G.Reads: Complete MBA, 2nd Edition


Is Small Business for You?
In This Chapter Understanding the role of small business
Determining whether you have what it takes to successfully run a small business Reviewing the reasons to own (and not to own) a small business Identifying alternatives to starting a business An old friend of ours, who has been a small-business owner for more years than most of us have been alive, says,


“Small business is a place where you can take your dog to the office whenever you choose.” That’s one way of looking at it, but we offer several other viewpoints as well. Owning and running a small business can be rewarding — personally and financially — but only if you have what it takes to succeed.


This chapter gives you all the know-how you need to be sure that you’re making the right decision. In it, we pose a set of 20 questions to ask yourself about your skills, talents, and abilities.
If you’re honest with yourself — don’t worry, there are no right or wrong
answers — this test can give you the information you need to determine whether running a small business is the right move for you. If you find that running a small business isn’t for you, we provide several alternatives, which may give you exactly what you’re looking for.


Lots of important issues — from your financial situation to your desire to create a needed product or provide a needed service to your ability to be
a jack-of-all-trades — should influence your decision to become an entrepreneur.


This chapter helps you understand the realities of starting and running a small business so that you can figure out how and why it may or may not work for you. Defining Small Business
The lingo of the business world — cash flow, profit and loss statements, accounts receivable, debt-to-equity ratio, and so on — makes small-business ownership appear far more complicated than it really is. Don’t be fooled. You’re probably more acquainted with the basic concepts of doing business than you think.


If you’ve ever participated in a bake sale, been paid for a musical performance, or operated a baby-sitting, painting, or lawn-mowing service, you’ve been involved in a small business.


Being a small-business owner doesn’t mean that you have to work 70 hours a week, make a six-figure income, or offer a unique product or service. We know many successful small-business owners who work at their craft 40 hours a week or less and some who work part-time at their business in addition to holding a regular job.


The vast majority of small-business owners we know provide products or services quite similar to what’s already in the marketplace and make reasonable but not extraordinary sums of money — and, thanks largely to the independence that small-business ownership offers, are perfectly happy doing so! Small (and large) business basics Imagine back to your childhood . . . it’s a hot summer afternoon, and you’re sweating it out under the shade of an elm tree in your front yard.


“Boy, it’s hot,” you say to yourself, sighing. “I could sure go for a glass of lemonade.
” Eureka! With no lemonade stand in sight, you seize upon your business idea.


You start by asking some of your neighbors if they’d buy lemonade from you, and you quickly discover that the quality, service, and location of your proposed business may attract a fair number of customers.


You’ve just conducted your first market research. After you determine that your community has a need for your business, you also have to determine a potential location.
Although you could set up in front of your house, you decide that your street doesn’t get enough traffic.


To maximize sales, you decide to set up your stand on the corner down the road. Luckily, Mrs. Ormsby gives you permission to set up in front of her house, provided that she gets a free glass of lemonade.


You’ve just negotiated your first lease (and you’ve just had your first experience at bartering). With a tiny bit of creativity and ego, you determine the name of your business:
The World’s Best Lemonade Stand.
After some transactions with the grocery store, you have your lemonade stand (your store), your cash box, a table, a pitcher
(your furniture and fixtures), and the lemonade (your inventory).


The World’s Best Lemonade
Stand (your brand) is now ready for business!
From the moment you first realized that you weren’t the only one who might be interested in buying some lemonade, you faced the same business challenges and issues that all small-business owners face.


As a matter of fact, the business challenges and issues that a lemonade stand faces are the same that American Express, Boeing, Costco, Disney, and every other big company faces.


The basics of doing business are the same, no matter what size the business is: Sales: Boeing manufactures and sells airplanes; you sell lemonade. A sale is a sale no matter what the product or service is or how large or small the ticket price is.
Cost of goods: Boeing buys parts for its vendors and suppliers; you buy lemons, sugar, and paper cups from the grocery store.


Expenses: Boeing has employee wages and pension plans (or employee benefits; see Chapter 17); you have sign-making costs and bubble-gum expenditures to keep your employees happy (also a form of employee benefits).


Profit: Profit is what’s left over after Boeing subtracts the cost of its goods and expenses from its sales;
the same is true for your lemonade stand.
Financial basics:
The same whether you’re big or small Not only are the concepts of Business
101 — sales, cost of goods, expenses, and profit — the same for all businesses, regardless of size or product offering, but many associated financial basics are the same, too.


Here’s what we mean: Accounts payable: Boeing owes money to its vendors who provide it with parts; you owe money to your local grocery store for supplies.


Accounts receivable:
Boeing has money due from its customers (major airlines and governments) that buy the company’s airplanes.
You have money due to you from Mrs. Huxtable, who wandered by thirsty without her purse. Cash flow: Boeing has money coming in and going out through various transactions with customers and vendors (sometimes cash flows positively, sometimes negatively), and so do you.


(See Chapter 14 for much, much more on this important, but sometimes murky, concept.) Assets: Boeing has its manufacturing plants and equipment, inventory, office buildings, and the like; you have your lemonade stand and cash box.


Liabilities: Boeing owes suppliers money; you owe money to your local grocery store. Net worth: Net worth is what’s left over after Boeing subtracts what it owes (its liabilities) from what it owns (its assets). Ditto for your small-business enterprise.


This comparison between The World’s Best Lemonade Stand and Boeing could go much deeper and longer. After all, the basics of the two businesses are the same; the differences are primarily due to size. In business, size is a synonym for complexity. So you may be thinking, if business is so simple, why isn’t everyone doing it — and succeeding at it?


The reason is that even though the basics of business are simple, the details are not. Consider the various ways in which you grant your customers credit, collect the resulting accounts receivable, and, unfortunately, sometimes write them off when you’re not paid.
Consider the simple concept of sales: How do you pay the people who make those sales, where and how do you deploy them, and how do you organize, supervise, and motivate them?
Think about all the money issues: How do you compile and make sense of your financial figures? How much should you pay your vendors for their products?


And when you need money, should you consider taking in shareholders or should you borrow from the bank?
And, lest we forget, how should you deal with the Internal Revenue Service (IRS), the Occupational Safety and Health Administration (OSHA), and your state’s workers’ compensation department?


These are but a few of the complex details that muddy the waters of business.
Small business: Role model for big business While working as CEO
of General Electric, Jack Welch once said in a speech to his division managers,
“Think small. What General Electric is trying relentlessly to do is to get that small-company soul . . . and small-company speed . . .
inside our big-company body.” Think small?


What’s happening here?
Why would the CEO of a gigantic company like GE want his employees to think small? Because Jack Welch knew that small can be beautiful and because success and survival in the business arena always favor the agile over the cumbersome,
the small over the big.


Thanks to this “small is beautiful” trend — and thanks to increasing technological advances — you no longer have to be big to appear big; you can be small and still compete in most of today’s marketplaces.


Different people and businesses,
similar issues Okay, so you know what small business means and you can identify the people who create and run one, but what about your particular small business?


After all, in your eyes anyway, the business you have in mind or the one you’re already running is different from anyone else’s. Different products, different services, different legal entity — the list goes on. Small business by the numbers The Small Business Administration defines small business as any business with fewer than 500 employees. To us, that seems a bit large.


Consider this: Coauthor Jim’s fourth small business had 200 employees.
With 200 employees, you have, say, 400 dependents, maybe 1,000 customers, and 100 or so of the business’s vendors all depending on you, trusting in you, and waiting for the mail to deliver their next check.


That certainly isn’t small by our standards — not if you measure size in terms of responsibility anyway. For those of you who like to work with numbers, our definition of small business is any business with 100 employees or fewer, a category that includes more than 98 percent of all U.S. businesses.
The latest year’s U.S. government figures show that the country is home to 27 million small businesses.


Of those, approximately 21 million have no employees.
Meanwhile, hundreds of thousands of new businesses open their doors each year. This kind of growth is an indicator of the appeal of owning a small business.


(Or maybe it’s an indicator of the lack of appeal of working for someone else.)
Not only do small businesses create opportunities for their owners, but they also create jobs. In fact, small firms create about three-quarters of the new jobs in the United States. What all these numbers mean is that small business isn’t really
small — it’s large, diverse, and growing.


Not only is small business not small when speaking in terms of the sheer numbers of small businesses and their employees, it’s also not small when talking about the tenacity and knowledge required to start and run a small business, which is where the remainder of this book comes in.
You provide the tenacity part of the equation; we provide the knowledge.
The term small business covers a wide range of product and service offerings.
A ten-person law practice is a small business.


A doctor’s office is a small business.
Architects, surveyors, and dentists are also in the business of owning and operating small businesses. How about a Subway franchisee?
You guessed it — small business. The same goes for freelance writers
(hence, we, your humble authors, are both small-business owners), consultants, and the dry cleaner on the corner of Main and Elm Streets.


Each one is a small business.
Small business also covers all legal business entities.
So small businesses can be sole proprietorships, C Corporations, nonprofits, or limited liability corporations, as long as they have fewer than 100 employees.
(We define these various business entities in Chapter 5.)


After all, each of the businesses and entities we list here has the same basic needs: Marketing to make its products or services known Sales to get its products or services in the hands of the customer Varying degrees of administration and financial accounting to satisfy a number of internal informational needs, as well as the needs of the IRS Beyond the similarities in this list, each business is significantly different. Some need employees; some don’t.


Some require vast investments in real estate, equipment, and elaborate information systems; some can get by with a desk, computer, and phone.
Some may need to borrow money to get the business up and running; many others get by with what’s in the owner’s savings account.
These differences are what make owning a small business exciting because you should be able to find a good fit for your desires and resources.


Our definition of a small-business owner
A small-business owner
(or entrepreneur), by our definition, is anyone who owns a business that has 100 or fewer employees, period. Everyone who hangs out a shingle qualifies for the title no matter whether the business is private, public, barely surviving, or soaring off the charts. You’re a small-business owner whether you’ve been in the saddle one day, one week, or one decade; whether you’re male or female and have a college degree or not; whether you work out of your home or on a fishing boat somewhere off the coast of Alaska.


Everyone has his or her own definition of the small-business owner. We find these four of particular interest; pick one or combine them all: Webster’s Dictionary: A person who organizes and manages a business undertaking, assuming the risk for sake of profit.


Peter Drucker: Someone who gets something new done.
(The late Peter Drucker is the Father of Modern Management. His books, primarily written for large companies, have virtually defined contemporary U.S. management theory.) Jim Collins: Best-selling author and business expert Jim Collins takes a broad view of the small-business owner.


The traditional definition — someone who founds an entity designed to make money — is too narrow for him. He sees entrepreneurship as more of a life concept. Everyone makes choices about how to live life.
You can take a paint-by-numbers approach, or you can start with a blank canvas. When you paint by numbers, the end result is guaranteed.
You know what it’s going to be, and though it might be good, it will never be a masterpiece.

Starting with a blank canvas is the only way to get a masterpiece, but in doing so, you could also blow up. So are you going to pick the paint-by-numbers kit or the blank canvas?
That’s a life question, not a business question. Us:
A person who is motivated by independence, creativity, and growth rather than by the security of an employer’s paycheck.
All people have their own collection of unique characteristics that determine who they are, what makes them happy, and where they belong in this world.


On those not-as-frequent-as-they-should-be occasions when our characteristics align.


snugly with the kind of work we’re doing, we know how
Cinderella felt when her foot slipped effortlessly into the glass slipper offered by the Prince. In all fairness, we must warn those of you who are considering a future in small-business ownership that owning your own business can be addictive.


We love it usually, hate it occasionally, and need it always, and we wouldn’t trade professions with anybody — except for maybe a professional athlete.
Do You Have the Right Stuff?
To discover whether you have the right stuff to run your own small business, take the test we offer in this section.


Don’t close this book just because we said the word test !
Tests don’t have to be a pain in the posterior. In fact, they can be relatively painless (and useful) when you don’t have to study for them, there are no right or wrong answers, and you’re the only one who will find out the outcome. Some words of caution here:


This Small-Business Owner’s
Aptitude Test isn’t scientific, but we think it’s potentially useful because it’s based on our combined six decades of experience working as entrepreneurs, as well as alongside them. The purpose of this test is to provide a guideline, not to cast in concrete your choice to start or buy a business.


The results will be most meaningful when it comes time to make your decision if you’re in the highest- or lowest-scoring groups. If you fall somewhere in the middle, we recommend more serious soul searching, consultation with friends and other
small-business owners, and a large grain of salt.


Getting started with the instructions Score each of the following 20 questions with a number from 1 (the entrepreneurially unfriendly response) to 5
(the entrepreneurially friendly response).
Determine the appropriate numerical score for each question by assessing the relative difference between the two options presented and by how fervently you feel about the answer.


For example, one question asks,
“Do you daydream about business opportunities while commuting to work, flying on an airplane, or waiting in the doctor’s office, or during other quiet times?”


Give yourself a 5 if you find yourself doing this a lot, a 1 if you never do this, or a 2, 3, or 4, depending on the degree of work-related daydreaming you do.
A business, especially one that you own yourself, can be downright fun and
all-consuming.
For most successful entrepreneurs, their minds are rarely far away from their businesses; they’re often thinking of new products, new marketing plans, and new ways to find customers.


To make the test even more meaningful, have someone who doesn’t have a vested interest in or a strong opinion about your decision — such as a good friend or coworker — also independently take the test with you as the subject.


We seldom have unbiased opinions of ourselves, and having an unrelated third party take the test on your behalf can give you a more accurate view.


Then compare the two scores — the score you arrived at when you took the test compared to the score your friend or peer compiled for you.
Our guess is that your true entrepreneurial aptitude, at least according to our experience, lies somewhere between the two scores.


Today’s Hottest Business
Trends In This Chapter Understanding the flat world of business Getting a grip on user-generated content Becoming socially responsible Embracing and motivating the changing workforce Business owners and managers live in a very exciting time.


Every day brings new surprises, because no matter where you live and do business in the world, change is taking place —and not incrementally, so you can get comfortable with it.
Change is happening radically —almost overnight —in ways that most businesses aren’t prepared for. What is going on? Less than a decade into a new century, change is happening faster than the business world can keep up with it. Adapting to change is a way of life in the business world, and one of the best ways for owners and managers to prepare for the changes that are bound to crop up in the future is to become more aware of the phenomenon of trends.


Trends are patterns that we observe in the world around us, and which may signal that a major change is about to occur. In this chapter, we examine many of the key trends that affect how all businesses operate today.
The World Really Is Flat! Thomas Friedman discusses trends and changes in his best-selling book,
The World Is Flat (Picador), which is really an instructional manual for understanding what’s going on in the business world today.
By “flat,”Friedman isn’t referring to the physical nature of the planet (in Columbus’s time, the world was physically flat —at least that’s what they thought), but rather to the global marketplace.


Technological advances and the Internet have leveled the competitive landscape so that anyone anywhere can compete —the good, the bad, and the ugly can all get into the game.
This section delves deeper into why today’s business world is flat and what that means to you, the business person. From outsourcing to insourcing:
Listing the flattening factors
According to Friedman, human history has seen three major periods of globalization: 1. The first period started with
Columbus’s trip to the New World and was characterized by demonstrations of power and imperialism.
2. The second period began in about 1800 and went to 2000. This period was exemplified by the growth of multinational companies and the decline in transportation and communication costs, which enabled goods to be traded globally more affordably than ever before.
3. The third period —going on now —is about shrinking the planet, flattening it, and giving individuals the power to compete and collaborate on a global level.
Friedman also named ten factors that have brought about this flattening of the world in the third period:
1. The fall of the Berlin wall in 1989:
Tipped the balance of power toward democracies and free markets —that’s good for business!
2. Netscape’s public offering in 1995: Brought the Internet to the masses and made it possible for companies such as Amazon, Google, and eBay to start and grow to an enormous size.
3. Workflow software: Enabled communication and collaboration worldwide —that’s why you can now work from home (called telecommuting).
4. Open Source software: Inspired self-organizing teams and community collaboration around a common objective.
5. Outsourcing: Enhanced the economies of developing countries by giving companies a way to reduce their cost of doing some business functions such as manufacturing.
6. Moving offshore: Increased the ability to compete globally as companies began putting offices and plants in other countries.
7. Global supply chains: Connected the world in a massive value chain.
8. Insourcing: Made it possible for small businesses to gain the competencies of much larger companies.
9. Web search engines: Brought information to anyone, anywhere, any time.
10. Digital and wireless: Enabled 24/7 connectivity and virtual collaboration.


Many of these flatteners have been around for a long time. Individually, each is powerful, but it’s the convergence of these ten at this point in time that has created sufficient critical mass to flatten the world, making everything and everyone accessible to anyone.


And what does a flattened world look like?
Friedman talks about visiting
Bangalore, India, and being startled by Pizza Hut billboards; glass-and-steel buildings with familiar names such as Texas Instruments, IBM, and Microsoft; and people who speak English with a perfect California accent
(if such a thing exists).


Hello, neighbor: When did China move in next door?
By taking advantage of technology and the Internet, China has moved from being a third-world country to growing faster than any other modern economy. In 2001,
China joined the World Trade Organization (WTO) —a significant eventbecause it signaled that China was willing to acknowledge and follow global rules of trade.


So, how did China begin growing so fast? It opened the floodgates for offshoring —moving manufacturing plants from their home sites
(for example, Europe or the United States) and plopping them down, lock, stock, and barrel, in China. Why?


Because in China, you can (for now at least) produce products using cheaper labor, lower taxes, lower healthcare costs, lower energy costs, and far-less restrictive environmental regulations.


Because China is such an attractive place to offshore, countries are clamoring to jump on the bandwagon and offer similar incentives —countries such as Malaysia, Thailand, Brazil, and Mexico. If you’re in business today, you have some important objectives: Figure out what you can outsource to China, what you can do in China via offshoring, and what you can buy from China in terms of low-cost goods and services.
In a flat world, you can no longer afford to do business on your own, and you can’t ignore your neighbors.


(Check out Chapter 4 for more advice about doing business in China.)
Googlevision: Searching everywhere for Waldo Thanks to Internet sensation Google (the 800-pound gorilla of search engines), anyone in the world with an Internet connection can find pretty much anything they want to find.


Suppose you don’t have time to go to the grocery store and you have to cook a meal with only the products you have on hand. Simply do a Google search using those items —milk, eggs, broccoli, tuna —in any one of a hundred languages and voila! You’ll have a list of recipes containing those four items.


Today anyone can create their own sources of information, entertainment, and knowledge in the most obscure areas possible, and then they can distribute them to audiences of millions with equal ease.
The reason that Google surpasses everyone else when it comes to search capability is that it goes beyond mere keyword search.


Google’s founders Sergey
Brin and Larry Page developed an algorithm (a fancy word for a mathematical formula that solves a specific problem) that ranks a Web page by the number of other Web pages that link to it.
Using this algorithm, users always get the pages most relevant to their searches first. Then Brin and Page went one step further and linked users with advertisers that have products and services directly related to those searches.


Search engines aren’t the only technology that enables users to find what they want more easily. With digital video recorders (DVR) such as TiVo, you can pause and replay live television, letting you decide what you want to watch and, more importantly, when.
The dark side of the search trend is the ability of anyone to find out information about you. Yes, that’s right.


Your reputation, words, and behaviors follow you wherever you go. In these days of Facebook, MySpace, and other social-networking Web sites —not to mention Google —this can be a problem for job seekers —especially job seekers who have lived, shall we say, colorful lives and choose to display them in public forums.


Turnabout: When little businesses get big businesses to work for them Big businesses working for little businesses?
That’s right. Freidman calls this phenomenon insourcing and it has taken the traditional outsourcing model to a whole new level. Outsourcing is hiring someone else to do the business functions that you don’t want to do or for which you don’t have expertise.
So you may outsource human resource activities such as payroll and hiring to a firm that specializes in these tasks.


With insourcing, on the other hand, your outsourced partner becomes an integral part of your business.
Suppose your company produces unusual pieces of furniture that customers can’t find anywhere else in the world.
Your potential to sell worldwide, using the power of the Internet to get your message out, is huge. Logistics is the problem, and you have no idea how to begin.


You can start by securing the help of an international shipping company, such as UPS Store, that can work with you to find the best packaging for your product and the best vendors to supply those packaging materials.


Then UPS slaps smart labels on your packages so it can track them anywhere in its delivery area (which is likely to be worldwide in today’s business environment). It also works with customs officials and makes sure your packages reach their destinations. To achieve that level of collaboration with you, UPS gets inside your business to really understand how it operates.


UPS may even help you redesign your production processes to make them more efficient. In fact, some companies never even touch their products; they just let third-party insourcing firms do all the work —sometimes even warranty repairs.


The basis for the successful collaborations that occur today
(as with the previous example) is trust.
To turn over a portion of your business to a supply-chain manager, you have to be sure that the company is reputable and reliable. Ask the company for customer references, check with the
Better Business Bureau at www.bbb.org
(it provides information on more than 2.5 million companies), and be because it signaled that China was willing to acknowledge and follow global rules of trade.
So, how did China begin growing so fast? It opened the floodgates for offshoring —moving manufacturing plants from their home sites


(for example, Europe or the United States) and plopping them down, lock, stock, and barrel, in China. Why?
Because in China, you can (for now at least) produce products using cheaper labor, lower taxes, lower healthcare costs, lower energy costs, and far-less restrictive environmental regulations.
Because China is such an attractive place to offshore, countries are clamoring to jump on the bandwagon and offer similar incentives —countries such as Malaysia, Thailand, Brazil, and Mexico.


If you’re in business today, you have some important objectives:
Figure out what you can outsource to China, what you can do in China via offshoring, and what you can buy from China in terms of low-cost goods and services. In a flat world, you can no longer afford to do business on your own, and you can’t ignore your neighbors.
(Check out Chapter 4 for more advice about doing business in China.) Googlevision: Searching everywhere for Waldo Thanks to Internet sensation Google
(the 800-pound gorilla of search engines), anyone in the world with an Internet connection can find pretty much anything they want to find.


Suppose you don’t have time to go to the grocery store and you have to cook a meal with only the products you have on hand. Simply do a Google search using those items —milk, eggs, broccoli, tuna —in any one of a hundred languages and voila! You’ll have a list of recipes containing those four items.
Today anyone can create their own sources of information, entertainment, and knowledge in the most obscure areas possible, and then they can distribute them to audiences of millions with equal ease.
The reason that Google surpasses everyone else when it comes to search capability is that it goes beyond mere keyword search. Google’s founders Sergey Brin and Larry Page developed an algorithm (a fancy word for a mathematical formula that solves a specific problem) that ranks a Web page by the number of other Web pages that link to it. Using this algorithm, users always get the pages most relevant to their searches first.


Then Brin and Page went one step further and linked users with advertisers that have products and services directly related to those searches. Search engines aren’t the only technology that enables users to find what they want more easily. With digital video recorders (DVR) such as TiVo, you can pause and replay live television, letting you decide what you want to watch and, more importantly, when.


The dark side of the search trend is the ability of anyone to find out information about you. Yes, that’s right. Your reputation, words, and behaviors follow you wherever you go. In these days of Facebook, MySpace, and other social-networking Web sites —not to mention Google —this can be a problem for job seekers —especially job seekers who have lived, shall we say, colorful lives and choose to display them in public forums.


Turnabout: When little businesses get big businesses to work for them Big businesses working for little businesses?
That’s right. Freidman calls this phenomenon insourcing and it has taken the traditional outsourcing model to a whole new leve l
Outsourcing is hiring someone else to do the business functions that you don’t want to do or for which you don’t have expertise.
So you may outsource human resource activities such as payroll and hiring to a firm that specializes in these tasks. With insourcing, on the other hand, your outsourced partner becomes an integral part of your business. Suppose your company produces unusual pieces of furniture that customers can’t find anywhere else in the world.


Your potential to sell worldwide, using the power of the Internet to get your message out, is huge. Logistics is the problem, and you have no idea how to begin. You can start by securing the help of an international shipping company, such as UPS Store, that can work with you to find the best packaging for your product and the best vendors to supply those packaging materials.


Then UPS slaps smart labels on your packages so it can track them anywhere in its delivery area (which is likely to be worldwide in today’s business environment). It also works with customs officials and makes sure your packages reach their destinations. To achieve that level of collaboration with you, UPS gets inside your business
to really understand how it operates.


UPS may even help you redesign your production processes to make them more efficient. In fact, some companies never even touch their products; they just let third-party insourcing firms do all the work —sometimes even warranty repairs.
The basis for the successful collaborations that occur today
(as with the previous example) is trust.


To turn over a portion of your business to a supply-chain manager, you have to be sure that the company is reputable and reliable.
Ask the company for customer references, check with the
Better Business Bureau at www.bbb.org (it provides information on more
than 2.5 million companies), and be sure to search online for any possible complaints that a disgruntled customer may have posted on a Web site somewhere.


Do It Yourself: User-Generated Everything
In today’s flat world, people no longer depend on others to provide them with entertainment and information. Rather, when they want something, they create it themselves — everything from promotional videos and independent films to editorials and communities of interest on any topic imaginable.


We don’t know anyone who can pinpoint exactly when this phenomenon started, but we can identify a few technologies that converged to help make average Joes and Janes into household names — celebrities, first-class marketers, political pundits, and journalists. The possibilities are endless.
The technologies and related applications that converged to make this possible include the following:


The Internet (no surprise here) Wireless technology (Apple’s iPhone, global positioning systems [GPS], personal digital assistants [PDAs] — you get the picture) Low-priced, high-quality video and digital content production technology
(Vegas Movie Studio and Adobe Creative) Advanced search engines (Google, Yahoo!, and MSN) eBay and PayPal (buy and sell products/services without the need to build retail stores or handle credit cards yourself)


Social media networks
(MySpace, Facebook, and YouTube) Web logs (blogs), podcasts, and vodcasts (technologies that make communication by text, voice, and video interactive) In the following sections, we look at two key “user-generated” trends that are putting communication power into the hands of anyone with something to say.

Tapping the new opinion leaders In the past,
consumers looked to reputable sources with brand names to get opinions on everything from the best music and films to cars, electronics, and so forth —sources such as MTV for music,
Ebert and Roeper for films, Edmunds for cars, and PC Magazine for electronics. Consumers still look to those sources today but in ever-declining numbers.
Why?
Because peer networks are becoming the trusted sources for critical reviews of products and services.


Customers who are unhappy with the service they receive can reach millions of people worldwide to make their cases against the offending companies, and companies really have no way to avoid this kind of bad press when they’re doing a good job. In a connected, online world, every individual customer has power, and collectively customers can destroy a company or make it hugely successful.


Although big companies spend hundreds of millions of dollars on promotion and customer service, for almost every major consumer product company, you can find Web sites devoted to complaining about it.


For example, if you Google “Microsoft hell,”you come up with more than 2,550,000 pages of complaints about the company and its products. “Dell hell”and “Wal-Mart hell”produce the same number of pages. What this tells you is that a company’s brand image isn’t really what it says it is, but what Google says it is.


This means that today, the opinion leaders on any product are the customers who try it, buy it, and write about it. And a lot of those customers are out there. What keeps all this consumer power from becoming a lot of noise?
How do you filter the bad stuff and get to the good?
That’s the value of search engines such as Google —they can get to those specialized niche markets and you, the consumer, can get recommendations tailored to your specific needs.



In other words, you can find out what the opinion leaders have to say about that rare book your grandmother recommended that’s been out of print for decades. Amateurs compete with experts online and over the airwaves When Google entered the world of television with Google Video in January 2006, it changed the way that broadcast networks promote their shows, and it gave amateur TV producers a chance to get their 15 minutes of fame.


Similar to the video marketplaces that followed —from Microsoft, Yahoo!, and AOL (and don’t forget YouTube) —Google brought the amateurs and the experts together in a new way in a format that’s a win-win for both.
For example, broadcasters now have a global storefront to display trailers for upcoming shows and to sell their archived shows, and an independent movie producer can upload his video from his home in Kazakhstan and become an overnight success without ever tapping the traditional distribution channels.


Some of the top online-video shows are viewed by as many as 250,000 people, which rivals many cable TV shows. And when the shows become successful, they can actually sell 30-second advertising spots.


These online shows have become so successful that network broadcasters such as NBC are now advertising and promoting on YouTube and associating their brands with popular bloggers. Although television is in no danger of disappearing in favor of PC screens and Internet videos, the new generation
(the New Millennials, which we discuss later in this chapter) is quite comfortable watching their favorite shows on their computers or iPods, and that’s a trend that isn’t going to stop.


Do It for Others: Becoming Socially
Responsible Making a profit isn’t enough to announce success any more;
businesses must also be socially responsible. Social responsibility is about operating your business in an ethical, legal, environmentally friendly, and community-conscious way.
Today, businesses often have social missions as well as profit missions —in other words, serve as role models and change agents for the betterment of society.


Those are lofty expectations, to be sure, but we’re guessing that you’d rather figure out now how to be socially responsible before the watchdogs in the press conclude that you’re not. This section takes a closer look at this trend of social responsibility in today’s business world.


Doing good is good business
The fallout from the Enron and WorldCom scandals (among many others), and the revelation that “imperial”CEOs were serving short tenures and then walking away with hundreds of millions while their companies’stock struggled, was more than the public (not to mention shareholders and the government) could tolerate.


Add in the fears about global warming, which have prompted environmental activists to point a finger at business’s operational practices, and you have a new set of standards being applied to measure business success. Finding ways to be socially responsible isn’t too difficult. Here are a few ideas:
You can donate products, services, or expertise to the community: •Many companies that produce products with a shelf life, such as bread and other food products, donate them to feed the homeless in their communities.


•If your company has an expertise that may be valuable in the community, consider donating it for a day. Starving Students, a San Diego moving company, helps to relocate women and children from abusive homes, for instance.


You can gather a group of local companies together to do something that has a bigger impact, such as adopting an elementary school.
For example, Just Desserts, a San Francisco-based bakery, put together a group of 35 businesses to adopt an elementary school.
They undertook renovation projects such as painting classrooms and planting trees. Give employees an opportunity to volunteer their time every month in charitable activities.


You may even consider adopting a specific charity and focusing your efforts on it. Sponsor an event such as a food drive or highway cleanup. Sponsor a city league team for soccer, baseball, or another sport. It’s not easy being green Being socially responsible is a worthy and attainable goal, but when businesses set goals that are extremely ambitious and rely on too many factors not under their control, they set themselves up for failure.


Such was the case for Ben Cohen, co-founder of Ben & Jerry’s, when he launched Community Products Inc. (CPI). He had the noble goal of saving the rainforest by donating 60 percent of the profits the company earned by importing nut products from the regions that encompassed the rainforest in South America. Unfortunately, the nuts CPI received from the region often came with foreign objects in them (such as glass, rocks, coliform bacteria, cigarette butts, and insects). Cohen also ran into problems with working conditions and the workers themselves, so it was difficult to produce sufficient product of acceptable quality in a reliable way.


Eventually, CPI was forced to declare bankruptcy.
The moral of the story is to set achievable social responsibility goals.
Setting a very big goal will certainly capture the attention of the media, but remember: the media will also be there to report when you don’t achieve it.
Take time to think about all the ways that your company can become more green. Some of them include using recycled office supplies, such as paper and printer cartridges, and hiring a consultant to check your business processes for ways to be more environmentally friendly.


Don’t forget even simple things can make a difference, such as using ceramic mugs for coffee instead of the usual paper cups.


The Changing Workforce:
Harnessing the Power of the Millennials
You can classify the generations occupying today’s workforce into four categories: The Mature Generation: veterans of WWII and the Korean War The Baby Boomers:
born between 1945 and 1961 Generation X-ers: born between 1962 and 1980 The Millennials:
born after 1981 If we asked how and where Kennedy died, the Mature Generation and the Baby Boomers would no doubt say,
“In Dallas in a motorcade by Lee Harvey Oswald’s gunshot.”Generation X-ers might reply “In a plane crash off Martha’s Vineyard.


”And the Millennials could possibly say, “Who’s Kennedy?
”This simple question illustrates a critical trend in the workforce today:
Four generations with very different attitudes are being forced to just get along.


But with different styles of communication, different work ethics, and different value systems, this is no easy task. Four different perspectives can wreak havoc when it comes to hiring,

>>>>


Choosing Your Business
Finding the right business to buy or start can be a bit stressful, but don’t worry.
We offer plenty of help in the following sections.
We assist you in matching your skills, interests, and job history with a suitable business, and we help you select the niche that works best for you, given who you are, what you like to do, and what you’re capable of doing.


Consider your category Before you decide which business venture would be best for you, you need to understand the four major business categories that you can consider: retailing, service, manufacturing, and wholesaling.


Here are some important characteristics you need to know about these four categories:
Retailing: Retailing is the general category that most people are familiar with because the typical American deals with at least one retailer every day.
Since most people are familiar with the retail business, the learning curve is usually much easier in retailing than in the other three categories
(although this benefit is true for your retailing competitors as well).


Also, because most retail businesses deal primarily with cash or near- cash equivalents (credit cards), funding requirements for accounts receivable are relatively low compared with some of the other business categories, which means, in turn, that the capital requirements for entry can be comparatively low, depending on how much inventory is required. (See Chapter 5 to determine your initial cash needs.)
E-commerce (retailing over the Internet) is changing the parameters of the retailing category.
The barrier to entry in retail-oriented entrepreneurial endeavors is becoming smaller as some successful retailing entrepreneurs choose web pages over storefronts. However, success online isn’t as easy or as lucrative as some would have you believe.
Service: The service industry is the fastest growing of the four categories, in part due to the low cost of entry (that is, you typically need no significant inventory outlays and minimal equipment).


Additionally, if you’re among the increasing number of service providers who choose to work out of their homes, occupancy expenses are relatively low and tax advantages are a potential perk.


Manufacturing: Save up your hard-earned cash if you’re thinking of becoming a manufacturer; this category is a veritable cash-guzzling machine. Inventory, accounts receivable, equipment, physical plant, employees — you name the cash-draining asset, and most manufacturers have gotta have it.


Although manufacturing is typically the most expensive of the four categories in terms of entry-level capital requirements, it offers great potential for rewards. Look at the high-tech industry for examples of wealth being created (not just for the founders but for key employees as well) in short periods of time; companies such as Microsoft, Intel, and Apple were start-up manufacturers not that long ago.


Wholesaling: The middleman in capitalism’s distribution channel, wholesalers act as intermediaries between manufacturers and retailers or consumers.
The wholesaler’s role is to buy large quantities of products at discounted prices (discounted from retail prices that is) from manufacturers, break them down into smaller quantities, and sell them at a markup to retailers or consumers.


Like manufacturers, wholesalers require significant cash outlays for inventory, receivables, physical plant, and employees; thus, the start-up capital requirements for wholesalers are correspondingly high.


Take advantage of accidental opportunities
Many small-business owners are “accidental” entrepreneurs — that is, they stumble on a good business to start or buy. Maybe a favorite retail store suddenly comes up for sale
(this is exactly what jump-started coauthor Jim’s entrepreneurial career), or a friend informs them of a can’t-miss opportunity, or a customer of the business they’re working for now invites them to do some freelance consulting — an invitation that turns into a business opportunity.


In these cases, the lucky entrepreneur doesn’t set out to own a business. Instead, he or she stumbles on the right opportunity. As with so many other directions people take in life, the time and the place just happen to be right.


Inventory your skills, interests, and job history Most people aren’t lucky or fortunate enough to stumble upon the right business. 
And the kinds of people who discover the right business are often those who are willing to go to a lot of trouble to find good opportunities. 

If the perfect business opportunity doesn’t just fall into your lap 
(and, actually, even if it does), you need to do some introspection to determine what type of business is right for you. The following questions can help you take an inventory of your business expertise and interests. 

(You can get a piece of paper and treat these questions like a quiz if you want to.) 

The answers you get will help you select the best possible business opportunity for you. What top-three business skills have you displayed over your business career? 
Examples include sales, accounting, marketing, administration, writing, communications, quantitative analysis, hiring, training, employee motivation, product development, customer service, focus, delegation, accountability, attention to detail, and so on. In which business skills are you the weakest? 
Refer to the examples in the preceding bullet for ideas. Over your working history (including part-time and full-time jobs), what three jobs have you enjoyed the most and why? 
After listing three jobs, consider (and list) the reasons why you liked those particular jobs. During your working history, what three jobs have you enjoyed the least and why? 
Similar to the preceding question, consider and then list the reasons why you 
disliked those particular jobs. What are your top-three overall personal skills? 
Examples include leadership, communication, intelligence, creativity, vision, cheerleading, invention and/or innovation, listening, problem solving, counseling, 
and so on. If this were a perfect world and you could select the industry in which you’d like to spend the rest of your life, what would be your top-three choices? 

Examples include sports, music, movies, art, finance, education, 
telecommunications, electronics, computers, medicine, architecture, agriculture, transportation, insurance, real estate, financial services, food and beverage 
services, apparel design and manufacture, furniture and home products, outdoor products, printing, photography, chemistry, plastics, and so on. 
What three favorite hobbies or special interests of yours might be conducive to creating a business? Many people turn a hobby or special interest (such as photography, golf, or coin collecting) into a business.


Narrow your choices When considering a business opportunity, you need to answer the following questions to assure yourself that the business you’re considering is the right one for you: Is it a business that suits your personality? 
• Consider a retail business if you like dealing directly with people, don’t mind 
keeping regular hours, and can handle being tied to one spot for long periods 
of time. The converse, of course, also applies. 

If you don’t like dealing directly with people, keeping regular hours, or being tied to one spot for long periods of time, don’t consider the retail business. 
• Consider the service business if you like dealing with people, solving problems, 
and working in spurts and flurries.

• Consider a wholesaling business if you’re a detail-oriented person, if you enjoy supervising employees, and if you don’t mind risking the significant amount of 
capital that carrying and distributing inventory requires. 
• Consider the manufacturing business if you’re a quality-conscious and detail-oriented person who enjoys searching for solutions to such engineering-oriented issues as process and flow and quality control. 
You should also enjoy supervising employees. 

Within each of the four major business categories, you can get more specific and narrow down your choices to specific industries. 
For example: • Consider the financial services or accounting/tax-preparation business if you like working with numbers.


niches that are currently enjoying the fastest growth. 
A number of past Inc. 500 fastest-growing companies are no longer in business. 
Risk and growth are common bedfellows, and one entrepreneur’s riches may lead to another entrepreneur’s rags. 
Thankfully for most people, other, less glamorous industries offer plenty of room for success.
Because the industry you choose can greatly affect your success, consider the following industry-specific questions: 
Do you believe in the industry you plan to do business in? Industries such as the tobacco industry, firearms industry, or debt-collection industry aren’t for everyone. 
Be sure to select an industry that will allow you to sleep at night and feel good about what you’re doing. 

Is it an industry that isn’t overcrowded or dominated by a few well-marketed companies? 
You say you’re thinking about a coffee house or a bagel shop? Good luck. You’d better know something or be prepared to offer a different product or service than Starbucks, Bruegger’s, or Noah’s Bagels. 

Every industry has a saturation point; you want to make sure that your chosen industry isn’t one of them. (You can usually determine the saturation point by observing how successful the existing businesses are. 
You can usually measure such success by observation — the condition of the business’s premises, the quality and professionalism of the employees, and the 
prices charged; for example, is there room in the prices to make a profit?) 

Is your potential business in an industry that’s moving at a pace that you could 
be comfortable with? Some industries move faster than others; for example, the biotech industry moves faster than the gift-shop industry. 
Make sure that you have a comfort level with the pace of your chosen industry. 
Some industries will leave you breathless (and moneyless) if you can’t keep up with the pace.

The gift-shop industry will leave you bleary eyed and passionless if you thrive on the rush you get from constant activity and change. 
Is it an industry that you can get passionate about? 
Can you love the product and the customers? Passion helps sell products to customers and vision to employees.



Stay on the Highway, maybe the next exit is yours.
KhD

Comments

Popular posts from this blog

MARKETING: THE ULTIMATE FREE MARKETING TOOLS 2019

SEO MARKETING: 10 PROVEN STEPS TO S.E.O

500 SOCIAL MEDIA MARKETING TIPS: INSTAGRAM