06 Sep Reflections
Part 1: The 2 Ingredients for Success
Chapter 1: The Opportunity. We are in the midst of a technological revolution that is offering ample opportunity for entrepreneurs. As Internet access, and computer and smartphone ownership expand in emerging markets, these opportunities are multiplied. The same technological advances that have created the right moment for entrepreneurship have also made starting a business easier than ever. The best time to get started is right now.
Chapter 2: Your WHY. Before you start your entrepreneurial journey, look within and find your WHY. Your WHY or purpose is the foundation of the person you are and is that element that drives you to commit and do whatever is necessary to achieve your goals. Your WHY is the foundation of your mindset for success.
A. Solve a Problem. Look around you and identify a problem you can solve. It’s preferable to select a situation that you are naturally passionate about. Make sure there is a large enough market for the solution and that the market is not already crowded with other people working to solve the same problem. Also, ensure there are high barriers to entry.
B. Passion. When you know your passion and solve a problem that engages that passion, deriving an entrepreneurial solution becomes much less complicated.
C. Focus. Keep your focus on the solution, not the product. Focusing too much on the product distracts you from your mission, which is developing and selling the solution. Always keep the wants and needs of your customers front and center. Once you have decided on a business idea, don’t overthink it. This can become a mental trap for making excuses to never move forward. When you feel stuck or need help, don’t delay asking for support – just be sure you get advice from a reputable source.
Part 2: The 3 Myths of Entrepreneurship
Chapter 3: The Myth of Experience. You don’t need the experience to get started. If you don’t have experience, often everything you need to know and learn to launch your business is available on the Internet, much of it free of charge. You can attend online classes and watch tutorials to gain knowledge. You can use many available services to create a website or use a drop shipping service if you know nothing about shipping. Many tasks can be delegated to freelancers and can cost much less than you may imagine.
Chapter 4: The Myth of Capital. The lack of capital will not prevent you from getting started, either. If you don’t have capital, technology allows entrepreneurs to start a new venture with almost no money. For a small outlay, you can get what you need to get started – a domain, hosting, and a website. Commercial drop shippers remove your need to have a shipping department. On-demand suppliers can eliminate investing large amounts in inventory. This also means it’s easy to pivot if your first idea doesn’t pan out.
Chapter 5: The Myth of Connections: Today, it’s not who you know because if you don’t have connections, you can still start a thriving business. Instead of worrying about who you don’t know, focus instead on what you know and what you are willing to do. If you work hard and are persistent, your business will grow, and so will your number of connections.
Part 3: The 7 Clicking Points
Every entrepreneur has a clicking point or a reason for their motivation to be successful. Here are the seven key clicking points.
Chapter 6: Security. People who are motivated by financial security usually had a difficult experience early in life. People who have suffered because of poverty want to build a financial cushion between themselves and the hardships they once endured.
Chapter 7: Pain. Some people are driven to succeed because of their experiences with loss or trauma. Such events may compel them to work incredibly hard as a type of self-therapy. They also may see the potential rewards of business ownership as a way to soothe their psyche.
Chapter 8: Self-Esteem. Another group of entrepreneurs wants to offset feelings of inadequacy. These feelings are often the result of self-belief incurred in childhood. These people often work hard, long hours in the attempt to bury or overcome their feelings of inadequacy.
Chapter 9: Freedom. One of the most common motivating forces among entrepreneurs is the desire for greater autonomy such as having the financial freedom to live as they wish, the desire to escape having to work for others, or the feeling of being in control of their own destiny by running a profitable enterprise.
Chapter 10: Recognition. Many entrepreneurs are motivated by a need for recognition or fame. The underlying reasons for this motivating force vary widely. One potential cause is emotional denigration during childhood, where authority figures enforced the impression they would never amount to anything. A common response is the desire to prove the abuser wrong by becoming successful. Other people carry feelings of inadequacy from an early age that can only be assuaged by popularity.
Chapter 11: Competition. Many entrepreneurs have a competitive personality and thrive in highly competitive endeavors. The desire to compete may be born of the desire to be the best. The psychology for this attitude is varied.
Chapter 12: Inspiration. A significant number of entrepreneurs enjoy the creative and innovative aspects of owning a business, they also are dedicated to serving the common good.
Humans are complex individuals and draw motivation from a combination of these clicking points. It’s important to recognize what motivates you so that when the road gets rough, you are better prepared to draw from your innate purpose and strengths.
Part 4: The 9 Laws of Entrepreneurship
These laws apply to business as well as most other activities and relationships. There is value for everyone in understanding these helpful guidelines.
Chapter 13: Build with Steel, Not Sand. As with selecting the materials for constructing a house, an entrepreneur chooses which materials to use to build your enterprise. You have the option to create your business so it’s sturdy and durable like steel, rather than something flimsy like sand. Selecting the strongest elements will make your business resilient and profitable.
A. Consider your strengths. What are your aptitudes? We all have certain natural affinities. Once you know them, they can become a strong core for your venture.
B. Know your weaknesses. It’s also important to know where your abilities lag. Fortunately, you don’t need to be good at every aspect of your enterprise because many tasks can be delegated.
C. The right market. When developing plans for your business, search markets that are growing, not overly competitive, have realistic options for entry, and will allow your business to grow.
D. Know your customers. Reflect upon the problems your potential customers face and consider how your product or service can help them. Know the demographics, and research consumer behavior. For more detailed information, you can conduct surveys of your target demographic.
E. Research the competition. Studying your competitors can reveal market opportunities, including potential weaknesses you can exploit, or identifying underserved segments of your target market. Competitors may be missing insights that seem obvious to you.
F. Ignore cool. Don’t worry about the “cool” factor. Instead, concern yourself with solving real problems for your customers. There are many businesses that create fortunes without being hip or cool.
G. Know the supply and demand factors of your industry. Entering a niche market with high demand can backfire if there is already an over-supply. Conversely, going into a market with low supply also doesn’t guarantee success – it may indicate there is very low demand and no need for additional supply. Look for markets or niches with high demand and low supply.
H. Barriers to entry. If you can enter an industry that has high barriers to entry, your number of competitors is likely to be lower. You could also raise the barrier yourself by creating a new sector and owning it.
I. Reduce dependency. Reduce your dependency on others as much as possible. Overdependence on platforms, people, suppliers, traffic sources, third parties, etc. leaves your business vulnerable to factors outside your control. Make your business stand by itself as much as possible, but make use of the services you need to avoid having to do everything yourself.
Chapter 14: Ideas Are Cheap; Execution Is Everything. Having a great idea for a business is just the first step. Without execution, your idea will evaporate. Follow the steps below to execute your idea. Into reality
- Construct your vision. Your vision should incorporate your goals, core values, sources of inspiration, and your WHY. Your goals should be specific, measurable, achievable, relevant, and time-bound. Construct a vision for what your business will achieve in five years. Your company vision should be clearly expressed in a few written sentences, and verbally in less than 30-seconds.
- Execute. Once you have articulated the vision for your company, don’t procrastinate – now is the time for action!
- Fail. Business activities rarely succeed on the first try. Embrace your failures and remember that failure is a necessary step. People fail forward to success, so keep moving forward.
- Analyze. After you have failed at something, learn from it. Be honest with yourself, and then find the best path forward.
- Adjust. Address the cause or causes of the failure. Prevent them from happening again.
- Repeat. It’s likely that you’ll have to try several times until everything clicks into place and your venture makes progress. Be persistent and patient with this process because it is a normal path to success. Remember that failure is a friend because it keeps showing you how to succeed.
Chapter 15: Whenever Possible, Get Someone Else to Do It. When you can afford to do so, delegate the jobs you’re not good at or don’t have time to do. Leveraging other people’s time and skills is a way of buying more time for yourself. Use this time to be the engaged captain of your enterprise. Time is your most valuable asset. You need time to work on your business, not on it.
- Two kinds of jobs. Analyze your business in terms of DO jobs vs. THINKING jobs. DO jobs require minimal skill; THINKING jobs can only be done by someone with expertise. Most DO jobs can be automated with software or outsourced to a freelancer or low-cost employee. Outsource as many DO jobs as possible with the goal of eventually outsourcing all of them.
- Systems are vital. Before you hire anyone, be sure to have systems for them to plug into so they can work efficiently. The systems should have precise instructions about their assigned tasks.
Chapter 16: Protect Your Downside. It takes time to make a business into a going concern. Don’t put yourself in a position where you’ll run out of time, money, or enthusiasm. Avoid going into debt if you can because debt is a downward spiral.
A. Asymmetric risks. The way to protect your downside is by only taking asymmetric risks. These are risks where the odds of success are in your favor, so even if you’re wrong many times, you only need to be right once to come out even or ahead. To take an asymmetric risk, conduct a market analysis and decide how much money you’re willing to invest and risk in your idea. Then, make sure the amount you invest offers substantial potential upside. For instance, imagine you discover the opportunity to have $1 million/year in sales with a $50k initial investment before you can start reinvesting your revenue. After spending some initial capital, assess the results. If the business isn’t growing, you should cut your losses and move on to your next idea.
B. Assess risk. Regularly assess risk in your business by recognizing the common causes of business failures in your industry, and identifying how your business is vulnerable to these risks. Then decide if you should make changes; keep moving forward or terminate the business to protect your downside.
Here are the most common causes of business failures:
- A mismatch between the product and the market. If you have a product or service that’s not delivering clear value to your market, shift the market, or adjust the product or service to fit the demand that exists. You may need to pivot multiple times before finding the best product and market match.
- Running out of money. Poor financial planning is a common source of business failure. Always put yourself and your business in the best position, and avoid hemorrhaging cash by building informed, well-researched forecasts to help you make wise financial decisions.
- Not the right team. If your team does not work well together, it will be tough to grow your business. Be sure the people you hire listen well, know how to work collaboratively, and have conflict-resolution skills.
- Out-competed. In most markets, competition is fierce. Be constantly on the lookout for companies that can out-compete you. You’ll be successful by being focused, prepared, and more aggressive than your competition.
- Pricing. It’s better to charge too much at the beginning and lower your price later. When you start your pricing too low, customers will notice when you raise your price.
Chapter 17: First, Make Sure It Fits
A. Fit. Product-market fit is the degree that a product successfully serves market demand. Rushing a product or service to market without doing proper market research will inevitably result in poor product-market fit. Once the product or service is launched, a reevaluation process should be conducted. Most companies will pivot multiple times before achieving the most compelling product-market fit.
B. MVP. Get a minimum viable product (MVP) out as soon as possible. An MVP is a version of a product that serves the needs of the potential market with as few features as possible so you can test customer feedback. This can be accomplished through customer surveys and tracking customer complaints. Remember not to try to please everyone, because that’s impossible. Your goal is to satisfy your high-value customers.
- C. Common mistakes:
- Solving a problem no one has. Ensure that your user’s pain point is something they are willing to spend their money on.
- Not hiring a good team. Hire people who have experience taking similar products to market with success.
- Assuming product-solution fit is the same as product-market fit. Solving an existing problem does not necessarily mean enough people will be willing to pay for the solution.
- Assuming product-market fit is a stationary goal. A problem that exists today may no longer exist in the future, or a new, more pressing issue could take its place. Keep an eye on the horizon; businesses that can’t adapt will not survive.
- Assuming that having customers means product-market fit has been achieved. Be strategic with your customer acquisition. You want consumers who result in sales, repeat sales, referrals, and have a high lifetime value.
Chapter 18: Strike While the Iron Is Hot. Successful ventures are rare. About 20% of small businesses fail in the first year, 30% in the second, 50% after the fifth, and 70% by the 10th. Luck is not on the side of entrepreneurs. Instead of luck, you must rely on your ability to work hard and make intelligent, data-driven decisions. When opportunities arise, don’t hesitate – strike and strike hard. Take advantage of these rare moments and dedicate yourself to generating the profits that are waiting for you to harvest.
- A. Signs of success. Listed below are several indicators that your business is showing potential to grow beyond the survival stage. If any of these apply to your business, it’s time to go all-in. A lack of focus in this pivotal moment could easily undermine your success. If you’re not all-in and someone else is, they will get the upper hand. Take the leap!
- Customers find you organically or via referrals
- You bounce back after going through tough times
- Bloggers and customers are talking about you online
- Journalists, podcast hosts, and other influencers want to interview you
- You achieve a positive cash flow
Chapter 19: The Power of Leverage. People tend to only think of money when they hear the word “leverage” used in business. Although money can be leveraged, so can almost any other commodity, skill, resource, piece of information, emotion, or desire. Look for leverage points in every transaction. The most critical time to use leverage is when you’re negotiating.
Chapter 20: Born to Sell. Selling is universal, not just in business. Every relationship involves persuasion so it’s wise to learn how sales are conducted and improve your skills and talents as a salesperson.
- Know your target audience. Sales are easier when your target audience already wants what you’re selling. Identifying the market that wants what you sell, and knowing your customers’ motivations, will lead to sales.
- Believe in what you sell. When you believe in your product or service, your confidence and enthusiasm persuade others to believe in it as well. Conversely, if you doubt what you’re selling, people will sense your lack of commitment and find reasons to reject your product or service.
- Connect with your audience. Your customers should believe that the product or service you sell solves a problem or satisfies their urgent desire or need. Connect with your customers emotionally, so they imagine and feel joyful using it and regret not having it. They should also logically conclude that your product or service is the correct, rational choice to make.
- Know your customers’ WHY. People who buy perfume are satisfying their desire to feel or find love. This explains why perfume ads are so often about finding love – it appeals to the deepest WHY of the target audience. As an expert marketer, it’s your job to find your customers’ deepest WHYs and appeal to them in your messaging.
- Exert confidence. This is a requirement for every entrepreneur. People listen more when they are confident, self-assured, and properly dressed.
- Demonstrate credibility. Know your customer base and have detailed knowledge about the product(s) or service(s) you offer so you can speak credibly to your prospects. People put their trust in those who know what they’re talking about.
- Truly listen. Active listening involves giving your full attention to the person speaking and listening to them with all your senses. If you’re thinking about how to respond, you aren’t actively listening. Listening includes noticing non-verbal cues such as body language, tone of voice, inflection, and what the speaker is doing with their eyes. When someone feels they are being heard, they will be more receptive to what you are saying.
Chapter 21: Exit on a High. The time to sell your business is when it’s booming. If you wait too long, your business will enter the downturn cycle and you’ll have missed your opportunity.
A. Be clear about why you’re selling your business. If your reason is that you can’t achieve profitability, it will be difficult to sell. Also, if you try to hide such information, it could be considered fraud. On the other hand, some people sell their businesses because they are bored, want to retire or have another project in mind. Your potential buyers will want to know why you are choosing to sell.
B. Prepare the business to be sold. You should start this process at least 12 months before you want to close a deal. This gives you adequate time to prepare financial records, fix organizational issues, improve profitability, and find an accountant, attorney, and broker to help with the process.
C. Determine your company’s valuation. Hire an appraiser with expertise in your industry. The appraiser will help you compose a detailed report explaining what your company is worth. This document provides credibility for your asking price.
D. Consider using a broker. Unless you’re selling your company to someone you already know and trust, use a broker. Good brokers understand the market, know who to approach, negotiate in your favor, and maintain confidentiality. Using a broker will also free up your time to keep the business running and make adjustments so the sale is more enticing.
E. Prepare the proper documents:
- Gather financial statements and tax returns from the previous five years and review them with your accountant.
- Develop a list of the equipment you will be selling with the business.
- Prepare a list of contacts to pass on to the new owner.
- Write up a summary describing how you conduct business on an operational level.
- Put everything in a packet so your broker can give copies to potential buyers.
F. Selling tips
- Make sure any non-compete agreements you sign won’t impede your future plans.
- Even if you think you’ve found a buyer, keep looking for other potential buyers. The deal is not done until papers are signed and the funds are in your bank.
- To avoid confidential information getting out, determine if a potential buyer is pre-qualified for any applicable financing before giving them sensitive information about your business. If you’re working with a broker, he or she will do this for you.
- If you’re financing the sale, carefully review the details with an accountant and an attorney.
- Stand firm on a price that is reasonable.
- Put all agreements in writing, and be sure potential buyers sign a nondisclosure and confidentiality agreement. Again, your broker will do this for you.
- After the sale, hold onto the money for a few months until the initial excitement from the sale has subsided before you decide how to spend the funds.
Part 6: The 3 Principles of Long-Term Prosperity
Chapter 32: Keeping It. Decide what financial freedom means to you. Once you know your goal, start working toward achieving that dream.
A. earn more than you spend. You never want more money going out than is coming in or you will begin to eat into your principal and diminish the longevity of your financial freedom.
B. The debt game. Debt is not a necessary part of life. If you want to take control of your financial future, don’t accept debt in the first place. Instead, save for what you need, and remember that material possessions do not hold the key to happiness. If you already have debt, pay it off as quickly as possible because it is limiting and damaging your future.
C. Passive vs. active income. Passive income is the money you receive that is not connected to your work — it’s income from such things as royalties, interest-bearing accounts, stock dividends, etc. Active income is the money you earn from work, such as your salary, tips, or commissions. You should invest or save as much of your active income as you can. The money you invest or save is principal and should remain in your investment or savings accounts. Eventually, as they grow larger, your savings and investments will generate passive income. The goal is to eventually spend only your passive income, leaving the principal to continue generating more passive income.
- If you only spend your passive income, you do not need to track your budget. Budgeting can be a hassle and consume a lot of your precious time.
- Your nest egg will grow. Many people struggle to save because of a lack of discipline, the way their finances are structured, or a poor savings strategy. You can avoid these issues and create a healthy nest egg by using your passive income to buy your groceries, pay your bills, and so on.
D. Save. Since financial freedom is your primary goal, saving your money and investing it so it grows is a smart strategy.
E. Invest. Every dollar you invest now will be worth significantly more later.
F. The asset illusion. Price is what you pay; value is what you get. Luxury items are liabilities because they don’t produce value; they reduce value because they begin depreciating the moment you buy them. Invest in assets, not liabilities.
G. Assets vs. liabilities. Assets increase in value over time, while liabilities decrease in value. The more your assets outweigh your liabilities, the higher your net worth. Start investing in assets and you’ll see your net worth consistently increase.
H. The cost of consumption. The cost of buying something isn’t limited to only the item itself. There are two additional costs:
- Opportunity cost. Every dollar you spend is a dollar you can’t invest.
- Time and energy cost. It takes time and energy to keep up with the latest fashion trends, hottest new cars, etc. This is time and energy that could be better spent more productively elsewhere.
I. Be practical. View material goods for their practical use, rather than how marketers want you to see them. For example, the purpose of a car is to get you from Point A to Point B — not to show strangers how much money you have.
Chapter 33: Growing It.
A. Focus on the long-term. Long-term investments will result in more value than short-term investments. that’s because money grows steadily over time. Time is your ally.
B. Asymmetrical risk and reward. Choose investments where the reward outweighs the risk. If the risk of complete loss is 10%, and the chances of success are 90%, your ability to be successful is in your favor.
C. Diversification. Because markets can be unpredictable and volatile, it is essential to spread your risk among different asset classes. You should also diversify within each asset class, and also spread investments among various geographic areas. When your portfolio is diversified, when one sector of the market dips or fluctuates, the others are likely to grow and develop. Diversification is a complex practice. Get the best advice from a professional financial advisor who has a history of successful investing. Unless you study the markets regularly and have experience making purchases, it’s worth the minimal cost of hiring an experienced and proven professional to manage your money.
D. Timing. It’s impossible to always time the market accurately. Investment success is not about timing the market; but about time in the market. Long-term investing will weather the markets’ ups and downs.
E. Buy the entire market. Purchase index funds so you receive the full benefit of the entire market. There are a number of different indexes, focused on different aspects of the market. Investing in several indices could be good for your portfolio.
F. Dollar-cost averaging. Purchase assets over time. Sometimes you’ll buy high and sometimes you’ll buy low, but the cost will average out over time. This way you don’t need to guess the “right” time to buy because timing the market isn’t an effective practice.
G. Automation. With an automated investment program, you decide how much you want to purchase and how often, and don’t have to think about it; your funds are deposited automatically every month. This keeps your investments steady, building your principal and eventually generating your passive income.
Chapter 34: Balancing It.
Once you’ve achieved wealth, accept that you’ve won the race and won’t have to run the entrepreneurial gauntlet anymore. Money now works for you. If you put your money to work, it will be your tireless servant, constantly generating more money for you.
A. Fight the “never enough” mentality. Viewing accumulated wealth as “points” in the contest of life is foolish; someone will always have more or less than you. Make peace with the idea of “enough”. When that day comes, you can declare victory on your terms, not by constantly comparing yourself to others.
B. Recognize the moving of the goalposts. There is nothing wrong with wanting more. However, if you constantly revise your idea of having enough, you will never reach your destination. “Moving the goalposts” can become a harmful habit and no amount of wealth will ever satisfy you. Recognize this dynamic so it doesn’t sabotage your dreams and keep you constantly on the treadmill.
C. Set your number. Plant your last goalposts — ones that won’t move. Then, set your number. The way you think about your number will depend on your age, lifestyle, aspirations, and personality. One method is to add up your monthly expenses, multiply them by 12, and then multiply that number by 20. Once you reach this number, consider declaring victory.
D. Embrace your financial freedom. Financial freedom means you can finally cut everything out of your life that you don’t enjoy doing, and fill your time with only the activities you enjoy. Hitting your number means your time has come. There are three benefits to having financial freedom:
- Time. You can always make more money. You can never get back time.
- Experiences. Start thinking of your wealth as an opportunity to have amazing experiences. You only live once!
- Fulfillment. Money is worthless if it doesn’t bless your life with purpose. Spend time with family and friends. Give generously to the causes you care about. Make the world a better place; your entrepreneurial work and sacrifice can now bless millions of people.