouse. This is because they will usually be the one most impacted by the decision, in many ways. For them it might mean feeling stressed over the financial risk, having to budget more, getting to spend less time with the person starting up or any combination of these worries and others.

The best way to convince a spouse that this is a good idea is to show them that there is a specific plan for the business, and that it isn’t as risky or as overwhelming as it might seem. Usually this just means showing them the business plan. Show them how much money is on the line, and why you think there is a very good chance for the business to be successful.

Show them that you have done the research and ground work necessary to take most of the risk out of the venture. You might also want to talk about back up plans, and other options and milestones that you will either meet or work on considering a different course of action. The idea is to get them comfortable with the plan, and understanding it, so it doesn’t seem like a big unknown risk.

You may also want to solicit their advice and feedback. If they feel they have some part in it, they will be more likely to want to see it succeed than if it seems like something that is just going to pull the other person away.

You can use the same strategy to a lesser degree to demonstrate to anyone else who you would like support from that this isn’t just some crazy scheme, but a well thought out and thoroughly researched plan to accomplish a specific goal.

You don’t want to let other people’s negative impressions of your ambitions turn you off doing what you want to accomplish, so there isn’t much point in spending time explaining yourself to people in general who will tell you all kinds of horror stories about people they’ve known who lost everything in small businesses. At the same time, anyone you run into who may know someone in the business you are entering or have specific experience that can be helpful is worth listening to just for an outside opinion.

Which Advice to Heed and Which to Ignore

For example, if you are starting a dry cleaning business, and some friends tell you it won’t work, but they all have day jobs in unrelated industries, it isn’t worth giving much thought to their comments. If you run into someone who owned a dry cleaning business for ten years, however, and that person tells you that what you are trying to do won’t work, it will certainly be worth listening to them.

You may not agree in the end, but at least they have some credibility, and even if you don’t agree with their ultimate opinion, you may be able to get lots of other useful inside information from them, if you take the time to listen.

If you run into a situation where you have made your best effort to win the support of someone important to you, and you still are unable to do it, then you have to decide what to do next.

One option is to agree with them to disagree, and then set a mutually agreeable way to resolve the situation. For example, suppose no matter how many plans you show them, your spouse will simply not agree that the business is a good idea. You could suggest that you will only invest so much, and only work on it for so long, and then if it isn’t working out, you will move on to something else.

That way, even if they don’t agree, they know there is an end point where either they are proven wrong because it is working, or they are right and you agree to give up and do something else. This way they aren’t worried that the venture will eventually consume the entire worth of the family, or go on so long that eventually there is no way out.

Another option is to get them to agree that if some third party says it is going to be OK, they will support you, and if not they won’t. Obviously this only is fair if the third party is someone neutral, and someone actually capable of listening to the plan and making an educated assessment of the likelihood of success. This is sort of like deciding to go to arbitration.

A third option is to scale back or change the plan to something that is more acceptable. The smaller the project, the less business risk there will be, and the easier it will be to overcome any objections about financial ruin or overwhelming debt.

While there is no absolute requirement that you have the support of your family and friends when you go into business, it certainly makes the overall experience much more palatable and rewarding. If you have to spend mental energy and time everyday overcoming negativity on the home front, in addition to all the challenges of starting a business, it can often be too much. And sometimes, it is too much just at the point where if you had just gone a little further, you would have had a big breakthrough and things would have gotten a lot better.

It is always a good investment of time to build some support for yourself at home before embarking on a startup journey. The business will test you enough without having to fight the fight every night at home as well. If you haven’t done it yet, make sure you spend some time doing it now.

Understanding Risk and How it Relates to Your Business

Lots of people will tell you that entrepreneurs are risk takers. That isn’t actually true.

Most of the entrepreneurs I know would rather avoid risk. What they want to do is maximize their success by jumping into sure things that other people haven’t discovered yet. They use their inside knowledge or insight to make a profit where other people aren’t sure or haven’t seen a way to make a business work.

Risk is defined as: The possibility of suffering harm or loss; danger.

No smart person going into business wants to suffer harm or loss, therefore, they try and stack the odds in their favor, and once they figure the return they can make more than justifies any potential loss, they go for it. Real risk takers are the ones who don’t do any work ahead of time to try and learn what they are getting into, or they go into something knowing the odds are long in the first place.

Most people who have “safe” day jobs will tell you that going into business for yourself is risky. They figure that not getting a paycheck on Friday is taking a risk, and not having a company pay for benefits is risky. In reality, of course, they can get laid off or fired from their job. They also are placing all their eggs in that one basket.

Being self employed is in a lot of ways less risky than having a job- you control your sales volume, and even if one customer leaves you have more to fall back on. You also enjoy certain tax benefits, and can succeed on merit instead of on office politics or an unfair promotion system. But this is after you’ve established yourself. How do you weigh the risk before you start?

The risk of starting a business comes down to two key elements- your previous experience in the same business, and the amount of assets at stake.

The first is pretty easy to determine. The farther what you want to do is from what you know how to do, the bigger the risk. This just makes sense. If you’ve sold insurance for twenty years, but you want to open a restaurant, you are taking a big risk by not having any idea how the business works.

Now exactly how much risk it involves is very dependent on the situation. If you are getting into an easy business to learn, it might not be that big of a problem. There are also several things you can do that will go a long way toward mitigating the problem:

  • Get a job in the industry before you start your business
  • Find a partner with experience
  • Hire an employee with experience
  • Form an advisory board that has a few members with experience
  • Spend time with an owner in the same field in a non competitive area
  • Speak with vendors in the industry
  • Take classes related to the field
  • Thoroughly research the industry

The second aspect of risk is how much is on the line in terms of assets. Assets include not only the cash you put at risk, but anything else you may use to borrow money, such as a house, retirement account, etc.

Obviously the smaller the amount at risk the lower the reward has to be in order for the risk to be worth taking. If you are putting everything you own up to start the business, and failure will mean bankruptcy, that is risky because you have no room to fall back or try something else. On the other hand, if you are only risking a week’s pay, there isn’t much risk at all.

The object is to combine knowledge of the business you are trying to get into with putting the least amount of capital at risk to make the startup as close to a sure thing as possible. The better you can do this, the easier it will be to get motivated to start a business and make it a success.

By the way, evaluating risk doesn’t end when you get your business started. It applies to lots of decisions you make about the direction and ways that you grow, how you hire, how you finance your growth and so on. Just because you have overcome the first hurdles doesn’t mean everything else you do will work out. Or that you are automatically going to be successful in future businesses just because you were successful in your first.

But let’s not end on a down note! One of the beautiful things about this country is that failure does not carry a stigma. So you can try and fail and try and fail and try again and no one will look down on if you keep on trying to succeed. Persistence is one of the most important qualities in an entrepreneur. But if you do keep failing, you might want to work on reducing your risk and increasing your chances of success for the next time around so you can finally come out on top.

Sources of Capital- A Quick Guide to New Business Financing

There are many sources of capital for starting a business (or funding an existing one), but not all kinds are a good fit for each type of business.

This post is a quick run through of each of the major types, pros and cons of each, the amounts available, the time frame and requirements to get your hands on the cash, and the overall chances of securing each type of funding.

These are the basic types of financing available:

Your Own Money

Obviously the easiest, fastest least hassles kind to get. You may feel limited by the amount, but often it is better to scale back and start something that works with what you have, so you can get started now, than try to raise a much larger sum going down one of these other routes. The vast majority of small businesses (and this includes almost all of our bookkeeping clients) are started using this type of funding.


This depends entirely on your situation. The pros are that you don’t need good credit, an application or anything else. The con is that if you can’t pay it back, you wish you’d never borrowed it from this source in the first place. A lot of clients who can’t fund the whole thing themselves go here to make up the balance.


This is just like family, except they will probably be harder to convince, so your chances of getting go down accordingly.

Bank- Collateral

This is easy to get if you have a home or other asset you can borrow against. The downside is you must start paying it back right away, and if you can’t you may have put a very valuable asset at risk. Not a decision to make lightly.

Bank- Line of Credit

This requires higher interest and is for a smaller amount than a collateralized bank loan, but you don’t need assets to borrow against. You are still liable, however, so if you do have assets, they will be attached and you will have to make good one way or another on the loan.

Bank- SBA

This is a poor choice for starting from scratch businesses, but an excellent choice for acquisitions or franchise deals. It is also very good if you are buying the land and/or building you are going to be using for your business.

Credit Cards

Easy to get but high interest. If you do use them, try to only use them to buy things that retain their value. For example, using it to buy inventory is less risky because you can always resell the inventory to pay off the credit card, even if you have to lower the price some. Using a credit card to buy advertising, pay payroll or by something else which retains no value is a more risky proposition, since you will have no asset to fall back on to repay the borrowed money if things don’t work out.

Crowd Funding

This is a relatively new avenue and there are lots of cool success stories, plus this is a low risk avenue and low cost to pursue. The main point to pick up on there is “story”. If you have something cool to talk about, or better yet, demonstrate on video, then you might have a decent chance of raising some cash.

It helps to have a track record, a tangible deliverable and need an amount of money that fits the typical fundraising profile of these kinds of sites. Raising $400K to open a restaurant is probably not going to happen (since you are only going to get local people who can actually enjoy the fruits of their investment, and it’s too much money for this site). On the other hand, a cool app, a gadget or a cause related product or service might do very well.


Leasing won’t put money in your pocket, but you can use it to effectively lower the amount of money you need to get started. You can lease all kinds of equipment, vehicles, etc. Lowering how much you need to get started is as effective a strategy as raising capital when it comes to getting off the ground.

Angel- Amateur

This is often who people think of when they say silent partner. In reality, these investors can be much more than silent partners, it just depends on their specific requirements. The best angel to find is someone who is very familiar with the type of business you are starting.

For example, to get an investor for a new restaurant, you should seek out successful restaurant owners who may have an interest in investing some of their cash into a new place, without them having to take on all the responsibility of running it. That way, they will be a great source of info as well as cash, and will understand much better the risks and rewards of the investment that someone with no specific knowledge.

The usual way to pay these investors back is either with a buyout agreement after a certain number of years, or by selling the business altogether after a certain number of years and splitting the gains. Either way, this agreement should be in ironclad writing before any money changes hands.

Angel- Professional

This specific type of angel only invests in deals they think a venture capitalist would be interested in funding once the business gets a little further along. They often fund very early stage ideas, and provide the money that builds the prototype, pays for patents, and gets the first few customers on board.

At that point, they will look for another round of funding from a venture capital group. Because of this, they will only consider types of businesses that a venture capitalist will invest in- high growth businesses typically in the high tech or bio tech fields.

Venture Capital

Venture capitalists won’t consider a business that doesn’t have at least a nine figure ($100,000,000+) potential valuation, which rules out 99.9% of small businesses. Even if you do fit that requirement, your chances of getting venture capital are relatively tiny.

You might be the next or Snapchat App with a billion dollar payday after only a couple years work, but the odds are very long. To figure out if pursuing venture capital is worth your time, we’ve got another article coming soon on using venture capital to start your business.