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The Cheat Sheet
THIS BOOK HAS A NUMBER of screening processes and sanity checks you can use to help you understand if you should own your own business today. If you were too lazy to read this entire book, then you pretty much failed the first screening process. You have to have the patience, be willing to do the research, and put in the work to make a business happen. As I have said, if you fail to prepare, you prepare to fail. Reading this book is not that much work, particularly compared to what you face as a business owner. So, if you can’t make it through the screening processes right now, use that fact as a good reason to keep your day job.
On the other hand, perhaps you did read the book, and you want a handy guide to be able to quickly remind yourself why entrepreneurship is so challenging and may not be worth pursuing (and to give you a sanity check when you conceive your next “big idea”). Remember to keep asking yourself not “Can I be an entrepreneur?” but rather, “Should I be an entrepreneur, given my personal circumstances, goals and opportunities?” Continually revise your Entrepreneur Equation, which will also shift as your personal situation and business opportunities do.
Whether you have read the book or not, here’s a brief summary of each of the chapters highlighting some of the realities, risks, and rewards to consider as you evaluate whether business ownership is for you (either today or ever):
| CHAPTER 1 |
The American Dream and our business landscape have changed substantially over the past eighty years, yet many entrepreneurs are approaching business with an outdated perspective. |
| CHAPTER 2 |
Every career path that has a lot of risk (and potential rewards) associated with it has a screening process; entrepreneurship didn’t until now. This book serves as that initial screening process for you as an aspiring entrepreneur. |
| CHAPTER 3 |
Experts have been doling out all kinds of advice on how to make your business successful for decades. However, the assumption may be wrong. Maybe you weren’t meant to run a business, either today or—depending on your personality and priorities—ever. Plus, the entrepreneurship game has changed. There are more lucrative career opportunities, and there is also more competition in business today, which makes running a business a less-attractive opportunity with less upside potential than it was even twenty years ago. |
| CHAPTER 4 |
Entrepreneurship has nothing to do with being good at producing a good or a service or having a technical skill. Being an entrepreneur means that you are good at running a business, and that means doing less of any single thing and much more of a lot of different things (many of which you may find really annoying, like marketing and accounting). You also need to know if you are creating a job or a business. If you have no employees and the business is virtually synonymous with you, then you have a job. However, this is a job you have to pay for the pleasure of working at, with lots of risk attached to it. That may not be so smart. |
| CHAPTER 5 |
When you start your own business, contrary to popular delusions, you are not in control, and you have no freedom. You are controlled by your customers (without whom you do not have a business), plus a whole host of other people, from your employees to your investors to your landlord, all with their own agendas. Crazy enough, you actually have fewer people with control over you when you have a job versus when you own a business. |
| CHAPTER 6 |
Your ego may make you want to go into business for the wrong reasons. You will encounter more rejection from potential customers in any business than in any job or job search. Also, having a good story to tell at cocktail parties is not a great reason to start a business. |
| CHAPTER 7 |
Ideas are not businesses. Good business ideas fail, and bad business ideas succeed. It is all about executing a viable business model. Everyone loves business ideas, but they are worthless (unfortunately) without work behind them. |
| CHAPTER 8 |
Hobbies are fun because we pursue them at our leisure. When you pursue them as a business, they become work. Also, if you know a certain hobby well, it doesn’t mean that you can run a business related to it. If your business doesn’t run full-time or generate the minimum wage on an hourly basis, then it is not a business, it is a “jobbie,” a hobby disguised as a business or a job. |
| CHAPTER 9 |
When you own a business, you have more, not less, contact with people. If you are a loner, a business is not a solution to your problems. |
| CHAPTER 10 |
Who else are you responsible for that may be affected by your business decisions? Will your kids be happy if you have to decide to use their college funds to grow your business? Remember, you can’t make two things your number one priority. |
| CHAPTER 11 |
You need to have experience to make your business successful, both in your industry and in business. If you can’t invest the time to learn an industry and business skills, why are you investing your personal savings? |
| CHAPTER 12 |
You may not have the time to start a business. If you start it when you work for someone else, they may own the business by default. If you try to fit it in after working, eating, sleeping, and showering, it may take you forty years to launch. |
| CHAPTER 13 |
Sometimes who you know is more important than what you know in business. If you don’t have good contacts and resources, it will be hard for your business to succeed. |
| CHAPTER 14 |
If you have issues with money, including not having money, not having financial responsibility, or having an ultra-conservative approach to money, running a business is going to be extremely challenging for you. |
| CHAPTER 15 |
Business ownership is a roller coaster, not a merry-go-round. The highs and the lows are amplified because you have everything at risk. |
| CHAPTER 16 |
Sometimes things are fun for a day but lose a lot of excitement as time goes by. Imagine yourself running your business for a decade. Will you still enjoy it when it is no longer shiny and new? |
| CHAPTER 17 |
Impatience and business goes together like a hungry tiger and a wounded bunny. One will kill the other. |
| CHAPTER 18 |
To succeed, focus on your core competencies. If your core competencies don’t include being a strategic visionary or being able to wear a lot of hats at the same time, don’t put yourself in a position to do either. |
| CHAPTER 19 |
Hoping, wishing, and dreaming don’t make a business. The “secret” to a successful business is hard, focused work. |
| CHAPTER 20 |
Raising capital is difficult, necessary, and ongoing. The more you need money for your business, the less able you are to find it. You will always underestimate how much you need and how long it will take you to get it, probably by a factor of one-and-a-half to two times. |
| CHAPTER 21 |
Now is the most competitive business environment in all of history. There are more products and services than we need, split amongst a fairly static group of people and resources. Today, there are fewer opportunities to make the upside potential from a business than there were years ago, if you can even break through the noise to get potential customers’ attention in the first place. |
| CHAPTER 22 |
Sometimes, you are too smart for your own good. If you are great at doing certain tasks, it doesn’t mean you can teach others to do them as well as you. You can’t do everything by yourself either—there are only twenty-four hours in a day. Plus, if the business is fully dependent upon you, then you have a job, not a business. |
| CHAPTER 23 |
Buying a business is not a shortcut for entrepreneurship. Sometimes, you are just buying someone else’s problems. You will always be at an information disadvantage when you purchase a business. Because people are greedy and won’t sell their business if they know the next year will be even better, assume that whatever business you are evaluating will have imminent issues ahead and possibly its best years behind it (people don’t tend to sell when the cash is sure to continue to roll in). |
| CHAPTER 24 |
Winning the genetic lottery doesn’t automatically pass down an entrepreneurship gene to you. Just because you have a business that has been in your family for years doesn’t mean that you can run it well (or will want to). |
| CHAPTER 25 |
Is the risk of the business worth the reward? Would you risk $990 for a chance at $1000? No, because there is not enough upside. You need to evaluate your business opportunities in the same way you would play Let’s Make a Deal with your own money on the line. |
| CHAPTER 26 |
When you leave your job, you give up a lot of things you don’t even think about. From paper clips, freshly brewed coffee, and benefits like vacation time, to credibility, clout, and contacts, don’t overlook all of the advantages you gain from working for someone else. |
| CHAPTER 27 |
Employees are necessary for growing your business, but they create all sorts of new problems for you. |
| CHAPTER 28 |
Managing the financial health of your business requires you to not only manage and understand profits and losses, but also working capital, investment needs, and cash flow. This is very complicated and is a factor that trips up even large, well-run businesses. If you want to play the game, you need to know how to keep score. |
| CHAPTER 29 |
Your business is the “You Show.” No matter who else you think will help you, at the end of the day, it is your name on the dotted line. And what happens in the worst-case scenario? If you are the only one that knows what is going on and you get the swine flu, get hit by a bus, or die, then what happens? What is at risk when you have your own business? |
| CHAPTER 30 |
The risk and reward trade-off in starting a business will be personal to you and your circumstances. However, the potential rewards from your business opportunity need to greatly outweigh the risks you will take on and the issues you will endure. If they don’t, you should not pursue that particular opportunity. |
| CHAPTER 31 |
There will always be a story about someone with rags-to-riches success. That person is either beyond lucky (the dozen-million-to-one lottery winner), or perhaps you aren’t getting the full story. Just because a business generates millions of dollars in revenue, doesn’t mean it is profitable. There are billion-dollar businesses that have gone bankrupt. |
That’s it. I hope that you were able to get a better understanding of why entrepreneurship is so different and challenging in today’s environment than it was generations ago and why the risks of starting, buying, franchising, and generally owning a business may not justify the potential rewards. If you decide to keep your day job, I am sure you will be motivated to focus on your core competencies and find a way to be entrepreneurial without having to become an entrepreneur. Or perhaps you will go the “jobbie” route and test out a business concept on the side to see if it has legs before pouring your life savings into it. If and when you do start a business, you should now be prepared for wearing many hats and feel confident that you have evaluated that the upside potential far exceeds the risk that you will be taking in terms of your money, time, and effort.
Whichever route you choose, I am sure we will be connecting again soon. I will be the one telling you that you have “spinach in your teeth” so that you can remove it, smile, and enjoy the rest of your day.
Okay, then. Lucy Van Pelt is officially closing shop for the day.