How to Become an Entrepreneur

A successful entrepreneur!

There’s a school of thought that being an entrepreneur is in our DNA and we either have that tendency, or we don’t. Some are definite about their belief that people are pre-disposed with a personality for being an entrepreneur. Others disagree, including me.

How to become an entrepreneur can and should be taught in schools. Given the opportunity to learn about it, more will likely choose it. This nation, the USA, was built on and became great because of entrepreneurs. And they are the ones to take the lead in solving the current economic crises.

I suppose it’s true that not everyone wants to be an entrepreneur, but that doesn’t mean they couldn’t benefit from a few courses on entrepreneurship.

The only thing that might stop a person from wanting to be an entrepreneur is mindset. For instance, they:

prefer to work for and with others for whatever reason feels right to them
don’t want the risk or responsibility that goes hand in hand with being an entrepreneur
don’t have that kind of drive or determination to succeed on their own
don’t think they’re qualified
aren’t comfortable with the idea
simply aren’t interested

Still, they are capable of learning how to be an entrepreneur. They simply choose not to.

A 2002 Harvard Study revealed if you can convince college students they have what it takes to run a business, they’ll take to entrepreneurship.

“Basically, we’re saying to the students that being an entrepreneur is not a personality characteristic, it is a learned skill.” – Paul W. Marshall, the Harvard MBA Class of 1960, Professor of Management Practice and course head for The Entrepreneurial Manager.

What did you learn in school about becoming an entrepreneur?

Granted, I think the social component is important, as is the ability to read and write. But the practical lessons seem to be missing, and we lose our creativity and intuition with too much structure. It would be nice if in six years of elementary school a few hours were put aside for creativity and philosophy, as well as lessons on entrepreneurship, basic psychology and human behavior, or, my personal wheelhouse, money and investing.

In our workshops and seminars we show how to make money by becoming an entrepreneur, i.e. starting a business. Once in a while, kids join us. (I love that!) During one weekend in Orlando, FL, an 8 year old participated with her grandmother and brother. Not only did the young girl learn MBA level business and finance, but she was fully engaged and attentive, for three full days. Instead of spending her weekend watching TV or playing with a PDA, she was interested, and learning. It was quite satisfying.

And it makes sense. Look at all the kids who create lemonade stands or have paper routes. Kids want to learn and engage with each other, even if it’s to build a clubhouse! An education system that kick-starts curiosity and the pursuit of practical knowledge could push our youth into productive behaviors and use of their time, and maybe even spur an important innovation, or several.

What about you? Did you learn anything in school about how to become an entrepreneur?

Business Partnership Agreements… Because Divorce Happens

A business partnership agreement is often overlooked when starting a business, because like a young couple deciding to get married, everyone is excited and they don’t want to upset the apple cart with formalities of things they think will never happen.

Well, unfortunately breakups do happen, in business just as in marriage, so when you hear this…

Dearly beloved… We’re gathered here today…

Before You Say I Do: Get It in Writing!

A business partnership is a lot like a marriage and the break up, should it come to that, can be just as devastating as a divorce.

Whether you are partners outside or inside of marriage, anytime you start a business with someone else, it’s imperative to get all the details in writing, and those details that are there for both of your protection can be defined prior to opening the doors with a business partnership agreement. It’s very possible that down the road there will come a time when the two (or more) of you don’t see eye to eye or circumstances change. Any nagging problem can be the start of much more trouble to come.

According to the National Federation of Independent Business, business partnerships between husband and wife account for around one million businesses. I didn’t find a figure on the total number of business partnerships, but they are very common. Today’s complex business environment has made it increasingly difficult to achieve great success by going it alone.

The problem is it can be a challenge t9 find the right partner(s). However, once you do, it’s time to get down to the financial, legal and working details of the partnership.

That’s why I say, get it in writing.

A business partnership agreement is like a prenuptial. Be precise, clear, and as detailed as possible in situational analysis. When money and power is at stake, set in concrete who gets what, who controls what, who does what, who makes the decisions, and what happens, when and if, one or the other wants to part ways.

Even a successful business can be brought to its knees when partners can’t work together any longer. Often times, court is required to settle things. Once you go that far, your business partnership agreement better be solid. In fact, it would definitely benefit everyone involved if your partnership agreement provides for alternative dispute resolution, such as mediation or arbitration.

In addition, a buy-sell agreement, which is a binding contract between business owners, should be negotiated beforehand.

A buy-sell agreement covers more than just a parting of ways between business partners. It details how you agree to handle the sale or buyback of an ownership interest when circumstances change. This includes outside offers to buy the business, a divorce settlement, personal bankruptcy, and injury, incapacity or death, among other things.

One common way to end a partnership is for one to buy out the other in cash or on terms. You should set up a reasonable buyout scheme in your business partnership agreement and have a qualified third party, such as an accountant; put a current value on the business when the time comes.

My recommendation is to hire an attorney to guide you through the process of coming to terms before the partnership is solidified. My advice would be the same in the event of dissolution. However, there are ready-made forms that you can use to help you through the process of forming or dissolving a partnership yourself. One such source for DIYers is Nolo.com.

There are also many popular services online that can assist you in setting up a business partnership agreement on just about any budget. LegalZoom is one of the more popular ones and their customer service reviews are really good.

Many of us have had, or heard about, business partnerships that have gone awry. Preparedness is imperative.

Your thoughts?

Are you considering a business partnership? Are you in one? Do you have other recommendations?

5 Quick Tips on How To Be A Millionaire

If you want to know how to be a millionaire, you need to study those who have already made it. How did they do it? What do they do differently? What sets them apart?

First let’s look at three of CNN Money’s “key stats” of millionaires:

8.9 million U.S. households have a net worth of at least $1 million, not including equity in a primary residence
46% of millionaire households own investment real estate
The average household income for millionaires is $209,000

So, the answer to “how to be a millionaire” isn’t as complex as you may have thought!

The U.S.A. has the largest population of millionaires in the world. Of those, the majority became millionaires through creating wealth of their own, i.e. they’re business owners.

Over 80% of millionaires are first generation, which means they worked hard and smart for their money. Two-thirds of millionaires are self-employed and 75 percent are entrepreneurs.*

If you want to know how to be a millionaire, take a look at what millionaires do to help them reach that financial status.

Tip #1

Millionaires have a plan.
A financial plan is your road map to money. Be specific and learn to adapt and recognize opportunity. You need to stay the course.

Tip #2

Millionaires work.
That’s right. You’re going to have to work. You’ve got to get serious, be consistent, and put in the time. The majority of millionaires are business owners and entrepreneurs that work no less than 45 hours per week and usually more.

Tip #3

Millionaires don’t spend what they don’t have.
Millionaires shop smart. They look for deals. The smart ones live on a comfortable middle class spending plan. Fact: 43% of millionaires have a Sears card. On that same note, most only carry one major credit card and pay it off at the end of each month. If they want something they devise a plan to get it without going further into debt.

Tip #4

Millionaires make sure every dollar goes to support continued wealth.
Simply put, you need a cash machine, a business that will sustain a continuous flow of income. And you need to put your money to work for you.

Tip #5

Millionaires are in a cycle of continuous learning.
In fact, most millionaires have a mentor or copied a successful business and or personal strategy model. You’ve got to keep up with the times and watch for new opportunities.

*Are you curious about the difference between self-employed and entrepreneur?

The difference is not as subtle as you may think it is. It’s about earnings. If a self-employed person doesn’t work, he or she doesn’t get paid. An entrepreneur, on the other hand, runs at least one business and employs others to work. If he or she goes away for any amount of time, the money still comes in.

Either way, your chances of becoming a millionaire are still quite good.

There you have it: Five quick tips on how to be a millionaire.

A few may be able to accomplish that goal simply by reading this post and getting to work on each of the tips. Some may do it by reading a few good books on the subject. (Check out my best-selling Millionaire Maker series of books.) But most people will need much more help.

How about you?

What kind of help do you think you need to answer the question, how to be a millionaire?

The U.S. Needs You!

Money Magazine is currently running a poll seeking responses to a simple question, “Do you love your job?” The multiple choice answers reveal an interesting result, especially when you consider the percentages of the votes tallied so far:

Yes, it’s interesting and pays well. (38%)
Not really, but I’m glad I’ve got a job. (33%)
No, I’d switch careers in a second. (16%)
I wish I did. I’m unemployed. (14%)https://iwealthsystems.wpengine.com/wp-admin/post.php?post=8634&action=edit

In this group of 34,091 readers of Money Magazine to date, the unemployment rate is 14%. The national rate is currently 9.1%, which reportedly consists of 8.3% of women and 9.3% of men over the age of 16. (Source: Bureau of Labor Statistics).

Why is job growth lagging?

One reason for the jobless recovery is “the remarkable story of continuously rising U.S. worker productivity, “says. The pattern was a godsend during the 2007-2009 recession, because it allowed businesses to “maintain output despite layoffs.” The “downside” of higher productivity is that it has “delayed job creation,” but don’t worry — after the “longest period of ‘rightsizing’ in decades,” most companies can’t get any leaner, so they’ll have to start hiring as soon as sales pick up. (Source: TheWeek.com)

The fact is the U.S. needs to add nearly 17 million jobs to get back on track. That total number would equate to 280,000 each month for the next five years!

Even if you are employed, it’s still a difficult situation. Wages aren’t rising, but the cost of living is.

As Phil Izzo wrote in The Wall Street Journal, “If prices are going up but workers aren’t getting paid more, it spells good news for companies who can keep labor costs low, but suggests continued struggles for consumers.”

That’s why the U.S. needs you — entrepreneurs starting new small businesses.

Historically, small business provides the majority of all jobs in the U.S. In fact, small business has created about two of every three net new jobs since at least the early 1970s. Obviously, this number is not the same year to year. The proportion changes with the business cycle.

Large businesses tend to have much larger swings in employment over the business cycle than smaller firms. Therefore, during economic expansions (good times), small business’s share of net new jobs falls relatively; during economically difficult times, small business’s share of net new jobs grows relatively.

The important point is not the number of jobs small businesses creates. It’s the number of net new jobs, meaning the number of jobs created minus the number of jobs lost.

So if small business generally adds two thirds of net new jobs, we, as entrepreneurs should be able to add 11,390,000 of those 17 million jobs needed!

Whether you hire employees, contract more services or choose to outsource tasks, you’re helping America’s economy grow.

Let’s pull together to get the economy back on its feet!

Starting a business? Ready to grow your business? We’re here to help.

What questions do you have? Where are the roadblocks for you? What do you need help with?

The America Invents Act

“Patent reform is an important part of making America more competitive in the global market over the long-term, helping turn more inventors into successful entrepreneurs and promoting American innovation. It will create jobs in Delaware and throughout the U.S.”
– Senator Chris Coons, Delaware

As of last Thursday, June 23, 2011, the patent reform bill was passed. (The recorded vote is here.)

Microsoft and Apple were started by “garage” inventors. Today both are huge corporations employing thousands of people. And they, of course, got patents.

What’s this got to do with it?

An analysis of multiple studies conducted in 2008 and 2010 on the relationship between innovation, entrepreneurship and patents revealed some interesting data. It seems that start-up companies with one or more successful patent applications — regardless of industry, financing stage or other factors —

Are more likely to have a significantly higher probability of completing an IPO (initial public offering)
Have a significantly lower probability of failure
Will obtain more venture capital funding in terms of dollars
Will obtain funding from more venture capitalists
Will have a longer incubation period (Note: Incubation is the time between when a patent is procured and it’s proven and ready to market. A longer incubation period means more time to get it right.)

This six-year-old effort to reform patent laws is in answer to the many differences that were still standing between the U.S. and the patent laws of the rest of the world — and the fact that there had not been comprehensive reform in 60 years.

Still, not everyone was in agreement with what was in this bill. (Imagine that.)

One of the controversial changes was the “first-(inventor)-to-file” system, which was a dramatic change from the original “first-to-invent.”

According to a report in the Wall Street Journal, a beltway lobby group called the National Small Business Association, as well as a coalition of business and trade groups, “urged lawmakers to reconsider the first-to-file provision, calling it a legal flaw.”

Basically this provision implies that an inventor may win the race to create an invention but still lose the race to file the corresponding patent application and the right to patent it.

Perhaps Steve Perlman, President and CEO of OnLive, Inc., explained the difference in the simplest terms. “To preserve defensible priority, every one of [his] 100 inventions would have to be filed as a patent immediately upon conception (which is why inventors throughout the world refer to ‘First-to-File’ as ‘Race-to-the-patent-office’).” He continued to say, If “First-(Inventor)-To-File” is made into law, it most certainly will face constitutional challenges. The plain language of the Constitution grants patents to first inventors, not first filers.”

It will be interesting to see how this plays out!

Do we have any inventors out there?

What are your thoughts?

The Entrepreneur’s Wonderland

Do you ever wonder just where exactly your business is going and how long it will take to get there? If so, it’s time to leave “wonderland” and get into action.

Half the year is over. How are you doing in meeting your goals? How are you doing on implementing your action plan?

Successful businesses put tremendous effort into creating detailed goals and marketing and action plans each year. And they check their progress against them regular basis, I’m talking about monthly and quarterly. They go through this for one real reason only: It works!

Here’s a million dollar tip from me to you…

Stop everything you’re doing and create a detailed map of goals and business strategies to achieve them.

However, if you don’t have goals and a plan that includes action steps you’re leaving your future to chance. If you do have them, let me ask you: have you examined them? They won’t do you any good sitting in a folder somewhere in your filing cabinet.

Once you have them in hand, ask yourself the following questions:

How have you done so far this year?
Are you doing great, average or behind?
What can you tell from your results?
What’s working and what’s not working?
Where could you use some help?
What successes can you leverage?

It’s imperative that you focus on what adjustments you need to make to continue your successes or cut your losses. It’s also a good time to revise your estimates for the rest of the year but don’t stop at just revising the numbers. Revise your action plan too! Where do you need to step up your action and where do you need to cut back? Again look at what’s working and what’s not.

Keep in mind that goals and business plans will only get you so far. An action plan (put into action) is what makes your business work.

Don’t want to get into all that hassle? Well, good luck with that. Your efforts, or lack thereof, will show in your business results. The time and effort it takes you to create these plans will pay you back tenfold. Knowing where you want to go and then comparing results regularly is the only way to assure yourself you’ll get to where you want to be.

Otherwise you might end up like Alice in Wonderland.

Alice: “Would you tell me, please, which way I ought to go from here?”

The Cheshire Cat: “That depends a good deal on where you want to get to”.

Alice: “I don’t much care where.”

The Cheshire Cat: “Then it doesn’t much matter which way you go.”

The Future of the Entrepreneur

Small businesses are an extremely important aspect of any economy and that will always hold true. Historically, they’ve provided the majority of all jobs available. It may seem foreboding today considering the number of jobs created by small businesses, less than a year old, decreased from more than 4.5 million in the late 1990s down to 2.5 million in 2010 (according to the Bureau of Labor Statistics – BLS.gov). Plus when this fact is combined with fewer new businesses being started, it might make you think going into business isn’t such a good idea.

Yet it was major firms, with 500 or more employees, that suffered the greatest net job losses. Not so much for small and medium sized firms which also are experiencing the most rapid recovery.

New and existing businesses are expanding because they introduce innovative practices to the marketplace. They aren’t stuck, like many established, large firms that remain stagnant in the ways they’ve been doing business for decades.

My hypothesis is that the media tongue-wagging about the current economy is shaking consumer and entrepreneurial confidence. People are holding back, afraid to jump into the game. Often they think it’s just not the “right time.”

If that’s what you think, let me tell you, there aren’t two “times” to start a business – there isn’t a right time and a wrong time. The right time is when you’ve decided you’re ready. Period.

Start. Do. Succeed.

According to FindLaw.com, 61% of American adults have thought about starting their own business, yet only about a third actually do it. 90% of those entrepreneurs choose to start their own business “to have more control over their future.” And that’s not likely to change.

I see entrepreneurs succeeding, far more often than not, when they concentrate on skills and experience they already possess, as opposed to going for something new. In fact, sticking with what you know reduces the risk of failure or loss by 50%.

Human capital is defined as “the abilities and skills of any individual, especially those acquired through investment in education and training, which enhance potential income earning.” In other words, your value is in what you know and marketing it.

You don’t have fixed potential, why settle for a fixed income? (You knew I was going to say that, didn’t you!) I’ve always been an advocate for fighting employment and underemployment by building your own business and continually moving up to the next level. That’s what it’s all about. Moving on up!

I’m not going to sugar-coat reality. Building your own business requires work and dedication. You won’t find me telling you to “follow your dreams and then you’ll get rich.” That’s nonsense. Marketability is the key to success. You have to be fully invested in building your business with your time, efforts and resources because success requires it. You will find it rewarding and fulfilling, but you’ll also find it arduous and, at times, something akin to a roller-coaster ride. That’s being truthful.

The “winning formula” resides within you, not outside. The business doesn’t make you successful, you make the business successful. The entrepreneur that takes action doesn’t want to watch others in the game, he or she wants to be IN the game!

What does the future look like for the entrepreneur?

The entrepreneurial spirit will never die, not in America or anywhere else in the word. Entrepreneurialism has no borders or limitations. The ever-growing class of entrepreneurs with good ideas and strong work ethics will continue without abatement as long as humankind exists.

The future is now. What are you waiting for?

What Makes You an Entrepreneur?

Entrepreneurship is an attitude more than a skill or a profession.

The term “entrepreneur” is thrown around a lot so let’s start by defining it so we’re on the same page. The American Heritage Dictionary defines an entrepreneur to be “a person who organizes, operates, and assumes the risk for business ventures.” In other words, it’s the process of creating or seizing an opportunity, and pursuing it even though there is a risk.

The goals of entrepreneurs may vary but two of the most common are 1. The desire to build or create something out of nothing, and 2. Financial freedom.

Entrepreneurs have a different perspective on things. They want to create something. They seek out opportunities. They watch for “change” or how to improve something. And most importantly, they want to finally be in control of their futures.

To be successful, an entrepreneur understands that they need to be logical and not fall in love with an idea but pursue it only if it’s deemed viable and marketable with a good chance of success. After all, ideas are just that — ideas — until you decide to take action on them.

Here are some common questions I get about what makes an entrepreneur:

Is everyone who runs a business an entrepreneur?

Many may not consider the newspaper carrier, shoeshine person, or grass cutter, entrepreneurs, though these are often early pursuits of those with an entrepreneurial bent.

Does it matter whether the business is part-time?

Some part-time activities are basically hobbies, or undertaken to supplement income and that’s fine. However, planning for growth is what makes an entrepreneur different.

Your path might begin by earning a salary in the business you want to enter, while learning more about it. This time can be used to develop a support network, professional and personal, and generating ideas to “bounce off” people you respect.

At what point does self-employment become a venture?

The primary objective of many self-employed people is merely to employ themselves (and others if necessary) at a moderate to good salary; some are even willing to eke out a living to do what they enjoy. This approach is often referred to as a “lifestyle” business, and is generally accompanied by little, if any, plan for growth.

Would you consider a person who inherits a business an entrepreneur?

From the point of inheritance on, it is their own money and financial security at risk. They could possibly sell the business, invest the proceeds in blue-chip stocks, and live off dividends. Some might consider managing a personal stock portfolio for a living as an entrepreneurial venture.

Would a person who inherited a small or marginal business, then took it to new dimensions be considered an entrepreneur? The inheritor could have tried merely to keep it going, or even to pace the business’ decline to just carry them to retirement. In a family-held business, long-term success is often a central goal.

Are franchise owners entrepreneurs?

Franchises are generally sure things. For many, operating a franchise is an entrepreneurial effort that comes with built in support. That support can make the difference, for many entrepreneurs, in their chances for long term success, eliminating quite a few of the obstacles and hurdles faced by those that decide to “go it alone.”

These questions are intended, not to develop a precise definition of entrepreneurship, but to help us understand our attitude toward its many forms of expression. You may answer them differently. It all depends on what your entrepreneurial attitude is.

Okay, your turn. Tell us your thoughts on these questions (and my answers) below in the comments.

Let’s Pull Together

Entrepreneurs throughout history have been the back bone of our economy. We are the innovators, the doers, creators, generators, and expanders. We employ more than half of this country’s workers. Small business is almost always responsible for converting a poor economy into an upswing. It’s time we all get involved. We’re at the brink of an amazing time. The opportunity to flourish is abundant and all you need is the right information and the tools to get there.
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