How to Write a Comprehensive Business Plan

One of the most daunting tasks for most small business owners is creating a business plan. Sitting down, staring at a blank page or computer screen is never easy, and even less so when you are creating a document that will govern, to some degree, the path of your business for the next few years. However, there are a few things that can make the process a little easier:

• Unless you are using your business plan to apply for finance, it’s more of a personal road map.

o This is to ensure that you know at least somewhat where you are going, and have a clue as to the way to get there

• Even if you are submitting your business plan for funding consideration, it does not have to be complex or confusing.

o In fact, the simpler you can make your vision seem (and back it up) the more effective your business plan is likely to be

• Understand that your business plan is NOT intended to be written in stone – it’s a working, living document that you alter as the dynamics of your business changes.

Now that we’ve clarified those business plan fundamentals, let’s get into the nitty gritty of how to actually write one.

Spend Some Time Brainstorming

Before you even put pen to paper on your business plan, it’s a good idea to sit down and make notes. Write down anything that occurs to you which may apply to your business. Don’t restrict yourself to the sections or template of a standard business plan; just allow your ideas to flow onto the paper. This will form the underlying basis of your final document, and will help you solidify the content to include in your plan from a holistic perspective. Once you’ve gathered all your thoughts on paper, you’re ready to start writing the plan.

1. Executive Summary

The executive summary of your business plan is pretty much exactly what it says – it’s a summary of the information contained in the rest of the document. Although it is short (around two pages), it’s the most important part of your business plan, and should be written last – after you have covered all the other sections of your plan. The reason for this is that potential funders and investors, who are extremely busy and have limited bandwidth, will NOT read your entire plan. To be honest, they will probably read just this part of your business plan to figure out whether to schedule a first meeting with you or not. Therefore, your executive summary needs to be a knockout!

2. Business Overview

In the business overview section of your business plan, you will cover the idea behind your business and the legal formation it become. For instance, you might be starting an online business that sells pet products. This is the section where you will cover that, as well as outlining what legal form the business will take, were they company is based, etc.

3. Management

Anyone who is seriously considering investing in, or funding your business, will want to know who is behind the idea. They’ll essentially be asking themselves “who will be steering the business from business plan to market success?” In this section of your business plan, outline who the key players in the business are going to be (along with their resumes), as well as detailing the management structure of the business. Use this section of your plan to assure investors that you and your team are the best people for the job, but don’t lie! If you’re lacking in a particular area, for instance, accounting, indicate how you plan to address the issue – for instance, by outsourcing the function. Remember – no one is good at everything!

4. Your Market

Anyone who is considering investing in your business will want to know that there is, in fact, a market for your product/service. Even if you are self funding, you need to know who your target consumer will be! That means examining both the potential demographic your business is aiming for as well as the overall industry landscape. Market research will also help you to avoid costly mistakes. For example, if you are planning to open a fast food restaurant, but the area you have chosen already has five, there’s a good chance you need to rethink your strategy, right?

5. Sales and Marketing Strategy

Once you have covered WHO you are going to sell to, you need to be clear about HOW you plan to do it.

• Are you advertising to the general public, or to business?
• Will you leverage only traditional advertising methods, or will you incorporate technology?
• Will you have a sales force?
• What will your USP be, and what will set you apart from your competitors?

All of this information will help you to gain a foothold in the market while you are starting out. If you continue to build on the above, it will be a very worthwhile step toward ensuring the success of your business over an extended period of time.

6. Financial Statements and Projections

Easily the scariest part of preparing a business plan (for most entrepreneurs) is constructing the financial statements and projections. However, there are plenty of free online resources that can help you. There are an abundance of templates that will provide a framework for creating a clear financial picture of where you are right now, what you need to get started, and what your sales and profits will be in the short-term. Alternatively, you could hire an accountant to compile your information into a financial plan. Based on my experience, in the early start-up days, it’s always best to be engaged in every aspect of the business – there’s nothing worse than trying to present a business plan to investors and not understanding the numbers.

7. SWOT Analysis

Yet another aspect of the business plan that scares many entrepreneurs is the SWOT analysis. This acronym simply means an analysis of your business in terms of:

• Strengths
• Weaknesses
• Opportunities
• Threats

Spend some time with a sheet of paper for each of the above, and list your ideas. Then simply transfer them to your business plan, and expound upon them with detailed explanations as to how you’re either going to mitigate or capitalize on each of them.

8. Supporting Documentation

This is the section of your business plan where you can supply any other documentation that is relevant to your company or which your readers may find interesting. Maybe you are applying for growth funding, and your company or product has won an award – include a copy. Or maybe you operate in a highly specialized environment that requires certification – include yours here. This section can have a substantial impact on how your business plan is received from a risk mitigation perspective.

Take Your Time, and Treat Your Business Plan as a Learning Tool

As you can probably now see, the concept behind your business plan is not that difficult or complicated.

Yes, building a business plan can be a process that takes some time, but it is an exercise that will help you to gain a clearer picture of your company. Furthermore, a great plan will help you to convince potential investors and funders that you are worth the risk.

Think of your business plan as your sales pitch for your business on paper – invest time in making it great.

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How to Start a Business with Little or No Money

Do you think you need a lot of money to start a business? You don’t! I’ve started eight businesses with less than $1000 each. These are the tricks I use.

You Don’t Need Everything from Day One

Don’t feel like your business has to look like a “real business” from day one.

• You don’t need an office.
• You don’t need to incorporate from day one.
• You don’t need fancy business cards, a fax machine or that desk you really like.

People can often become distracted by the things mentioned above and lose focus on what matters. Concentrate on selling and then selling some more. That’s all you should be working on at the very beginning.

Use Relationship Marketing to Your Advantage

This is the most important lesson that I’ve learned in my career as an entrepreneur, so please pay attention. The best kind of marketing is called “relationship marketing” and it’s free. How does it work?

1. Find the people that have access to your audience.
2. Offer them a commission for referring business to you.
3. Let them market your company at no risk to you.

Let’s say you offer city tours in London. Go to all the hotels in the city, talk to the front desk staff at each place and tell them what you do. They have access to millions of travelers and that’s your target audience. Pay the front desk clerks a commission for each guest they send your way. This is risk-free and extremely effective.

Do As Much as You Can Yourself

Design your own business cards, build your own website, and write your own marketing copy. These won’t look as great as work done by professionals, but it’s free and fast. Once you’ve sold a few thousand dollars worth of products or services, you can always re-do your website, business cards and marketing copy using experts.

Good Enough is Good Enough

There’s a group of people that struggle more than anybody else when it comes to starting a business with no money: the perfectionists. They can’t stand good business cards; they need great business cards. They can’t stand using a template for a website; they want a custom-made site. They can’t work with a web-based application that’s $5 a month because it doesn’t have all the features they want. They don’t leverage existing products, they need stuff that is customized for them, and that can be very expensive.

Have Contractors, not Employees

Having contractors has many advantages:

• You can stop working with them when you don’t need them anymore or if they’re not good at what they do.
• They don’t need a desk or office space.
• When work is slow, they get paid less. When there’s a lot of work, they make more money. Try that with an employee.

Pay for Results

It’s OK to have some people on retainers, but make sure that most of their income is tied to results. If they bring you a lot of business, they should make a lot of money. After all, you’ll be making a lot of money too, so it’s only fair that you share it with those that help you achieve your goals.

Be Smart About Your Inventory

These are two great pieces of advice I learned from my mentor:

• Produce on demand. When you receive an order, collect payment and then manufacture the product. By doing this your working capital will come from your customers instead of your own funds.
• Be the middle man. Instead of producing your own products, buy them at a discount from someone else and sell them at retail price. The profit margin will be smaller but this is a lot less risky. Once you’re in a better financial situation, you can start producing your own products.

Barter as Much as You Can

Very few people barter these days, but bartering is extremely powerful. If you have something other people want, try to barter for their services. You might not get the best expert in the industry to work with you, but whomever you get will be good enough.

Leverage Other People’s Businesses

You should take advantage of the retail locations, distribution channels and manpower that other companies pay for. For example, if you sell t-shirts, opening your own retail store will be way more expensive than selling your t-shirts through other people’s stores. Let them carry your products. Use their salespeople, their retail space and their distribution channels.

Bonus Tip: Don’t Quit Your Job Yet!

Having to make money by tomorrow in order to be able to buy groceries is no fun. I know it because I’ve been there; several times. Don’t quit your job yet. Work on your business in your free time. Grow it without taking stupid shortcuts because you’re desperate for money. Once you’re getting a decent income from your business, you can quit your job and work on your business full-time.

What other tips do you have for low- or no-budget startups?  Share your comments below!

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Learn Strategies in Convincing People to Loan You Money for Your Startup

The funding problem is one that all entrepreneurs face. Without money to start your business, your options are very constrained and growth could take eons longer than it would with the help of an investor. If you don’t have the means to self-fund, you should begin polishing your pitch to investors immediately, but without proper etiquette and requisite plans you could come off looking desperate and unprepared. The following tips will help you look more credible, serious, and promising to potential funding sources.

Build a Prototype

Let’s face it: talk is cheap. Anyone can have a “great idea” that sounds like a real winner on paper, but no amount of talk is ever as impressive as using the real thing. TechRepublic warns against spending too much time and effort on the functionality of the prototype. They recommend that a prototype should be an empty shell of an application that does little more than visually represent your current vision.

The purpose of the prototype is to get it in front of your prospective investors fast and let them critique it. If you invest too much time in programming the technical back-end, you might end up having to scrap a lot of your work when the investor submits changes he or she want to see before writing you a check.

Identify a Clear Target Market

Too often investors meet people who have grandiose new ideas that they are sure the world will want, but can’t specify who in particular will use it. Believe it or not, a product without a market is like a rowboat without oars – practically useless. Investors know it, too. “It’s a big red flag when someone outlines the size of the market-multibillion dollars-but doesn’t clearly articulate a plan for how the idea will meet an unmet need in the marketplace,” says Aaron Keller, an adjunct professor of marketing at the University of St. Thomas.

Dedicate a significant amount of time putting yourself into the shoes of your future customer. What problems do they have? How does this product solve them? How can you communicate the value of your product to them? Understand as much about your market as possible and communicate this knowledge to your investor.

Seek Help with Your Business Plan

If you plan to seek funding from a professional investor (such as a venture capitalist, or a small business bank loan) you will need a dynamite business plan before you even walk through the door. No amount of crafty salesmanship or product hype will get the job done with these folks – they’ve heard it all before. The problem is that you’re not a professional business plan writer, you just know your product and want to get started developing it.

That is why the Small Business Association (SBA) offers free online business plan consulting. Their toolkit offers everything you need to complete an attractive business plan quickly, from essential inclusions to formatting guidelines. There is even an interactive online workshop to help you ensure that you learn all the tricks and tips for writing to investors.

Define Your Team’s Roles and Credentials

Behind every great company is a talented team that can combine specific skills to create the magic that drives their sales. Investors know that the success of a new business is as much about the people turning the wheel as it is about the wheel itself. Before seeking funding, write a brief biographical outline of the credentials and roles of your core team members, making sure to include all professional certifications, work experience, and educational merits that apply.

Design Clear Return on Investment Figures

An important component of your business plan that every experienced investor needs to see is your return on investment outline. Specifically, this section explains how the investor stands to benefit from your company. What percentage of profit is he or she entitled to, how soon do you expect to reach profitability, and how long will it take him or her to gain their investment total back? Considering that these are likely the biggest questions on the mind of anyone you ask for money, it is important that your ROI figures are backed by research and show a positive outcome for the investor.

Decide On Your Exit Strategy

New entrepreneurs are so excited to begin their businesses that the concept of an exit strategy is usually the furthest thing from their minds, but it is an important aspect that deserves attention. For those unaware, an exit strategy is how you plan to leave your business in the future. Some envision a life-long company that they will work at until retirement while others plan to build the business up and sell it off for a big pay-out.

It’s tempting to put off this decision for later, but StartUpNation points out that the exit strategy can actually shape the business right from the start. “If…you plan to exit your business and transform your equity into cash through a sale, merger or IPO, you need to prepare for that every step along the way,” they explain. “You’ll need to build value and equity in your company by creating unique products, services, relationships and distribution channels, building an intellectual property portfolio and expanding your customer base.”

Try Approaching Friends And Family First

Often, when entrepreneurs think about funding, their mind immediately focuses professional investors and neglects an alternative possibility. Before calling the bank, consider talking to your friends and family about investing in your company. Consider that you have a reputation with the people closest to you, and they surely want to see you succeed. New investors are fine, but they are a much harder sell because they see you strictly as a business proposition.

Tonia Papke, president and founder of MDI Consulting, agrees. “Family and friends are great sources of financing. These people know you have integrity and will grant you a loan based on the strength of your character.”

Justify Every Dollar of Capital

Deciding on an amount to ask for is one of the most difficult steps in planning funding. Carl Showalter, founder of an early-stage venture capital firm known as Opus Capital says that proposing a reasonable amount of funding is a skill many new entrepreneurs lack. “It’s surprising how often I meet with first-time entrepreneurs who tell me they need $5 million. Not many companies need that amount in their first round of funding.”

If you want to increase your chances of getting the money you need, keep the estimates conservative and justify every dollar. Never name a high figure just because it sounds like you’d be financially set for a while, this is inappropriate. Instead, create a comprehensive expense report that explains exactly how the money will be used to grow the business.

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5 Questions to Ask While Searching for a Co-founder

Starting your business, especially the first one, is like starting a new life. If you are sure of what you want to achieve, you would soon find yourself thinking and talking about your startup all the time, as if you were living in a new world. This is where you need someone who could share your vision, help you strategize better and work with you to make the plan work on ground. This could be your first key employees, a mentor or better still, a co-founder.

A co-founder is someone you can trust and fall back on. Some entrepreneurs prefer to tie-up with their old college friend or a colleague they know quite well, provided they have the right skills. Some bring their spouses or siblings on board, if they share the same vision. However, the worst thing that you can do to yourself and your startup is to make someone a co-founder only because he/she is “known” to you. Business is about hard facts and numbers, it is not a boat ride or a mountaineering trip. So, you got to be cautious as to whom you want as a co-founder. A right co-founder can add a lot of value and make your entrepreneurial journey worthwhile while a wrong one can rock the boat and leave you gasping for breath.

If you are looking for a co-founder, ask yourself some quick questions:

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Personal Brands are All the Rage – Here are Four Reasons Why Many Fail

Today’s world has many successful personal brands – Tim Ferriss, Gary Vaynerchuck, and Tony Robbins to name a few. Their success has led many to believe that their own ideas and philosophies can be practically applied to the world market for improving other’s lives. These success stories, combined with the recent surge in social media and the ease of use and high potential for Facebook and Twitter marketing has created a very big illusion – personal brands are easy and will carry high success with their creation. Unfortunately, this is statistically almost never the case. The reality is that very few people are able to create a personal brand that earns them an equal amount of money, let alone more money, than their existing occupations do.

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10 Business Ideas for the Teen Entrepreneur

Many of the most successful people in business today started out as teenage entrepreneurs.  For many teens, the realization that building something of your own beats working for “the man” comes to them naturally, but coming up with the right idea isn’t always easy.  So here are 10 ideas to get your creative juices flowing.  Most can be started by anyone, and a few will require some specialized knowledge, but might get you on the right path or spark another idea, even if you don’t have that knowledge right now. 

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9 Powerful Tips to Help your Prepare your Company for Growth and Success

The economy taught you to expect the worst, but have you ever prepared for the best?

It's Business 101 to have contingency plans in place for when things go wrong. But, conversely, are you prepared for growth and success? What if it turns out your positive expectations were too conservative? What if an unexpected celebrity endorsement sends demand for your product soaring? On a more practical--and likely--note, as the economy shows signs of turning around, are you ready for what that will mean for your operation?

Here's what you need to do to be prepared for growth:

1. Know what growth means for you and your company.
   To prepare for something, you have to know what it is and how you'll recognize it. Growth is more than just hitting a set of numbers--it's a package that includes changes to your company in terms of operations, production, staffing and facilities. In addition, think about what growth means to you personally. What will your life be like when your company grows and profits increase? How hard are you going to have to work? Are you ready and willing to do what it takes?
    
2. Maintain relationships with your funding sources.
   The faster you grow, the more cash you're likely to need. Growth financing is every bit as hard--if not harder--to obtain than startup funding. Do regular cash-flow projections so that you know how much credit you're going to need well before you have to start writing checks. Develop and maintain strong relationships with your funding sources and be sure to have primary and backup sources available. In today's financial climate, it's harder than ever to predict credit availability, so stay on top of your cash and financial needs to give yourself have plenty of room to maneuver when it's time to borrow.
    
3. Get comfortable being in the spotlight.
   Successful owners of growing companies are almost always in the spotlight to some degree--maybe not always to the general public but certainly within your industry and with your employees. Be prepared for a level of attention that you probably haven't received before.
    
4. Hire people based on where you want to be, not where you are.
   The team that can successfully run a NGN1 million company is not the same team that can run a NGN100 million company. If your goal is growth, hire people who can perform in the size company you want to be--they'll help you get there.
    
5. Put the right people in the right places.
   The right people doing the right jobs is absolutely critical to sustain growth. Whole person assessments and job benchmarking will allow you to take a systematic approach to hiring and career development, which will reduce your mis-hires and employee turnover.
    
6. Take care of your people.
   Your employees are what keep you successful. Recognize and reward that. Working in a high-growth organization is stressful and challenging. Take note of your employees' work and respond appropriately, or risk losing top talent. Create an environment where people are willing to work through the growing pains. In addition, take care of your suppliers, professional advisors and anyone else who can have an effect on your operation.
    
7. Listen to the experts.
   You may be an expert in your business, but you don't know it all. What's more, there often will be experts who know more about particular parts of an industry than the insiders. Identify the experts, listen to them and learn from them. Let them help smooth out your learning curves and keep you on your growth track.
    
8. Stay close to your customers.
   No company can do without customers, and if you don't stay close to them, you'll lose them. Know what they need, but more important, know what they want and do everything you can to give that to them. Most important, communicate. Never let your customers wonder what's going on. Tell them--whether it's good or bad.
    
9. Focus on your core business and don't get distracted.
   Stick to the business your company knows best. Be sure any diversification or product line expansion you do makes sense. If it has nothing to do with your core business don't get into it just because it seems like a good opportunity. Otherwise, you'll you confuse your customers and your employees--and you'll likely find that dividing your efforts reduces the quality and profitability of everything.

Just as you plan for when things go wrong, also plan for when things go well. When you're prepared for growth, you better can manage the changes it brings and let it take you to the goal you set when you started.

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The Easiest Way to Raise Money

It's simple: Don't spend it. Here are 10 ways entrepreneurs waste their hard-earned capital. 

If entrepreneurs could recover all the time and money they waste, our GNP would soar. I can't prove that scientifically--researching the topic would be, well, a waste of time and money--but I've seen it often enough, in business plans, on income statements (including my own), during bankruptcy proceedings and just looking around.

To win the startup game, you need to be a miser with your money. You need to spend it on things that will make you a success, not on what will simply make you feel or look like one. You need to pander to what your customers need, not to what you need.

So before you sign that check, swipe that credit card / ATM Card or sign that contract, ask yourself, "Will this bring me business?"

If the answer is no, consider it one less dollar you need to beg, borrow or spend.

Based on my experience, here are 10 of the most common ways entrepreneurs waste money:

1. Custom logos, fancy letterheads and other icons of success. They may make you feel like an entrepreneur, but they don't bring home the bacon. Instead, design your own with one of the many templates that come packaged with your word processing software. They include matching business cards, letterhead, envelopes and invoices. You can find templates in the Project Gallery of Microsoft Word or the Template Chooser in Apple's Pages. If you need more choices, HP.com and Avery.com offer free templates for use with their specialty forms and paper.

1. Fancy offices. Speaking of bacon, maybe the dining room isn't the ideal office, but working there beats not eating. If you don't need a formal office, don't pay for one.
2. A company car. The latest luxury car doesn't make you a better businessperson, it makes you a poorer one. If the wheels you have already get you back and forth to the grocery store, new ones are a waste of money. Just be sure to log you business travel so you can deduct the usage.
3. A slicker-than-you-can-afford website, brochure, sign, ad, etc. In the beginning, good enough is often good enough.
4. Consultants. Sorry to say, many of them will borrow your watch to tell you what time it is. If it's not rocket science, figure it out for yourself.
5. Falling for the pitch "You'll be getting in on the ground floor." You're not in a position to be someone else's venture capital. If a rep for a new advertising outlet gives you the hard sell about how wonderful it's going to be, invite them to call you back when they can prove it. Leave the experimenting to others
6. Starting a Business because your friends love your idea. It's one thing to like or even love an idea--it's an altogether different thing to be willing to plunk down money for it. There's no substitute for test marketing where real money changes hands.
7. Basing your marketing strategy on what you think is wonderful. Good chance your customers are nothing like you (or them you). Instead, research your market thoroughly. What do they read? What do they eat? What do they watch on TV? Then craft your message based on what appeals to them, not you.
8. Underestimating the competition. Or worse, thinking you don't have any. Any business plan that proudly states it has no competition earns itself an immediate place in my round file. If you don't understand your direct and indirect competition, you don't understand your market. And if you don't understand your market, you may be trying harder and harder to get better and better at something you shouldn't be doing at all.
9. Thinking that your product or service is what sells. Here's the sad truth: A great marketing strategy beats a great product every time. Business owners can (and will) go on and on about their wonderful products or services. The successful ones spend their time scheming about who's going to buy it and how they're going to reach them. Products don't sell, marketing does.

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Philanthropy - - Direct from Dell

By bringing business principles to philanthropy, Michael and Susan Dell are improving the odds for children in need.

When Michael and Susan Dell became parents, they did a lot more than make room in their house for their own children. They made room in their hearts for underprivileged children they might never meet. “Being a parent of four children and seeing many who are not so fortunate, we knew this was a great area to focus on,” says Michael Dell, the 45-year-old founder of computer giant Dell Inc. “When you become a parent, you are suddenly aware of how important good health and quality education are for the well-being and success of children.”

The Dells’ philanthropy is a lesson in hope economics. Through an endowment of about $1 billion, the Michael & Susan Dell Foundation helps underprivileged urban children become educated, healthy and successful. “Susan and I wanted to extend the charitable giving we had done in the past, so the foundation was a way to do that in a much more focused way and at larger scale,” Dell says.

Established in 1999, the foundation’s overarching goal, as Michael Dell sees it, is having “the greatest possible impact on children’s lives. That means focusing on the opportunities that have the greatest potential to directly and measurably transform the lives of children living in urban poverty.”

“Michael and I had already been philanthropic around Austin,” says Susan Dell of their Texas hometown. “We had to figure out how to make a bigger impact. We didn’t want it to be scattered…. We think education and health are the most important things. Kids must be healthy to learn, and kids who can’t learn won’t be successful.”

As goal-directed achievers, the Dells bring valuable skills and personality traits to assisting children in the United States, India and South Africa. They provide microfinance and scholarships, combat child abuse, and support medical research, health insurance, physical fitness, child care and education initiatives.

“Focus is very important,” says Michael Dell, who draws on his experiences leading Dell Inc. in his foundation work. “Patience is also important because measuring progress takes time—sometimes years—to show the full results and impact. We are trying to drive systemic change in areas where there are big problems with big challenges.”

Applying Entrepreneurial Savvy
It was Michael Dell’s impatience, rather than patience, that contributed to his entrepreneurial drive from an early age, as well as a keen interest in finding ways to work smarter. During his early teens, he organized a sale of collectible stamps that earned him $2,000. To increase his success rate in selling newspaper subscriptions, Dell researched lists of marriage licenses and home mortgages, then targeted newlyweds and new home owners.

At 18, personal computers distracted Dell from his University of Texas coursework, and his dad challenged him to get his priorities straight. “What do you want to do with your life?” his dad asked. “I want to compete with IBM,” the freshman replied.

Although Dad wasn’t amused, the statement proved prescient: Michael Dell dropped out and started a direct-to-consumer sales model that leapfrogged competitors as it rose to the top tier of personal computer companies. He led the company as founder and CEO until stepping down as CEO in 2004, while continuing to serve as chairman of the board; he resumed the role of CEO in January 2007.

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Why Young Entrepreneurs Fail

Founder of Under30CEO.com, Matt Wilson, shares tips to avoid failure. 

Face it. Nothing will go as planned. Ever.

Failure is inevitable. Your world will be flipped upside-down on a daily basis, and even the best-laid plans--accompanied by the best intentions--can go belly-up.

To make it as a business owner in the real world, you need to learn to fail like a pro, adapt at will and pay attention to detail in order to make informed decisions that will keep your business moving forward. Your ability to plan for the worst-case scenario and maneuver around unforeseen circumstances will be the keys to finding success as your own boss.

What was your biggest failure as a young entrepreneur?
MW: My biggest failure as an entrepreneur came at Under30CEO after wavering from our mission of inspiring young entrepreneurs. We were frustrated because our market wasn't buying what we had to sell, so we took on an enormous re-branding campaign and changed the name of our company to incorporate a larger audience and drop our under-30 demographic. We spent a lot of time and money trying to expand our market. Still, nobody bought.

It doesn't matter how big your market is if nobody likes your product. It wasn't the market's fault. Our product was bad, and we ruined our brand and had to start from scratch. The most embarrassing part was going back to our old brand and apologizing to our old customers we wanted to welcome back.

That being said, now we spend a lot more time getting to know our market instead of trying to sell anything to anyone. We were in a hurry to turn cash-flow-positive when we needed to stay focused and be patient.

Are there specific obstacles young entrepreneurs need to overcome vs. older generations?
The biggest thing for a young entrepreneur to overcome is credibility. Why should someone invest in you? Why should someone trust your advice? What will make people think you will get the job done with no track record? Building credibility is best done with a stepping-stone approach. Do one thing today that will make you more credible tomorrow. If people won't pay you or invest in you, give away your product or service for free, get testimonials from customers and build your track record that way. Show customers what value you can provide them, and if you can quantify that value, even better. The more things you can come to the table to brag about, the better.

What about some typical missteps you've seen young entrepreneurs make?
One of the biggest mistakes young entrepreneurs make is neglecting their revenue model. Today there are so many businesses that haven't figured out how to monetize themselves yet. To me, the word monetize is redundant in business. If you don't have a business model, you aren't really in business--it's just a hobby. Sure, investors are dropping millions of dollars into companies with hopes of being acquired by Google, but without a solid business model behind it, you are just building "castles in the sky."

Seasoned investors and accomplished entrepreneurs can help mentor young people to overcome this hurdle. Show them your financials and focus on how to generate cash flow. There are thousands of people out there who want to see young people succeed--you just need to ask.

What advice do you have for aspiring entrepreneurs who hate their 9-to-5s?
Aspiring entrepreneurs need to surround themselves with others who want more out of life than the typical 9-to-5. There is a great group of motivated people eating peanut butter and jelly sandwiches every night in your city, scraping by to build their business. Surrounding yourself with these types of people gives you the confidence to know you aren't alone on the road to success. The minute you quit your job, naysayers will come out of the woodwork, but if you have that support group to fall back on, you'll be able to overcome the hard times.

Remember, entrepreneurship is a marathon, not a sprint.

How has Under30CEO.com helped young entrepreneurs avoid failure and launch successful businesses?
More than 100 young entrepreneurs from all over the globe have shared their successes and failures on Under30CEO.com. Hearing insights from young people overcoming the same problems they are experiencing in their businesses allows Gen Y to come together and learn from one another. The community has a culture of reaching out to one another and helping each other with the challenges they are facing.

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Kiyosaki: The Law of Compensation

Don't quit at the top.

Robert Kiyosaki

Most of us have heard the saying Winners never quit and quitters never win. Yet, few of us have heard of the law of compensation.

I explain the law of compensation like this: Returns are minimal in spite of massive effort at the start, yet returns can be massive with minimal effort over time. I’ll use two personal examples to further illustrate.

The first example is health. It was easy being healthy when I was young. I was full of energy, so sports and physical challenges were fun. But as I got older and the spring left my step, exercise became harder, and eating, drinking and watching TV became easier. By the time I was 50, I’d put on 50 pounds.

During those years, I would make a resolution to get healthy, and begin working out and eating less. By the following week, however, I’d lost no weight, and I was hungry and ached all over—so I quit because I’d put in a lot of effort for very little return.

Finally, after realizing I needed help, I hired a coach to get through the initial period of maximum effort and minimal returns. After two years, the law of compensation kicked in. My health and strength returned, and I could exercise less, still gain strength, and eat and drink what I wanted.

Unfortunately, I went on a two-month vacation, kept eating and drinking, stopped exercising and gained 20 pounds back. I’m currently with the same coach, once again going through a period of maximum effort for low returns.

My second example of the law of compensation has to do with wealth. In 1978, I lost my first major business, which shot up like a rocket—and came down like a rock. I struggled to regain my momentum, and lost another business two years later. I was down for about four years, working hard for very little return. But by 1994, I retired financially free at the age of 47.

In 1996, my wife, Kim, and I launched our financial education board game, CASHFLOW 101. I wrote Rich Dad Poor Dad in 1997 and self-published it after every publisher turned it down, and for three years Kim and I worked hard explaining the game and promoting the book. In 2000, Rich Dad Poor Dad made The New York Times Best-Seller List. In 2000, I appeared on The Oprah Winfrey Show, and the rest is history.

Today, when it comes to health, I’m paying the price for disobeying the law of compensation. I’m glad I caught myself at 20 pounds rather than 50 pounds. When it comes to wealth, I am reaping the benefits of following the law of compensation. Today, with very little effort, my returns on my years of investment are phenomenal—even in a bad economy.

I write this article for those of you who are struggling with success. Press on even though your returns on investment are small. If you quit, like I did with my health program, you’ll have to go through the same crummy period of maximum effort with minimal gains again.

Remember that winners never quit. Success is not a stop sign. Obey the law of compensation.

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What Is Your Financial IQ?

It’s been 11 years since the publication of Rich Dad Poor Dad. Robert Kiyosaki’s mega-hit best seller not only challenged our preconceptions about money, it cast light on what he says is an antiquated education system that teaches subjects many will never apply in real life, preparing for a world that will never exist.

To say the book ruffled a lot of feathers would be an understatement. But that was the whole point. Kiyosaki wasn’t looking to write just any financial book. There were hundreds of financial books, in his view, that said the same thing. He wanted to let the education system know it was failing in teaching children what they need for financial success. He wanted to shake up parents by telling them some of the most dangerous advice they could give their children was to go to school, get good grades and look for a safe secure job.

This advice was based on the old rules of money when people worked for one company for 30 years and retired with a fat pension. Those days are long gone. With corporate mergers and downsizing happening every month, Robert Kiyosaki says it’s just too risky to play by the old rules. In the end, employees lose and owners and investors win.

Two Dads Two Philosophies
Rich Dad Poor Dad’s monumental success showed that Robert and wife Kim Kiyosaki, co-founders of The Rich Dad Company, were on the right track in their mission to educate and empower people by improving their financial literacy.

Robert’s financial philosophy was honed at a young age when, having been raised by two “dads,” a rich one and a poor one, he had been taught to strive for two different goals. His educated father (his real father) wanted him to go to school and get a cozy corporate job. His rich father (his best friend’s father) told him to own the corporation. Both men were successful in their careers and earned substantial incomes. Yet one struggled financially his entire life. The other would become one of the richest men in Hawaii. One left his family with millions, while the other left unpaid bills. Both men valued education but different courses of study. Both had different views of money—one believed money to be the root of all evil; the other believed the lack of money was the root of all evil.

As a young man having two “fathers,” Kiyosaki realized he needed to be careful about which thoughts and words he adopted as his own. At 9, he decided to listen to and learn from his rich dad about money. And in doing so, his education about money began. His rich dad taught him over a period of 30 years, finishing when he fully understood that money is only one form of power. Financial education is where the real power lies.

Kim Kiyosaki was raised with a “rich dad” philosophy, so her views were similar to Robert’s when they met. Kim’s career started in advertising, working for a top Honolulu agency. By 25, she was running a Honolulu business magazine. A couple years later, she ventured into her own business, a clothing company with national distribution. In 1989, she started a real estate investment career that now controls millions of dollars in property.

Kim joined Robert, her business partner and now husband of 24 years, in teaching entrepreneurial business around the world. That business grew to support 11 offices in seven countries. They sold the business in 1994 and “retired.” But retirement for them was short-lived.

Rich Dad Poor Dad has been on all the best-seller lists for years. Kim has written a best seller, Rich Woman, and Robert has written several others, including Why We Want You to Be Rich with Donald Trump. “Donald has really inspired me. You know, I’m just an ordinary millionaire, and now I’m inspired to reach his billionaire status.” Robert says.

Assets Don’t Make You Rich
Robert Kiyosaki knows well that his success is partly due to his going against conventional wisdom. “When I wrote Rich Dad Poor Dad I told people that your home is not an asset,” he says. “People really criticized me for saying that, but if you look at what is happening today with the mortgage crisis, families are getting wiped out because they can’t afford their house payments.” Experts are saying that in 2008 up to 2 million people will lose their homes. “These are good people—but people who lack the financial education to make good money choices.”

Robert defines financial intelligence this way: If you put money in your savings account, the bank is going to pay you 3 percent. But the problem is inflation is running at 3 percent so your financial intelligence is 0.

“You can lose money on anything,” says Robert, who as a young adult began investing in gold. Although he didn’t make much money, gold taught him many priceless lessons. He realized it’s not the assets—real estate, stocks, mutual funds, businesses or money—that make you rich. It’s the information, knowledge, wisdom, and know-how—one’s financial intelligence—that makes a person wealthy.

Increase Wealth: Start a Business
With companies downsizing, the failing dollar and higher cost of living, many families feel the pinch. “The need to earn more money has never been greater than right now,” Robert says. For many, he says, “the No. 1 thing people can do to increase their wealth is to start a part-time business. They can start a small home-based business, an Internet company or network marketing business. The key is to start small and learn everything about the business.”

Most people have enough financial intelligence to make money, Robert says. One reason they aren’t able to make more money is because they fail to realize “it’s the process that makes them rich, not the money. Many other people fail to become rich because they value a steady paycheck rather than going through the learning process of becoming financially smarter and richer. They are held back by the fear of being poor,” he says.

“In my second book, The Cashflow Quadrant, I talk about the four types of people in the business world. It’s targeted to people who are ready to make changes in their lives—changes far greater than simply going from job to job—and to start building wealth.”

In 1984, early in their marriage, Robert and Kim were trying to get their business off the ground. Robert attended seminars and studied all the time. But they were struggling financially. “We were homeless for a period of time, even sleeping in our beat-up old brown Toyota. And everybody kept saying to us, ‘Why don’t you just go get a job?’ or ‘Why don’t you put the dream on hold?’ ” Kim says. “The easiest thing would have been to quit, but we didn’t quit.”

Taking risks and making mistakes are essential to learning, Robert says. “I take on risk because it forces me to get smarter. When I buy an apartment house, it forces me to mitigate and minimize that risk—to get smarter, to study more, to know what I’m doing.”

Reaching Out
Generosity is a big key to the Rich Dad philosophy. Robert and Kim are committed to supporting organizations such as the Boys & Girls Club of Phoenix. Instead of giving money away, they are giving the tools to teach. And they are teaching these kids in an unconventional way—with a board game. “Games like our Cashflow Quadrant are a powerful way to teach anyone financial education—especially kids—because they learn by doing,” Kim says. “These kids were so excited to learn and the progress they made in just a short time in terms of learning about money was simply amazing.”

The staff invited the children’s parents to come play the game, and now they are learning the basics of finance, accounting and investing. “That’s really what our message is all about,” Kim says. “The Rich Dad philosophy is not about holding a person’s hand and telling them how to do it. We are all about giving people the tools and the education to go out and do what they want to do. We are not about saving people. We are about enabling and empowering people.”

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Reinvent Yourself as an Entrepreneur

In this web extra, entrepreneur Mitchell York shares tips for reinventing your business-self.

Are you thinking of starting your own business? Before you make the leap, take Mitchell York’s advice. The author of Freedom or Fantasy: How to Know if a Franchise Is Right for You After Your Corporate Career, York reinvented himself after 20 years as a corporate executive, buying a Maui Wowi Coffees & Smoothies franchise in 2002. Today, he is a thriving franchisor and also a coach who has counseled more than 100 clients on reinventing their lives through small-business ownership.
York’s advice to those considering entrepreneurship:

1.    Where are you going? “Know whether you’re running away from something or running toward something. A lot of people go into business because they’ve been laid off or gotten stale in their job. The only way they see of getting out is to start a business. Ask yourself: If you had the choice of a fantastic job that paid really well and would give you a good lifestyle, or starting a business, which would you choose? If it’s the job, then that’s your answer. Starting a business of any kind is much harder than getting a job.”

2.    What level of risk are you comfortable with? “Starting even a franchise is very risky. You also need to manage the expectations of every key stakeholder in the business—including your family members. It’s important to acknowledge what your family wants to do. If [starting a business] is one spouse’s idea and the other person is along for the ride, that’s not a ride you want to go on.”

3.    What role models do you have for entrepreneurship? “Have you ever had a business, even as a [kid]? Have you ever done anything entrepreneurial? Do you have family members whose businesses you watched close up? If you don’t have any role models or heroes from the world of entrepreneurship, that should be a red flag.”

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Brian Tracy: It's Easier Than Ever

In this age of rapid economic expansion, it’s currently easier than ever to start your own successful business. People from different backgrounds, with varying degrees of limitations, have all started and built thriving businesses. And they’ve enjoyed varying levels of success by focusing on three key components.

 

1. First, you must find the right business for you. Next, you need to be passionate about the business you choose. And lastly, you must be willing to dedicate time and effort to the business before realizing any fruits from your labor. Follow these basic principles, and you, too, can be an entrepreneurial success story.

Seventy-four percent of all self-made millionaires in America today made their fortune by building their own successful businesses. And here’s an important point: Many of these people never owned a business previously. You do not need to have experience in entrepreneurship. You just need to learn everything necessary about your particular business and then apply it as you go along.

Confucius said, “A journey of a thousand leagues begins with a single step.” The most important single quality in starting and building your own successful business is courage. Like the starship Enterprise, you have to have the courage to go where you’ve never gone before. No matter how many other people have started and built businesses, when you embark on this journey, you are going to feel like you are the first person who has ever done it. And, in your terms, you are.

2. Make a Career From Your Passions
Passion is the critical factor in determining business success. As Peter Drucker said, “Whenever you see something getting done, you find a ‘monomaniac’ with a mission.” Every single business needs a dedicated champion who lives and breathes the success of that business and enterprise.

Many people start businesses selling products they particularly like using themselves. Others start businesses because they are passionate about the technology or the science involved. Some start businesses as outgrowths of their hobbies or their interests in life. Look around you at the parts of your life you enjoy the most. Think about the products and services you have the strongest feelings about.

3. You Have the Most Valuable Assets You Need

When you start your new business, the most valuable assets you have are your energy, imagination, character and discipline. It is your ability to get in there and do the work to create the results. It is your ability to make the key decisions and to get out there face to face with the customers and make the sales. It is the ability to follow through on your commitments and promises. Ralph Waldo Emerson once wrote, “A great institution is the length and shadow of a single man.” Well, even a small organization or company is the length and shadow of a single person. You are the business. The business is you. The business can never be more or less, better or worse, than you are, on an hour-by-hour, minute-by-minute basis. The business is really a mirror image of your character and ability. Your business tells you and the world who you really are.

There has never been a better time to achieve financial independence by starting your own business than today. Anything that anyone else has done, and especially something that millions of other people have done, you can do as well, and probably even better. You can piggyback on the knowledge and experience of hundreds of thousands of entrepreneurs who have put their best ideas and insights into books, tapes and courses. You can become one of the most successful businesspeople in America by simply doing what others have done before you. There are no limits, except the limits you place on your own imagination.

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