First 10 chapters, Assured Entrepreneurial Success

CHAPTER 1

LOCATION

Considerations:

Do I want high foot traffic?--it will cost the most.

Do I want to save rent money and get the least expensive place?

Do I want to sub-let from someone else?

Have I found a place that has had high previous tenant turnover?

Is my place the previous hot spot for traffic and now, people have
gone elsewhere?

Is my place in the path of growth that is perhaps 5-10 years still ahead of me?

Am I located at the end or middle of a block, nearest residential areas or am I between an industrial and commercial area--and a great distance from any residential?

What are the advantages to being closer to either?

Can I realistically-economically gain an option to buy the property so I am not beholden to a landlord for more than a year or so?

Am I near enough to a river, lake, ocean, that I may have to be concerned about floods?

Am I near a municipal dump?

Am I near a liquor store/bar?

Am I near any business that may disrupt my business?


Realtors will tell you all success for them relates to closing and location, location, and location. I do not claim that location is unimportant, but that location is not all that it is made out to be!

Let me offer examples where location was irrelevant to the success of some businesses.

AT the crossroads near Folsom Lake and a North South Road (Sacramento County, California) sits a restaurant/bar combination that seems as remote as anything could be to the rest of the world. I was driving/wandering around in one of my cars a decade and a half ago, just looking to see what existed in that part of the world/county. According to all the laws of busies and location, this place should have been located at least 12 miles further West and maybe a few miles South. There were no ranches, cabins, businesses or other life, save for the wallet-less birds that flew over (little existed here but a crossroads.) When I entered this place, I expected to see some inebriate owner watching football and the ambiance of death waiting to crumble the insides. I did not experience anything remotely similar to death warmed over. What I did experience was an energetic conversation with the owner or manager (I forget which) who told me without exaggerating, that this place was a night place, and that I would need dinner reservations at least one week in advance, thought they were open 7 evenings and were miles from civilization. They had a steady clientele who booked reservations between one and two weeks ahead, year around, no exceptions. They would be happy to serve me a snack type lunch, but they were a dinner house that had been there for a decade and rarely had stop-ins. (Those without reservations).

This owner had obviously curried favor with the Folsom Lake fishermen and women and others who he knew that liked rubbing elbows with "Country!"

My next example is one closer to heart; what was, in the 60's, known as Charlie Anderson's Domino Club. If you think that a building in the middle of nowhere is a tough nut to crack, just think about this; One door only (grand fathered), facing an alley, and no advertising. This was likely the pre-eminent resident's exclusive, up-scale restaurant and bar place in San Francisco, California. My dad played piano while, across from him was another pianist playing another piano which faced his, so they could see each other over the length of both pianos. Leonard Garr played and my dad played, and an artist painted a live nude lady on a platform off the their side. Above the other side, gracing a wall, was an example of the artist's work--another graceful nude of one of his past models.

Charlie Anderson didn't need to advertise, lower his prices or do anything special. He just knew how to "do San Francisco with San Francisco natives" who knew this was their hangout and no visitors were allowed (philosophically).

I can't say whether Charlie's place still exists (it did from the late 50's to the 70's and that Charlie sold out).

Location is a prime factor if one is dependant upon a specific clientele. If one doesn't locate near one's customers, one had better have a super service/product or the customer will go elsewhere for his/her goods/services.

Your author seeks to buy businesses and, perhaps interesting to the reader, it is not important to me where the business is located. I only seek those businesses that are operating and depending on their profitability, I use company stock, use all cash, or use just short balloon date promissory notes. CHAPTER 2

SECURITY

Considerations:

Am I locating near a crime infested area without realizing it?

Are there a number of homeless or welfare people nearby that might be inclined to find my firm ripe for the pickings?

Can employees and customers/suppliers enter and leave with reasonable safety and in a well lit area?

Is there sufficient privacy in the layout of the business so that thieves will have little privacy to themselves and yet, where robbers would have a hard time getting to a secured office?

Is the street and surrounding areas reasonably monitored by the municipal police?

Does my layout tell customers that I have little of value to pocket?

Security may well be an area within business operations that can make or break a firm's financial neck. Let me explain. You are likely honest and do not steal from your neighbor, your store or office or anyone else. You likely always wait in lines and pay for all gods you have chosen to buy. I do. Some people feel, for a myriad of reasons, that if they are clever enough to pocket or take goods not seen by the store within which they are shopping, that they deserve to keep the goods. Some people are compulsive thieves and have admitted on TV cameras that it is a disease, that even if they have the means to pay for goods, they must take things and not pay for these things, even realizing that if caught (it appears that less than 1 thief in 10 is caught) jail is inevitable even after reimbursing the merchant for the goods.

Because this embezzlement and shoplifting is done to the total of billions of dollars yearly, stores must do some things to protect themselves: the most undesirable thing is to raise the cost of all goods because the store owners are not stupid enough to pay for thefts from their own pocket. They simply raise the rices of goods to compensate for those that leave the store without being paid for. Also, executives get very lax at raising the wages of the cashiers and warehouse workers, instead keeping the difference for their pockets or just to reimburse themselves for the lost money and goods.

Electronic cameras can record most activities of thieves, but a professional thief will get what he/ she wants most of the time--that's how they stay in business! The fact that their purchased goods or the costs of goods in the neighborhood rise to accommodate for the loss of goods taken does not slow down the thief. Some thieves think everyone else owes them a living and the benefit of their clever stealing. Specially coded price tags help slow down some theft, as does an alert staff.

Make certain that if any employee is to handle money, that your business insurance carrier provides you with bonding on each of them (refer to chapter on insurance).

When hiring, it is a good idea to do security/police checks on your employees if you have any doubt or care if they might have been in jail for any reason. It will frustrate some employees, but if they have something to hide, wouldn't you want to know it now? CHAPTER 3

HIRING
Full-Time Executives
Fill-Time Blue Collar
Part Time
Seasonal

Considerations:

Have you remembered that not all employees are as honest as you, nor is everyone else a crook?

Have you remembered that not everyone is as ambitious, and that their definitions of ethics may be different from yours? Have you remembered that going through the interview phase of hiring is just slightly less uncomfortable to the average applicant than is receiving a dental root canal?

In hiring, do you want to do a back ground check on every candidate, or every serious candidate, or is that background check an affront to the person's integrity?

Can you offer a specific duration, written employment contract to any employee? Musicians and entertainers receive them--why can't you offer one?

Are you getting the word out to all logical sources/places that you am hiring (homeless shelters, state unemployment offices, special pool groups--those over 50--and Viet Nam vets)?

Do you have a reasonably paced training or orientation program so that you pay heed to what an employee can be reasonably expected to remember from day one as a new employee?

If you have a new employee manual, have you set policy to have it examined semi-annually to compare your hiring criteria to what your true staffing/skill needs are?

Do you test or not test--who and when and why and how--and if yes, who grades the tests?

Do you have a formal pay raise policy or promotion policy?

Do you have a policy about using temps?

Under what conditions will you require drug testing?

A hundred years ago, hiring, other than by a government, was very easy to accomplish--if someone "looked" and "sounded" good, you hired that person. If all employers had been totally ethical and moral and all that, they wouldn't have asked any female employee to sleep with them as a condition of employment. Further, Black, Hispanic and other non-Anglo employee candidates would have been given equal opportunity. Unfortunately, employers, across the board, haven't been fair or equal. Obese people, recovered alcoholics, Blacks and others have been basically termed "one of them" by the "good old boy network" who figured that they could do whatever pleased them with their firm, and the negative consequences to their employees was not their concern. Thankfully (sometimes obsessively and arbitrarily) the federal government stepped in after several court battles and passed laws protecting employees in several ways, not all of which I agree, but with good intent nevertheless.

According to the specifics of the law, all employee candidates must be considered equally for each position. In firms with 150+ employees, an employer must hire a specific percentage of "minorities". The government's equal opportunity and quotas fail when it doesn't allow for differences in skill demands. For example, if on an emergency basis, an Anglo with a high level of skill in a specific field leaves a company and the firm is obligated to hire a minority for its next hire, the firm, according to the he letter of the law, must hire the most qualified minority person. The only complaint I have with this is that it is feasible that no minority might apply who has decided previously to gain the necessary skills to perform the job. The company would lose. This specifically happened to a lamb manufacturer in Chicago and was delineated on the TV program 60 minutes a few years ago. The equal opportunity commission even placed a fine on the firm and gave the firm no opportunity to discuss the situation. The firm I think went out of business because the fine alone exceeded the firm's net profits for a year.

If an employer is not qualified to hire (95% are not), they /he/she should retain an employment agency who can screen and do all the necessary paperwork and interviewing and screening. A search agency can be hired in advance to do the same thing for an executive employee.

IF you are new to the United States, you might not know the following:

An employer may not ask, via mail, the phone or in person, (before hiring) a person's race, religion, creed, sex (whether obvious or not), whether they have ever been arrested, and on and on. The situation is simple--the employer may and should ask all the questions possible of the employee candidate regarding past accomplishments, failures, objectives, and what he/she would most like to accomplish if they became an employee for the firm. Getting "inside the employee's head" is a great idea when the interview is restricted to finding out how the employee would solve certain problems that are directly relevant to the firm's success and therefore, the employee's success.

Most employers do extensive examinations of prospective employees. I suggest caution doing so, because the employee candidate in front of you now (poetically speaking) is not the same person that left the last firm he/she was with. Each person changes one way or another, for the better or worse, and it is your author's opinion that too few employers remember this; if the employee candidate was failure or bad news with his/her previous employer, it might well be that the previous employer may have been dictatorial or sexist or whatever. Ask what is relevant and applicable to tomorrow, not yesterday, and I think you will be ahead of the game, for after all, tomorrow's profits are all that your candidate can help you reach, yesterday is gone!

Full-Time Executives

Too many "grunts" fail to understand the value of an executive to a firm: an executive "supposedly" has the scholastic training and previous work experience to know how to handle the entire firm and knows from which employees technical advise/help can be procured.

Some employers hire incompetent people at all levels under these circumstances, the hired individual is not able to perform according to the individual's professed capability. Other than these rarities, the average executive, when given the responsibility and authority, can adequately run his/her firm and under some circumstances, run it better than can the boss. Because of this advanced operations skill, these individuals are paid several times what the blue collar employees are paid and this often promotes hostility and frustration on the part of the lesser paid blue collar employees. When the blue collar employees demonstrate their frustration, in my opinion, management is at fault, because it failed to share critical data with those whom such decisions are most affected.

Also, for the reason of critical skill need and responsibility for the entire company, executives are harder to hire, take longer to be hired, are tested more extensively and are perhaps improperly, considered the most important, least easily replaced staff members.
Fill-Time Blue Collar

Blue Collar employee are the stuff with which America is made. These are the grunts, the lowest line employees, the people whose floors are covered with either the poetical garbage sent down from management or the literal policies that too often reduce operational efficiency because of arbitrary policies that too often are not tested as being valid and therefore, valid and valuable for the company.

Part-Time

Perhaps the biggest gain in new business for the employment agencies of the world is in the demand for part time temporary workers who can come at a moments notice and stay as long as is needed. Part timers are often hired not by the personnel department ( if you are your firm's "personnel") of firms but by temporary agencies who handle all aspects of the hiring process and then (supposedly) send the most qualified candidate to the contractors' address to complete either specific tasks or spend 'x' hours under direction of the store/company owner/manger. In this instance, please note I identified the using firm as a contractor, not the employer. The temporary agency, if one was used to find the employee, becomes the employer and the firm using the employee is the contractor who uses the employee, an pays the agency who takes a cut to off-set administrative costs and which includes a profit per hour the employee works.

Seasonal

The seasonable employee is a valuable source of high traffic customer satisfaction. The seasonable employee is an employee hired to work for a firm during periods of a year that the employer normally feels is a "high wave" on the sales curve (refer to sales cycles) so that all customers, old and new, are assisted to the best ability of the firm without regular employees being "strung out" trying to help all customers with all problems. If an average employee is expected to help 100 customers during a shift and all of a sudden 150 expect service, the employee must either offer quick, slip-shod service, or receive the assistance of a seasonal worker who can do "maintenance" jobs that don't require extensive customer service thus freeing the permanent staff to help any customer with odd requests or special needs. (in some cases, to simplify things, seasonal workers don't help customers at all, they simply do the cleaning, moving and stocking of goods and do all the "housekeeping" things that regular employees cease having time to handle during high wave customer times.

The EEOC feels businesses must keep a racial mixture among their employees. When one is operating their own firm and each employee becomes a part owner, I think the ratio required disappear because the EEOC has no and cannot regulate the racial mixture of business owners.

Different types of employees and how to deal most effectively with them:

There are some things that new, hiring entrepreneurs, need to know about different employees.

Some employees will be honest to a fault, pointing out everything that they think is not honest, ethical or not exactly as you have indicated things should be or according to the faultless employees perspectives.

Some other employees will feel that since they will never be given an "honest break", they have every right to borrow, take, fib or do whatever it requires to get the most out of the job and to have you off their back.

Some other employees will be quiet because it is either their individual way or within their culture.

Some other employees will be so mouthy that you'll think them impertinent.

Some employees will feel that to get to work at all is quite reasonable and that dealing with their family is more important than anything, you, the owner, have in mind for them!

Some employees are so sloppy you wonder how they can dress and drive and others are so neat you wonder why they don't have fits when something is just slightly less than perfect!

Some employees will tell you what you want to hear, some will tell you exactly what they think, some will be sexual, some aggressive, some assertive, some you will forget even exist, and many will be so afraid that the slightest "direction/order' will cause them to go into the rest room to get rid of their shakes!

In training, there is no simple, pat answer because: people learn at different speeds and have different comprehension levels, some hate to be tested and then, forget learned data after being tested. Some love tests for it is time to demonstrate their skills. Others think that if they have to be tested, then you are a slave monger and they should be elsewhere. Your author knows of no method(s) available to determine employee effectiveness will appeal to all employees! CHAPTER 4

BUYING SUPPLIES [known as Purchasing]

Considerations:

Some suppliers will offer credit--have you inquired about such?

Some suppliers' product quality is superior to your needs, while others are inadequate. Have you a supply quality requirement?

Have you determined how long various types of supplies ought to last? Many discounters are opening up whose prices, per single unit, are 50% of that of local specialty firms. Do you want to consider trades-outs or buy from the discounter?

It's been said that employees' use of company supplies in Fortune 500 firms costs their employers thousands of dollars annually. Also, the attitude employees have regarding stinginess on the part of the employer can be as harmful as being too free with supplies.

While your firm cannot afford to become a full fledged supply house for your employees, there must exist a comfort area for both you and the employees where you know what you can use personally and what you should buy for your own use--previous to any intrapreneuring.

Supplies are those things that we do not intend to re-sell, but use in our offices and shops and stores: like toilet paper, cleaning solutions, stationery, pens, tape, and the list often seems endless. If we are astute, we will find up to three vendors (suppliers) that carry what we need and see which ones have the best quality for our needs at the lowest price and the best, if available, credit terms enabling us to buy and use now and pay later.

There is a cardinal rule in business that many of my friends seem to ignore (assuming one has a business with daily cash receipts and vendors allowing single payments monthly)--that those who pay when invoiced (rather than at a later date if agreeable by the supplier) are losing the use of their money and therefore, if one is astute in investing their daily revenue, are losing its availability. Some stores make 30%. of their net profits by the use of their daily cash! Greater than immediately needed quantities should only be bought when the price available is considerably less than buying said items when needed. Remember, any dollars not put to use bringing in more dollars are usually, thought not always, wasted dollars. Any activity and any inventory or capital equipment not used to generate dollars should be considered as wastefully and done away with as soon as possible. Everything in your firm costs you money and often your extra items must be inventoried and this hastens waste!


SUPPLIERS

Considerations:

Do you constantly read industry journals and newsletters to learn about new suppliers?

Do you keep abreast of all currently used suppliers' return policies?

Do you have any suppliers who provide no credit? Have you developed sufficient bank credit terms to make up for this?

Do you have back-up suppliers for those whose business practices may make them vulnerable to strikes or failure?

Do you constantly monitor customers' quality desires and see that you are carrying a combination of low, medium and high quality goods as applicable?

Do you constantly gain updated industry data from suppliers?

Are your suppliers as ethical as you?

In this chapter I relate to both your usables and your resalables. This means I am talking about your both your inventory which you buy to resell and your consumables; toilet paper, stationery and the rest that keeps your business in business. (Some people call these office supplies).

To handle this effectively, I now separate the two types of suppliers, because they supply radically different types of goods and your need for them is different.

Usables

These things help keep your people and some customers happy but they don't increase your bottom line--they do the opposite--they just take money out of your pocket. As they are not direct profit contributors, be a bit careful how you use them, and don't go crazy trying to saver a dime, while you are not interested in paying more than necessary either.

Women are more aesthetically oriented than men, so the color of your women's restroom (or, if you have but one restroom, make sure is clean, clean and clean, and colored attractively--it can't hurt to make it attractive) is often important. How a man leaves a bi-sexual usage restroom also is indicative of how your women will feel after they have access to a neat, non-poster filled restroom which has a toilet seat left down (I do not understand this argument of nature--since both sexes can raise and lower the lid with only negligible trouble). The neater the restroom, the happier everyone will be. Colored waste paper is cheerful too! If your supplier(s) of reusables are understanding your needs and know you will treat them fairly, they will hand deliver whatever you need and on a timely basis and can help keep your appliances working property or advise you on contractors who can. Being unnecessarily tight (my term) with providers and other suppliers is wasteful, as long as your integrity is not called into question by the use of the goods you use and how you use them in your shop. If you buy cheap cleansers that smell, the customers and suppliers who visit you will make viable excuses not too--they don't want to become inundated with your foul smells!

Rule #1--you live there, make it nicer than your home! CHAPTER 5

BUYING INVENTORY (Merchandising)

Considerations:

Here is where the large firms make it or break it regarding cost controls, aside from employee labor costs. Are you using just in time inventory ordering?

Do you have a sufficient variety of goods so that you can prompt new customers' purchases without going off onto an illogical tangent?

When new goods are delivered to your store, do you have a policy to examine them immediately so that items needed to be returned are prepared for same quickly and then TRACKED so they do not wind up at the supplier where they just sit?

Do you sometimes become experimental and buy something off the beaten track that is slightly complimentary to your regular inventory that can attract and "grab" different customer interests?

Do you assign the job of buying to different employees every so many months so each employee gets more experience in this critical field?

Are you always ready to buy out auctioned inventory from afar to cut your inventory costs? (By averaging, you can add the cost of your manufacture bought goods with the auctioned bought goods, and arrive at a lower bought cost!)

Do you have something constantly on sale to prick interest in sale oriented customers?

New products and services

According to every management consultant and supposed guru (be he/she have business cognizance or not) a business need be careful of their variety and freshness/style in inventory. If a new thing ( good or service) is available from a start-up or veteran business, the entrepreneur is directed to be sure that the new item is not appropriate for his/her market or, if found to be so, he/she had better include same in the inventory open-to-buy!

When your author was a student of the science of inventory control and merchandising, he was taught such things as cost of goods sold, carrying costs, credit terms, inventory mix, lead time to arrival, competition on the part of suppliers of resale goods, warehousing of goods, banks loans to financing inventory and a myriad of other things.

I can gladly say that while some facets of business seem to have remained the same for a dozen years, inventory science has not.

When you examine chapter 52, Accounting, you will recall that the most recent scientific analysis on reduced cost operating systems, et al, in inventory acquisitions includes what is now known as not first in first or last out, but Just in Time Accounting and buying. As this name may imply, inventory buying used to include slight storage charges so that a merchant would have a storeroom and carry backup inventory in almost all areas. This would require the merchant to actually carry double inventory (a very expensive system and very historical--the way most merchants have operated businesses for over a hundred years! With a warehouse full of inventory, all merchants had to a) secure with gates or shelves all incoming fresh inventory so that it was of virginity when it was placed on the "floor" to sell, b) be insured against theft, fire and other emergencies, c) inventoried for tax purposes on values of the firm and handled one or more additional times, and perhaps ever mini signs made up for the goods that were simply on shelves awaiting customers on the floor! That meant each item had two homes, and two ID tags on its front shelf--one to tell the warehouse person what was on the shelf ready to go to the he sale floor and the item on the floor itself.

Cost accountants and business consultants, in order to cut firms' inevitable rising costs, felt that the traditional method of buying just enough inventory to keep 1-15 replacement items in the warehouse of the merchant is too expensive.

Now, the most scientific method of handling (read that buying) inventory requires that the buyer arranges delivery so that inventory arrives at the store in the morning when it would ordinarily be placed right on the shelf. This way, with the just-in-time system, the cost of buying and storing and selling is reduced because the merchant only needs to pay for inventory sold, with no need any longer to pay for any warehouse building, inventorying, insuring, handling or anything else applicable. Plus, its important for the merchant to get the most liberal credit terms possible; for example, some suppliers will offer the traditional 2/10, net 30. This set of numbers breaks down to the following, and it is simple to remember:

The 2 equals the percent discount, the 10 equals the last day after receipt of goods, when the merchant can pay the bill and take the 2% discount and the net 30 means if the merchant does not for any reason pay within the 10 days, the are authorized to pay as late as 30 days from date of receipt of goods and the merchant is then obligate to pay the face amount of the invoice.

Mathematically, if one gets a 2% discount, this equals an annual discount of 24%. The proof of this is--there are 360 banker's days to a year. if one pays within 10 days and gets a 2% discount, he would get actually a 360\10=36. He can earn 36 X 2%= 72% per year.

A 2% discount over a monthly invoice means a person can save 2% a month. There are 12 months a year, so the 2% is multiplied by 12 to equal 24% Since most firms earn 12-15% annually, this discount is critical to any firms success! (If a firm is not taking this discount and is earning 15%, the firm is giving up 24% more return that is available.

It has also come to my attention that many retailers are paying cash for their inventory out of their pocket upon its delivery, and they have either not asked for credit or have been in business for 2 plus years and have been refused credit. When your business is about to open, you ought to contact all your inventory suppliers and seek the most generous credit terms available: first, assume you are gong to get credit. Then, try for the most generous terms; 5/30 net 90 or any that allow you to work with the vendor's goods the longest period of time before you have to pay for them! If you INVENTORY TURNS" are 12, that means you are turning everything in the store at least (averaging) 1 time per month. With these turns in mind, If you can get, as an example only, 4/45, net 60, these are the advantages (and therefore consequence) of having the vendor's goods on credit for that period of time: for 15 days longer than needed, you are able to sell what you are buying for your regular "markup" (chapter y) and you are earning extra profit on the sold item because you based your profits on having to pay the vendor's full net price (net= regular cost to you) and yet you are paying 4% less.

Always borrow from the bank to pay your vendor's when they offer discounts like 2/10 or anything better. Reason: the bank is charging you between 8 and 15% interest on an annualized basis and the discount earned is based on a monthly basis--meaning you are earning between 24% and 36% (or more percent) given by the vendor. The bank charges a maximum 15% divided by 12 = 1.25% interest charged for the use of the money, presuming you pay the bank back within the 30 days, or a full 15% of you pay it back in 1 year.

If you can get the vendor to constantly increase the time before you have to pay the invoice, the better for you. If you can get the vendor to take less and less for the amount of the goods (a $100 piece of resalable goods initially costing you $50, then $40, then 35, etc). The less you have to pay for the goods, the more profit you make in one of two methods; you charge the same for the goods and turn as many as normal thus increasing your profits by having a higher margin of profit, or you are going to reduce the selling price of the goods by whatever percent with the intent to sell more and then you have this cash available to invest in other things or in outside activity (trust deeds, et al, chapter z). CHAPTER 6

SELLING

Considerations:

Do you have selling contests, seminars, and ask that each person study from Joe Girard, Stone, etc?

Do you introduce the complimentary, not related and sale items?

Do you inform all employees that every employee is a sales person and then do you reward every person for extended efforts in making sales?

Do you pay for floor people to attend community college, 3 unit credit sales courses?

Do you have your people shopped?

Do you ask your people to visit the competition every month to compare styles?

Do you offer debarment responsibilities and change these every 6 months?

It is not heresy to remember that cutting an operating cost or eliminating waste is similar to making 30-50% sales. If you eliminate waste, it is like free sales!

I have not had one merchant in 25 years tell me that their business was basically like any others; that their selling chore, responsibility, skill needed, opportunity or that they were similar to anyone else in need.

My close call selling percentage, before I quit selling in the field, was 85%. This meant, whether I was selling oil, greeting cards, film processing or whatever, I would canvas via the phone book or other media, logical dealers or retailers of the kinds of goods I was wholesaling to see who might be a reasonable retailer. I would take my goods, insurance and seek them out when they were likely slow, so as not to interrupt their sales time or customer service time.

I would not ever say I was there to sell something to the merchant, because I wasn't! I was there to solve his/her problem(s). All merchants ( I haven't met any exception in 30 years) need to serve customers and therefore, solve their respective customer's problems.

According to scientists to study human behavior (you might think behavior science is hokum, but I know better), people have needs that need satisfying. Coke satisfies the average soda drinkers needs better than Dr. Pepper, Ford satisfies the motorists needs better than Subaru, et al. Research, questionnaires, surveys and other investigation systems can accurately determine what customers want and wise merchants follow these guidelines.

When I sold (satisfied a merchant's problems which were increasing his sales) my metal treatment, I simply asked what he/she would say about a chemical that would increase an engine's RPM even if I did not touch the vehicle in any way, and the vehicle could be in horrible condition. I knew the characteristics of my product (called Tephguard) and knew what it would do. I didn't say that I would make the merchant lots of money. The merchant's money was his business. Merchants are rarely stupid. The merchant's (mechanics) problem I sought to solve was to increase his customer's engine speed without touching the engine--just by having the mechanic pour my junk in a can into the crankcase of an operating engine. If the engine increased in RPM in 1 minute, I was proven correct. If not, I was proven wrong and I would walk away and the merchant/mechanic owed me nothing. If I was right, and I could increase the RPM by 50 in 1 minute, than my product had valuable characteristic and the merchant could make lots of money using it and selling it. I had no turndown in 35 attempts! I averaged 100% cold call sales. I didn't work a miracle. I simply attempted to satisfy or solve the merchants's problem by increasing the quality of the work the merchant was performing on the customer's car.

Was I a "born" salesperson? Those who sell poorly would say yes. Those who are professionals would say no. What is cold-call selling? What is therefore, a cold-call selling ratio?

Cold-call selling means not contacting a firm in any way before approaching it for a sale. According to White's tutorial book on selling, a professional sells 95% of the time, and a college student majoring in sales/marketing sells 80% of the time.

When I first took White's tutorial test, I averaged, I think, 60%. When I completed a semester's worth of classes and outside selling, |I took the test again and attained 80%, top for a college graduate who has studied selling.

Within a few years, I had my own consulting firm, and took on Tephguard. I hired 15 field sales people, who I learned after bringing them into the office a month later, sold nothing. I inquired why they had a unanimous record of 0 sales. Each told me it was a tough field, no one was buying, and that getting an appointment was a bear itself.

I asked how many demonstrations they had conducted and a few said they had conducted one and most had conducted none. Tephguard is a demonstrator's dream.

I terminated all the sales people on the spot, took all their merchandise out in the field myself the next weekend and used the techniques learned from White, Joe Girard, Bettger, Stone and others who are experts in the science of selling. How did I do? I sold all 25 cases at my full retail price and got cash. I had no turn downs! I simply studied, of those who had auto repair shops, who was repairing cars and who wasn't. I examined my "potential market" and conducted a demonstration at each place I visited. If I had offered to sell my oil/metal treatment, I am sure I would have sold no more than one of my 25 cases. Instead, I went to each merchant/mechanic and said I simply wanted to see if I could increase the client's engine RPM by 'x' percent without me touching the engine at all. IF I could do this, the client's car was sure to work better. The product worked perfectly the first time every time because I had tried it on my car and naturally, received the same consequences/benefits.

Perhaps insurance salespeople have the toughest "road to hoe". I don't know. I realized when I moved to Arizona, the highest cold call sales ratio I found was 8%, not 98%! People thought I was a genius or a nut case when I told them what my highest ratio was before I left field sales. Each sales person naturally felt their respective field was too extraordinary or special for cold call closing ratios to have any meaning. I did not agree then and I do not agree today. Selling is a science. No one is exempted to cold call close 100%, but there is no excuse for any ratio or percentage less than 85% for those who:

understand intimately their product, use their product, succeed as users of their product, believe in the company selling the product to the salesperson, understand that merchants and consumers do not like feeling that anyone is selling anything to them. People need help buying, but, like the physician and dentist, one needs to help show the positive side of taking instructions. Realtors need to show the beauty and financial benefits of home ownership (not how much down payment do you have?) Car sales people must have a desire to find out more about what the customer wants WAY before a car is even shown to the customer. Computer salespeople need to demonstrate what a computer can do, not ask the customer what the customer needs or wants unless the customer is very technically oriented. (I have never had a computer salesperson demonstrate a computer's software--the main if not only reason for having a computer! Most computer store salespeople show hardware sitting on a counter and expect people to buy it and then take lessons on its use at some college--wrong, wrong and wrong again! One place I was going to buy a computer said that he doesn't even warrant his equipment, it's too expensive for him to do so--unless the customer is wiling to bring in the computer to his shop--he sells low cost hardware--not any recognizable service and he is proud of his cost cutting ways!

Your author's required reading demands/expects the reader of this material to read a few issues, if not directly subscribe, to Venture and Inc., magazines. These are the motivators, the testimonials of successful merchants from whom a potential entrepreneurs can study!

A few additional points of view:

Usually, a customer can afford more than what they say they can afford, if the product/service is geared to making them money.

Customers do not buy features, they buy benefits (16 bands, 400 lbs of pressure, +- 2 db, and a myriad of other features mean nothing to most people unless a technician is buying. The average customer buying for personal use wants to know the BENEDICTS of the features the manufacturer wishes to tout. Maybe the 16 bands can provide greater variety of sounds to an audiophile. Maybe the 400 lbs of pressure will expedite the removal of paint or the placing of a chemical on something. Maybe the +- 2 db will give the listener a cleaner, truer sound without fuzz.

Don't ask what you can do for someone. Wait to see what they are looking at, or listen to their questions if they come to you. How may I help you is also lame. A greeting is fine, people do like to be greeted, most of the time. If a person says they are just looking, it is not a lame comment. Potential customers are looking before they are able to make up their mind! Unless you are visiting a pizzeria or a hamburger joint, you likely need to study the merchants's wares before you decide. Maybe you aren't sure whether this or that option better services your need. Perhaps what you think you need you don't need. Listen to sales people and then ask questions.

Let's say you have made the sale. You have won the confidence of the customer. To increase the customer's satisfaction and your firm's net profits, it's just fine and reasonable to introduce complimentary goods to the customer. In fashions, salespeople automatically try to sell a shirt with a suit, socks with shoes, belts with pants, etc. CHAPTER 7

STORE POLICIES

Considerations:

Have you made sure all employees understand and have had a chance to comment before you demanded all policies be followed?

Have you given a manager authority to waive or by-pass some policies under given circumstances?

Remember, there are no policies that invent themselves. Some stores have no written policies because some store customers don't tolerate policies.

Are all policies examined quarterly to see if they are still applicable and provide more benefit than hassle to the store?

Make sure all employees sign a document that they have read and understand all policies. Then, provide written test, for all new employees', their understanding of policies via giving examples of situations and ask which policy might cover this and how to apply said policy!

Some policies must be inviolate and others policies must be so flexible that you can toss them at whim! (Drugs in the store vs. operating hours)

Store policies are valuable and perhaps necessary for any merchant: they remind the manager/owner and all employees (full time, seasonal, temporary and others) about check cashing, taking things out of the store for the employee's use, when vendors should come to demonstrate or introduce/sell to the merchant, how often mark-downs should be taken, how to deal with irate customers, etc.
Other store polices ought to describe how to handle robberies, break-ins, promotions, reimbursement for school, vacations, et al.

A store policy is a safety valve and a timely up-date on how best to manage the business--therefore, a policy needs to be examined fairly regularly (monthly?) and removed, modified or simply examined to see if the way the community and the business respond and deal with each other makes each store policy relevant and most appropriate for current operations. In short, don't wind up with policies remaining on your books that suggest your employees take an hour off on Sunday morning for church, or that ladies will not date employees or customers or marry while in your employee--such policies will get the store owner in court for breaking a myriad of federal laws!

Only have, for a store policy, the technical actions needed to be taken in case of some rather major problem and the boss cannot be located. When the store owner is very savvy, he/she will let the store employees do whatever their common sense and business experience guide them to do! If the employees act like children its usually because they have been treated like children. If the employees have been treated like adults and given continuous responsibility, these same employees can defuse troublesome situations or find their own very viable solutions to episodes of need if YOU LET THEM! A chain of command is not bad if someone must be held responsible! (maybe one strong person will try and override the person thought to be in charge until the weaker, real temporary boss, is identified as such! If the boss is a quality boss, no matter what the decision is of the person in charge, the boss will, as close and as much as can be done, leave the decision alone and back it up! If the person making the judgement screws up royally, the boss needs to increase the training, quietly or privately, of the preferred person in charge to assure the boss that volatile situations or power struggles will be quelled quickly by the person known to be in charge when the boss is out!

Make damn sure all employees, customers and others are all treated equally in all policies! CHAPTER 8

CREDITORS

Considerations:

Have you continuously asked for an increase to your line(s)?

Have you continuously searched for the least expensive rates of interest on lines of credit?

In case you might be late paying anyone's bill, have you informed the applicable person/company?

Do you have credit available even with those to whom you now pay cash?

Have you compared each supplier's credit terms with those from your bank to see whose is least expensive? Presuming you are in business partially for money enhancement, you need the best money terms at all times!

The greatest ally you can have or be your biggest headache! What/who are your creditors? The people (firms) who supply you with resalable goods for your firm and others who provide usables used in your store. For example, someone provides you your toilet payer, stationery and gas for your vehicles. Someone provides you advertising and maybe security. These creditors must be paid so that your business will not be disrupted in what is called a maintenance item.

Finally, your resalable goods' suppliers must be paid or you are going to have further problems; if these suppliers are not paid on time, you will likely have no help when you need special assistance--greater credit terms, help finding special order items for better (read that biggest spenders in your store) customers, and sometimes better than average return policies for those customers you want to keep who return things that are well beyond their repairable stages.

Most vendors will replace customer' returned goods even thought such goods (inventory) require the vendors often to take a small loss--something the vendor(s) are willing to do because you are helping the vendors earn good profits by paying all invoices on time and not asking unnecessarily for special favors.

(People who demand things of others before they will keep their original bargains are unethical in my book! I recognize that some people think those merchants who can badger their supplier(s) to:

1) accept unreasonable returns, 2) better credit than the merchant has earned, 3) to accept slow paid invoices, are considered excellent business people (hard nosed profit seekers, et al).

I find it fine if a merchant wants to discuss different terms for in the future, or if a merchant wants to pay for the due bills and suggest that next time, different terms, favorable to the merchant, be discussed. I just do not think it fair to have the vendor, or creditor, be required to accept different terms AFTER THE SERVICE OR CREDIT HAS BEEN PROVIDED. If our credit is amenable to be increased or we have followed the "rules", then ask for what you want.

If the merchant tries to get something undeserved from a vendor, the merchant is browbeating and such hurts everyone!

I suggest the merchant negotiate what to earned, before both sides have satisfied a contract.

I suggest the merchant to not start negotiating after things have been provided that you have agreed to. (If the merchant finds it necessary to re-negotiate, do so without expecting things to go your way at this stage).

I have expanded on this chapter because of what I read and believe that Don Trump (he admitted so in an autobiography) has done with his creditors: He forced banks to provide credit on various deals, or threaten bankruptcy--without giving up his lifestyle!

Rather than me analyze each or any of his deals, (he is no apprentice in finance) I want to explain how he has hurt others:

When he negotiated for a loan for 'x' dollars to buy or pay for real estate, he did so on part gamble and part cash flow analysis.

He led a very glamorous life. When the properties (which were pledged to pay for his loans) began slipping in profits and, therefore, were not able to pay their mortgages, instead of putting all other deals on hold, he kept on buying speculatively and continued his life style.

He threatened the lenders that should they foreclose on any loans, he would abandon other properties that may not be paying either, keep their cash flow (daily revenue) and let the bank face a run on deposits and bankruptcy. His bankers had no other viable buyers at the time who would pay what was due on the loans, so his bankers had no choice but to re-write the loans at terms most favorable to D. Trump.

Don kept his lifestyle and its gambling. He forgot that if these lenders had not been so good to him in the first place, he wouldn't have been able to procure the properties.

Now, with the banks losing, based strictly on his threats, new potential borrowers who have other good deals cannot get money because Don failed to keep his word. This is/was the most unethical thing he can do. If he had instead offered to work out any pay back plan the banks invented, and been willing to immediately sell all of his possessions to make his payments (unless he got a lender in Asia to lend him enough to pay all his loans off using the same collateral) he should have moved to a card board box to satisfy his loans. Then, he could have kept his dignity, made honest attempts to pay his huge debts and cold have borrowed from these same bankers when the properties again were paying good profits. CHAPTER 9
HOW TO HELP SOB'S FAIL:
(WHY SOB'S SUCCEED AND NICE GUYS FAIL IN SMALL BUSINESS)

The book to which this chapter refers suggests that being cordial, paying bills on time, collecting debts amiably, treating employees as family members and being in general a "Good Joe" or someone who is overtly empathetic is the best way to lose. I do not agree!

Being a decent person, caring about others and offering a fair deal (reasonable goods and services for a fair price is the best way to succeed, and has been the best way to deal since time began.

Let me give you some examples of the bad vs good guy syndrome:

The bad guy (my ex-step father is a prime example) bullies everyone, makes excuses when it is time to pay employees or creditors, badgers customers (he/she presumes they will come back or that he/she doesn't need this or that customer, etc.

The bad guy seems to have a few redeeming qualities; spotting other bad guys! A "crook" seems able to catch other crooks, a sneak seems able to catch other sneaks, et al.

Now the good guy syndrome: the good guy syndrome denotes a guy or gal who automatically sees the world with rose colored glasses on--everyone entering the shop or calling is a "good Joe", an honest person, and this good person syndrome perpetrator has a Mary Poppins, innocence that is usually beneficial to the business. Whether the lacking of the street smarts which seems vital to any business is a true liability remains to be seen. For example--John Doe asks for credit and explains that such and such a product is just what he/she wants for the spouse or girl friend. This customer has just started on moved to this job from afar and just moved into an apartment which has no phone and the customer's line is to be hooked up next week.

The product is selling for several hundreds of dollars and the customer seems so honest and true and "churchy" in honesty. The good guy/girl merchant will often feel that the honest person/customer is a good risk (any time a merchant lets goods go out the door without being paid in full permits a great risk to occur. Fraud lines at district attorney offices across the nation abound with tales of "she/he sounded so honest when they asked about credit and wanted to so please his/her spouse, etc. This type of being a good merchant, a trusting merchant is, in my opinion, excessively trustworthy. A trusting merchant, wanting to make a sale to a young, new to the neighborhood, would ask for references and offer to do a lay a way. Since the merchant probably cannot afford to give away the item (what any merchant does when it extends credit to anyone who does not pay) the merchant is wise to ask for a lay a way, a credit card, a co-signer, or something else to protect the merchant.
Where can the merchant become the good guy and be safe? The merchant can be or play the good guy in how he/she treats the customer--in dialogue, in exclaiming it is good to have the new customer and mentioning politely that the store takes such and such credit cards, does lay a ways or takes checks protected with bank guaranteed cards. The merchant takes no chances with the value involved in the sale.

The good guy merchant pays all bills in time, pays employees as expected and in the amount expected. The merchant treats everyone like they were respected grandparents (presuming the merchant respects his/her grandparents);.

Let's say that the merchant is a good person and the competitor is a bad person (using the examples of description above). The good merchant can do all the things the bad merchant is not doing and soon the good merchant will take a good percentage of the bad merchants' business away!

Further qualifying the business

The start-up business:

A business plan includes both a narrative (story) and accompanying financial data which includes what money or other equipment and physical resources you have to bring to the firm and what you need from others (family or financial institution) to complete the start-up firm's financing, also known as capitalizing the business.

This Business Plan is going to have a “Table of Contents”, a “Summary”, your resume (and resumes of other founders. Your business plan will be best written if it includes chapters discussing its history, purpose, objectives and competition, collateral and other pertinent data you know are important and proposed financial statements (known as proformas: income and cash flow statement and balance sheet).

The balance sheet is the easiest thing in my opinion to develop because it depicts things as they are before you have your first customer, as you think they will be the first day of business. A Business Plan for an acquired (purchased, inherited, repossessed) business will be developed in the next chapter.

For clarity and demonstration purposes, I will begin an imaginary business, one of my own, and will develop its business plan step-by-step for you to follow.

PROPOSED BUSINESS PLAN
for

Entrepreneurial Consulting, a small business advisory firm

It is reasonable and necessary that I start off with a validity test of my proposed business: (This is not included in the plan, it is a prerequisite to writing a plan--if you cannot in your own mind "validate" the purpose for the business, perhaps you shouldn't open/buy it and if you decide not to--you needn't write a business plan at all. (Better to know now.)

Let's see how chapters to this book are applicable to this proposed business: (you will also see how usually several chapters intertwine because business intertwines several topical areas, within your business, often concurrently--one cannot locate anywhere without determining what one's balance sheet owner's equity or borrowing ability is for acquiring a site, or after determining if one can afford the applicable rent).

Just to remind you of your newness and to stroke your back (when you start asking yourself, can or should I do this or that) CHAPTER 51's YOUR NEW REALITY can be a reality check (like TV new's Dan Rather's Reality check reporter does--he suggests reality issues as he examined politician's perspectives and major news makers.

This business will be started because, after reading other surveys, I have learned that there are thousands of people in a 3 mile radius, who wish to open up a business of tier own, or fix one they own now, or wish to expand a successful one they own.

I do a review my resume and further determine that I have the necessary skills currently, [no additional
skills needed] to both sell consulting services and perform the diagnoses myself.

Next, I need to decide what the zoning is in my community and I learn that the needed zoning is “C O or C 2" to sell consulting services.

Next, I need to work out my budget; can I afford to live off the proposed profits
of this business?

Let’s assume I need $1,500 to live. My [chapter b ]ORGANIZATIONAL STRUCTURE choices of corporation, partnership, LLC and proprietorship lead me to want the start simple. As the book will show, anything but a proprietorship takes time to prepare and often must be filed with the county/state. When a sole proprietorship opens, the proprietor [aka owner] withdraws money weekly for his/her own living expenses. This can be either a DRAW or SALARY expense.

Taking the income statement, then, we invert it and realize that we must end up with no less than what a $1,500
draw would take plus other expenses, such as rent, advertising, utilities, phone, transportation, insurance and the list goes on.

I add the expenses together [plus the draw of $1,500]. I must now decide what I could earn per hour advising prospective and current small business operators. By adding the expenses together I determine I need $3,000 to cover the draw and the rest of the expenses. I know I can expect to sell 12 hours a month, and my gross PROFIT equals $3,000, we have our matrix match. If the average
sales of services ......plus discounted service hours we can “test the market” for one month and charge $140 an hour, giving us an additional $15 times 10 or $150 gross profit for consulting services.

If I advise 5 entrepreneurs for 1 hour a week, 2 weeks a month, and charge them $145.00 an hour, that is an additional 10 hours or $150 a month also. That would get the company $300 net profit before taxes. [before we added ... and repair, the sales of ,,,, alone covered the total expenses of the store and my draw [salary].

I now know if my expenses drop, and if I generate the same revenue, my net profit will increase. IF my revenue decreases, I have to cut expenses to cover my draw.

The point is that, during one’s work week, one always knows what one’s status is and how close one is to covering all the business expenses for that week and month. One needs this data for additional purposes:

the owner will want to know if he can increase his draw, or if he needs to bring in more ..... or repair business, or if he must be gone for a while, and has no one to replace himself, he needs to know what additional revenue he needs to bring in the next cycle [week or month] to make up for loses. One can actually KNOW
in advance, when on can expand, cut back or even when one will need to “close the door”.

I have done my initial market research and determine that I can and should work near my home-- one and a half miles from Phoenix College. So, in CHAPTER 1, LOCATION, I believe that a location near a private business or public community college will do well for a site. I will buy an empty or partially rented-out building and the land beneath it. In my city (Phoenix) a site near Phoenix or Glendale Community College near either Glendale Road and 35th Ave., or 15th Ave., and Indian School Rd would seem to be viable--a building and land I will buy (using my real estate license as leverage--allowing me a rebate against the normal down payment and closing costs). The building will have to be a minimum of 20 x 40 square feet to allow room for a counter (if one doesn't already exist) and naturally, a back room for the repair work. The building will also have to have room in front to display and sell my typewriters.

The building's lot must be adequate to park 3-5 customer cars at one time in addition to employees' cars.

About now, before I continue, I need to guess what amount of cash I will need to start and continue with my business prior to the business earning a profit (sales minus costs of goods sold minus expenses--which is not likely to reach a profit for many months or even the first year).

I need of two financial statements; balance sheets and income statements along with a proforma. These will give me data I need to continue with decision making. CHAPTER 30's FINANCIAL STATEMENTS (Accounting) will guide me here. Problem here duplication with CHAPTER FINANCIAL STATEMENTS. If I find myself thin on opening capital, CHAPTER 59's SBA might help me now.

Next might come CHAPTER 5's BUYING INVENTORY (Merchandising). After I have determined who my SUPPLIER's will be (discussed in CHAPTER 9), I will then know who my (CHAPTER 8's) CREDITORS will be. Then, the fun planning comes as I decide how I and my staff are going to handle the lifeblood of the company, CHAPTER 6's SELLING!

For my repair staff, I'll need equipment such as tools, benches and gages to examine and test the machines. I'll also need business insurance, electricity and other utilities and 1 delivery vehicle (to handle outcall repairs).

Once my offer to buy 'my desired' property has been accepted--my firm's balance sheet [Chapter xx Financial Statements] will include the following;

Assets: a building and its land and prepaid utilities' deposits, plus the value of my Pinto (which I will use for delivery), equipment (like tools, benches and gages to examine and test the machines, and prepaid insurance, and all utility deposits.

The mortgage is listed both under monthly expenses where rent would be listed, and with expenses such as insurance and utilities as billed (as used) are my expenses too.

Any cash I place into the bank to cover "operating expenses" becomes my owner's equity. I will closely examine weekly my balance sheet and income statement to make sure neither my assets nor expenses are too excessive. (Too many purchased things--equipment included, comes out of daily operating cash that can be used for daily expenses--a danger to all newly opened businesses!

I need to make sure I make my business as safe as possible. In CHAPTER 2, SECURITY, I haven't yet determined how I will protect my firm and employees and customers from CHAPTER 22 's ROBBERY or CHAPTER 50's BREAK-IN/ROBBERY or CHAPTER 21's EMBEZZLEMENT. CHAPTER 58's FEARS will keep me awake without me having to worry about all the things that firm's have to worry or be concerned about!

I know, via my business plan, and objectives, that I want to have an .... IN CHAPTER 3, HIRING I need to determine how many sales and repair people I'll need (versus contracting out any services).

I might want a partner skilled at selling. Regarding other store tasks, I might do them myself or hire one or more Full-Time Executives or blue collars or I might opt for a management trainees)--less expensive but less immediate performance/skill. I might have to settle for some Full-Time Blue Collar workers (including technicians) and see what growth I can generate. Often, a firm such as mine will start out with no Full- timers but only Part-Times, using Seasonal help when things heat up till I can sustain my growth and hire my Fill-Time Blue or Executive quality people.

Once I think I have the right people hired, my new team and I will need to get together and introduce a set of policies for the firm. These policies, if we are smart, will be developed by all via spoken and written input that we all understand and agree to. These agreements ought to benefit us all! These ideas I will endeavor to cover in CHAPTER 7's STORE POLICIES. One of many policies we will develop will include CHAPTER 57's--BONDING YOUR EMPLOYEES.

I would endeavor to emphasize that polices we mutually develop must demonstrate how they can be values if used as guidelines to present employees in case problems arise when I step away from the building. Policies should not become fixed standards that allow no negotiating or common sense thinking!

Policies are written to deal with common circumstances and should force management--me and a trainee--to think when a non-production-stamped situation arises!

You need to continue your business plan, chapter by chapter, as its applicability arises--some chapters of this book will not be immediately viable to your TODAY needs, and maybe some parts will be forever "Peter Panish" for any single entrepreneurs's needs. While that is so, make sure you have examined every chapter for applicability and be prepared to show a banker or lender or investor why any single chapter in this book is not relevant to your business!

To help myself and the first employees get the company going, CHAPTER 12's OFFICE SYSTEMS (equipment) needs to be created to facilitate company operations! I hope to discuss this topic in sufficient detail to get my firm started profitably and add continuity to operations from which I may peg changes.

Almost before I can blink, a combination of things will inevitably me; the most important for my crew and myself may be my purchase of both health and life (and auto) INSURANCE which is discussed in CHAPTER 13. Next, might come the examination and purchase of SUPPLIES I would be BUYING in CHAPTER 4. Whether or not I will need CHAPTER 10's CAPITAL EQUIPMENT will depend on my business plan. What is needed and Where to procure is also discussed!

When these polices and guidelines have been devised, then I want to let my creative people set up or buy CHAPTER 11's DISPLAYS.

There is no best time for me to learn other important areas of the firm, so now might be a good time for me to begin studying how to cope with CHAPTER 20's TRANSPORTATION of goods and customers to my store, and what I might do to continue smooth operations during CHAPTER 23's discussion of INCLEMENT WEATHER (Freezing weather, high Wind, Flooding, Fire, the Plague: or other forms of inclement weather or negative environments.

It would be wise for me to bone up a little on my CHAPTER 24's BUSINESS LAW (Torts and things).

Now that the business is up and "flying", we want to remember our employees (especially our key operators who will take over management when we are ready to expand) and to assertively compensate these people, CHAPTER 25's ESOP'S will show my people I will provide more than lip service in giving them pay equal to their real contribution to our mutual efforts and results.

I have developed a viable business plan and have been following it. Therefore, now is the time to put everything to the test, for it's Here's Johnny---and now it's my (CHAPTER 56) GRAND OPENING.

If my people's TRAINING (CHAPTER 29) has been effective and has been a mutual effort (and includes skills' contributions among myself and the employees), I will not head directly into a possible EMPLOYEE EMPLOYMENT STRIKES (CHAPTER 19).

Instead of seeking new employees, with the mutually reached compensation package in the company's policy manual, the firm should be examining customer-effective ADVERTISING (CHAPTER 27).

If my firm's advertising and sales have been successful, then my next stop may well include either CHAPTER 14's FINANCING 1ST STAGE, (I'd be in my 2ND), ETC (which will compare various Costs of funds via and its expanded cousin, CHAPTER 15's FURTHER FINANCING.

If I am lucky, and study my options in investments in addition to my own genre of businesses, I might find outstanding short-term investment opportunities (25-3000%) for CHAPTER 16's INVESTING EXCESS CASH FLOW (Revenues).

In case I have more troubled waters (Simon and Garfunkle) than expected, CHAPTER 18's OPERATING WITH INADEQUATE CASH might be a life saver. However, sometimes, I might catch a fall or a bug before the firm is ripe with top management. If so, CHAPTER 17's KEEPING THE COMPANY OPERATING WHILE (me) THE OWNER IS ILL (TEMPORARILY INCAPACITATED) might keep the firm afloat and suggest temporary promotion or another, easy, comfortable way(s) to generate managerially-oriented employees from within my current personnel file of active, working employees.

In the wonderful event that my firm grows and is actually gliding rather successfully, it behooves me to begin considering perhaps some esoteric arenas of business--some areas that few, if any other authors, discuss regarding entrepreneurship. I would consider positive action with the following:

CHAPTER 26's MAIL ORDER to increase sales, CHAPTER 28's DELIVERY, CHAPTER 31's the company's COLORS for its logo and inside and outside the store itself.

CHAPTER 32's PARKING might provide solutions to internal dissent and provide more alternatives for customers who want to shop at our store but feel they cannot conveniently because of inadequate parking.

CHAPTER 33's SIGNS will help me deal both with my city's and county's zoning and hopefully, my company's most artistic employee vs finding a contractor to display my most valuable asset--my firm's name!

Other ways to promote esprit de corps include CHAPTER 34's UNIFORMS and CHAPTER 52's INSIDE STORE MUSIC.

If I have a problem with any employee at any time that is not life- threatening, CHAPTER 35's CORRECTING EMPLOYEES will give me hints that may eliminate mass dissension and the detestable strike discussed earlier.

If my firm is physically located next to a municipal building or freeway to be, I might find (CHAPTER 36) a MUNICIPALLY ASSISTED MOVE staring me in the face. Sometimes, this move may be precipitated because of a new (CHAPTER 37) ENVIRONMENTAL COMPATIBILITY problem.

My brother would suggest a few, casual, easy to digest might-do's with me and ask if I have (CHAPTER 38) a RECYCLING program for my waste paper and water.

So far, we have a "swinging" little business and are rather content. Just so I don't get too content, I might have my attorney do a semi-annual audit of my local county commissioner and city hall and make sure the (CHAPTER 39) POLITICAL ENVIRONMENT OF [my] CITY hasn't negatively changed. (Municipalities often change sign ordinances, zoning ordinances, etc. that might help me but more often than not, will inevitably disrupt my current business operations and growth. I won't sleep when the government boys and girls are playing with my rights!

I have a great problem with the most despicable idea that certain civil leaders feel they know what everyone wants (or the moral majority) and they will often find my business in conflict with community standards--whatever those might me. CHAPTER 40's ETHICS might guide me on how to handle any political upheaval presented.

Just when I had everything licked, CHAPTER 41 comes along and shows me that who I was doing business with previously regarding one supplier or a customer has been changed and the rules and expectation are now different. A customer's or suppliers's LANGUAGE AND CULTURE DIFFERENCES can make what used to be a simple quick deal become complicated (like new commercial mortgages).

When I find my dander growing and some dude up the street or across town is acting like the proverbial Dillenger or bully, I may need to find a way to compete or simply help get the other guy by his private's if the situation deems it. If something like this faces me, CHAPTER 42's HOW TO HELP SOB'S FAIL: (WHY SOB'S SUCCEED AND NICE GUYS FAIL IN SMALL BUSINESS) might help me. (If I ever get into a slugfest with the bully or SOB, CHAPTER 49's RELEASING ANYTHING TO OFFICIALS (WITHOUT SUBPOENAS) can be a mini guide for my employees in case my business is struck while I am out to lunch or at home or on vacation.

Other fun chapters (not all of my entrepreneurial life has to be seen as threatening or challenging--lots of it can be fun!) include CHAPTER 43's FANTASY VS CONFORMITY IN APPEARANCE, CHAPTER 44's [how to deal with] ACCIDENTS, philosophies on (CHAPTER 45) CONTRIBUTIONS, when to have fun or have I missed out on the latest industrial talk--if so, I will need to attend CHAPTER 46's MEETINGS-CONVENTIONS. After I return from one of these, I will need to consider which of CHAPTER 47's SUBSCRIPTIONS might be apropos for my firm.

One of the best way to keep my people and customers happy (from Tom Peters, In Search of Excellence) could be to know the tenets of CHAPTER 48's I WANT TO SEE THE OWNER/MANAGER.
If I did not do a "need check" to see if my firm was needed before I opened it, I am in a "world of hurt." Therefore, presuming my firm was needed, it is time to piggy back CHAPTER 54's MARKET RESEARCH with CHAPTER 55's [a] BOARD OF ADVISORS to help me keep a continuous validity check on the rest of the firm and to get outside expert points of view on my growth plans and policies.

Am I a hot rising business entrepreneur yet? If so, I will now consider CHAPTER 62's EXPLOITING OPPORTUNITIES--an entrepreneur's walk through extra opportunities, one of which includes CHAPTER 63's GOING PUBLIC via an IPO with OTC with the Pink sheets, and when my firm is adequately indoctrinated and capitalized, NASDAQ. (There are "other exchanges" that may also be considered.

If your firm gets big for its "britches" and you want to become an advisor in my field OR if I find myself in need, CHAPTER 53's CURING A TROUBLED RETAIL FIRM cam provide priceless and life giving advise beyond that available from my advisors.

I might want to take a gander at having one of my people open a small booth at a merchant's exhibition, or I might find CHAPTER 60's STREET MERCHANTS offering perspectives on how to solve problems with them.

Finally, in case one of my employees want to try partial self-employment while working for/with me, I can make good use of CHAPTER 64's COTTAGE INDUSTRY.



Marketing

I have loved teaching marketing in community colleges. A well accepted definition of marketing includes all the activities involved in procuring the raw materials, getting them to the manufacture, getting the finished product to its most effective distribution center and finally, into the retail store and its myriad of activities from janitors to banking. (The janitors before banking is apropos to the priority of people importance in business!)

Entire books are well written just on marketing. I have decided this would be duplicitous. This entire book is about marketing as it applies to the entrepreneur in his/her new or expanding store.

According to a new (about time!) philosophy, the marketing concept means satisfying customers' demands, rather than buying things the seller likes and trying to convince buyers to buy. This "what the customer wants does not mean that the customer is always right. IN fact, often the customer is wrong in his/her choice of a good or service. To extrapolate from Stanley Marcus, Who's minding the store, often a customer needs guidance or simply doesn't know what is best for a need. Some philosophers would argue the customer must decide and take the consequences. I genially disagree. Selling is a science as is auto mechanics. One can determine, via scientific methods, what products and services best serve customers' needs, EVEN WHEN THE CUSTOMER PROFESSES DIFFERENTLY! Mr. Marcus even stated that one buyer wanted some jewelry and a fur and he politely declined a $250,000 sale. Now here's where the lay person vehemently disagrees--the lay person says get the money no matter what! The customer is the boss! In Mr. Marcus' "station in life", he knew the customer, he knew the purpose of the gifts and knew that his customers talked a lot about what they bought and from whom. If an item of apparel or jewelry was in apropos for an occasion, Mr. Marcus' business would suffer! Mr. Marcus offered the "appropriate" items for the occasion and the customer declined. Mr. Marcus accepted the loss because he knew in the long run, the customer would respect his position and the community would know that with Mr. Marcus' primary responsibility to fashion image, his Neiman Marcus stores had an obligation to "decide for the customer" even if at odds with the customers' idiosyncracies. This is a courageous position to take in business and works for those who are experts in merchandising and fashion. When done with tact and diplomacy, the "I won't sell this to you because it's wrong for you" philosophy makes and continues an image that was and is expensive to perpetuate. However, the positive consequence is that Neiman Marcus is the world's number one expert in fashion knowledge and they perhaps have the top 10% of the world's wealthiest people for their customers.

If you have no distinct specialty, sell anything to anyone with a smile and a no-questions refund policy. When you begin to develop a specialty (mine is retail firms--I do not advise manufacturers) guard it with your life! Successful marketing to you! reading!

Organizational Structure

Chapter

Please don't open any business based primarily on its legal organizational structure!

[If children want to open a business for more than a very limited time, they should get their parents/guardians to "go through the hoops" and open up a legitimate business for them--which the children would control under the auspices of the parent. The business control and legals should be given to the children the day the eldest turns 18 years.]

A business, even operated by one person, is seen by the business community, customers and suppliers as a living entity--a structure. There are three basic types of structures; proprietorship (just you--or just one person), partnership and corporation.

Proprietorship

A proprietorship is a business founded, started and managed by one person. It can have as many employees as it desires and can afford, but the total responsibility (and benefits) belong to one person only. If a husband or wife individually own a business, the business may be community property by law but it is a proprietorship and controlled by one (again, the founder). Many students have said one only needs a license, a lease and he/she is in business (assuming a business idea has come first). It's actually easier than that--a business' license is external to the business and in no real way signifies a business' existence--albeit the tax collector may disagree. One can (chapter xx-cottage business) run said business from one's home--taking a chance on zoning laws if anyone wishes to complain or have your legal existence challenged!

Partnership

There is not just a partnership--all state laws see partners as either general, silent or limited. (There can be unlimited numbers of partners in a partnership.)

General--all are equally responsible and usually (depending on the agreements made in writing by the parties beforehand, preferably with an attorney) benefit equally. Agreements should indicate how to split up the business in case all agree to close and the agreement should agree on who is in charge of daily operations and who is responsible for which activities. If there is a disagreement that cannot be solved in a meeting, an arbitrator is usually agreed to beforehand.

Silent--As its name suggests. Any number of people can be partners to a business but the silent part indicates that only the lawyers know who owns the business--the business license and all contracts signed are done as if the company is either a proprietorship or is a partnership with two or more general and one or more silent. This partner may not divulge his/her relationship to anyone other than the lawyers and may not discuss the relationship to customers, suppliers, etc. If a silent partner divulges the relationship to customers, suppliers, or other relevant people, then the relationship becomes one of either limited or general, no longer silent.

Limited--according to written agreement--any number of people may be limited partners (whether silent or vocal) and their limited obligation is usually limited to their investment.

Corporation

There are two basic types of corporations, and hybrids of both; private and public (there is, complimenting the infinite wisdom of the Arizona Legislature, an additional corporation structure known as the limited-liability-corporation too). When a proposed business person or group desires to incorporate, the choice usually begins with being private and continues over to being public when the firm must or does reach the multiple millions of dollars of net worth.

Within a corporation, entire books are written on this complex topic, but basically, cutting to the chase, the activities are open to examination by the state, the limitations of obligations are valuable to those investing who also have a "large" net worth and who don't want to jeopardize their non-corporate, private resources.

For the corporation to enjoy the rights of "individualism", it files extensive paperwork with the state and its split profits are again taxable for each founding officer on his/her personal income taxes.

For some convenience, corporations could opt for a Sub-chapter S filing and save double taxation and still gain some benefits not available to non-hybrids.

As of the early 1990's, various states have added even more hybridization, such as limited liability corporations who want the benefits of limited partnerships and corporations combined.

See your business attorney for suggestions on corporate structure if you decide to incorporate. Prior to having the business net $500,000, a proprietorship may well suffice as long as the founder has plenty of insurance!

LLC

An LLC is a LIMITED LIABILITY COMPANY. This “new” organizational structure is about 10 years old and allows one or more people to start a company that is very similar to a partnership. Some people have mistakenly called this a limited liability corporation but it cannot be so, because a corporation by its very nature means unlimited liability. To form an LLC, one simply writes on a piece of paper the purposes of the company, its officers and purpose and when this is filed with the COUNTY RECORDER, the business is in operation and is legal [excepting any city, county or state laws to the contrary]. [IF the type business filed “normally” requires a state license like a law, medical, or real estate office would require, it must be assumed that such a license is already held by the creators of the LLC for that particular company to be legal.

Assured Entrepreneurial Success

Assured Entrepreneurial Success

Introduction-Preface if you prefer

Excusing the “pie in the sky” aim of this book’s title, this guide has taken about 30 years to write.
I have worked for many retail firms, been in the military, been married and traveled to several nations, from whose and which perspectives I “borrowed” to see how American firms can do better. I have also been a small business consultant for 4 decades, doing far to much pro-bono work to help people get their business started, expanded or fixed. Sometimes, like a pastor, getting someone “there” has been more important for me than making sure I was reasonably and timely remunerated. Perhaps this book can help make up for too many soup and egg meals.

Dr. Ralph Todd--who was my management mentor--likely my most important mentor! Ralph always was positive and a guide with no peer!

Like philosophers have said repeatedly, the wisest man learns from those who both harm as well as those who aid him. I hope I have.

Philosophy of Reasons for wanting to be self-employed

The WHY of wanting to start a business

The WHAT, WHEN, WHERE, WITH WHOM, and HOW of business

According to your author (and other experts), the reasons you have for entering self-employment must be VALID if you are to have much likelihood for success. I'll now take you through an analysis of VALID vs INVALID reasons for entering self-employment. Having valid reasons doesn't insure your success (the author can assure your success, but you must adhere to all the precepts of this book and any other directions the author gives you if you accept his offer of an assurance of success.) Uniquely, having invalid reasons doesn't assure you of failure though it will likely hurt you over time as will be distinctly pointed out throughout this book. Also, a "valid" reason will tend to assure you of a greater likelihood of success whenever things get "difficult." By difficult I mean when employees quit and suppliers change costs and availability at the most inconvenient times and when items are most in demand (for those of you carrying manufactured supplied inventory.

Professionalism in self-employment is anything but an '8 to 5 job." If you enter self-employment with valid reasons, you will weather difficult times much more easily than if your beginning reasons were invalid. Truly, validity in entrepreneurship makes the difficulties simply doors to more opportunities. Invalidity in entrepreneurship, when things are 'going wrong' will make you wish you stayed in bed, just like you often feel when working for someone you don't really want to work with.

The reason 'validity' will help assure success is that you, the merchant-to-be, will be motivated to take corrective steps to solve problems before problems become serious. Invalid reasons for wanting to be an entrepreneur will likely contribute towards making you, the merchant-to-be, part of the statistics on failures that flood the federal bankruptcy courts nationwide.

This book then, could, perhaps, have an additional purpose; keeping you out of bankruptcy court. (Helping you put money into your pocket and keeping it there!)
A valid reason for anything means it has been thought through and is defended well and can therefore guide others (in self-employment, this includes counselors, attorneys and accountants) who can further guide you.

Validity

Reasons people have offered me/themselves, over the past 50 years, for wanting to enter self-employment :

1. An increase in take-home pay.

2. A site preference.

3. A marketing plan to capture a certain percent (%) of a market.

4. Anger with the boss.

5. Have exclusive (a license for) use of a new technology.

6. Ideal work/employment field (area of interest) unavailable.

7. Am an alien.

8. Am retired.

9. Am handicapped.

10. Am a hobbyist (and just get a kick out of doing something).

These are all logical reasons for wanting to be self-employed, but are invalid by themselves! None of them yet speaks about what you are going to do for a "clientele base.

You have read 10 reasons why many people think of being self-employed. Let me disclose why most of these reasons, by themselves, are considered inadequate for wanting to open or buying a small business, why these reasons can't be defended.

"Why" must be defended and become "valid" (good) If you want your likelihood of success in self-employment to be high.

Let's cover the defect in each of the ten reasons listed above and see how, if possible, these reasons can be modified or changed to become "valid." The reasons people choose to become self-employed are:

1. An increase in take-home pay.

You need more! This is not, by itself, a reason for self-employment! For the first few months (or years) you can physically draw money from cash flow (gross sales). If you do so, you will likely hurt a business you start. If you buy a going business, I would wait 3-6 months before drawing a salary until you know how your demographics, your marketing and your management style are going to be perceived and accepted.

2. A site preference.

Most real estate agents, both commercial and residential, will suggest that location, location and location are the three most important considerations in acquiring property (for rent or purchase). There are some good reason for considering the location of any property, but like the firm's innovativeness or pricing or any of the other "matrix" items of a business, no single consideration (location) can be considered significantly more important than the others.

Two examples will help demonstrate the exceptions to the rule of ideal or best locations. When I was a pre-teen aged boy, my father worked for a bar named Charlie's Penthouse in San Francisco. It had only one entrance (a grand-fathered commercial site) and this was on an alley-way. If one weren't a resident (most likely with several years residency) of the city, one would likely not know how to find it. Did it make money? Plenty! Those who were natives knew where Charlie’s was and went in droves!

A second establishment was a restaurant and bar. I found this place by accident! I was driving home to Sacramento, CA., after visiting Folsom Lake, CA. About 10-20 miles south west of the lake, at a cross-roads in the middle of NOWHERE, sat this building with a restaurant and bar. Venturing into it, I found a reservation-only place of business and they were booked two months ahead of time! Again, those who knew passed the word around. It could have been located anywhere, it was simply where it was. People would have driven 50-100 miles to eat and drink there.

Therefore, a site preference for a business without having done one's homework as to type of business, a semi or formal survey to confirm customers exist who would consider doing business with you and that your atmosphere, price, quality are what customers want and enough would shop with you to make YOUR SITE and its accommodated business attractive and profitable, would be an invalid reason to be self-employed. Answer or solve the above requirements and you turn the site preference into a bona fide reason for self-employment and your site reason becomes valid!

3. A marketing plan to capture a certain percent (%) of a market.

A marketing plan may be the best reason of the 10 listed, to open a business, but a marketing plan to capture business by itself, like site preference, is inadequate. Let me explain. Let's say that you have available an attachment to a solar water heater. This attachment allows water to have its temperature changed higher or lower within 15 minutes to 20 degrees higher or lower, and the device can be invented, perfected and be ready to compete with something else on the market that sells for 300% more and the profits will be 75% on sales (excellent!) Further research also discloses that only 25 solar cells are sold monthly, there are only 5,000 nationwide, and expected sales of the cells are 300 annually for 10 years. Capturing 35% of this market at a cost of $250,000 would be prohibitive if the profit is $35.00 for each item. The start-up costs would be high ($75,000 is our example), the time to reach your market would be long (3 years), and the total market (8,000) is insignificant to make it worth your while, even if you could sell to 35% (it was presumed you could capture 25% and the competition gets 15% now) of all the past and future users. (Not all users of these cells will use your attachment. If you sold them via a license agreement to the original cell manufacturer, you may be better off. Therefore, in this situation of capturing a majority percentage of a market is an inadequate reason for becoming self-employed.

4. Anger with the boss.

According to extensive research, 65% of Americans are dissatisfied with their job. Probably 85 % of these dissatisfied workers are directing the reason for their frustration to one or more problems with their boss (having poor attire choices, bad breathe, bad body odor, bad temper, etc. This is an inadequate reason to become self-employed, because the anger does not describe the new business venture you would have if you left the boss; the reason is invalid.

5. Have exclusive (a license for) use of a new technology, bought or invented.

By coincidence, many "bio-tech" firms were started in the 60's, 70's, and 80's because some scientist, biologist or chemist discovered something in a laboratory or read of another's discovery and had developed or thought they knew how to exploit such a new creation in a different way. These 'laboratory rats' provided to investment groups uses for discoveries that weren’t involved with patent infringement, copyright infringement during FDA approval. The Federal Drug Administration is in charge of certificating all things that are of a drug nature. If the process proves positive, the drug firm can get permission to sell its discovery.

6. Ideal work/employment field (area of interest) unavailable.

Unemployment is and has been the greatest reason besides serving a marketing need since our country was founded, but it also provided the biggest headaches simply and literally because the business wasn't designed originally to satisfy a particular marketing niche. The business, regardless why opened, must, to exist, inevitably satisfy a market. To wait to find a niche is expensive and headache generating--flipping a coin and rolling dice have slightly poorer odds. Being unemployed, therefore, doesn't focus on serving a market--the criteria here.

7. Am an alien. [legal]

Excepting that America was built (again, excluding the founders--the Indians) by aliens--I'm not sure whether any came by air mobiles, but this conversation relates to the ones who came by ship from England and elsewhere--those who came to America seeking political, religious, movement and economic freedom found the opportunity, albeit, run by aliens (anyone not part of the founders were aliens). Perhaps the first culture in the world whereby aliens became the power group and other aliens coming came from he same reason but were treated differently. Like simply being unemployed, being an alien (and likely finding work with and among bigots--many Americans are bigots) is insufficient reason for starting a business. Do the market research necessary to determine what market/business you want to serve and you will then satisfy that criteria. Being an alien, like the others, in and of itself, is an inadequate reason for being self-employed. Unless a marketable idea catches your interest and you test its marketability, your reason for self-employment is invalid.

8. Am retired.

It is absolutely true that one's age is not a reason for any firm or organization to retire anyone. Perhaps a person wants to retire. That's great if the retirement is voluntary. However, regardless how a person becomes retired, no longer working for this or that employer because of age is, like being an alien, not a valid reason in itself for being self-employed. One only need seek an unmet need in a market place and, ideally within one's previous realm of expertise, to then have a valid reason for self-employment.

9. Am handicapped.

Regardless the federal law prohibiting discrimination in the work place because of one's handicap. An employer will almost always win a suit charging discrimination because there is almost always someone else equally skilled who is not handicapped and who will therefore cost the employer less in modification change costs, and peer acclimatization time and work place adjustments if necessary.

Regardless the attitudes of employers, if one is unsatisfied in the work place because of anyone's attitude, such attitude or discrimination is an invalid reason in itself for being self-employed.

10. Am a hobbyist (and just get a kick out of doing something).

Most small businesses in America are run by hobbyists who don't realize they are only hobbyists and not real business operators. A business owner is one who has the customer's needs in mind before the needs and desires of the company. Hobbyists have taken their love of cooking, painting, fixing cars, taking pictures, et al, and have evolved a business from said activities. The idea of interviewing or surveying customers about their needs seems like something involving activities 'big' companies do. Offering to help customers with needs' satisfaction that doesn't follow the exact parameters of the business seems like a foreign activity and hobbyists are not likely to engage in such "folly." For such reason, hobbyists who are very fond of their activities are not candidates in and of itself to become self-employed, until they find that the tasks they claim only big companies involve in is necessary for all customer-oriented firms. Hobbyists are therefore ruled invalid as entrepreneurs.

--If friends seek a service or product unavailable by local merchants, and your friends would be glad to buy from you in enough quantities to make a living for you, you may well have a valid "why" for being in business.

We may presume you have passed the validity test for being self-employed you have a good business idea and have tested the market place to see if your idea is good. (See market research)

If your business is to or might ever become "big," you need to conduct a system of planning, thinking, making decisions called STRATEGIC thinking, strategic planning. With this strategic work, you decide the who, how, when, where, and other things of your business. You decide the stages of growth, what you are going to do slightly different, or the slight changes, differences you need from your business each month, or quarter, in order to have your business reach (and therefore, you reach) specific objectives. Say for instance, you want sales to be $50,000 a month within 6 months, and grow by 2% per month every month for the next 3 years. You further decide that you will need 5 sales people, 2 office people and an advertising budget of $1,500,000 on June 1st to accomplish this by June 1st of the next year, etc. These kinds of decisions are part of what is known as strategic planning decisions. If you want to stay small, not even caring if you make a profit, don't waste your valuable time making such decisions. Small businesses can be run like hobbies (most are) and profit oriented decisions need not be considered for hobbies. If, on the other hand, you want to see profits by the 2nd month, and have profits increase by 5% a month for the following 3 years, and other consequences (strategic goals and objectives), you must plan for them if you want to make reasonable sequential decisions to the myriad of questions that will come up before you reach your financial objectives.

The 'why" question for this business has been asked and answered positively.

Now that we have the why, let's make sure you can defend the why. Your why must be defended and become "valid" (good). If you want to serve a distinct market; your why is "valid." A valid reason for anything means it has been thought through and is defended well and can guide other business decision makers who can further guide you; your accountant and lawyer will be able to guide you when you provide them with valid "why" answers.

Now that we have discussed and analyzed reasons for being self-employed that are valid and invalid, it is time to consider the next question: do we want to start-up a business or acquire one.

Each method uses the same kinds of overall data, but the approach must be different because the priorities are different! One is to get the door open on a designated day in the future and hope customers come on opening day and all the days thereafter, and the second way hopefully will allow you to make the business you bought more efficient than the last person (the seller) had it by doing things your way (with my guidance on things I am sure you will not have thought of!)

Also, one must, for hope of existing a long time, have a plan of operation, known as the Business Plan. If you have a valid reason for being in business and your plan substantiates this, you will likely succeed!

THE WHY OF BUSINESS

Starting vs Buying

Starting

One wants to start, rather than buy, a business.

a) one needs to bootstrap. Bootstrapping means starting a business with next to no cash. One does this when it appears one can work from their home for a while, and can get purchase orders for goods and services.

b) one starts when one cannot find enough acquisition cash to satisfy the seller's representative or the seller with enough cash out cash or down payment cash.

c) there is no similar or modifiable (within your definition of reasonable) business to be acquired.

d) the idea is too new to have any way of exploiting another business whom might very well steal the idea if they learned about it while you were trying to buy them.--sometimes during the process of acquiring a business, a seller gets wind of the ultimate reason for the business and feels he/she can steal your "wind" and run with your idea and make it theirs leaving you with no recourse and while they renege or fail to complete the sale of their business to you.

We have already determined that your reason for being in business for yourself is "valid." Now, we are only concerned with buying vs starting form scratch.

The defenses used in buying are almost identical to those of starting. You must determine why this particular industry, and then, when you have satisfied the "why" validity, you must ask yourself if your reason for buying vs starting from scratch is valid. Frankly, I think there are more reasons for buying than starting from scratch. This data took 12 years to determine!

Valid reasons for buying

You want to buy if: daily cash flow, daily net profits, good will, and a team to build (that already has a mission or objective) are important to you. You also want to buy when you have determined you want fewer risks as you prepare to try something new. By buying a business, you need only open a different system, product, or operation in an adjoining room or building and build off the credit, cash, staff and additional sources that exist with the business that already run. Let's take these one at a time and succinctly analyze them.

You want instant daily cash flow--(Cash flow is synonymous with gross sales--different from net profits. Cash flow stems from the question/position--where is all my cash flowing to? Some goes to paying back vendors for goods bought, some to overhead, some to your paycheck as owner (called draw).

For clarity and demonstration purposes, I will begin an imaginary business, one of my own, and will develop its business plan step-by-step for you to follow. This start-up business is included in PROLOGUE E, BUSINESS PLANS.

You must determine (presuming you have passed the validity test Why this particular industry for being self-employed and [Why you, why now, why here.]):

[you have satisfied all the validity tests]

Once you confirm that buying a business is right for you, you need a business plan to guide your acquisition BUSINESS PLANS financing the acquisition is a next logical step and this will be covered in chapter 9, Financing.

BUSINESS PLANS

We can compare, for those who like analogies and associating words, (business counselors and writers have used association to facilitate communication) a business to both a battle field and a ship to help our understanding of business plans:

Maybe running a business is like a battle; you are going to have to attack unless you give the "Hun" (from the movie Patton) the upper hand and wait for the son of a bitch. We need only determine whether you are going to start a business from scratch or buy a going concern.

Now let's compare a business to a ship:

A ship needs a captain, similar to a business's owner.
A ship needs power, similar to the businesses's inventory or skill.
A ship needs a rudder to provide it direction, similar to the businesses's plan.

A ship needs either wind for sails or fuel for its engine to propel itself forward similar to business credit and inventory.

This ship analogy goes further--the ship's engines can rev with power but it goes nowhere or in circles until it has a direction.

Why does it make a difference? With one, you have things to do to get the door open, with the other, you want to assure things, at least for a while, stay the same (presuming some people like what your seller's business was and will still do business with you even before you make the first change) until you determine how to go where you want to go. While examining things, you want to make sure things are their most efficient before going off in any direction!

Writing the Business plan

All business owners, be they considering a start-up or the acquisition of a (very successful) business, need a business plan for guidance. One ought never blatantly accept the previous owner's business plan or financial statements without independent examination by a CPA. The new business owner needs to write his or her own plan, and if applicable, uses parts of the previous owner's plan.

A different plan, but one as complete, would need to be written for a start-up business. This book will cover business plan writing for both start-ups and for acquisitions and offer applicable explanations.