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million-dollar-business

Table of Contents

How to Start a Million-Dollar Business for $25,000 #1

I've got it pretty darn good. I work only when I want to work. I can work anywhere in the world. I work with only people I like. I do only the kind of work I want to do. And I make a lot of money.

If that isn't the definition of having it good, what is?

I travel about three months out of every year. This past year, I was in England, France, Germany, Belgium, Spain, Nicaragua, and Argentina-not to mention New York, Washington, D.C., San Francisco, and Yellowstone National Park. When I travel, I take my computer with me. I spend half of the day visiting parks, shops, and museums and going to concerts, dance performances, and the theater. I spend the other half working on my computer.

And because my business interests are international, travel is largely first-class and paid for by one of the companies I consult with.

My office is more a grown-up version of a boy's tree house than it is a workplace, complete with a personal gym, jujitsu room, billiard table, movie-screening room, and art studio. It is located 1.1 miles (an eight - minute jog) from my main home, which is in one of America's best cities, on the Atlantic Ocean in South Florida.

I take off early when I want to and come in late anytime I wish. I have eliminated all of the stress that used to characterize most of my workday.

And if I want to, I can do no work at all for six months or a year or forever.

In short, I am living the dream.

The purpose of all of this self-congratulatory talk is to tempt you to heed my advice. The reason I have this great life is due to one thing and one thing only: About 30 years ago, I decided to become an entrepreneur.

The most profitable thing I have ever done in my entire career of building wealth has been to invest in start-up businesses. Last time I checked, the returns I have enjoyed as an investor in small businesses have exceeded 25% per year.

There was a time when people thought they could earn that kind of ROI in the stock market. That was a very stupid and very costly notion.

If you are a great investor, you can make 10-15% in the stock market. But you can make 10 percentage points more than that, on average, by starting and/or funding small businesses that you understand.

Start-up businesses have given me so much-a steady growth of income, a base of wealth that has doubled every three years, the opportunity to get involved in so many other, interesting investments, and a rich and stimulating business life.

Although I sometimes grouse about working too hard, the truth is that I love starting new businesses. It's challenging, but it's also a great deal of fun. And when the business starts to work and the money starts flowing… well, it feels pretty damn good.

Thirty years ago, my track record at starting new businesses was a very mixed bag. But these days, I am usually confident that the businesses will work. This kind of confidence comes from 25 years of accumulated experiences, good and bad, and learning from them.

So if you were to ask me, “What is the absolute fastest way to become rich?” I'd have to answer: by starting a small business.

That's my answer. It doesn't mean it has to be your answer. You may not want to invest the time and energy that it takes to be a successful entrepreneur. You may be too timid. You may be too tired. You may lack the self-confidence to launch your own thing. But I'm hoping I can persuade you to consider this path. Because it is, as I said, the best way to become wealthy.

If investing in your own small business is not for you, then there are still plenty of other recommendations for you. You can look into stock, bond, options, precious metal, and so on. You won't be making 25% per year, but you'll do all right.

But if you are willing to become an entrepreneur-even a part-time entrepreneur-you will be amply rewarded. Not only can you double (or even triple) your money every three years, you can also enjoy the many other benefits of being your own boss:

The freedom to choose your own schedule The power to create your own products The excitement of being fully challenged The knowledge that you are providing an income for your employees.

My friend Anna W. asked me to help her start a business based on her love of music. She'd been looking over her current retirement plan and figured out that if she keeps her present job and continues to increase her responsibility and her income, she will be able to have a comfortable retirement in 14 years (at age 67).

That's not bad. Most people in her age bracket won't do that well.

But if she puts her energy and resources into creating a successful business of her own, she can look forward to a much better return on her “investment.”

Anna is going to start her new business on the side, working evenings and weekends. She's going to find a partner to back her, develop her product, and take it to market. When we went over the numbers, it became clear to Anna that this secondary business-if it is successful (and I'm pretty sure it will be)-will allow her to achieve her retirement goals in five years instead of 14, while she is still relatively young.

At that point, she can do whatever she wants to do with the rest of her life.

That's what a business can do for you.

Think about your own financial situation. Are you okay as you are-or would it be helpful to triple your money every three years?

If you need that kind of way-above-average ROI in your life, you simply have to consider starting your own business. Don't quit your day job. Just get something going on the side. You don't have to invest a ton of money or work endless hours. You can do well starting small.

Here are five proven (and absolutely true, in my experience) secrets of highly successful entrepreneurs that will help turn you into a business-building genius. These are very general principles. I am just touching on them here. In later essays, I'll explain them in detail.

Secret No. 1: Don't Spend Too Much Time Planning

When you are entering a market, you don't know (and couldn't possibly understand) the hidden problems and challenges you will face. You won't understand those problems until you make a few mistakes. And you won't solve them (and go on to making a success of your new business) unless you are capable of changing directions quickly.

Most successful new businesses (probably 90% of them) end up following practices that are different than anticipated. That's why it doesn't pay to spend too much time and money planning. Do a reasonable amount of noodling. Figure out the big strokes and give yourself a bailout option. Then go for it. He who can adapt wins.

Secret No. 2: Don't Spend Too Much Money

The vast majority of business start-ups that succeed do so on limited budgets. Almost none of them have the benefit of venture capital funding.

The great majority of new businesses are hampered (and enhanced) by flying on empty. People involved in businesses that have limited funds must think harder, work harder, and (most importantly) sell harder. Their primary initial effort is to bring in the cash. And that's how it should be. There is only one thing that will surely stop any business in its tracks: a lack of cash flow. Ironically, limited capital usually means a quicker and stronger cash flow.

Secret No. 3: Get Operational Fast

The most common reason for new product/project failures is wasting time getting ready. Between making overlong and expensive business plans, endlessly tinkering with the product, fooling around with focus groups, and second-guessing yourself, it's easy to let a good product/project lose its steam.

Bootstrappers don't mind starting with a copycat idea targeted to a small market. Imitation saves the cost of market research-and the start-up entering a small market is unlikely to face competition from large, established companies.

Secret No. 4: Go for the Quick Cash First

Contrary to what some business books may say, successful entrepreneurs are almost always those who take the fastest route to cash when launching a new venture. They do so because they don't have a choice. (See Secret No. 2.) After the cash starts coming in, they have the time and funds to improve the product, enhance customer service, and refine operations.

Keep in mind that the best-laid plans are often arrogant. You don't know for sure how to best serve the market. When launching a new business or product, figure out how you can get to breakeven fastest. This kind of thinking will force you to pay closer attention to the market. And the market is your master.

Secret No. 5: Forget About the Crack Team; You Are It

Successful entrepreneurs don't hire experts to run their businesses. They figure it out for themselves. When it comes to making your new product/project work, rely on nobody but yourself to make sure it gets done right. It may be stressful and time-consuming to do a lot of extra work, but it will pay in the long run. You will understand the project in an intimate, extremely valuable way.

You should want to learn about how your business works from the bottom up. You should want to know how to buy the products and services you learn. You should want to understand how to hire the best people. And most of all, you should want to understand how to bring in new customers at an acceptable cost. This is the key to every successful start-up.

Having started hundreds of successful small businesses in my career, I am bold enough to think that I understand how the start-up and development process works. I outlined it all in my book Ready, Fire, Aim. In my humble opinion, it is the best book ever written about starting and growing an entrepreneurial business.

In future essays in this series, I will tell you everything I know about building and starting a successful business. That means, as a member of the Wealth Builders Club, you will learn all of the most important things you need to know to avoid costly mistakes and ensure your success as an entrepreneur.

I am going to share with you all of my secrets, such as:

Why you shouldn't quit your job to start your business The four basic types of business, and which one I think you should be in The myth of the natural-born salesman How to come up with tipping-point ideas The handful of numbers you need to know to run your business How to groom protégés to run your business for you so you can live your dreams.

Take Action Now

If you listen to what I tell you and make it a point to keep yourself informed and educated, I have to believe you will come out a big winner.

There are dozens, if not hundreds, of small businesses you could start this year. With the advent of the Internet market, there is virtually nothing you like to do that can't be turned into a business.

My success rate in business is probably 80-90% these days. The main reason is not that I know so much more than I used to (although I do) but that I'm much more reluctant to get into something I don't understand.

Make yourself a promise to devote a good part of your time this year to creating and/or developing a second stream of income. Allocate learning time every week. Develop a three-page business plan. Make at least one new contact every month-and use that contact to start your business.

No matter what type of side business you decide to start, assign to it a specific financial target each year, and reach that target by figuring out how much you have to accomplish every month to get there. Break those monthly targets down to weekly objectives and the weekly objectives down to daily tasks, just as I've detailed in my book, The Pledge, which I've sent you.

But don't feel overwhelmed. I do not want you to quit your job and risk your life savings. I will show you how you can start slowly, from your home, investing only modest sums, working weekends or at night, and build your little business slowly until you can figure out the best products and how to sell them.

Much of this you can get from reading my latest book, The Reluctant Entrepreneur. So read that, as well. But also read all of the essays in this series, too, since they will contain everything I've learned since writing that book. When that's done-and that should take about a year (maybe less)-you'll be ready to hop onto that 25% train.

I call it being a “Chicken Entrepreneur,” and that will be what our next essay is all about.

To your wealth,

Mark

How to Start a Million-Dollar Business for $25,000 #2

When Mary Kay Ash retired from her job in 1963, she took her life savings, $5,000, and opened her own business. Boy, did it pay off! Mary Kay Cosmetics is now a billion-dollar company.

Or take Hugh Hefner. He financed Playboy with $8,000 in loans from 45 family members, friends, and other investors. Today, he's a mega-millionaire. (His famous mansion alone appraises at more than $45 million.)

Successful entrepreneurs like Ash and Hefner who risked all their money (and sometimes their family's money) to pursue dreams that others considered foolish get lots of press. And with good reason. Their stories are exciting and inspirational. But they are also misleading.

These risk-taking entrepreneurs are actually the exception. Most business builders succeed by taking a far more conservative approach.

In his book The Leap, Rick Smith uses Bill Gates as an example. Contrary to popular belief, Gates didn't drop out of Harvard, says Smith. He took a leave of absence-and relied on his parents' financial support-while he developed his programming skills and made the contacts that led to Microsoft. If it hadn't worked out, he could have gone back to finish school.

Closer to home for you, India has similar stories. You all know the remarkable story of Dhirubhai Ambani's beginnings with a spice business in a 350 sq ft. room. And now he's a multi-billionaire legend.

But do you know about Denise Huffton from Chennai who founded 'Dream Weaver' with her mother. She got the idea for making biodegradable garments while still at college, and today these products are being widely used for hospital patients. She started with Rs. 500 to buy some cloth and a sewing machine, and today has an annual turnover of 30 lacs, and is expanding overseas.

Flipkart started with an investment of 4 lac rupees and within five years grew into a $100 million-revenue operation. Unicel started in agarage and is now worth Rs. 100 Crores.

Google was a side project of two Stanford grad students. Michael Dell started what would become Dell Inc. in a University of Texas dorm room for just $1,000. Apple's first computers were hand-built in a garage and sold to local computer geeks.

Read the biographies of successful people, and you will discover the truth. Most of them started small and took modest, calculated risks. They were not reckless and brave, as the business magazines would have you believe.

The Only Business Start-up Strategy I Recommend

Yes, starting your own business is the fastest and surest way to grow wealthy. But you don't have to-in fact, you shouldn't-risk everything to claim your slice of the entrepreneurial pie.

I have started dozens of multimillion-dollar businesses. But I have never been willing to “bet the farm” on one.

I want all the benefits that come from owning a business. But I refuse to risk my hard-earned money or time on an unproven idea. I want my cake. And I want to eat it too.

That's why I call myself a “chicken entrepreneur.”

A chicken entrepreneur is somebody who keeps his day job while he gets his ideal career going in the evenings and on weekends. He is an entrepreneur because he is taking the initiative to start his own business. He is chicken because he's not willing to quit his job and lose the income.

I have done my best to promote this concept in all of the business and self-help books I have written, including my most recent book, The Reluctant Entrepreneur. My primary point has always been “You don't have to be a wild and crazy risk taker when starting a business.”

Let me tell you about “Alan Silver.” (I profiled him in my book Seven Years to Seven Figures.) Alan has a multimillion-dollar health supplement business. He does what he wants when he wants. He spends much of the winter skiing from his vacation home in Park City, Utah. And when he's back home in Florida, you can often find him on the golf course after doing a couple of hours of work in the morning.

He started as a chicken entrepreneur.

A friend of his, a newsletter publisher, was starting a publication on natural health. One day he mentioned to Alan, quite casually, that he was looking for someone to sell vitamins to his subscribers.

Alan, who had been selling office supplies for 15 years, stepped up. With his friend's help and mentorship, he started his own company with a very small initial investment. Mostly, he invested his time and energy.

The going was rough at the beginning. He didn't know anything about marketing, supplements, or the health industry. But he was willing to learn. Keeping his sales job while working on the new business meant 10-hour days. But it was worth it.

Within six months, this side business had brought in more than $250,000 in sales. Alan reinvested most of the profits back into the business at first. But soon he was making enough to quit selling office supplies. And within a few years, he was bringing in $10 million annually.

And Alan isn't the only one. These are just some of the people I've personally mentored:

CF built her specialized physical-therapy business from zero to $90,000 in 15 months.

JJF's financial teaching program for children is paying him close to $100,000 per year after less than three years.

WC made $250,000 in less than 18 months-on top of his regular salary-by running a mail- order business I helped him with.

PR built his health-product business to more than $20 million in six years (and became a multimillionaire doing so).

KY's business pays her a very nice salary-plus, she shares $500,000 in profits from a career- counseling program that's less than 10 years old.

It's Definitely Worth a Small Investment of Money and a Large Investment of Time

Having your own business is not the only way to get rich, but it is-far and away-the way that most people do it. Statistically speaking, it is your most likely road to success. It also gives you a chance to eventually become super-rich-to join the $50-million-plus club.

Maybe you think that a small business built from your kitchen table won't amount to much. You'd be wrong. For example, I helped friends start American Writers and Artists Inc. (AWAI) and Early to Rise-now both multimillion-dollar publishing businesses-with less than $10,000 each.

Every business, from your local landscaper to General Electric, started with that first sale.

With each passing year, your business will grow-and that will give you greater cash flow and the potential for a bigger payout when you're ready to retire.

In two or three years, your side business should be big enough to hire you as the CEO. Then, and only then, can you quit your current job.

Once you become CEO, things should really skyrocket. You'll be able to devote all your time and energy to this one single enterprise, and the benefits of all of that concentration will pay off.

But maybe you don't want to be a multimillionaire business owner. Maybe you just want to work for yourself. If you are retired or unemployed, you can choose to do the work-and that way, you'll be both the owner of a microbusiness and its only employee. But you could also get a friend or relative to do the work, pay them a good salary, and still have a good second income.

Either way, you earn a good living, enjoy a great deal of independence, and-if you follow the advice we're going to give you-you can even get rich.

Chicken entrepreneurs who start microbusinesses do it because they want to give up the routine of commuting to a 9-5 job and take on the fun of managing and growing their own little service enterprises. They can make decent money working on their own-often as much as they'd earn elsewhere as an employee -and they can choose their own hours, customers, work clothes, etc.

But some of them find that there's also a way to make a microbusiness into a gold mine. Basically, here's how you do it…

After investing a few years as the main employee of your microbusiness, you hire someone to replace you and pay him roughly 50-60% of what you were making. Now, instead of earning, say, 20 lac rupees per year, you'll earn about 10 lacs - but you'll be working only 10 hours per week.

By adding other people to your pool… selling franchises, as it were… you can double, triple, or even quadruple your take-home pay without appreciably increasing your workload.

So you can turn a small amount of money into a lot.

However, it's going to require a large investment of time. You will essentially be working two jobs, dedicating 50 hours or more to your day job, plus another 20 hours or more to your business. But it's worth it.

For one thing, there is tremendous satisfaction in charting your own course and seeing it through. And when you begin to employ other people, and you will, you create wealth not just for yourself but for them, as well.

Are You Ready?

Right now, you're an employee, working for someone else. You have the security of a job with a predictable salary and benefits. But you want more. You want to be an entrepreneur, but you're afraid. You're not a risk taker.

That's what this How to Start a Million-Dollar Business for $25,000 series is all about. I'm going to teach you how to be a chicken entrepreneur-how to get from employee to employer without quitting your job, risking your life savings, and rolling the dice.

You should now be ready to take your first step. In the coming essays, we are going to move at a pretty fast pace. The motivation shouldn't come from me; it needs to be in you for you to take the next step.

It's your vision and action that will start you on the road to entrepreneurship. Are you ready?

Best, Mark

How to Start a Million-Dollar Business for $25,000 #3

In my first How to Start a Million-Dollar Business essay, I told you that one of the fastest ways to become rich was to start your own business. Then I told you that if you wanted to start a business, you needed to be a “chicken entrepreneur.” What does that mean? It means you need to start small while you hold your current job.

In these first few essays, I'm laying the groundwork that will take your business from a relative success to a true million-dollar business. Beginning with the next few essays, you are going to have to stretch yourself and make some very serious decisions. You'll also need a map to know which way to go.

These are the principles that people have paid me thousands of dollars, and even relocated across the country, to learn. So, please, take them to heart if you are considering starting a business.

Whatever type of business you intend to start-whether it's landscaping or selling landscapes-all businesses fall into one of four categories:

Retail Service Wholesale Manufacturing.

You could call this an oversimplification, but the world of business does fall into these four categories. Each has its own pluses and minuses.

What About Retail?

Retail is usually the first thing most people think of when they think of business. They think of restaurants and supermarkets, bookstores and movie theaters. The retail business often seems fun and easy. For that reason, it is very attractive. But the reality of working in the retail sector is usually very different.

There are several distinguishing features of retail that set it apart from the other business sectors in terms of how you might enjoy (or detest) the work experience:

Generally speaking, the retail business requires you to be in one place for regular periods of time. It does not allow for a great deal of flexibility in terms of hours or travel.

Being in the retail business in a serious way (serious enough to make a good living from it) means tethering yourself to a ball and chain. The ball is the store. The chain is your obligation to keep it running properly.

The most common problem retailers have is finding good people to sell the product and protect their merchandise. Finding, training, and managing retail workers is not something that can be done here and there on a hit-or-miss basis.

The retail business is heavily dependent on location. If the city you are in decides to do six months' worth of roadwork right in front of your store, you may go bankrupt waiting for them to finish. Your customers can find somewhere else to go, but you can't. You're chained to that location.

While this is going on, you still have to pay all of your bills, including rent, utilities, and employee expenses. You can boost sales with good marketing and sales strategies in the retail business (just as you can with any business), but you can't work miracles. The lion's share of your success will depend on walk-by traffic.

It's tough to get rich with retail. You can make a living, maybe even a good living, and you can enjoy yourself. But you can't get rich. The only retailers who are rich have thousands of retail operations. But they are not retailers themselves; they are marketers of retail operations. There is a big difference.

So if you (a) don't really like to spend time talking to people, (b) like to travel a lot, and © want to get super- rich, retail is probably a bad choice.

The Service Industry

The service industry, too, is something that quickly comes to mind when we think about business. Maybe you can start a call center. Or maybe you can hire a bunch of electricians and have them work for you.

How much you can make depends on what service you provide. But the services that seem the most fun or glamorous usually pay the least. Why? Because of supply and demand. Plenty of bright people vying for a limited number of good positions.

Service businesses include everything from blue-collar hole digging… to middle-level technical work… to white-collar executive work… and, finally, the professions.

Yes, accountants and lawyers are service providers. So are plastic surgeons, speechwriters, and most entertainers. I include entertainers in this category, because they share the essential characteristic of the service sector: At the end of the day, they are charging for their time.

Ask people who are undecided about a career what kind of work they want to do. You'll often hear “something that involves working with people.”

And that's what is good about the service business. You will, indeed, spend most of your time interacting with people.

Much of that time will be a lot of fun, in which your affability and social skills will come in handy. But some of that time will be stressful. Some of it will be downright disagreeable.

No matter how much of a “people person” you may be, it's hard to enjoy yourself when some rich slob screams at you because he isn't happy with the color of the trampoline your event-planning service provided for his five-year-old's birthday party.

The lower ranks of the service sector are replete with high-stress, low-paying jobs. And the upper echelons don't pay as well as you might think in India. The average docor, for example, makes only about 10 lac rupees, so does the average lawyer.

As you can see, I'm not too hot on service-sector businesses. It seems to me that they offer a layer of fun and/or glamour but deliver lots of stressful hours at relatively modest pay.

Service is a great entry-level business opportunity, because it's an easy industry to get into. If you make up your mind to do a great (not just good) job at a fair or cheaper-than-average rate, meet your deadlines, and keep your promises, you'll find yourself climbing to the top of the ladder in no time flat.

As your business grows, you can gradually increase your fees. If you work hard to find good workers and offer them the chance to develop in their own right, your business will grow. Eventually, you won't be doing any of the actual service work yourself. You'll just develop new client relationships and renew old ones.

Of course, the problem with the service industry goes hand in hand with its main advantage. It's so easy to get into that you will have lots of competition as your business grows. That competition will squeeze your prices, making profits tough to get and salaries low. This is especially true of the glamorous service industries such as travel and anything to do with the media.

The Wholesale Business

Wholesale is a pretty good business, although it takes a while to develop.

[“Wholesale” relates to the sale of goods in large quantities, as for resale by a retailer.]

Today, the opportunity for wholesale is in China and Indonesia. Those countries can make anything made in western countries, at a fraction of the cost.

But getting good, inexpensive products is only the beginning.

The tough part of wholesale is developing a customer list of retailers. And, unfortunately, your customers will eventually figure out that they can probably cut you out and buy directly from the manufacturer.

The secret is to develop unique products that others cannot duplicate. You won't be able to do this right off the bat. But over time, it's the way to go.

Once you've developed your unique product, you'll need to sell it to retailers. This will involve going to trade shows, which can be expensive and time-consuming.

The top trade shows, for example, can cost thousands of rupees to attend. You will spend a lot of time talking with retailers and displaying your product, and you may end up with no cash-just a pile of orders to fill later.

Discouraging as it may seem, this is where you have the potential to make the big money. You could possibly take orders worth tens of thousands of rupees. (Remember, though, that you won't see the cash upfront. You'll receive payment for those orders over a long period of time.)

My Favorite Type of Business

My favorite type of business is what I'm calling “manufacturing.” And in that general category, I include all sorts of things that you would not normally consider. I include, for example, publishing and the selling of natural products, nutritional products, and so on.

Manufacturing, to me, is any industry in which you create the product and sell it directly to the end user.

I love this type of business… It gives you complete control over the entire selling process-from inventing the product to closing the sale and even going back to the customer for more sales.

In this age of the Internet and globalization, manufacturing is a great business to be in. To create your product, you can use anyone the world over. And you can sell to the entire world, too.

So if you don't know what you want to do but want to get wealthy while you figure things out, get into a business like manufacturing.

Action Step: It's time to take some action and decide what type of million-dollar business you will build. As I've said, I favor manufacturing, and I'm going to explain more in future essays.

For now, re-read what I told you about each type of business. Then decide which one you'll pursue. Finally, start making a list of all of your ideas. It's time to take action-and that's exactly what we will talk about in our next essay.

Best, Mark

How to Start a Million ­Dollar Business for $25,000 #4

You're anxious to launch that business you've been thinking about for years. So what should you do first? Here's just a short list of advice I've found in the mainstream business press:

Check with your municipality to find out what permits you will need in order to operate a venture like yours.

Hire a lawyer to set up the legal structure for your business. Have him file all necessary documents with your local and state governments.

Find a great office space and fill it with furniture.

Protect yourself by registering your business name, logo, and slogan.

Print hundreds of business cards and brochures and hand them out at business functions and meetings.

Buy business insurance and “talk to an accountant” to make sure you're not missing anything.

Get a toll-free phone number (to give the impression that your business is much bigger than it really is).

Does that feel right to you?

I hope not.

None of these legal, accounting, and operational issues are critical to your success. Handling all of them perfectly will not get your business off the ground.

By spending time and money on such issues, you delay doing the most important thing: finding out if you can sell your products at a profit.

Every business has two primary objectives: creating desirable products and selling them. Everything else is secondary.

The best way to get a new business started is to figure out how to test the validity of the business idea as quickly and as cheaply as possible. In other words, you have to figure out how to sell your products before your time, money, and patience run out.

I cannot count how many new businesses I've seen fail because the entrepreneur did not understand this.

When you are starting out, don't worry about getting everything perfect. There will be time for that later. Spend 80% of your time and money on testing your idea in the marketplace. For most businesses, there are many ways to do that without spending a fortune.

I talk in depth about this approach in my book Ready, Fire, Aim.

Want to start a business selling diamond-studded collars for kitty cats? Fine. There are two ways to go about it:

You can spend most of your time and money designing and manufacturing a line of such collars-and only then start to think about how you can sell them.

You can make a dozen collars and go down to your local flea market or neighborhood pet shop and see if you can sell them.

Most people start businesses the first way. That's why most businesses fail.

But with the Ready, Fire, Aim approach, you devote 80% of your initial resources to discovering what I call your Optimal Selling Strategy (OSS) -the best way to acquire customers in a manner that creates cash flow.

Cash flow is the lifeblood of a new business. With cash coming in, you will be able to rent an office, buy office furniture, hire a lawyer and an accountant, expand your marketing efforts, and keep coming up with new and better products.

With cash coming in the door every day, you won't have to worry about the problems that always arise in the natural course of business. You will be able to handle them as you go, devoting 20% of your time and money to getting them right.

Ready, Fire, Aim doesn't mean you are willing to be sloppy. Nor does it mean you are willing to sell second-rate products to your customers. On the contrary, Ready, Fire, Aim is the only truly practical way to keep your business growing.

Here, in a nutshell, is what I mean by Ready, Fire, Aim…

Ready: Get your product ready. Make it good enough to sell. Don't worry about making it perfect. There will be time enough for that later.

Fire: Start selling it. Sell it every way you can. Test different offers. Test different ad copy. Test different media. Keep testing until you discover a selling strategy that works-your OSS.

Aim: Expand your customer base by focusing on your OSS. As your customer base grows, develop business procedures to accommodate that growth. Hire the best people you can to manage parts of your business and free up your time to test other products and services that you think your customers will buy.

Testing is a very important part of the Ready, Fire, Aim process.

When we say we have “a great new product idea,” what do we really mean? When I say it, I mean that I have a strong feeling that the product will sell well-that it will be a commercial success.

But the truth is, I have only a hunch about how well that idea will do. Experience has taught me that my hunches are often right… but not always. If I spend too much time and energy on ideas based on conjecture, what happens if my assumptions don't pan out?

What happens is that it leaves me with nothing-no money or materials or energy-to start over again. The essence of entrepreneurship is the ability to try and fail and then try again. You can't do that if you blow your wad the first time you try.

So here's what I do when I think I have a great business idea: I figure out how I can test that idea as quickly and as cheaply as possible.

Once I know that my idea has “legs,” I can roll out a sales program. And once a successful sales program is under way, I can refine and improve the product. The truth is, I cannot perfect a product in isolation. I used to think I could, but experience has taught me the arrogance of that kind of thinking.

To get your products from good to great, you need feedback from your customers. The best customer feedback comes not from surveys or focus groups but from marketing results. You find out what your customers want to buy by selling to them. This keeps you in the Ready, Fire, Aim loop.

If I had to pick one thing that has been most responsible for the success I've had in launching businesses, I'd have to say it was this Ready, Fire, Aim mentality.

It's something I believe in strongly. That's why I wince when I read the kind of “expert” start-up advice I cited at the beginning of this essay.

Action Step: For details on this approach, read my book, Ready, Fire, Aim. To better the chances of having your business succeed, get familiar with this important process.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #5

How to “Aim” Your New Business

Mark Ford, Founder, Common Sense Publishing Last month, I gave you my ready-fire-aim strategy for starting a new business. I said that for every entrepreneur who fails because of lack of preparation, nine never succeed because of too much of the same.

In my view, the most important thing you can do to ensure your success is to spend 80% of your time, money, and thinking power on marketing in the first stage of your company's development. What you are trying to discover is what I call the “optimum selling strategy”- i.e., the most cost-effective way of bringing in qualified new customers.

The strategy, in short, is this:

Ready: Find out as much as you possibly can about the marketing side of the industry you want to enter. If possible, get a job as an apprentice or intern in marketing.

Fire: Start the business and focus on discovering the optimum selling strategy. Don't worry about anything else until you've done that.

Aim: After you are generating cash flow from sales, you can begin to aim your company. Then, and only then, should you do all of the smaller stuff, such as administrative, accounting, legal, office, and other issues.

But aiming is also about refining the product or service you are selling. One of the side effects of employing a ready-fire-aim strategy is that you will have made your first product without the benefit of exhaustive market studies. That's okay, because most market studies aren't worth the paper they are written on.

The truth is you will never know exactly how your product should look and feel and work until you begin to get feedback from your customers-particularly, from your best customers. Then, and only then, can you make the necessary adjustments, augmentations, and refinements.

This is what happened when we started the Palm Beach Wealth Builders Club. It began when I got a letter from a PBL subscriber who said that, as much as he liked the investment advice in PBL, he didn't have the $20,000 in cash he needed to invest safely in that program. So we created a club for subscribers who were “not yet wealthy.”

The original concept of the club was strong, and club members offered positive feedback from the beginning. But if you've been a member for any length of time, you know how many new programs, services, and reports we've added to it since the beginning.

In other words, we launched the club as soon as we felt “ready,” knowing we were going to be “aiming” it as time passed.

The following essay explains how this concept worked for someone who started a retail business. I enjoyed it. I hope you do too.

Best,

Mark

The Shopkeeper Whose Customers Told Him What Business He Was In By Iris Bell

Editor's Note: Iris Bell is a writer and graphic designer in New York City.

Paco opened his general store on the main street of Brooklyn Heights in New York City without a preconceived idea of what his shop would feature.

When I visited it for the first time in 1967, he was selling everything from socks to toothpaste, to greeting cards. Its name, MiniMax, would work with whatever he decided to sell.

If the socks had sold well, he might have tried bedroom slippers next and could have ended up with a shoe store. If the toothpaste had sold better, MiniMax might have been a drugstore and pharmacy.

But what his customers bought most were the greeting cards. When I first saw his shop, he had a sale to get rid of all the general merchandise. He'd set about expanding the greeting card area and over time tried out everything related to cards he could think of.

He brought in some boxed luxury chocolates. They did well, so soon he gave over a section of his store to them. Then he tried ice cream cakes and regular cakes. Those, too, were a success.

He put out a few decorative candles, and when they sold quickly, he created one of the largest selections of them in the city. He offered some stuffed animals. They sold well, and he added more, from many manufacturers.

Taking Risks in the Search for More Business

This was the MiniMax pattern of changing and growing that continued for decades. Most other shopkeepers would have decided they'd found a formula that worked and stopped experimenting with other kinds of merchandise.

Paco was always trying something new in a portion of his shop. Anything that didn't work made a quiet, quick exit. I can't remember the things that didn't make it. There were many, and they gave Paco the information he needed. He wasn't afraid of those as failures; he was just searching for what his customers wanted.

Paperback books appeared, grew to fill almost a third of the store, and then disappeared in favor of other merchandise.

His shop became the place to visit for invitations, napkins, etc., if you were giving a party. Paco featured every holiday season with special merchandise. For Christmas, he contacted craftspeople in the area and had them make ornaments just for his store. For collectors of ornaments, MiniMax was worth a trip from any place.

Card Shop to Gift Shop

Paco began selling a few gift items, and soon he offered a wide selection. There were items such as candy dishes, clocks, salt and pepper shakers, pen holders, and wine glasses. The shop was small, and he knew there was a limit to the number of items he could display.

A Unique Display Plan

He developed a new type of gift shop display that allowed him to offer hundreds of items yet not look crowded. His method was to put out only one of each item. All of the backup stock was in the basement. Another effect of this was that each item looked special, rather than being one of dozens just like it in a group.

He'd recently come from Cuba and had many younger nieces, nephews, and cousins who'd come here, too. He hired lots of them as clerks.

When a customer wanted a particular item, he or she would tell a clerk, who'd run downstairs and return with the item in a box. The clerk would open the box, inviting the customer to inspect it.

Paco grouped these items in the display area by color… all of the silver and crystal items together… next to the black and white items… next to the red items, etc.

Even though Paco had filled the shop with hundreds of items, they looked elegant in their artistic arrangements. Paco offered far more items than other gift shops, without the shop looking crowded.

Using a Prestigious Name

Paco was selling the top greeting card line, Hallmark. He had a giant sign made for his storefront, featuring both Hallmark and MiniMax. When the Hallmark salesman visited, he told Paco that Hallmark allowed only the few Hallmark- owned shops to use the name on the sign and that he must take down the sign.

MiniMax was a top seller of Hallmark cards, but that didn't give him the right to use the Hallmark name. Paco explained that he was sure featuring the Hallmark name on his sign helped him sell his high volume of cards.

Paco worked out a deal with the Hallmark corporation. Paco could keep the Hallmark name on his sign. In exchange, he'd welcome the groups of card shop owners Hallmark would fly to him from all over the U.S. He'd show them his method of displaying one of each gift item.

To this day, all Hallmark shops display their Christmas ornaments this way. They feature one of each, with the stock of boxed ornaments tucked away.

Ever­Changing Store Layout

The shop layout at MiniMax was always changing, as Paco tried merchandise in different parts of the store, tried out different kinds of shelf systems, removed walls, etc.

More Businesses

When the shop next door became available, he rented it and opened a bakery specializing in birthday cakes and fine desserts. In time, he added a restaurant to the bakery in that space.

Then he turned a storage room in the back of the restaurant into a festive space he rented for both children's and grownups' parties.

Next, he created a glass-enclosed sidewalk cafe with a popular weekend brunch.

He filled the cafe with flourishing hanging plants. And in the back of the restaurant, Paco placed a piano for live entertainment in the evenings.

What would happen next… Would he begin selling potted plants and end up opening a flower shop… Would he add more musical performers and move into offering concerts?

Then Stillness

Something even more unexpected happened… He sold the shop to a cousin. The cousin obviously wanted to play it safe and didn't change a thing from that moment on. MiniMax froze just as Paco left it. There were no new products, no new display counters, no new thinking.

The shop's heart and brain were gone, and of course, the business began to shrink. First, the restaurant and bakery closed. Later, the gift shop shrank, and the cousin sublet some of its space to other retailers selling cell phones and such.

Watching the stillness settle over MiniMax was another way to appreciate the creativity of Paco, to be reminded of how unique MiniMax had been. The customers never again had a chance to “vote” on new products. And now it's gone.

Other Businesses in the MiniMax Model

In the years since watching MiniMax flower, I've enjoyed watching the growth of a few other stores that weren't wedded to being any one type of business. These are two of my favorites.

ABC Carpet in Manhattan had been a carpet store for three generations. The fourth generation was a young woman who enjoyed shopping for unique decorative household items when she vacationed around the world.

Her father suggested that on her next trip, instead of buying one of an item, she buy multiples of it. He gave her a sales table on one of the eight floors of carpets.

I first visited ABC Carpet a few years after that. By then, two whole floors were already selling only the daughter's unique decorative household items… not a carpet in sight.

Slowly, the daughter's merchandise took over the store until today, when only one floor sells carpets. Other parts have been rented to many houseware companies.

The shop has been renamed ABC Carpet & Home. ABC Carpet & Home's main floor once had a gourmet grocery, and at another time, there was a large area selling potted plants, but those are both gone. That's part of the correction that comes with this type of risk.

Now part of the main floor has a stationer, jewelers, women's accessory shops, a bakery, and three restaurants, plus ever-changing shops on the balcony.

ABC Carpet & Home is alive and changing. The daughter married a man recognized as one of the greatest retailers of our time. They divorced, and he has a shop in L.A.

Who'd have expected that an old-line carpet store would become the place to buy freshly made bread?

Eli Zabar's E.A.T. was a gourmet grocery store on Madison at 72nd Street in New York City. Ralph Lauren bought the building, and E.A.T. moved further up Madison, discovering a long-forgotten brick oven in its space. E.A.T.began baking some of the finest breads, then added a restaurant.

When the shop next door became available, Eli Zabar opened a children's gift and toy store there.

Going further uptown, he opened the Vinegar Factory grocery with a restaurant and a splendid florist.

At the west end of that block, he has a bakery, supplying bread to more than 1,000 shops and restaurants. He uses heat from the bakery to grow vegetables and herbs on the roof year-round.

Like MiniMax, all of his shops are continually changing, with different product mixes and different decor. Eli Zabar is giving his customers the chance to “vote” on his tastes in many areas.

Who'd have expected that a shop once known for importing exotic cheeses would now also be the place to buy sweet stuffed animals and children's furniture?

These shops all seem sensible now because they exist, but they follow no historic pattern. Each grew from a series of experiments by a shop owner.

Each shop offered the public a chance to buy from a unique mix of products and got a big “yes” in their cash registers for most of the items. Every visit promises surprises, because no one can predict what they might offer next.

Copyright 2012 Iris Bell

*

Editor's Note:

When starting a business due-diligence is essential. That's the aiming process, so you know which direction to head in.

But where many businesses falter is keeping up with diligence after the business is launched.

Our context is changing rapidly, the market is fluid, and technology often becomes outdated before you've even had the chance to 'update your status'.

When I was taking a class on entrepreneurship, a professor at the University of Pennsylvania once told us about a product he developed: an image search technology where big brands paid him big bucks to search the Internet for unauthorized use of their logos, and take legal action.

When Google Image Search was launched, suddenly his product was completely obsolete, because brands could now do what they were paying him to do, for free.

He would have had to shut down overnight. But he did not. Because he had his finger on the pulse, he knew what was going on in the market, and had developed various related services to keep himself valuable and ahead of the curve.

So keep your ear tuned to what's going on around you. If you think 'okay I have a product now, it's fine as it is, let's just try to sell it', your product will stagnate over time.

Whether its greeting cards, cameras (Kodak couldn't keep up with the digital age and now they are out of business) or social media (remember Orkut? Completely wiped out) if you're not moving ahead, then you will fall behind.

You need to keep changing, developing, innovating, to keep pace. The world keeps moving, and you must too.

To your entrepreneurial journey,

Anisa Virji Managing Editor, Wealth Builders Club

How to Start a Million ­Dollar Business for $25,000 #6

We've covered a lot of ground so far in our “How to Start a Million-Dollar Business for $25,000” series. In the first few essays, we discussed the benefits and challenges of entrepreneurship, how to ease into it without too much risk, and the four main types of businesses.

Recently, I told you about my “Ready, Fire, Aim” concept- the importance of getting your business up and running, rather than wasting too much time trying to make everything perfect.

Today's essay is about your business idea and a common mistake many would-be entrepreneurs make.

The Importance of the Idea

It's hard to say which comes first-the desire to be an entrepreneur or the germ of an idea for a business. Obviously, you need both.

The idea can come from anywhere. It can be the result of an experience you faced in the marketplace, or it can be something to do with a hobby or passion you have. And the two sides of the initial decision of what business to get into are this:

First, you need to know a lot about the subject. When I say a lot, I mean you should be able to write a book about it. If not at first, then at least before you start investing in it.

Second-and this is more important than you might think-you need to be interested in it. You are going to be married to this idea. You are going to be sacrificing time and investing resources into it. If the whole concept does not keenly and seriously absorb you, you won't last long. You won't be able to maintain the momentum it takes to go through the process of developing and running a multimillion-dollar business.

But if the idea excites you and you want to know everything you can about it, you'll be ready to dig in and put your time and money into it. You'll enjoy the process and, even more, you'll be gratified when your business serves a need in the market.

Now, let me stop right here and do a little balloon bursting.

If you've been scanning the entrepreneur news for long, you may be on the “do what you love” bandwagon. I'm all for having a passion for what you do, but only to a point. “Doing what you love” can be a big mistake, unless you keep it within certain guidelines.

Let me give you some caveats on deciding what your business will be…

Separating Your Passion From the Reality of the Marketplace

I can't stress this point enough. You might think the world will beat a path to your door to buy your product, especially since there's nothing else like it in the marketplace. You've got visions of selling your wares like hotcakes and watching the money roll in. No one's ever heard of your breakthrough idea, but once they do, they'll have to have it, right?

Not necessarily. If you're filling a true gap in the market, it might be true. But if your product doesn't already exist, there might be a good reason for it… no demand.

You must realize that if there is no demand for your product, you won't have any buyers. Entrepreneurship is not a case of “build it and they will come.” No matter how passionate you are about your idea, the market, not you, decides what sells.

A prime example is the online grocery business that was called Webvan. Owner Louis Borders was already a successful entrepreneur (Borders bookstores), so he was able to attract a lot of startup capital. And because he was so sure of his idea, he spent it all on a distribution system of warehouses and delivery trucks. Then reality set in.

People weren't as quick to change their shopping habits as Borders thought they would be. He had banked on the idea that people would choose convenience over time spent going to the grocery. And that they would pay not only full retail price but also a delivery charge.

That wasn't the case. If Borders had tested the market, he would have found that people like to shop for specials when they go grocery shopping. They also go to the market several times per week, because they often don't plan meals in advance.

One big delivery order at a premium price doesn't meet the customer's need. And then there's the fact that most people like to squeeze their own tomatoes before buying them…

Borders built it, but they didn't come. And with the profit margin in the grocery business being razor thin (he didn't have the power of volume buying on his side), the business tanked. When it closed, 2,000 people lost their jobs.

As you can imagine, Borders has had a hard time living down this spectacular failure. It's easy to say in hindsight that he should have known better. But if you're ever going to learn from someone else's mistakes, this is a good one. It really drives home the point that you need to build your business slowly to minimize risk.

You need to determine exactly what works-and what doesn't-before you blow all your capital. You need to make sure there's a place in the market-not just in your own mind-for your passion.

The Conceit of Outside Knowledge

One of the most common mistakes made when choosing a business venture is thinking you know things you don't.

For instance, you might enjoy dining out. You eat at restaurants several times per week. In fact, you've dined at some of the finest eateries in the world on your travels. It seems only natural that your passion for great dining experiences and all the time you've spent in restaurants would lead to opening a restaurant of your own…

The problem with this thinking is that you are going on “outside knowledge.” Your experience, vast though it may be, has been as a customer, not as a business manager or owner. Your experience feels deep and certain. But it isn't. It's specious. And rather conceited.

I am not immune to this mistake myself. I once partnered in a restaurant because I had the hubris to think that my own dining history qualified me to run one. And a colleague, George, an architectural designer, almost helped me make it worse.

Like me, George thought he knew the restaurant business because he had spent many years frequenting fine dining establishments. When I gave George a tour of my place, he suggested doubling the size of the kitchen. My partners and I were keen on the idea because we also thought the kitchen was too small.

Fortunately, I got a couple of expert opinions. I hired two friends who had been running restaurants for years to do an analysis. Imagine my shock when their report showed that the present kitchen was fully capable of handling three times the traffic we expected to have!

As proof, the report included a diagram of how to better organize the kitchen space. The map showed where every sink, stove, storage unit, and cooking pan should go. It boggled my mind because it was so counterintuitive to me. I'd based my own ideas on kitchens I knew-household kitchens.

But that's not how an industrial kitchen works. A restaurant kitchen equipped to produce 200 meals in three hours is a very different thing. It's not a family space; it's an assembly line. And it needs to be set up like one.

That's a classic example of the conceit of outside knowledge, which is why I am no longer in the restaurant business. Just think of how many people have jumped into business simply because they think they understand something they do not.

Typical businesses that fail due to this mistake include:

Restaurants Travel agencies Vacation tour operations Bed-and-breakfast enterprises Art galleries Gift shops Antique stores Bookstores Coffee shops Sports-related businesses.

If you're tempted to start a business in a field you have never worked in, be aware that much of what you do in the beginning will likely be wrong. Ask yourself if you have the resources-human, capital, and emotional-to push the business forward after you suffer from your mistakes.

Thanks for all of the work you're doing and sharing your knowledge with others. Club member RS.

There's no better foundation than building on what you know. You might be drawn to the rush of something new and exciting, but your chances of success decrease with every step you take away from what you're familiar with.

If you want to be a successful entrepreneur, I say go for it. But do your homework and build on what you know.

Next Steps

To improve your chances of success, I want you to ask yourself the following questions. And be honest. It's better to discover that your business may not be right for you, or the market, earlier, rather than later.

Is my business idea something I truly love? Can I spend 15 hours per day working on it? For the next 20 years?

What demand is my idea meeting in the marketplace? Am I sure someone else hasn't already had this idea? If they have, are they making money at it? If not, why? How will my idea be different from theirs?

What evidence do I have that anyone will actually spend money to buy my product or service? (Remember, just because you think you have a great idea doesn't mean anyone else will.)

Do I actually know the business I'm considering? (As was my case in my story above, just because you eat at nice restaurants doesn't mean you're able to run a nice restaurant.)

I hope you won't rush your answers. Going through this process has helped me every time. I'm certain it will help you too.

Best, Mark

How to Start a Million­Dollar Business for $25,000 #7: Business Is Selling

Today, we pick back up with our “How to Start a Million-Dollar Business for $25,000” series. As you know, starting businesses or investing in people who are starting businesses is the primary reason for my wealth today.

If you want to become wealthy in seven years or less, you have to seriously consider starting a business.

In our last few essays, we covered the four main types of business, the importance of getting your business up and running (rather than trying to get it perfect), and, most recently, a common mistake many first-time entrepreneurs make: choosing a business that you think you know about when you don't.

I made this mistake personally. I partnered in opening a restaurant because I had the hubris to think that my own dining history qualified me to run one.

Today, we're going to keep going in our series, discussing “selling.”

Just about anyone can start a business. But there's an important caveat - and it jumped to mind when I got an email from Lynn, who wants advice on starting a newsletter. She writes:

I've worn many hats, juggled them off and on in my years as mother, grandmother, realtor, concessionaire, and artist retailer/wholesaler. Love, divorce, custody issues, death, inheritance, bankruptcy, accidents, health issues, friendship, betrayal.

I've either been through it or carried someone through it.

What I seem to do best is calm nerves and give good advice, to the point

where it often interferes with other endeavors. I've seriously thought about copywriting/ Internet ideas, but I'm wary of selling things.

It seems that, among family and friends, at least, I am the oracle of issues, the witchy­woman matriarch with the final answer. The trendy term “life coach” isn't quite it. I want to be like an email comforter. A listener of last resort. A sounding board.

It's the only thing I think I'm really quite good at. Could this be a business?

Yes, it could be a business. But not if you are leery of selling.

Business is selling. You can't make money unless you sell something. As Robert Louis Stevenson said, “I find it useful to remember, everyone lives by selling something.” So the first thing Lynn needs to determine is what it is she is going to sell. People will pay for comfort… but not if it's billed as comfort. Think about what therapists do. They charge pretty good money to give people comforting advice.

Yes, there are some who deliver discomfort, but they don't stay in business very long. People pay money to have their therapists make them feel good. If you've ever been in therapy with a good therapist, you already know that.

I've been reading every email coming my way from Wealth Builders Club, especially the ones relating to How to Start a Million­Dollar Business for $25,000. Being a member of the club is a real lifeline! . Club member EF. But if therapists said that they were in the business of comforting their clients, no one would take them seriously. And no one would pay them lots of money for this advice.

Rather than advertising what they are really selling, therapists advertise their methodology (Freudian, behaviorist, etc.). Or they sell the type of “problems” they deal with (addiction, various disorders, etc.).

Since Lynn isn't a trained psychotherapist, she can't honestly advertise those sorts of things. So she will have to come up with her own ideas about why people get themselves into trouble and how they can find solutions.

These ideas will eventually form into a unified whole. This unified whole is what we call an “intellectual franchise.” That's what Lynn needs to develop. And then she needs to test it and see if it sells.

Remember, starting a business and making it a success is not just a matter of having a good idea. The idea has to be one that people will be happy to pay money for.

So if you are in Lynn's position - looking to turn your idea into a profitable business - you have to become okay with selling.

How do you develop the skill of selling when you are “wary” of selling, as Lynn puts it?

The first step is to understand that there are really two kinds of selling:

Pushing people (to buy things they don't want)

Helping people (to select those things they do want to buy).

Pushy salespeople - the telemarketer who calls while you're eating dinner, the broker who calls on the weekend with a “hot deal,” the proverbial used - car salesman - love persuading you to do what you don't want to do.

Such salespeople see selling as a kind of battle. They bully and beat you into submission. It's an ego game, and your acquiescence - even if you really do want the product - indicates submission.

Such salespeople should be tarred and feathered, run out of town, dunked, and pilloried.

They are the same people who delight in not letting you merge in traffic and cutting ahead of you in the supermarket line.

Helpful salespeople are actually more common than their obnoxious cousins.

If you understand that the job of a salesperson is to solve a customer's problem or help him meet a need, selling won't seem so odious to you.

Let's say your prospect's main concern is the future of his marriage. What you would do, in this case, is ask him questions and find out, in as much detail as you can, what his worries are. You're then in a great position to address each concern to explain how your product (in Lynn's case, her advice) can give him effective solutions.

By driving home the benefits of your product that the prospect cares about, you make a strong sales presentation. You are telling him exactly what he wants to hear.

Remember - your prospect wants to be sold. As long as you help him understand how your product can help him achieve his desires or solve his problems, he will be prejudiced in your favor. You lose your prospect when you start talking about other things - product features that he doesn't really care about.

So don't sell him. Help him. Begin by finding out what he wants and needs. And then (if and only if you can really help him), make the strongest, most specific case you can. Convince him that with your help he'll achieve his desires and solve his problems.

Once you've figured out how to sell your product and have gotten over your distaste of selling, you need to start testing… preferably on the Internet. Don't spend a lot of money building your business or idea before you know it works. Keep testing until you find some way to position the product that catches on.

And then, to grow your business, you will have to produce lots of products that tie into your initial business idea. And you'll need to send lots of sales letters to convince people to buy them.

Does this sound like something you can do? If so, you are on your way!

Your Optimum Selling Strategy

You should know by now that selling is not optional for your business; it's essential.

When your business is just an idea, it is impossible to know with certainty what specific selling strategy will work best.

Should you advertise on local radio programs? What about television? Should you buy space ads in local newspapers? How about Internet strategies such as pay-per-click advertising or search engine optimization?

These are questions you may be asking right now.

To determine the optimum selling strategy for your business, you need to answer four questions:

Where are you going to find your customers?

What product will you sell them first?

How much will you charge for it?

How will you convince them to buy it?

Four answers to four questions - very simple, or so it seems. There is a catch, though: You need to answer all four, not just some of them.

Question #1: The first question every entrepreneur must ask is a question of location: “Where will I find my customers?”

My best advice will not stir or inspire you. It may even disappoint you. But it is my best advice: Do what everyone else is doing. I am a big believer in originality, but when it comes to answering most of the basic questions about selling your product (the four questions listed above), the best answer will always be this: Imitate the norm.

So how do you find out where successful companies in your industry are sourcing customers?

It's relatively easy. Start by looking in all the likely places. If you were selling shoes, for example, tour the shoe shops, go to the bookstore and browse all the fashion magazines, and watch style-related shows on TV. Search online to see what websites, articles, or blogs you come across. When you do each, take note of the advertisers.

The best ad locations for your competitors will probably be the best locations for you too.

Question #2: What product do you sell them first?

After figuring out where your customers are, selecting the right product to sell them is next. Starting with a single product in mind is usually a big mistake.

There are five simple steps to creating a product that can launch a business:

Find out what products are currently hot in the market.

Determine if your product idea fits that trend.

If it does, you're set to go. If it doesn't, follow steps 4 and 5.

Come up with me-too versions of several hot products. In essence, a “me-too” version is just a copycat. It's your take, your spin, on the hot product. But it must…

Improve the hot product in some way by adding features or benefits the originals lack.

Question #3: How much should you charge?

For every product, there is an optimal selling price. This is the price at which the selling campaign yields the greatest profits. The price you charge for your product has a major impact on sales - an impact that is third only to the media you use and the appeal of the product itself.

Your instruction is clear and more thorough than anything else I've read. Thank you for sharing your ideas and knowledge. I really enjoy the integrity and passion of your efforts. Keep up the great work. . Club member KK. Choosing the price is fairly easy. You should start-as you did with media and product- by finding out what competitors are doing.

If your competitors' widgets sell for Rs. 500, consider selling yours for 500 too.

Question #4: How will you persuade customers to buy your new product?

This requires more time and subtlety.

Finding out which media will work for you is quick and easy. But the copy platform, the actual sales message, is tougher.

When you are starting your business, you may have a few ideas about how to sell your product-what features and benefits to emphasize and what words to use. But the only way to find the best copy platform is by testing it.

Whenever I work with a client to launch a new product, we test as many new media as we can at two or three different prices. And we use at least two completely different copy platforms.

As always, if you have little experience in crafting winning copy, a financially valuable skill, you can learn how by following the principles set out in the Accelerated Six-Figure program through AWAI. We wrote about copywriting and this great program here.

In short, business is selling. You can't make money unless you sell something. And remember, the idea has to be one that people will be happy to pay money for.

For those of you averse to “selling,” keep my definition of selling in mind - that is, selling is “helping people select things they already want to buy.” It's not harassing people, as telemarketers do. Selling is easier once you adopt the mindset that you're helping people.

After you've accepted that to start a business you're a salesperson, your next step is to determine your optimum selling strategy, as I've outlined above. Do this by answering the four questions I identified. Don't skip any. Give them good thought. Going through this process provides an essential framework for your business.

Take the time to either write or type out your answers. Forcing yourself to do this - rather than just answering them in your mind - requires you to think through your answers more completely. The result is better answers.

Remember, “now” is always the best time to start.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #8: A Guide for Becoming a Marketing Genius

I got an email from a man I'll call J. His question is probably the most common one I get.

J writes:

“I have been struggling with the idea of starting my own Internet-based business. I would like to start small with some proven methods and techniques and build from there.

“I do not have countless thousands of dollars to experiment with, nor do I have the luxury of being able to sit in front of my computer day in and day out. I need your help to get me started in the right direction with a system that will hopefully start generating some return fairly quickly.

“Please help me make this the year I finally take the plunge and start achieving success!”

Introduction to Direct-Response Marketing

If you are not an expert at direct marketing, you should become one before you spend a rupee on your new business.

Direct-response marketing means that you attempt to persuade your prospect to respond directly - in some specific way - to your sales effort.

Typically, direct-response marketing includes direct mail, direct advertising, freestanding inserts, direct radio, direct television, Internet advertising, and so on.

Direct-response marketing differs dramatically from conventional advertising in that conventional advertising is primarily concerned with promoting awareness of and interest in a product or service. It does not attempt to stimulate a direct response.

Thank you for your informative, educational, and wealth-building articles. I have greatly enjoyed my subscription to the Wealth Builders Club. Club member LJ. It takes a lot of talent to get someone to respond directly to your sales proposition. Since you don't have the advantage of personal contact, you must employ a battery of psychological techniques to substitute for the intimacy and personal power you could create in a one-on-one selling situation.

These psychological principles are the foundation of all selling, but they are easiest to understand (and most necessary to employ) when you are separated from your prospect by a television, computer, radio, or the postal service. And that's why I favor direct-response marketing. If you master that, you have the basis for mastering all other forms of selling.

The Skills You Need to Be a Direct Marketing Master

To be a successful direct marketer, you need:

A good understanding of why and how people buy things

The ability to make a big, tempting promise

The skill to show that promise as a picture, to advance it with propositions, and to support those propositions with proof

The ability to distinguish between features and benefits.

We are going to go through each of these quickly. Don't worry if you don't quite get them all. We will come back to them in the future, again and again.

Why People Buy Things - A Marketer's Perspective

Let me put it as a fact: We buy most things not because we need them but because we want them.

Sure. You buy food because you need to eat. But if you buy anything other than generic foodstuffs, you are paying extra money to satisfy your wants.

Housing? Yes, you need shelter. But you don't need that duplex you've had your eye on.

Clothing? Loincloths went out years ago.

Rule: The secret to selling is to create in your prospect a desire to buy that is so strong that it feels like a need.

Here's how:

To make a sale, you need to make a promise. And that promise has to relate to something your prospect wants.

If you owned a butcher shop, it wouldn't do much good to put a sign on your window that said, “Dead Cow Meat for Sale.” If you were even dimly aware of the psychology of selling, you'd probably do something more like “Prime Choice Steak Now on Sale.”

You've got to make a promise. And the promise should be big enough and strong enough to attract a lukewarm prospect. Remember, success happens at the margins. It is easy to sell to those who are predisposed to buy what you're selling. It is impossible to sell to those who are steadfast against it.

The difference between mediocrity and success lies in between-in selling to those who are neither pre-sold nor dead set against it - the people in the margin.

To make your promise vivid, transform it into a picture.

If, for example, you were selling chocolate cake, you might want to show your prospect a picture of the cake itself, with a slice overturned and a nice tall glass of milk or cup of coffee on the side.

If you were selling something more complicated than cake (such as membership in a music club), you would need to create a subtler, more sophisticated picture (one in which the prospect sees himself enjoying and benefiting from the music).

To advance your selling effort, you need to make certain propositions or claims.

If cake were the product, you might claim that it is light and sweet or thick and creamy.

You would then need to support such claims with proof.

Perhaps you make your cake with only natural ingredients or that it won the food critics award for delectability, etc.

People Buy Things for Emotional Reasons

To sell things, you need to stimulate those emotions.

To stimulate your prospect's feelings, present not the features of the product/service, but its benefits. Tell your prospect how the product/service will help him. Show him how that will happen.

I am really enjoying the issues I am receiving from you guys. Club member TM. For example, the features of a particular sports car might include power steering, an oversized engine, and an advanced breaking system. The benefits would be the ability to take a tight corner, to hit 60 miles per hour in five seconds, and to stop on a dime.

By focusing on what's in it for the prospective driver - and not what's in the car itself - you can evoke the deeper feelings (I want to be seen as powerful, sexy, wealthy) needed to make the sale.

How to Create Your First Advertising Campaign

There must be a Compelling Idea.

The Compelling Idea for an advertising campaign comes from your product's unique selling proposition (USP). If the USP is strong, the Compelling Idea will be strong too.

Then there's the Big Promise.

The Big Promise comes from the Compelling Idea. If the Compelling Idea is the right kind of Compelling Idea, it will have a Big Promise contained within it.

You base your specific marketing scheme on that Big Promise. If the Big Promise is big enough, you won't have any trouble coming up with dozens of claims that will excite your potential customers and persuade them to buy your product.

Here's a checklist to walk yourself through the process:

Make a list of every feature of your product that you can think of.

Make a separate list of every possible benefit those features can provide.

Identify a rising trend in your market - a trend that is just beginning.

Ask yourself: “Which of my product benefits could tie into that trend?”

Identify those benefits as potential USPs.

By talking to experienced industry professionals and interviewing potential customers, find out which of your potential USPs are the strongest.

For each of those strong USPs, create a Compelling Idea.

For each of those Compelling Ideas, create one or several headlines that express a Big Promise.

Working with a copywriter, make a list of claims for your product, including proof of those claims.

Get at least two versions of the advertisement written - each version expressing a different copy approach - and test them.

Take the version that works best, and make that the basis of all your sales and marketing efforts.

As you roll out an advertising campaign, make plans to start the process again so you can keep your selling ahead of the market.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #9: Innovate or Die

In 1982, members of the pop band Tommy Tutone wrote “Jenny,” a song about a guy desperately trying to get in touch with a girl named, of course, Jenny.

It was at the top of the music charts for 40 weeks and made the band members rich and famous. At least for a while.

A couple of years - and a failed follow-up album - later, the lead singer was making a living as a software engineer, while his band mates were reduced to playing in bars. The band's problem? They never wrote another hit song - not even a remotely popular one.

In musical history terms, Tommy Tutone was a one-hit wonder.

[A one-hit wonder is a person or act known mainly for only a single success.]

In the world of entrepreneurship, we have one-hit wonders too. In fact, they are probably more common among entrepreneurs than they are in the music industry.

Tomima Edmark, a Dallas entrepreneur, is a good example. He released the Topsy Tail hairstyling gadget to widespread acclaim in 1992. Despite several attempts, he never produced another hit product.

Other famous one-hit wonders include Victoria Secret's founder Roy Raymond, who went bankrupt after founding a failed children's clothing line.

Are You a One-Hit Wonder?

The thing about being a one-hit wonder is that you don't feel like you are one while it's happening. You feel like a big success. You've created or sold a product and it's doing really well. Your business is growing. You are making plenty of money. It feels like you are living the dream. But then, suddenly, you lose everything.

One-hit wonders often fail because they put all of their eggs in one basket. They have the wrong idea about how to build a business. They've seen movies and read books that depict one-hit wonders - people getting rich and living happily ever after because of a single invention or product - and they buy into it.

Business in the real world doesn't work that way. To develop a thriving business, you must produce new products and advertising campaigns all the time. You have to put the people and processes in place to continuously produce more and more. You can't stop or even rest just because you've had a single success.

I wanted to thank Mr. Ford for his amazing essays! I feel a HUGE change already in my mindset and I have managed to take some action as well. Please thank Mr. Ford for sharing his knowledge, and I look forward to his future insights and instructions. Club member Salman H. You have to recognize that things change as time passes. If you are still trying to sell yesterday's products tomorrow, after things have changed, you will be slammed so hard you won't know what hit you.

I've not done any formal research on this, but I'd bet that most “successful” businesspeople are one-hit wonders, either actual or in waiting.

I can think of a half-dozen people I know- including a few friends of mine-who are running one-hit wonder enterprises. They are happy as can be because they are making money and keeping busy.

But when I look at their businesses, even from the outside, I can see the writing on the wall: Sooner or later, their one product, promotional scheme, or market will change, and their businesses won't have any way to adjust to it.

At first, sales will slow gradually. And they will respond by cutting costs and laying people off. “Things will turn around soon,” they'll tell themselves. But things won't turn around, and their profits will disappear. Eventually, they will close down their businesses and wonder what went wrong.

Are You in Danger?

Your business may be working fine right now. But if you have too many business assets in one basket, you may be a one-hit wonder in waiting. Ask yourself the following questions:

How many products do I sell right now?

How many new products have I sold since I began?

How many new products have I sold per year since I began?

How many new products have I sold in the last three years?

How big was my production budget three years ago?

How big is it today?

How big was my marketing budget three years ago?

How big is it today?

It should be easy to pinpoint where you're at. The more products you have and the more growth you've experienced, the further you are from being a one-hit wonder.

The problem with the one-hit mindset is that it can't imagine good things going bad. It has no capacity to understand the universal principle of entropy - everything naturally disintegrates.

The one-hit mind believes it deserves any success enjoyed. Perhaps it's even divinely given, and therefore destined to last a lifetime. The one-hit-wonder mind refuses to see that its great product or promotion will likely be a thing of the past one day. So it will not prepare for that by inventing or creating another.

The one-hit wonder problem affects most businesses in Stage One and Stage Two of their growth. (If you've read Ready, Fire, Aim, you know that means when they're making from zero to $10 million in revenue.) To get beyond that threshold, and thus beyond the risk of being a one-hit wonder, you have to focus on two things: innovation and speed.

As I said in Ready, Fire, Aim:

It probably took you several years to produce and market your first product. To take your company to the next level, you will have to move much faster - at least twice as fast as you are comfortable moving right now.

I'm talking about increasing the velocity of innovation. This includes the time it takes to brainstorm, develop, test, and produce new products. In Chapter 10, I talked about how you can get better at coming up with good ideas. But I also pointed out that if you don't execute good ideas quickly, they will degenerate over time.

Innovation matters. And so does speed. Combined, they give your business extraordinary growing power.

Make Your Business Success Eternal With Double-Barreled Innovation

No matter what size your business is, there are only two ways to keep it growing.

Increase revenues with sustaining innovations - by continually improving the products you are currently producing.

Use disruptive innovations to create a new market, expand an existing one, or move into a different price category.

Sustaining innovations are perhaps the easiest to produce because their need is apparent. (For example, a microprocessor that enables computers to operate faster or a laptop battery that lasts longer.) Plus, the technology comes from existing research.

Apple does a fine job of sustaining innovations. That is one reason its customers are so cult-like in their loyalty.

But Apple made its greatest stride with the iPhone - a disruptive innovation. Disruptive in that it provides much more than cellphone users were used to at a comparatively miniscule price. When launched, the iPhone ate up huge bites of the market.

Improving your products incrementally will keep them fresh in the minds of your customers. That means continued renewals and back-end sales. But if you can introduce new products to the market - then you have the opportunity to double or triple your revenues in a matter of months.

I have enjoyed reading and thinking about how to apply many of the essays. I'm no longer trying to “swing for the fences” and wasting money by investing foolishly.

So many “investment advisors” hype up enormous returns or guide people to use newsletters based on an annual scorecard. What you are giving us are guidance, direction, and tools so we can improve our life. Thank you! Club member AM. Initially, disruptive innovations perform poorly compared to established products. But because they are often cheaper, simpler, and more convenient, they can create new markets.

When the transistor radio came out in the 1950s, it had very poor fidelity. Therefore, it couldn't compete with the market for stereo systems: adults. But its portability and low price made it enormously popular with teenagers.

You want sustaining innovations so you can hold on to your existing customers. And you want disruptive innovations so you can expand and eventually dominate your market.

Every smart businessperson wants both.

For your business to succeed, you need two parallel processes: one that allows for sustained improvements and another that gets you into different markets.

Both processes start in your head.

For one thing, you must recognize that coming up with incremental improvements is entirely different from creating something radically new.

You may need two sets of people and procedures to do both well.

If you run a new product idea through the regular channels, it will no longer be innovative by the time everyone has finished “polishing” it. It will be just another modification of what you are already doing.

Most senior executives I know claim they care about product improvement, but they don't walk their talk. Their first response to suggested improvements is to worry about the costs - in terms of money, manpower, and time.

To create incremental improvement, you have to believe that it will pay off. Eventually. That's psychological.

And to create an environment in which disruptive innovation flourishes, you must recognize any sizable growth will come from ideas that are far afield. This is difficult for most entrepreneurs. And with good reason. They base their success on what has worked for them in the past. Not on moving into the unknown.

Your first step is an internal one: Make a commitment to innovation, both sustained and disruptive.

The next step is a matter of communication. You must persuade your key people to believe in both types of innovation. You must give them a vision and inspire them to achieve it.

Your third step is implementation. You need two separate systems. Your core team can handle incremental improvements. But the radical ideas - those will probably have to be developed on the side. (I like to bring in copywriters and marketers from other industries to brainstorm disruptive innovations.)

Ultimately, whether or not you keep the two processes separate doesn't matter. What matters is that you become a business of “making things new,” as Ezra Pound once said.

Your customers - like all customers - are always on the lookout for new and better. If you don't provide it for them, your competitors will.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #10: The Economics of Customer Service

Thirty years ago, I worked for a brilliant businessman who in every aspect but one was terrific. He was fun to work with, and he was a natural-born salesman.

The only trouble: He didn't believe in “customer service.”

Our business grew because of his management and marketing skills. We kept the overhead low and created compelling marketing campaigns that sold our products at deeply discounted prices.

This man taught me tons about how to bring in new customers with cheap pricing and strong promises. He also, inadvertently, taught me the problems with running a business that way.

We were able to launch one successful product after another - and make good money from those launches. But we never developed a community of really happy and loyal customers - the way Apple has, for example - so we always had to keep selling our products to new prospects.

Excellence in marketing will generate vital cash flow. And having the ability to spot and seize product trends will help your business grow. Being a good negotiator will keep your costs low, and excellence in management will limit costly mistakes.

You should acquire all of those skills if you want to build a profitable business. But to develop a business that will grow more easily as the years go by, you must devote yourself unrestrictedly to providing your customers not only with quality products but also with excellent customer service.

By “excellent customer service,” I don't mean just picking up the phone on the second ring and smiling when you speak to customers. I mean having a genuine commitment to developing a long-term relationship with the customer, one that optimizes your profits by optimizing his experience with you.

The Challenge for Start­up Entrepreneurs

Everyone believes in excellent customer service - at least, in theory. The problem is that improving the service you provide your customers is expensive. And when you are a fledgling business, you may feel you can't afford that extra cost.

But my experience has taught me that you can't afford not to provide excellent service.

If you are going to commit your business to excellence, sooner or later you will have to charge more money to compensate for the additional costs. And when you do raise your prices, you will get complaints from some of your customers.

Nevertheless, many of them will stay with you because they value quality. Others will leave in search of the next cheapest option.

Don't worry about the customers who leave. They are not the ones you want to keep. To build a big, profitable, long-term business, you have to keep upgrading your customers along with your products and service.

You're not aiming for the greatest amount of customers possible, but a good number of customers who appreciate and are willing to pay for the excellence you will continue to give them.

And you will do that by following a rule I call “incremental augmentation.” I'll tell you why you must follow the rule of augmentation, but first, let me tell you about incremental degradation.

How to Prevent Incremental Degradation

I can't wait for these next essays from Mark. The things that bring me the greatest joy are free and can't be delegated (exercise, reading, visiting hospitals with my dog, etc.). Subscriber SM. One of the first things I did upon taking on AP as a client was call his customer service line and pretended to be a customer. The phone rang eight times before someone picked up.

Then someone put on me hold. Then that someone answered by saying, “What?”

This was an $8 million company.

I postponed any marketing discussions while I revamped AP's entire customer service process.

I replaced most of the staff with better-educated, more articulate, and more conscientious workers. I introduced a training program. I implemented automated monitoring and reporting systems. And I established progressively higher standards for everything from call waiting through problem solving.

Within six months, service went from embarrassing to best in show. Then I hired a very good manager to continue the program. With her in place, I was able to do the job AP hired me to do: improve marketing and increase sales.

I wish that were the end of the story. It is not. About four years later, a colleague, in the midst of a conversation about something else, made a comment about how everyone in the industry believed that AP's customer service was “a joke.”

I was shocked. And when I checked into it, I was floored. The person I'd hired had left.

And the top-notch operation I had worked so hard to set up was back to providing horrendously bad service.

Nothing had gone dramatically wrong. The new customer service manager had been given my guidelines but wasn't as careful about implementing them. The college-educated people I'd hired had moved up in the company and been replaced with less-qualified people. Other standards were relaxed - just a bit - to save money.

Your newsletter is one that I always take time to read. As I read some of your responses to questions asked, I can't help but smile knowing that you are honest in your actions. Thank you for not only the wealth advice but also the honesty in your actions and answers. It is very refreshing indeed. Subscriber RM. It was a classic case of incremental degradation. Physicists call this “entropy” - the natural tendency of things in the universe to move from order to disorder.

It is true of all aspects of business (and life). But none as surely and with more damaging consequences as customer service. Unless you constantly strive to improve service all the time, it will degenerate. Not in leaps and bounds but in small, sometimes imperceptible degrees. Only after several years will the difference be obvious.

To combat incremental degradation in your organization, you must make an active and sustained effort. The best way to do this, as I mentioned before, is to initiate a culture of incremental augmentation.

The Rule of Incremental Augmentation

The rule of incremental augmentation states that you must consistently improve your products and services in every way. You don't have to begin with the best overall product/service in the marketplace. (If it's a competitive market and you are a beginner, it is doubtful that you can.)

But you do have to find one aspect of your product/service that you can excel at. Market that. After it catches on, go on to something else that your customers will appreciate. Never allow yourself to think that your product/service is as good as it needs to be.

Always be asking yourself, “How can I make this better?” Good is not good enough. You want your customers to be more than happy with everything they buy from you. A customer who is more than happy will recommend your products and come back for more.

Incremental augmentation is an ongoing process. It involves regularly upgrading your products by a small degree, even when there is no evidence that your customers are in any way unhappy.

The main rule is: Improve your products as often as you can.

Implementing Excellence

So… how do you put incremental augmentation to work for your business?

My clients usually spend a few days outside the office each year in order to take an objective look at their businesses - sometimes with the help of consultants or even customers. They identify the aspects of product quality and customer service that they do well and those that they don't do well.

Then they brainstorm to “imagine” how they could improve both the things they do best and the things they do badly.

Think about your business. What is your greatest strength in terms of product quality and customer service? What is your greatest weakness?

How could you make one substantial improvement in each of those categories by the end of the year?

One significant improvement in your greatest strength and one significant improvement in your greatest weakness - that's plenty to accomplish in one year.

Make the improvement and advertise it. Sell it to your customers and sell it to prospects. Make the added value clear. And charge more for it. But explain why.

Yes, some customers will balk at the slightly higher pricing. But your best customers - the ones who will make your business soar - will be happy to pay the price.

As I said, you can get a business started by discounting. But if you stay in that market, you will have a hard time getting any traction with your business. By sticking exclusively to bargain basement prices, you will attract primarily bargain hunters. And they will quit you as quickly as they came to you.

A discounted offer is like a tightly knotted fishnet. Cast it into the ocean, and it will bring up lots of fish. But most of those fish will be too small to eat. Throw away the little guys while you weave yourself a better net. Then the really good fishing will be easy.

Best, Mark

How to Start a Million­-Dollar Business for $25,000 #11: Find Your Superstar Employee

How do you attract the best possible people to your business? How do you snag that rare person who can help you grow and improve your company? How do you find someone capable of doing what you do… when you don't want to do it anymore?

Ask successful business owners what accounts for their success, and at or near the top of their lists, you will find “the right people.” And with good reason.

The difference between an ordinary employee and a star performer is the difference between smoke signals and email. And finding a superstar - someone who can eventually take the burden off your shoulders-is like striking gold.

In my business career, I've been lucky enough to find a few superstars. And they have made a big difference. When you get one, everything afterward is easy. He will learn your secrets faster than you can explain them. He will take on any challenge. He will figure out solutions before he tells you problems. And most importantly, he will share your enthusiasm (maybe exceed it) and vision.

Thank you for the courage to be so honest. Your words of encouragement are just what I needed! We all need a good dose of personal responsibility in this country. Subscriber SB. Right now, I am working with several superstars. Each is single-handedly running a business for my partners and me. We provide input, but casually and occasionally. These entrepreneurs produce about $30 million in revenues at 10%-plus nets. That spells happiness.

I was a superstar once, for a gentleman with the initials JSN. Through his careful tutoring, we were able to take a start-up marketing business and grow it to $65 million in about seven years. His son became our superstar and helped us grow larger - doubling it in three years.

The Secret of Finding Your Superstar

You can and should find yourself a superstar. You need someone to help you succeed and take some (or eventually all) of the burden from you.

Getting a superstar is a three-step process. First, you have to find someone as good or better than you. Second, you have to make him a very generous deal. And third, you must teach him everything you know.

We'll talk about partnering and mentoring some other time. Today, let's discuss what you should be doing right now… hunting for your star performer.

There are so many difficulties in finding a superstar. The most obvious is availability.

Like good spouses, superstars are few and far between. Don't let scarcity tempt you to accept second best. You cannot make an ordinary person extraordinary. It will eat up all your time and end in failure.

Start your search now. Go to industry meetings. Place ads. Talk to people. Even if you can't yet afford another salary, start looking.

When you meet someone who seems great, strike up a friendship. Find out as much as you can about him. Show interest. Follow his career. Offer to help. When the time is right, drop hints. “If you ever want to do such and such… give me a call.” Say it every time you see him. The message will get through.

Don't Expect Every Seed to Sprout

Do this with anyone who seems great. Keep at it. One day, an opportunity will present itself, and you will have not just one but several highly qualified candidates. Select and hire the best.

Work with him closely for several months until you've seen what he can do. If he has the potential you're looking for, it will become apparent. Invite him to share your future.

Some people try to retain superstars as employees. They figure they will pay less, risk less, and get just as much from them by giving them just enough to keep them happy. This is a big mistake.

Superstars are rare birds. If they don't know their worth when you hire them, they will soon enough. It's much smarter (and cheaper in the long run) to treat them like partners-in-training the moment you recognize their potential.

It doesn't matter where you are in your business-building process - even if you work freelance or are only just dreaming about starting your own business - you need to start looking for your superstar right now.

Teach Your Employees to Mentor One Another

If you spend a lot of time training your employees, you may be making a big mistake.

Your primary job is to build your business. That includes teaching people what you know. But if you devote too much time to it, your business will suffer.

Here's a better way: Teach your best employees what you know. And then, teach them how to teach it to new employees.

Not only does this free up your valuable time, but it also establishes an automatic mentoring system.

And that provides additional benefits:

Every new employee has someone with experience to turn to for advice.

The mentor feels responsible for the new employee's performance- and they both learn that responsibility is best when shared.

For a while at least, a separate pair of eyes will be carefully reviewing the work of every new employee. This should result in fewer mistakes that they'll need to fix later.

The mentor will probably rise to a higher level of commitment and dedication to the business. He'll take himself and his job more seriously.

Flexibility Is Key

A flexible working environment will allow all of your best people to work at their best for you.

To make your dream come true, you need different types of people. You need analytical people to make your operations run smoothly, entrepreneurial people to spur new growth, and creative people to make your marketing succeed.

Each of these types likes a different type of working environment.

Analytical people need good training, regular feedback, and the authority to make their systems work.

Entrepreneurial people need coaching on “the big picture,” the resources to get their work done, and plenty of freedom (but also clearly demarcated boundaries).

Creative people need protection from the bureaucracy, kudos when they succeed, and support and guidance from mentors they can trust.

If you are running a small enterprise, you are probably doing a lot of this yourself. As your business gets bigger, you need to pay attention to the structure of things so that no single atmosphere takes over for all your employees.

This is also a critical concern when choosing profit-center managers. You don't want them to narrow the working environment to the one that works best for them. Coach analytical managers in providing marketers and business builders with the freedoms they need. Teach creative and entrepreneurial managers that their operational people need rational processes and discipline.

Now go find your next superstar employee.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #12: Overcome Difficult Business Challenges

My friend Bernard opened a furniture shop shortly after he immigrated to Boca Raton, Florida from Manchester, England in the early 1980s. That's when I met him. I was shopping for an armoire for our bedroom. Most of the nice ones I'd seen were priced above $500. He had a half dozen of the same quality for only $195. I asked him how he was able to do it. With a twinkle in his eye, he said, “It's not that my prices are good. It's the other prices that are bad.”

Since then I've bought at least $50,000 worth of furniture from him. And I've seen his business grow from a single shop to a network of wholesale, retail, and manufacturing facilities from here to China.

Today, I want to focus on a technique he uses that has allowed him to become very successful and, at the same time, very well liked. And keep in mind that he's in a competitive industry where people are knocking off one another (and suing one another) as automatically as they sneeze.

The Awesome Power of a Light Touch

Bernard is an affable guy. He always seems happy to see you. He asks about your family, business, and friends. He is happy to talk about his life too, if you ask him. And when he does, it is always positive and amusing.

Bernard has a wonderful sense of humour. He is always lighthearted. He is never mean - more Jerry Seinfeld than Larry David. And, like Jerry Seinfeld, he makes you feel that you are in on his joke.

This combination of congeniality and wit is used to make quick friends with customers, employees, and colleagues. The unsaid theme of his humour is that the business you are doing with him is not all that serious. “Let's make a deal,” he seems to be saying, “but let's make it fun.”

If you tell Bernard you think the price of a particular antique table is high, he won't argue the point, he'll make a joke of it. “For a person of your wealth,” he might say, “it is chicken feed!”

If you ask him if he can deliver it on Friday, he'll say, “Friday of what month?” In doing business with Bernard, you can never forget that fighting or fretting about most things simply doesn't make sense.

Bernard has even used this skill to do something I wouldn't think could be done in business.

It took place in High Point, North Carolina, at the annual trade show for furniture wholesalers. A colleague of his who had made a fortune selling designer-brand tables and chairs was furious when he saw that Bernard was selling what appeared to be the very same designer products at a fraction of the price.

When he stormed into Bernard's office to accuse him of knocking him off, Bernard smiled and acknowledged that he had been doing just that. He pointed out that he had done it legally. And then he suggested to the irate wholesaler that he start buying his furniture from Bernard.

“I don't know how he did it,” the wholesaler told me, “but he made me feel that what he had done wasn't such a bad thing after all. And somehow he got me laughing. I realized that I wanted to be able to enjoy business the way Bernard does. So I forgave him on the spot, and we have been doing business with one another ever since.”

I do not have the skill that Bernard has, but I have been studying his technique for many years. Here are some of the things I've noticed:

He greets you with a smile. He insists on personal chitchat before talking business. He never seems to care whether he makes a deal or not. He doesn't bargain. He doesn't push. He doesn't lie.

It is that last one that I find particularly remarkable. In a business that is as competitive as furniture sales, fabricating stories about the value of goods is as common as discount tags.

But Bernard never tells you anything but the truth about his products, how he has them made, and what he pays for them. He is confident that he provides very good value because, coming from Asia as they do, his goods are always priced below the competition. But if you prefer to buy from his competitors, he doesn't seem to mind in the least.

And when Bernard has a tough message to deliver (if, for example, he is dissatisfied with the performance of a vendor or an employee), he doesn't sugarcoat the truth. Instead of shying away from difficult discussions, he seeks them out. He seems to know that he has the power to straighten out problems quickly using his finely tuned sense of humour.

He does what George Bernard Shaw said he always tried to do: Take the trouble to think of the right thing to say, and then say it “with the utmost levity.”

This is very powerful, when you think about. When confronted with a difficult or awkward business situation, we usually feel that the prudent thing to do is to say nothing. But saying nothing conveys nothing. The fraud is not unmasked. The foolishness is not sanctioned. The reprobate is not reproached.

Bernard's way of communicating - his wit and lightheartedness - is not something one would normally think of as having anything to do with business, wealth building, or personal achievement.

But Bernard uses it every day to handle all sorts of problems and accomplish his objectives.

When it comes to interpersonal communications, Bernard's approach can work wonders for you, too. It can:

Dismantle tension Create intimacy Defuse anger Eviscerate quibbling differences Aid in the formation of trust, and Help form deep and lasting relationships

How to Use Humour in Business

The ability to tell jokes is often thought to be a useful business skill. In actuality, it demonstrates nothing except that you have the capacity to be trivial - to memorize a remark or anecdote and retell it for the amusement of others.

And if joking is bad, punning is worse. A punster's only attribute is a remarkable lack of embarrassment. He is willing to verbalize inanities that others have the sense to keep to themselves.

By contrast, true humour involves wit, requires intelligence, and draws from an appreciation of the absurdity and pathos of life.

Humour is funny. Joking is, at best, amusing. And punning? Spare me.

Leo C. Rosten was speaking about wit when he said that humour is “the subtlest and chanciest of literary forms. It is not accidental that there are a thousand novelists, essayists, poets, or journalists for each humourist. It is a long, long time between James Thurbers.”

If you are interested in these distinctions between wit, joking, and punning, I can recommend a great movie to you. It is titled Ridicule.

It is a French film about a rural doctor who goes to Paris to raise money for his practice during the reign of Louis XVI. But to get the ear of the king, he must first educate himself in the many levels of humour that were popular in France at the time.

At the climactic moment, he is in the king's garden, hoping the king might pass by. Sure enough, the king and his secretary come along. The king greets him, and the doctor replies with a witticism.

The king looks perplexed. He turns to his advisor and asks, “Was that a jeu de mot or a double entendre?” The advisor considers it carefully and says, “It was a jeu de mot.”

The king laughs loudly and the audience sighs in relief, knowing our hero has just accomplished his mission.

Enjoy Your Work, Including the Bumps

If you don't right now have the power to put people at ease with humour, you can develop it by doing as my friend Bernard does: Greet each person with a smile. Ask about something personal before discussing business. And try to maintain a lighthearted attitude - especially if the conversation is difficult.

With practice, Bernard's technique will eventually become second nature to you. That may take some time. (I am still practicing after many years.) But along the way, you will find that you will be able to do business with less stress and more enjoyment.

Humourless businesspeople inevitably become upset when they encounter obstacles or setbacks. They are like wagons without springs, as Henry Ward Beecher said, “jolted by every pebble in the road.” What's worse, they are often unhappy even after they achieve their goals.

But with lightheartedness and humour, you can deal with disappointments and surprises with equanimity and even optimism.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #13: The Ten Commandments for Success

“I come from a poor family. I want to start a business and make money to help them. But when I see successful businesspeople depicted on TV and in the movies, it seems like lying and cheating people is the way to go. I'm worried. Is that what I'm going to have to do?”

This question was posed just after I had given a presentation on entrepreneurship to a group of MBA candidates at Florida Atlantic University. I was momentarily startled by the question. I was sure I hadn't said anything that suggested success in business required a cut-throat approach.

Still, the question was understandable. When movies depict business and businesspeople, it is more often than not in a negative light. And when the stock brokers, the banking community, and the insurance industry screw their clients - as they've done so notoriously - how could any young person think any differently?

So I told the young people in my audience what I'm about to tell you today.

It is definitely not necessary to be bad to be good in business. But the path to business success - and this is especially true for small businesses - is booby-trapped with temptations to do the wrong thing.

I have been starting and growing businesses ever since I was a teenager, and was never tempted to violate my conscience until I went to work for a South-Florida direct-marketing company when I was in my early thirties.

During my time there, I accomplished a lot that I am still proud of. But I also got involved with a few marketing schemes that were misleading. These got me into regulatory trouble and cost me a lot of money.

Looking back at it now, I feel foolish to have allowed myself to act that way. The projects that made the most money in the long run were the good ones. The flim-flam stuff was only good for short-term money. I could have done better had I walked a narrower line.

Most of the successful businesspeople I know are honest men and women who treat their colleagues, vendors, and customers as they would like to be treated themselves. But there are a good number who do cut corners now and then. And there are a few who are bad - who seem to derive pleasure from causing others harm.

I've known direct-mail marketers who bargained with their printers and letter shops to provide service at below cost simply because they knew these guys needed to keep their staffs employed.

I've known owners of profitable businesses who paid lower-level employees minimum wage simply because they could get away with it.

I once worked with a man who refused to pay me my equity in a business when I wanted to get out simply because he knew I wouldn't sue him.

I once worked with a consultant who slandered my client on the Internet as a way to generate business for himself - then had the nerve to teach his dirty trick to people who bought his largely plagiarized marketing program.

The list is endless…

These rotten apples prove that you can become successful by being ruthless. But if you look at their lives, you can see that their path is not easier, faster, or emotionally satisfying in the end. When you grow your business by being devious, your character is tainted by your actions. You become jealous of your competitors, distrustful of your employees, and suspicious of almost everyone you deal with because you assume they think the way you think. As time goes by, you find yourself spending most of your time fighting to stay in business. It's a miserable way to get rich.

My experience tells me that ruthlessness is not an essential component of entrepreneurial success. Success is always a product of…

Hard work Long hours The ability to focus Marketing know-how The will to carry on when faced with any obstacle

Machiavellian business tactics are self-defeating. All those people you suckered will remember you. In their own quiet but powerful ways, they will do whatever they can to see you punished. That may mean anything from ignoring your next sales effort to denouncing you on the Internet to reporting you to the authorities - even to blowing your head off.

Wise businesspeople understand that the trust and loyalty they've earned will pave golden paths of opportunity. With each passing year, every dollar will come more easily because of all the relationships they have developed along the way.

The dozens of “good” businesspeople I work with these days are open and honest in their dealings, generous with their time and knowledge, and always willing to share in areas of mutual interest.

EP is a great example. We started working together about 15 years ago on some large-scale, residential real-estate projects.I knew nothing about that business at the time. He could have easily taken advantage of me in a hundred different ways. Instead, his deals were fair - even generous. He never made a dollar until I made one first. And when one of his deals went bad, he put in a big part of his personal savings to bail out me and the other investors.

When he calls me to say “I've got a project you might be interested in,” I never hesitate to invest. I don't ask to see a business plan and prospectus. I just say “How much do you need?”

And I'm not the only one who has this level of trust in him. He has established relationships a group of wealthy investors who are all eager to work with him - even in today's difficult markets.

A few years ago, I loaned one of my Jiu Jitsu instructors $5,000. He was embarrassed when he asked for it, but he needed the money - and I really wanted to help him out. He paid me back every dollar, insisting on paying me interest too. So when he came to me recently and asked for advice on a business he wanted to start, I was happy to give it to him - and to invest a considerable amount of money in the business as well.

Donald Trump presents himself as a very tough businessman. And I'm sure he drives a hard bargain. But I don't think he's ruthless. I've heard from people who've worked with him that his deals are generally fair - and although he can be a bit pompous, his business demeanor is usually measured and respectful.

I have written about Bill Bonner before. Of all the clients I've had, he is one of the most impressive in terms of the way he treats people. In more than 14 years of working with him, I've never heard him say a bad word about anyone. And I've never heard anyone say a bad word about him.

Treating people fairly is like putting money in the bank and collecting compound interest. As the years go by, your account will grow gradually larger and then, suddenly, it will get huge. When that happens, you can enjoy continued success without working very hard because you will have banked so much good will.

One caveat: Treating people well and fairly works for 95% of those you come in contact with. As for the other 5% - well, there's not much you can do except try to avoid them in the first place.

So before you go into business with anyone (an employee, a colleague, a vendor - anyone), get to know him on a personal basis. Meet him. Ask questions. Ask for references. Check them. If you feel at all concerned that you might be dealing with one of the rotten few, take a pass.

Over the years, I've become a better businessman because I've been influenced by people of good character who were kind enough to give me lots of good advice. Among the things I've learned, I recommend the following “commandments” to you:

The Ten Commandments of Doing “Good” in Business

The customer is always right. Even when he is wrong.

Don't promise what you know you can't deliver.

Honor your verbal contracts with the same seriousness as you honor written agreements.

When negotiating, always aim for a deal that is as good for your partner as it is for you.

If a deal turns out badly for your partner but stays good for you, change it to be fair to him.

Always pay your employees as much as or more than they are worth - or, if that is impossible, as much as you can afford to pay them, with the promise of making it up to them later.

Share your business wisdom with everyone, including your competitors.

Never engage in gossip. Speak as if the person you are speaking about will find out what you are saying. (Because he will.)

Never take advantage of your vendors simply because you can. Your goal should be to compensate them fairly, even if it means paying them more than the market demands.

Never engage in recriminations and try to avoid litigation. In the long run, it is better to be cheated rather than become the cheater.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #14 Franchises: Buying Into Proven Success Formulas

A popular business opportunity is to own and operate a franchise.

In franchising, companies decide to expand by selling licenses to individuals or other businesses. A franchisor is the company selling these licenses.

The license holders, called franchisees, operate a branch of the franchisor's business. The individual franchisees own these locations-stores, offices, or restaurants-not the franchisor company.

As a franchise license owner, you can own and operate your own business. The restriction is that you must follow the franchisor's operational requirements.

To maintain their reputation and brand image, franchisors keep strict control over their franchise owners. Retail locations must conform to the company's corporate guidelines. The individual locations must follow operational procedures specified by the franchisor.

The franchisee must buy his supplies, raw materials, and products from the franchisor. They are forbidden to sell other brands; if they do, they'll face severe consequences.

Not long ago, I walked into a local Baskin­Robbins and was shocked to see them selling Hershey's ice cream. The following week, the store was shut down and shuttered. Lesson: Don't violate your franchise agreement, even in a minor way, even once. If you get caught, penalties are swift and severe.

There are several thousand companies selling franchises of their business today. Franchising is in its infancy in India which had its first International Exhibition just a few years ago in 2009. It is, however, one of the biggest franchising markets because of its large and entrepreneurial population.

For A.S., buying a franchise met her desire to be the boss. She says, “With my own business, I have the advantage of having my own time and my own terms.”

G.C. was a pizza delivery driver at a Domino's until he saved up enough money to buy three of his own locations. He now earns over a hundred thousand per year in personal income.

Is Owning a Franchise for You?

When Mark began writing essays for the Wealth Builders Club, he promised to show you dozens of ways to generate more cash. A tall order, for sure. To make good on that promise, Mark and his team brainstormed for months. Owning a franchise has passed our litmus test because it has some unbeatable advantages…

First: Anyone should be able to do it (it's easy and simple to understand).

A huge advantage of buying an established franchise is that it is a “done­for­you” business launch.You do not have to reinvent the wheel. Someone else has already thought out and tested the business. The franchisor provides detailed operations manuals you can follow line­by­ line to ensure success. You just paint by the numbers and follow directions.

Franchises dramatically reduce your chances of failure. That's because the franchisor has already proven the business concept at other locations.

When you open a restaurant, risks are high because you don't know if local residents will like the food or ambiance. But if you open a McDonald's, you know in advance that consumers like and buy McDonald's food.

These franchise businesses don't take a rocket scientist to run. They are restaurants, retail stores, or service businesses such as tax preparation services or hair salons - usually nothing too complex.

Second: You can have a home office that you operate out of, when you are not on-site.

You can have a home office and work there part of the time. But in most situations you must be on­site to manage and supervise.

Franchise businesses are typically retail locations or offices outside your home. Ideally, the location has heavy car or foot traffic. And your storefront has maximum visibility.

You can also reduce your time on site by hiring someone competent and trustworthy to manage the franchise for you. If you can't afford to do that yet, then you will be there many hours each week as the manager.

Third: You can choose to work part­time or on the weekends.

As we just noted, franchise owners who work either alongside employees doing the manual labor or as the general manager will work full­time.

Again, the only way to reduce your hours is to hire others to do the work. Many owners do this. You can even hire a manager so that your franchise makes money with minimal labor on your part.

Fourth: The opportunity should not require a tremendous amount of start­up capital.

Now, you probably think it costs a fortune to own a franchise business. And some do. Among the most expensive are jewelry brands which can cost you in the crores.

Fortunately, there are also many options that you can find for under a lac rupees of investment as well. Besides restaurants, many other franchise opportunities don't require a building or space. So you can get in for considerably less.

Steve Marr, a consultant who helps match aspiring entrepreneurs with the right franchise, says:

A common question is, “What is an affordable franchise?” I use the loose definition of an investment between $10,000­60,000 (Rs 6 - 36 lac) cash. A franchise investment may cost more, but with good credit and 30­40% down, the rest can be financed.

Some franchisors consider the owner's salary as part of the startup-others do not. When I work with a client, I avoid stating what they can expect to make, for legal reasons. I do help them develop their own understanding on the likely profit. I look at earnings over time. Most franchises require 6­12 months to make a profit. Franchisors, afraid of lawsuits, often do not publish what a franchise will make.

This includes the owner's salary and profit. The owner must understand they will need to build multiple units to grow a large income.

And fifth: You should be able to make 100% RoI in a year

It takes a few years for your business to stabilize and start turning a profit. But if you choose carefully your franchise business should start making returns of upwards of a 100% in a year.

Additionally, as the franchise owner, you also build equity in the business. And when you become successful, not only can you make more money, but you can hire someone else to be the manager. This will significantly reduce your own hours. Another way to increase your earnings is to expand beyond owning just one franchise location. For example, E.B. owns 61 McDonald's franchises that earn an estimated $135 million annually. One of the biggest overall advantages of owning a franchise is that you are buying into an existing operation. It comes with a proven business formula and an established brand.

You probably have heard the often­cited statistic that only one out of four start­up small businesses remain in operation after five years.

By comparison, after five years, nine out of 10 franchise businesses are still around.

Who Buys Franchise Licenses?

Who is most likely to buy a franchise? Steve Marr again: I would divide this into three camps. The first is full­time owners and operators. They will want to follow a passion. They may not have thought of a business, but unless they can see themselves doing the work and filling a role they won't want to move forward.

Full­time operators will be working in the business every day. If they don't want to do janitorial, they won't, even if they could make money. If a candidate can't see himself doing furniture repair, they will pass.

Executive type businesses are the second category. The owner works on the business, not in it. They market, manage staff, and do accounting. This group may be interested in several ideas, like a maid business, handyman service, or home care.

Those in this group are likely open to several ideas. Their passion is more management than the actual business. They still need to develop an interest in the business to be successful, but they are open to different ideas.

The third group is passive owners who want to invest cash for a return. They are very interested in the rate of return. Again, they may not be interested in some businesses, but they usually will get interested in those that can generate a good return. The focus is on the return first, the business type second. It's important to know which category you fall into. If you are going to be working in the business full­time, you will be happier buying a franchise whose products you actually like. If you are going to be a hands­off owner, that is not as important.

Find the Franchise That's Right, Bob Bly

How to Start a Million-Dollar Business for $25,000 #15: The Myth of Branding: Why Entrepreneurs Should Focus on the USP

recently got an interesting e-mail from reader Brian O. He said, “As a direct-response copywriter, I'm skeptical about the number of marketing people who are enamored with the need for 'branding' or to 'build their brand' to effectively market their business.

“I know that brands such as Nike and Coca-Cola have power and influence with people, but I'm not sure 'branding' has much of a place with most small- to medium-sized business marketing.”

He posed three questions:

What, exactly, is “branding”?

Can it be an effective type of business marketing?

Can it work effectively together with direct-response marketing?

Brian's hunch is exactly right. Branding is perhaps the most commonly touted and least understood aspect of marketing. If you believed all the hype, you'd think that you should spend 80 percent of your time and money “building” a brand.

As I have said in past articles, nothing could be further from the truth.

Branding makes sense for Coca-Cola, Nike, and Sony. Huge consumer companies have to spend money on that kind of advertising to keep their names out there in the commercial world. The idea is that when people make buying decisions, they will favor products whose names they know.

Brand-name consumer products almost always outsell generic products. And the reason brand-name products come out on top is not quality. (Many generic products are just as good.) The reason is consumer trust.

Trust comes from familiarity, and familiarity increases sales. But it is very, very expensive to create a household name. We are talking about tens of millions or even hundreds of millions of dollars here - which puts branding entirely out of the reach of any fiscally intelligent entrepreneur, even if he is working with a big budget.

Prior to the Internet boom, small-business owners understood that they couldn't afford to spend money on branding. To break into new markets, they relied on traditional techniques: big discounts and bigger headlines. But when billions of dollars started pouring into start-up Internet ventures, the idiot-savant CEOs running those operations had to put the money somewhere - so they put it into advertising their brands.

To justify this enormous waste of money, they invented theories to substantiate their foolishness. Most of those theories were versions of the same, stupid strategy: Spend whatever it takes to get the most eyeballs to your website. And after you've established first position in the “look-who's-looking-at-me” contest, figure out some way to profit from it. Profiting from something so nebulous needed its own magical name too. They called it “monetizing.”

Create traffic first by selling the brand… then monetize the traffic… and then go public. That was the program. And dozens of Internet entrepreneurs did just that. Most of that brand building went to naught, of course. Sports stadiums were renamed for unpronounceable URLs, and then they were changed to something else again as the Internet businesses behind them went bust.

It was during that period of chicanery that the modern myth about branding was formed - the myth that the first course of action for any small business should be to build a nationally (or internationally) recognized brand. This myth persists today in books and at conferences and seminars about Internet marketing. But smart would-be entrepreneurs like you have the sense to smell rats when they are rotting beneath the floorboards.

The fact is, most of the profitable business in the world is done without the benefit of brand recognition - and 99 percent of new businesses develop without any money or time spent on general advertising.

The branding myth persists today, even among experts who witnessed the debacle of the Internet advertising implosion. According to a 2005 PointRoll Inc. survey, 70 percent of online advertising professionals cited “branding” as the most important or second most important goal of online advertising. Interaction rate was viewed as the most important measurement of an online ad's performance, with 53 percent of those responding indicating that the best way to judge an ad's effectiveness is to measure the percentage of users who interact with it.

What's missing from that picture?

Profits, of course. As a future entrepreneur, you want to create sales immediately. But they have to be profitable sales - or at least near-profitable sales - or you'll go broke before your second year of business. There are as many ways to create profitable sales as there are businesses. When you get into your own business, you will have to figure out which way works for you. (I explain how to do this in my book Ready, Fire, Aim.)

Direct-response marketing of a hot product is probably the most effective way to create profitable sales. Promoting your brand through branding is probably the least effective way.

So now, to Brian's three questions:

What is branding? It's selling the name of a company or product through general advertising - so that later on, when the customer is faced with buying your product versus another one, he chooses the brand he is familiar with.

Can it be effective? Not for small businesses.

Can it be combined with direct marketing? Not really. Branding is meant to make selling (either direct selling or retail selling) easier. It is not meant to be used simultaneously.

Those questions answered, let me say a few words about where and how branding can work for entrepreneurial enterprises.

First, understand that establishing a unique selling proposition (USP) is not the same thing as branding.

Many, if not most, products and product lines will benefit from marketing that stresses the USP. If, for example, you are launching a business that sells organic food, your USP should emphasize the fact that all your products are green. Your company's name might express that benefit, as should the product names, the packaging you choose, and the layout and design of your marketing materials. And your USP should be a major component in the design of and sales copy on your website, as well as your Internet ads and landing pages.

Doing all of that to promote your USP will have the effect of creating an idea in a potential customer's mind that will have the same effect that branding has for large businesses. And that effect - which is a higher-than-average initial response rate to your marketing due to consumer familiarity - will also work with your existing customers on the back end.

Thus branding in this limited sense (consistently promoting your USP) works in conjunction with direct marketing as a back-end mechanism - to sell more products to people who have already bought from you. And that's how people with small- and medium-sized businesses should think of it.

I have plenty more thoughts on this subject, but these are the most important for someone in the early stages of starting and growing a business.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #16: Match the Business to the Market

“Desperate to escape her hand-to-mouth existence in one of the poorest regions of Brazil, Maria Benedita Sousa used a small loan five years ago to buy two sewing machines and start her own business making women's underwear,” The New York Times reported.

Today, her business is thriving. She employs 25 people and produces 55,000 pairs of cotton panties a month. With the income she's earning, she has bought and renovated a house for her family and a car. Her daughter, who is studying nursing, will be the first family member to finish college.

Sousa is living the entrepreneurial dream. “You can't imagine the happiness I am feeling,” she said. “I am someone who came from the countryside to the city. I battled and battled and today my children are studying with one in college and two others already in school. It was a gift from God.”

A gift from God? I don't know about that. But I do know that it was partly due to a loan she got from a private bank - that and her gumption, her persistence, and her instinct to start a business she already understood.

If you want to have the best possible chance of making your new business work, learn about it from the inside before you start. Sousa did exactly that. Before creating her own clothing business, she worked for minimum wage sewing clothes for someone else's clothing business.

By the way, Sousa doesn't begrudge the years she worked for a dollar an hour. She was happy to get the work when she had none, happy to earn the money so she could help pay the family's bills and - most important - she is grateful she had the chance to acquire the skills she uses today to run her business.

Sousa's story is a life lesson in Ready, Fire, Aim, too. She didn't wait till everything was ready before she set up shop. She didn't have any training in business. She didn't have a facility to work in or any sewing equipment. All she had were the skills she'd developed from working and the money she got from a micro lending institution.

And she had one more thing: She got into the right business at the right time.

This is the aspect of the story I want to highlight.

Sousa was successful because she did all the things we talk about all the time in WBC: She set and pursued goals. She acquired financially valuable skills. She took a Ready, Fire, Aim approach to her business. But the reason her business did so well - grew so quickly from a one-women operation to employ 25 people - is because she went into the right business at the right time.

Business gurus like to tell you that you can be successful at any business, so long as you do A or B or C. But the hard truth is that some businesses will do much better than others. It's not just your personal qualities that count. And it's not how much capital or human resources you have either. It's picking the right business for the market you are in.

Let me illustrate this point by telling you about Y, the woman who takes care of our house in Nicaragua. Like Sousa, Y was dirt poor until she got a job earning $5 a day cleaning one of the upscale homes in our development. She didn't know much about cleaning fancy houses at first, but she was a quick learner. And when my place was finished, she applied for the job and I was happy to give it to her.

It was a good deal for Y, because, with two houses to take care of, she doubled her income. It was a good deal for me, because I got a very good and reliable person at a fraction of what I'd have to pay in the States.

Because I can't help but preach entrepreneurship, I several times suggested to Y that she should start her own business. To help her along, I offered her a loan that could be repaid by doing extra jobs for me on the side.

Y used the money I loaned her to build a little store on the side of her house and open a children's clothing shop. She buys cute outfits in the capital city, hauls them to her shop, and sells them to the locals. Her store is busy once a month - on the first (payday for most of the workers).

Y is learning to be a good businesswoman. She runs her store profitably and has reinvested those profits in a small truck (to save money on transporting the clothes) and an expanded inventory. At the end of every month, she also takes cash out and puts it in the bank for her children's education.

So she is doing well. But she is not doing nearly as well as Maria Sousa. And she is not likely to do much better.

The reason is simple. Y chose a business that could not possibly grow quickly in her little corner of Nicaragua. Selling children's clothing was and is a fine idea. It fills a need. But no matter how hard she works, how much advertising she does, or how much money she reinvests in her business, her market is limited by the number of local people who can afford her wares.

When you decide to become wealthy, you should take some time to consider your goals and ambitions before you select the business you will start. Don't believe the gurus who tell you any business will do.

Yes, you can start a children's clothing business if it suits your fancy, but don't expect it to become a big money-maker if you don't have the customers to support it.

For fast growth, choose a hot business in a hot market in an economy that is expanding. Manufacturing cheap clothing in Brazil fits the bill. Selling children's clothing in Nicaragua doesn't.

Now if you plan to take your business to the Internet - and I highly recommend that you do - you have a little more wiggle room. Because then your market expands to include the entire world.

But you must still be in the right business at the right time.

For example, there are thousands of options for getting into the information publishing business. But if you decide to sell information online about some obscure interest/hobby, such as bookbinding, you are going to have a smaller market than if you choose a more popular interest/hobby, like tennis or golf. And if you get into a market that is in a growth stage, such as yoga or Pilates, you'll do better than if you choose a market that is shrinking, such as aerobics.

How do you determine the size of your market?

Keyword research should be your first step. The first thing to do to determine the potential for a business is research the keywords for that industry - the words that are being searched for on the major search engines. Each search engine has its own set of keyword tools that will tell you how many people have searched for any given keyword phrase (and any combination of words in the phrase). You get to ‘see' what people are looking for online instead of guessing.

If your keyword research indicates that there's a big pool of potential customers for the product or service you intend to sell online, you can take the next step and start testing your idea. Because there's a good chance you're about to enter into the right business at the right time.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #17: How to Set Realistic Goals

Aim high! Reach for the stars! Shoot for the moon! In other words, Think Big!

Thats the message we get time and time again from motivational speakers. And I get it.

In business, it certainly makes sense when you are in the very first stages of developing a new product or project. It makes sense because it helps you rally the troops and put the heavy machinery of your idea into motion. (“Wouldn't it be cool if we could…?”)

But thinking big is a serious mistake when it comes to setting specific goals (in business and in investing).

In today's essay, I want to help you avoid making that mistake. I will explain why setting big goals doesn't work… and I will give you an alternative strategy that does work.

How Setting Lofty Goals Can Backfire

I used to believe in setting ambitious goals. I recommended it to every business I consulted for. But about 15 years ago, I realized that I was wrong.

My main client at the time was in the information-publishing business. The company was broken up into seven or eight units, each of which published a dozen or so newsletters. Once per year the owner and I would meet with each of the publishers to review what they had accomplished that year and to set goals for the upcoming year.

I would challenge them to think big. And they did. They delivered projections that showed enormous growth and profitability. In nearly every case - regardless of how mature the business was or what problems it was facing - we were given spreadsheets that promised 50%-plus growth - and even higher profits.

Needless to say, this made us all feel great.

There was only one problem: Aside from the rare exception, those numbers were never achieved.

Year after year, we played the same game. Set big goals. Fail to meet them. Set big goals again.

The elation we enjoyed when we set the goals was counterbalanced by the frustration and embarrassment we felt when results fell far short of our expectations.

I finally had to accept that what we were doing was not only a waste of time, but also a detriment to our business.

The crazy goals the publishers set allowed them to jump into the year pursuing a business plan that was big and bold, but ultimately unrealistic. The very “bigness” of it kept them from coming up with new products and projects that could have helped the business grow.

A Better Idea

We brought the publishers together and told them that we were going to try something new: a two-part approach to setting goals.

Step 1: Map Out Current Projections

The idea here is to study the results of your past marketing efforts. Based on those numbers, and assuming everything continues to go as it has been going, you then come up with realistic expectations for the coming year.

There is no room in this process for hopes and dreams about better products and promotions. You simply extrapolate the numbers. And in doing that, you have to be conservative.

If, for example, a particular product achieved 25% growth in the prior year, you cannot automatically anticipate an additional 25% growth in the future. You have to first look at your most recent sales and determine whether they have been trending up or down.

The point of this step is to force you to look at your business in the harsh (and sometimes grim) light of reality.

Which brings us to…

Step 2: Set Realistic Goals

The first time the publishers mapped out their current projections, it was, as you might expect, sobering. Some of them were able to project growth. But often it was less than what they wanted to believe. And sometimes their projections were negative.

None of them were happy with their numbers. And this was actually a blessing. By facing what would happen if they kept on doing what they had been doing, the publishers were forced to come up with new ways to stimulate growth.

At this point, they were ready to set realistic goals - goals tethered to their current projections. They could not, for example, set a sales or profit goal simply because they were “determined” to achieve it. They had to have a detailed plan showing how that goal would be achieved.

It was hard work. Work that we had been neglecting. But it paid off.

Twelve months later, every set of projections had been exceeded. More importantly, nearly all of the publishers' goals had been achieved.

Before we implemented this two-step approach, my client had been stuck for several years at about $90 million in total revenues. After we made the change, revenues rose sharply. First, to $150 million. And then to $200 million. Today, gross revenues are in excess of $400 million.

How This Applies to Investing

As I said at the beginning of this essay, thinking big makes sense in business when you are developing a new product or project. Imagining all the “what ifs” is exciting and motivating and can sometimes inspire surprising and profitable possibilities.

But when it comes to the nitty-gritty of putting together a yearly business plan, you will be much more successful if you set goals based on realistic expectations.

When we created the WBC, we agreed to use the same conservative approach. We believed it would help us set better for the ideas we would be recommending to our readers.

I have a good deal of experience investing in real estate. My first investment was an unmitigated disaster. But I learned quickly and my results improved considerably. Several times, I've made more than 100% on my money within a year or two. I once made 10-times my initial investment in less than seven years.

But when I wrote about real estate and developed the Real Estate Investment Series for the Wealth Builders Club, I talked about much lower returns: 8-15% per year.

I did so because, though I knew higher returns were possible, I didn't want to sell the program by giving subscribers unrealistic expectations. Our business, after all, is a business built on long-term relationships with our readers. Making promises we may not be able to keep is not the way to do that.

Returns of 8-15%, however, was a promise I knew we could keep. I came to that by reviewing my three primary rental real-estate investments. One is based in Baltimore, Md., one is in Lake Worth, Fla., and is one in my hometown of Delray Beach, Fla. I won't tell you specifically how each investment did (for fear of embarrassing my partners), but one has returned about 8%, another about 12%, and the third returned more than 15%.

The Smart Way to Grow a Business… or Your Investments

Right about now, you might be thinking: “I'm not interested in making a mere 8-15%. I'm looking for 25% returns… Even higher!”

If that's the case, I am quite sure you will find someone out there who will offer you programs promising those big returns. But my guess is that you will be lucky to end up breaking even. The more probable outcome is that you will lose money.

That's the result of “Thinking Big!” instead of setting goals based on realistic expectations. You don't have a clear picture of what is likely to happen, so you don't understand where and when you have to make adjustments.

This is why I recommend that businesses should set yearly goals. They can intend to accomplish certain things in the future. But their budgets should be based on current projections. They should start with actualities and then make adjustments as needed. And their businesses will then grow.

How to Start a Million-Dollar Business for $25,000 #18: Method Marketing

Mark Ford If you know anything about acting, you've probably heard of Lee Strasberg and Konstantin Stanislavski. Strasberg was head of the famous Actor's Studio in New York. Stanislavski, a founder and teacher at the Moscow Art Theatre, was the man who gave Strasberg his ideas about what came to be known as “method acting”.

In method acting, an actor prepares for his role by getting deep into the skin of the character he is playing. He tries to understand his character by becoming him. Robert DeNiro, Sean Penn, and Marlon Brando are all method actors. Closer to home, Aamir Khan has gained considerable fame for his method acting prowess as well.

Stanislavski said that great acting makes the audience forget it is seeing something artificial. Strasberg used a literary expression borrowed from poet T.S. Eliot to describe this experience: “the willing suspension of disbelief.”

It's an apt description of what actually happens when you read a good novel, watch an arresting movie, or see a captivating play. In each case, you forget that you are seeing something fictional. You aren't fooled. You haven't lost your mind. You have willingly stopped disbelieving in the fiction.

This is very similar to what we do when we read a good marketing piece. We start off (usually) fully aware that we are being sold and suddenly forget about it. Something is said or shown that triggers an emotional response in us that makes us want to forget about the selling process and focus on the story - the sales message.

The legendary copywriter Bill Jayme recognized this when he said that it is not only “in the theatre but in the marketplace too that there is a factor at work called ‘the willing suspension of disbelief.'”

How often has it happened to you?

Somebody's trying to sell you something - a product, an idea. Maybe it's a restaurant or a travel destination. You are listening, but skeptically. “I'm not going to get pulled into this,” you are thinking. Then, bit by bit, detail by detail, you find yourself being drawn into the dream.

At some point in the process, and usually without your noticing it, you are carried over. Your pulse quickens. Your senses glow. Your logical mind stops resisting and starts racing ahead - imagining how good your life will be once you own the product/service.

You have “suspended disbelief” - not because you truly believe all the promises being made but because you want to believe them.

“Method Marketing” is the title and theme of a very good new book by Denny Hatch, an old pro direct mail guy. The purpose of marketing, Hatch points out, is to get your customer to suspend his disbelief and start dreaming about your product.

Take a look at your marketing materials. Try to identify how well you are able to achieve that goal. If you believe you are falling short, consider whether a method approach to marketing might work better.

A method marketing approach would demand that you:

Understand the deepest needs/desires/feelings of your prospect Ignore just about everything else and focus on persuading your prospect that those needs are going to be met

Unless you get to the core - your customer's most heartfelt needs, hopes, desires, etc. - you may never achieve the breakthrough marketing success you are after.

Best, Mark

How to Start a Million-Dollar Business for $25,000 #19: Simple Internet Marketing Ideas that Can Boost Sales

Recently, I participated in a seminar on Internet marketing. I went to listen and learn, but I did make a small presentation. One of the most important points I made about the Internet is that it is not one thing but many things. It is not only a market but also an industry and a medium.

Strike that. It is not just one medium but many media.

Websites are the medium people most talk about when they talk about the Internet. Websites come in many forms and have many functions. There are sites that are nothing more than data-storage centers. You go to them to find something. There are websites for shopping. Websites for news. Websites for advice (like ours). Websites for auctions. Websites to watch sex. Websites to plan travel. Websites to register your opinion. Classified websites. The list goes on and on.

Each kind of website is unique. Yet so much of the advice you read about websites is singular. It makes as much sense to make blanket marketing rules for all websites as it does to apply shopping-center selling strategies to daily newspapers.

And websites are only one group of Internet Media. In addition to websites, we have e-mail, banner ads, insert ads, e-zine advertorials, and much more. Each of these Internet business venues has a unique nature and purpose, But, again, so much professional Internet marketing advice lumps all these things together.

How to Sort It All Out

It's no wonder so many businesses have lost so much money on brainless Internet marketing schemes. In a market where money is abundant and good sense is rare, large losses are bound to occur. And they have. A quick tally of the marketing follies that have already crashed and burned would total in the billions of dollars.

Of the marketers attending the seminar, some had made money on the Internet and some had not. But all expressed some confusion about what exactly they were doing. When I asked them, ‘What is the primary purpose of your website', none had a clear and certain answer.

Yet when I polled those who had been successful, an interesting thing came up. Although they had all toyed with elaborate and fanciful plans about marketing (many of which were based on popular ideas), all had, when it came down to brass tacks, abandoned those ideas in favour of simple direct-marketing techniques.

Rather than lose a bunch of money following somebody's idea of how to use a website or write an e-mail ad, they fell back on their old ways. And guess what? It worked! It turned out that, contrary to what the self-appointed Internet experts had predicted, the old rules of selling are still effective and these marketers instinctively knew so.

The Internet Has Changed Business In Many Ways, But One Thing It Hasn't Changed Is Human Nature.

Most of the early claims about New Economy marketing were based on the (wishful?) proposition that the Internet was going to change human nature. It didn't.

Thank God it didn't. Those of us who have built businesses by understanding human nature are happy to be able to apply the same old principles to the new media. And that gives us a very valuable clue. If you accept the idea that the old rules apply, you can be successful on the Internet by figuring out which rules apply to what situations.

The secret to doing that is to look for resemblances. What does e-mail resemble? Direct mail, of course. And if my theory is true, that would make it possible to make good money by sending e-mail solicitations to a list of people with common interests. Of course, that is exactly what porn e-mailers do (with great success) and it is what one of my colleagues has been doing for about a year. (During that time, a list of 30,000 names has yielded over a million dollars.)

What else? Internet insert ads resemble fractional space ads in magazines. And guess what? They work like them too.

Banner ads look like billboards to me. If you know how to make billboards work, you might be able to do wonders with banner ads. (Instead, thousands of companies have spent billions of dollars treating banner ads like I don't know what maybe silly business cards and they haven't worked.)

Internet classified ads and advertorials look like, and work like, classified ads in newspapers. Websites that act as magazines should use the layout and advertising approach that magazines use. The same holds true for websites that resemble department stores. Or websites that are, essentially, daily newspapers.

Figure out what an Internet medium resembles and apply the rules that have always worked on its corollary. Chances are you will be very close to right on.

About two years, ago I created a little website to sell weekly leases for a beach cottage I own. Since I didn't know any better, I ignored all the rules about what I should have done and followed the rules I knew for selling real estate in classified space. It was a good instinct. A $200 investment has returned almost $80,000 so far.

To sum it up, this is what you should think about when you decide to market your business on the Internet: (1) the method you have traditionally used to sell your product/service, (2) what Internet form it resembles, and (3) how that might someday make you rich.

How to Start a Million-Dollar Business for $25,000 #20: Keep Your Risks Low, and Hold Your Dreams High...

Earlier this year, I talked about grappling with fear and contending with negative thoughts. Today, I'll deal with a particularly important financial fear: the fear of starting a business.

When business writers talk about why so few people become entrepreneurs, they cite 'fear of failure' as the number one challenge.

I agree. Fear of failing is a real factor. But to overcome it, you need to figure out what it means in more specific terms.

When I feel trepidation about starting a venture, I'm not worried about something as abstract as 'failure'.

I worry mainly about three things:

I sometimes worry I don't have the knowledge or skills to make the idea successful. I worry I might lose all the time and money I'm about to invest in the idea. And I worry if word gets out I've had to close, businesspeople will think I'm a fool. (Especially the people who doubted my idea in the first place.) Best-selling author Seth Godin talks about that first fear. He says most people who buy books on entrepreneurship never get beyond the dreaming stage because deep down inside, they don't think they have what it takes to succeed.

I don't know if that's the most common fear of starting a business. I wish it were. But I'm afraid too many entrepreneurs have the opposite problem.

They don't realise they don't have what they need to succeed.

If you have that fear, you should respect it…because nine times out of 10 it's valid.

My number one rule of wealth building is to invest only in what you know. If you think you might not know enough or have the right resources, you probably don't.

The solution to that fear is to put your plan on hold and acquire the experience to know what you need to know.

If your fear is being shamed by a failure, you can - and should - move forward. You can overcome this kind of fear by doing what I talked about in that previous essay: imagine the worst possible outcome and visualise being emotionally okay with that.

Another thing you can do is be a bit humble when you're announcing your venture.

Rather than bragging about all the money you'll be making, keep the claims small and try a little self-deprecating humour. This is probably a terrible idea, but I'm going to try it.

If your fear is losing your time and money, you should follow this protocol…

Keep your current job and all your current income. Start the business in your spare time at home. Spend the first few days creating a short business plan. Identify your product and why you believe you can sell it. List the media where you can advertise. Do a quick and dirty cost/benefit analysis. The entire plan should be no more than four pages. Over the next few weeks or months, spend as little money as you can, testing your 'optimal selling strategy' - your plan for selling your product: how you'll position it, how much you'll charge for it, what media you'll use to advertise it, and what sort of advertising copy you'll use. Find a corner of the overall marketplace where you can test your selling strategy cheaply. If your ultimate market is retail, for example, you could consider selling your product on Sundays at a market. Create a cash flow projection that'll allow you to ramp up your marketing if the initial testing is positive. If possible, get someone to act as your mentor - a retired business owner who's willing to teach you what you need to know and encourage you to take the steps you have to take. When the business starts growing, read Ready, Fire, Aim, my book on the subject. That will give you the details of what you need to do to take your business from inception to $100 million in annual revenues and beyond. Fear is a good and useful emotion. Successful entrepreneurs don't deny it. They overcome it sensibly and cautiously by taking baby steps and proving the optimal selling strategy before going big.

If you have what it takes, don't let either the fear of embarrassment or the fear of losing time and money get in your way. Keep your risk low and your dreams high.

How to Start a Million Dollar Business for $25,000 #21: How Mentors Can Help You Reap More Profits

A man looks at his youth and says, 'I wish I knew then what I know now.' That's what 'Eric,' a pot dealer who spent four years in jail, said to me after he had become a multimillionaire.

Eric was talking about what he had learned about direct marketing. I gave him a job after he got out of jail. He was bright and hardworking and honest. (Honesty is an essential quality for a pot dealer.) And so I taught him what I knew.

It took Eric 10 years to accumulate a fortune dealing drugs. And all that money disappeared to lawyers and the government when he got busted. It took him only two years to become an expert at marketing. Two years later, he had his own multimillion-dollar business. He would have been much, much richer if he had learned what he learned from me earlier on.

This is not an essay about legal vs. illegal businesses. My purpose is to point out how valuable it is to have someone help you, like I helped Eric.

It can take a decade or more to become the successful person you want to be. But you can shorten your learning curve - even drastically curtail it - by using a mentor.

With the advice and support of an experienced person in your field, you can avoid the most common mistakes you are likely to make. You overcome the stickiest problems and find shortcuts to success.

Let me give you another example. This one comes from Business Week.

Russell and Gayla Bentley wanted to start an apparel company, specialising in upscale, 'extended-size' women's clothing. The idea was solid. And they had experience. (Gayla had been a fashion consultant for 25 years. Russell had an MBA.)

Russell wrote a detailed 100-page business plan. The plan had them investing their life savings, $250,000, along with loans, into a catalogue showcasing their original designs.

Luckily, their bank suggested they have their business plan vetted. That's how they met Allen Shapiro, a retired executive with more than 30 years of retail experience.

Shapiro told them - at their very first meeting - that their marketing plan was way off base. 'He answered questions I never thought to ask,' said Russell. 'He made us see the pitfalls of starting too big too soon.'

Shapiro guided them to 'a more realistic approach.' Instead of starting with a catalogue, he suggested they open a showroom and sell directly to retailers.

Shapiro's advice worked. Before long, NeimanMarcus.com and Nordstrom stores began stocking the Gayla Bentley Collection. Two and a half years later, they were selling into moderately priced lines for outlets like Dillard's and QVC.

Talking things through with Shapiro, Russell admitted, saved them from disaster.

We probably would have gone broke pretty fast if we'd have gone forward with the big-scale plan,' he said.

I've had similar experiences many times in my career, both as a mentor and a protege.

In the past, I've often talked about my mentors.

From Leo, my first post-college boss, I learned the importance of persistence and dogged determination.

Leo once had me call Honda Motors more than 100 times to convince them to give us a new engine after the one we had died (from lack of oil). We didn't have a single, sensible argument in our favour, but that didn't stop Leo from pushing me. Finally, after I got all the way to the top, the Honda execs decided they had wasted too much time on us and gave in.

I didn't feel good about getting something we didn't deserve, but I never forgot Leo's lesson.

From Joel, my second major mentor, I learned a great deal.

The first lesson he taught me - by firing the lady who wanted to get me fired - was that a good leader needs to surround himself with the strongest people he can find. Another lesson I learned soon thereafter had to do with the fundamental nature of business. 'Until you make a sale,' Joel explained patiently, 'nothing else happens.'

From Bill, a client, partner, and part-time mentor, I discovered - relatively late in my career - two important business secrets that have made me a better leader.

For one thing, I no longer feel compelled to solve every problem put at my feet. I've watched Bill ignore countless squabbles and come out much the better for it. Before getting involved in a dispute these days, I ask myself, 'Can these people eventually come up with a satisfactory solution themselves?' If the answer is affirmative, I do nothing.

Thanks to Bill, I'm also now a big believer in product quality. Having mastered the secrets of selling through my relationship with Joel, I tended to underestimate the importance of the product. I was one of those marketers who actually wanted to sell snow to Eskimos. In working with Bill, whose focus is always on quality, I've seen how much better a business becomes when that's what you stress.

Don't Fall Into This Trap The popular view of the entrepreneur is a maverick who strikes out all on his own. The truth is, the great majority of successful businesspeople were proteges at one time. And those who did it on their own wish they had been lucky enough to have had a mentor.

But don't be seduced by the promise of 'free' advice.

If you believe the popular books on the subject, you have no doubt come across the idea that you can get great free advice from retirees. They recommend contacting your local Chamber of Commerce or taking advantage of an industry forum.

Indeed, you can locate lots of formerly successful businesspeople that way. But I'm sceptical about this approach … for two reasons.

Volunteers for such programs are usually long retired. And businesspeople who are out of their industry for more than five years no longer know its most important secrets.

Any advice you get for free is ultimately worth nothing. Not because the advice is bad, but because people don't value anything they get for free. If you want the right kind of mentors in your life, you have to be prepared to pay for them. You must pay for what you get in dollars. And you must pay for it in gratitude too. (More on that in a minute.) What You Can Expect From Your Mentor It doesn't matter where you are along your career path. Getting yourself a good mentor will be enormously helpful.

A study commissioned by the Elliot Leadership Institute at Johnson & Wales University confirms this. Researchers surveyed senior executives and middle managers in the food service and hospitality industry about leadership competencies. Those who had been mentored reported that the experience was invaluable. They said their mentors helped them build all kinds of leadership skills, including decision-making, strategic thinking, planning, coaching, and effectively managing others.

You may have no idea what you need to learn to make the next leap forward in your career. But someone who's been there and done it before does know. Getting the help of that person will speed up your success by light years. It will save you a lot of money too.

But those advantages of mentorship are just the beginning.Another study I read recently - a detailed and comprehensive study from the University of Georgia - found that people who had been mentored enjoyed their jobs and felt less stress than those who hadn't.

That makes sense to me. Because the right mentor will do more than simply tell you trade secrets.

Your mentor will be your learning coach - someone you can talk to and trust. He will provide you with guidance, feedback, and support. He will help you focus on your goals and give you direction.

He will offer advice on skills he's found valuable. He will counsel you on opportunities in your industry and different paths to success. He will share his personal experiences, but he won't inundate you with unsolicited advice.

An article I read in Black Enterprise magazine put it this way: 'Your mentor is not a saviour.' He's there to help you help yourself.

Or as leadership consultant Ron Yudd put it: '[Mentors] hold the flashlight so others can see the path.'

Getting Started with Your Mentor Before I tell you how to find a mentor, let's talk about how to handle your first few meetings with them.

For your first meeting, come prepared with a list of your business goals. And a list of questions too.

What do you want out of the relationship?

What do you feel you need to learn?

What do you want this person to teach you? Prior to each succeeding conversation, outline what you want to get out of your time together. And keep track of your progress.

It's important for you to set specific goals and monitor your own progress. That's not his job. And if you don't do it, he won't be able to help you continue to achieve.

Respect the Mentor-Protege Relationship To maintain the relationship with your mentor, you must recognise his value and reward him for it. Keep in mind that the advice he is giving you is likely to have a profound effect on your career. Although you can't measure the financial value of any specific suggestion (i.e., 'Stop spending so much time on this fulfilment project. Get to work on improving your advertising.'), you can bet that, in the long run, the effect will be significant.

Show him you appreciate what he is doing for you. Tell him, in specific terms, what you have learned from him, and thank him every time you meet.

The psychological reward of knowing he is helping you succeed is his primary reward. That said, once the relationship has been established, it's time to offer to compensate him for his time with money. (It doesn't have to be with cash, if you don't have it. You can offer him a cut of the profits he's helping you make instead.)

One of my current mentors, Sid, gets a check for several thousand dollars whenever I spend time with him. On a per-hour basis, he's extremely well paid. But for the help he gives me in making key leadership and wealth-building decisions, the $30,000 to $40,000 a year I invest in him is a bargain.

How to Find Your Mentor(s) There are many ways to find mentors. I'll begin with the best but most difficult.

Look around your industry for five successful business leaders who retired within the past five years. This five-year timeframe, as I've said, is important. If they've been retired any longer, they will almost certainly be out of touch. That is especially true today. The Internet has changed marketing hugely and forever. Anyone who hasn't done business since 2004 can't possibly give you anything but general advice.

Write each of these five people a short letter expressing genuine admiration. Compliment them on specific achievements. Then ask for advice on your own career.

Offer an invitation to go to lunch. Or, if they're located out of your local area, ask for a 15-minute phone call.

If you make five personal contacts, odds are that one of them will grant you an interview. If not, pick another five and repeat the process.

Spend most of your time asking questions and thanking your prospective mentor for his answers. You must show him right away that you are someone who (a) pays attention to good advice and (b) appreciates it.

If you find that you hit it off…you've got yourself a mentor.

The other, faster and easier, way to get a mentor is to invest in one of the many good mentorship programs available. You can find dozens of them through the Internet.

Don't Let This Moment Pass We all make mistakes. We all waste valuable time. But we are all capable of changing our lives for the better. And that change can happen much more quickly with a mentor.

If you don't have a mentor now, you should get one. If you have one, consider using multiple mentors. This makes enormous sense when you think about it. It gives you not only the wisdom of one person, but also the perspective you get by comparing the ideas and judgments of several experts.

Don't wait another year. Don't wait another day. Now is the best time to jumpstart your success. Seize the day.

Adopting a mentor or mentors requires a temporary abnegation of pride. Or perhaps something beyond that - the wisdom to understand that one's own ideas are not always the best ideas.

I consider this to be a truly great secret of success.

How to Start a Million Dollar Business for $25,000 #22: Is Your Business a Growth Machine or a One-Hit Wonder?

In 1982, members of the pop band Tommy Tutone wrote '5309/Jenny,' a song about a guy desperately trying to get in touch with a girl named, of course, Jenny. It was at the top of the music charts for 40 weeks and made the band members rich and famous.

At least for a while.

A couple of years - and a failed follow-up album - later, the lead singer was making a living as a software engineer, while his band mates were relegated to playing in bars. The band's problem? They never wrote another hit song - not even a reasonably popular one. In musical history terms, Tommy Tutone was a one-hit wonder.

In the world of entrepreneurship, we have one-hit wonders, too. In fact, they are probably more common among entrepreneurs than they are in the music industry. Tomima Edmark, a Dallas entrepreneur, released the Topsy Tail hairstyling gadget to widespread acclaim in 1992 but never produced another hit product (despite several attempts).

Steven Wozniak cofounded Apple but failed to make a mark (except in techie circles) with other ventures after leaving the company. Roy Raymond made millions with Victoria's Secret, but when he sold it and tried his hand at children's fashions, the business went bankrupt within a couple years.

What Causes One-Hit Wonders? The thing about being a one-hit wonder is that you don't feel like you are one while it's happening. You feel like a big success. You've created or sold a product, and it's doing really well. Your business is growing. You are making plenty of money. It feels like you are living the ultimate dream.

But then, suddenly, sales start to decline. You try all sorts of new marketing strategies, but none of them do the trick. Meanwhile, you notice, expenses have been rising. When your sales drop to 50% of the peak, your profit is down by two-thirds because your costs have risen.

One-hit wonders fail because they put all their eggs in one basket. They develop (or often stumble upon) a product that happens to be in the right place at the right time. It becomes a best-seller, and the business grows quickly. They hire marketers, managers, and salespeople, and everything is going well. So, they believe they have become successful business people. They believe they understand how businesses work and grow, but they actually have little or no idea.

I like to tell my proteges that there are three great dangers in being successful at anything - and that includes writing, teaching, and building wealth. Those dangers are not outside threats but faults of characters. Having been educated in a Catholic grammar school, I call those faults the Mortal Sins of Success.

These mortal sins are Sloth (laziness), Pride (arrogance) and Ignorance (lacking the knowledge or skill required of the goal).

Building a good and sustainable business requires the contrary virtues: hard work, humility, and knowledge (both of industry secrets and financially invaluable skills).

Three Virtues of Effective Business Building To develop a business that will thrive, you have to create a machine that will produce new products and advertising campaigns all the time. You have to put the people and processes in place to continuously produce more and better products all the time. You can't stop or even rest just because you've had a single success. You have to be willing to do the work, the relentless work, of making your business grow.

If you believe your first big seller will sell forever, you are guilty of pride - the belief that your product is better than it probably is. Some products (Coke, Johnny Walker, etc.) may last for ages. But most (typewriters, taxi services, etc.) lose their market share over time.

And if you think the marketing strategy that worked for that first product will work for the second and the third, then you are guilty of ignorance. As anyone who has been in business for several decades will tell you, new media change marketing methods, and sales campaigns ebb and flow. To transform a one-hit wonder enterprise into a lasting business, you have to be committed to learning new secrets and developing new skills almost every day.

And you have to demand that your key employees develop those same virtues: that they are willing to work hard, to stay humble, and to learn for as long as they are in your employ.

I can think of a half-dozen people I know - including a few friends of mine - who are running one-hit-wonder enterprises right now.

They are happy now because they are making money and keeping busy. But when I look at their businesses, even from the outside, I can see the writing on the wall: Sooner or later, their one product (or advertising scheme or the nature of their market) will change, and their businesses will shrink or even die.

When sales begin to dip, they will think, hopefully, that 'things will turn around.' But because they have been too proud, have gotten lazy, or have failed to learn, the decline will continue, and their profits, along with their faith in themselves, will disappear.

Are You a One-Hit Wonder? Your business may be working fine right now. And you may feel (in response to my comments above) that it is in good shape for the future because you are not lazy, arrogant, or dumb.

I grant you that. But are you practicing the virtues of business building? Every day? Are your key employees doing the same?

Here is a quick quiz that will help you assess the danger of becoming a one-hit wonder.

How many 'front-end' products are you currently selling? (By front-end products, I mean those that are sold to new customers.) What percentage of those front-end sales comes from a single marketing campaign? How many back-end products do you sell? (By back-end product, I mean one that is designed to sell to existing customers - usually, these carry higher prices than front-end products.) How often do you develop new products? When was the last time you successfully sold a new product? What percentage of your overall sales comes from front-end products? How much are you spending now on developing new products compared to previous years? How much are you spending now on new marketing strategies or finding new markets compared to previous years? How many active customers did you have three years ago compared to today? The 'right' answers to these questions are self-explanatory. Spend some time thinking about them, and you will be able to assess your company's profile in terms of the one-hit-wonder risk.

How to Change Your Business Into a Growth Machine If you think your business is at risk, you should act quickly and decisively to change the way you and your key people think about how businesses grow.

One way to do that is to become familiar with the stages of business growth from infancy to maturity. You must determine what stage your business is going through right now and understand the particular challenges and opportunities that exist.

You must accept that there are serious challenges ahead, even if you can't see them right now. And you must take it on faith that there are problems right now within and without your business that need to be solved, even if they are not apparent.

You must recognize and accept the universal principle of entropy - which tells us that everything naturally disintegrates over time.

And finally and most importantly, you must work hard to embody and teach the virtues of hard work, humility, and knowledge - understanding that you and all your employees must practice these virtues constantly and continually.

A Shortcut That Has Worked Well for Others To accelerate your progress in changing your business you should read (or reread) Ready, Fire, Aim. It is a book that sold very well and also (most importantly) helped lots of people build successful businesses. I am happy to say I have heard from many of those people. Some of them built good but modestly sized businesses, and some grew multimillion-dollar growth machines.

In Ready, Fire, Aim I explain my thesis on business growth: that most entrepreneurial businesses go through four distinct stages, from infancy to maturity.

If you are at risk of being a one-hit wonder, it is probably because you have had great success in Stage One of your business but never advanced to Stage Two.

To become a Stage Two growth machine, you must change the primary objectives of your business. In Stage One, the primary objective a business is to find the optimal selling strategy for product one. In Stage Two, the primary objectives are two: to develop a culture of innovation and speed.

As I say in Ready, Fire, Aim:

It probably took you several years to produce and market your first product. To take your company to the next level, you will have to move much faster-at least twice as fast as you are comfortable moving right now.

I'm talking about increasing the velocity of innovation. This includes the time it takes to brainstorm, develop, test, and produce new products. In Chapter 10, I talked about how you can get better at coming up with good ideas. But I also pointed out that if you don't execute good ideas quickly, they will degenerate over time.

Innovation matters. And so does speed. Combined, they give your business extraordinary growing power. But to change your business from a Stage One enterprise to a sustainable growth machine, you must practice and teach the virtues of hard work, humility, and learning.

How to Start a Million Dollar Business for $25,000 #23: Aim To Grow One Decimal Point At A Time

What follows is only for some readers: those who want to become really, really rich. Billionaire rich.

Be forewarned. If you are in that category, you may be disappointed by what I'm about to say.

But read it with an open mind. Because it is the only possible way to increase your wealth in any serious way.

I've had the following conversation more times than I would care to remember:

Aspiring Billionaire: I need you to help me.

Me:

What can I do?

Aspiring Billionaire:

I want to grow rich!

Me:

Okay. Have you read any of my books?

Aspiring Billionaire:

Yes, but they're about becoming a millionaire. I want to become a billionaire!

Me:

You do? That's too bad.

Aspiring Billionaire:

Why do you say that?

Me:

For one thing, it's a very silly goal.

Aspiring Billionaire:

Anything the mind can conceive and believe, it can achieve!

Me:

I can conceive being an IPL player, but I know I can't achieve it.

Aspiring Billionaire:

That's because you don't believe it!

Me:

You are so silly. And would you stop ending your sentences with exclamation points?

Aspiring Billionaire:

You are making fun of me.

Me:

Yes

The truth is that even if I took these guys seriously, I couldn't help them. You see, I don't know how to make billions. I'm not sure anyone does.

Every year, we read stories about clever young people who create online businesses that they sell for a billion dollars or more. There aren't many such stories, but they are so dramatic that they seem to be omnipresent.

When I was starting out, my wealthy role models were people like John D. Rockefeller, Henry Ford, and Jean Paul Getty. These guys became very wealthy by working long and hard for decades, building huge companies that dominated their markets.

I consider myself fortunate to have had those people as role models. Why? Because the chances of becoming a billionaire the 'new' way are about the same as the chances of becoming a professional sports star. One in a million.

The truth is this: It takes a lot of effort to become rich. And it takes time.

It took me about four years of concentrated effort to become a millionaire…and another several years to acquire a net worth 10 times that.

But even then, I didn't know how to make millions. I just knew how to make more money one decimal point at a time.

I worked my way through college by starting and running small service businesses. And almost all of them billed in increments of hundreds or thousands of dollars. As a result, I could only conceive of and believe in finding ways to add to my income a few thousand dollars at a time.

With, for example, my business constructing above-ground pools, I could (and did) develop an automated procedure for building such pools that any unskilled laborer could follow. This could (and did) allow me to increase the number of construction crews working for me. And it amounted to thousands of extra dollars in profits…not millions.

1983 was the year I decided to get rich. Having graduated from college and returned from a stint in Africa as a Peace Corps volunteer, I was working as an employee of a publishing company. As an employee, I could imagine getting big raises. But since my base salary was only $35,000, I couldn't imagine how I could increase that sum by more than about 10% per year. Ten percent was $3,500. In other words, I still just knew how to increase my income by thousands of dollars at a time.

Then, after my big decision to become rich, I knew I would have to do something to increase my income by more than $1,000 at a time. I realized that I would have to change the way I worked for money. So I learned to write advertising copy, and I became my boss's most valuable employee. Several months later, he gave me a 100%-plus raise.

I had learned to increase my income by $10,000 increments. What was the next step? To learn how to get richer, $100,000 at a time.

I achieved this by becoming a business owner - by inventing a new product and convincing my boss to give me a 25% stake in it. This new product made more than $200,000 in profits within months.

I spent the next 10 years learning how to build a serious business with the man who was now my partner. Our business went from $1 million to over $100 million in revenue…$1 million at a time.

Over the following 10 years, I started many other businesses and I invested in real estate. My wealth grew by tens of millions. But, for the most part, it was with a series of $1 million deals. And though the main business I worked with at the time grew in $10 million increments, my compensation was always a smaller portion of that. So I can't say that my knowledge of getting rich has ever gone beyond earning $1 million at a time.

By diversifying, I was able to increase my overall income by $3 million-5 million per year. (Uncle Sam always took his 40%.) That was (and is) a lot of money. I realized that I was earning enough to fulfill any need I could possibly have. So I turned my attention from increasing my income to building sustainable wealth. Looking back, I know I made the right choice.

Getting rich $1 million at a time was and is enough for me. And it should be enough for anyone.

So even if you have the billionaire bug, you should follow the process I've been describing: getting rich one decimal point at a time. You should do that because it's the only practical and reliable way of becoming wealthy.

You do it step by step - first getting richer by thousands, then by tens of thousands, then by hundreds of thousands, and then by millions.

The process might mean taking steps like these…

If you are a salaried employee, you can increase your income by becoming the most valuable employee in your business. This will increase your wealth by tens or even hundreds of thousands of dollars at a time - though it may mean switching employers as you go. If you are a professional or small business owner earning six figures, you can increase your income in $100,000 increments by replicating your business. If you own a business that is making millions of dollars per year, you can keep growing your business and your revenues. I go into detail on all of these in my books Automatic Wealth, The Reluctant Entrepreneur, and Ready, Fire, Aim. And I cover them further in other essays as well.

Meanwhile, there is one piece of advice that I have for everyone who wants to become rich - millionaire rich or billionaire rich: Develop a financially valuable skill.

A financially valuable skill is a skill that will help you climb the wealth ladder one step at a time. It is a skill that will put you in the mix whenever the opportunity to acquire wealth appears.

There are not many financially valuable skills. In fact, there are basically only four: marketing, selling, coming up with profitable ideas, and managing profits.

Learning how to sell is probably the most important of these skills, because it will allow you to sell your ideas, as well as the idea that your ideas are valuable. You will need this skill in just about every possible business situation.

Marketing is also a very important skill. It will allow you to sell your company's products and services to an ever-expanding market. It will also allow you to generate more income from the customers you have.

Learning how to come up with profitable ideas is the most difficult skill to acquire. Many wealth builders never learn this skill. They simply use their sales and marketing skills to convince idea generators to sell them their ideas or work for them. If you don't feel you have this skill, don't worry. You can still become wealthy if you have some combination of the other three skills.

The final skill is managing profits. This is essential for building wealth. Many people develop businesses that bring in significant revenues. But because they lack the skill to create profits, they never get beyond earning a decent living. They never get rich.

The good news is that learning how to manage profits is the easiest skill to acquire. You simply must commit yourself to it and pay attention to your business. The opportunities to increase cash flow and cut costs are always present.

So there you have it: several more tools for becoming as rich as you possibly can. Learn one or several of these financially valuable skills and then learn from them how to increase your wealth one decimal point at a time.

How to Start a Million Dollar Business for $25,000 #24: Become a Foodpreneur

In this report we will help you start your own food service business, which is one of the most popular branches of entrepreneurship. The food sector could seem deceivingly simple, but don't be fooled.

In the sixth essay of How to Start a Million-Dollar Business, Mark Ford says:

One of the most common mistakes made when choosing a business venture is thinking you know things you don't.

For instance, you might enjoy dining out. You eat at restaurants several times per week. In fact, you've dined at some of the finest eateries in the world on your travels. It seems only natural that your passion for great dining experiences and all the time you've spent in restaurants would lead to opening a restaurant of your own…

The problem with this thinking is that you are going on 'outside knowledge.' Your experience, vast though it may be, has been as a customer, not as a business manager or owner. Your experience feels deep and certain. But it isn't. It's specious. And rather conceited.

I am not immune to this mistake myself. I once partnered in a restaurant because I had the hubris to think that my own dining history qualified me to run one. And a colleague, George, an architectural designer, almost helped me make it worse.

Like me, George thought he knew the restaurant business because he had spent many years frequenting fine dining establishments. When I gave George a tour of my place, he suggested doubling the size of the kitchen. My partners and I were keen on the idea because we also thought the kitchen was too small.

Fortunately, I got a couple of expert opinions. I hired two friends who had been running restaurants for years to do an analysis. Imagine my shock when their report showed that the present kitchen was fully capable of handling three times the traffic we expected to have!

If Mark Ford himself faced difficulties with the food service business, you can imagine how deceptive it is. Here we provide useful tips to help you understand what you need to know to be successful in the food sector…especially if you have no experience.

The food service industry The food service industry is one of the strongest and most popular among entrepreneurs. Franchises like Dominos, McDonald's, Cafe Coffee Day have penetrated into almost every town of the country.

According to a report by the National Restaurant Association of India, the growing trends of eating out have propelled the food industry to more than $50 billion.

Risks The food segment is always one of the first choices for entrepreneurs, because there are many business models and opportunities to explore. However, they do not take into account that there is a lot of competition; neither do they plan how to operate their business.

Also there's a great risk of dealing with people's lives. Food poisoning is a serious matter. When opening a food business, you have to keep in mind the local, state, and country regulations. Check out the rules and regulations of The Food Safety and Standards Authority of India.

The economy is also a key factor. People love to eat, but in times of crisis they choose to eat at home more often. Layoffs in the times of recession also affect the restaurant industry. Another important thing to consider is the effect of inflation in the cost of products. And, frankly, it is not feasible to increase the prices to the consumer with the frequency and fluctuation of inflation.

Getting the job done Here are some recommendations from experts:

Before you begin you should understand each aspect of the food business (management, hygiene, shopping, etc.) or look for a partner who has experience in the industry. You can also take some course to understand the specifics of this industry. Focus on your target audience and value proposition. In this way, you will develop the appropriate menu and know how to meet consumer needs. Beware of fads and assess the size of the consumer market. Now you can choose a location for business and build the necessary structure. Too often people choose a space only to realize that there municipal zoning rules that forbid restaurants in the area or that the infrastructure is inadequate (water, energy, etc.). It is necessary to think about the route of the food from your supplier to the customer's plate. Does the supplier maintain proper hygiene in producing and storing food? Where else does he supply products? It is always Experts suggest to have at least three suppliers and visit them to know the production and processing of the products. When you receive the food, you need to check it and make sure you have received what you paid for. Scout for good employees and train them well. You must realise that having good workforce in a food service business is as important as the meal you are going to serve. They can make or break your business. Know exactly what your costs are and price food accordingly. Have an electronic management system to control expenses and cash flow. Trends There are three strong trends for you to keep an eye on.

Health: These days more and more people are getting concerned about health. Organic and vegan are common words that people utter and include in daily lifestyle. Serving healthy meal is a strong trend that is getting popular nowadays…and it will not go away soon.

Experience: Do pay attention to your ambience and how the customer is being treated. Remember that food is only a part of the experience the customer is paying you for - ambience, service, and hospitality are equally important.

Convenience: Provide home delivery, proper packaging, online ordering services, and everything that would add to customer's convenience.

Expectation and expansion Do not expect short-term results and try to keep a cash reserve for setbacks. If after six months you keep losing money…if you've tried everything you could…and if you've used up all your cash reserves - do not put your personal reserve into your business.

It's important to plan everything really well so you know how much money you need. When you set goals you can track results. If the situation is bad you will be able to identify the problem and try to find a solution.

But what if the business is a success?

Then you need to understand what is your differential advantage. Your strengths will be the foundation for establishing the business model for expansion.

An inspiring case In 2000, RP and her three business partners had an electronics import company. However, the unfavorable exchange rates began to derail their business. But the partners found an alternative. 'We believed that the food industry is less susceptible to periods of crisis so we decided to bet on it,' says RP.

However, none of the them had any experience in the industry. 'This forced us to do a lot of research. But our knowledge of entrepreneurship helped us think about how to develop products,' RP explains.

They used their own investment to create the first unit of a diner and only closed the electronics import company when the diner was already functioning.

The first store was near McDonald's. But never competed because the concepts were different: The American franchise is a fast food chain, they made sandwiches.

But what went right and what when wrong in the beginning?

Hits: the product idea was very good and innovative and had full acceptance from the public.

Misses: the product was advertised to low income audiences when it should be aimed at higher income audiences.

The business was going well (the restaurant had over a thousand customers per weekend) and soon opened a second unit. 'We expanded because we realized that we had many customers and could no longer could meet the demand,' she says. Over the next seven years, they opened seven more units.

In the eighth year, they decided to franchise the business. 'I had no knowledge of how the franchise system worked, but we were approached by people interested - it was an option to continue growing, because we had no more capital for expansion.'

'Even in a standardized way, working with food is different. Each business unit is a unique challenge, because of the local spot and qualification of the franchisee. That is why it is so important to understand all aspects of the operation,' RP further adds.

A few tips from RP:

'The challenges of working with food are huge, because in addition to all the difficulties that any business faces (such as major competition, inflation, labor costs, etc.), there are also the very serious issues of health surveillance and food safety. A poorly run restaurant without well-trained employees can lead to the death of a costumer.

'Having a good team is critical, because you depend on your employees to make the perfect dish for customers. Unlike a shoe store, where you can just replace the product, a restaurant doesn't usually give you a second chance. Be prepared to work on Fridays, Saturdays, and Sundays…when everybody is having fun.

'The advice I would give someone who wants to invest in this industry is to first look for a good location, in line with the objectives of the restaurant and its target audience; to invest in a good team and to keep in mind that you need to have a lot of passion for the business. You will only make progress after a lot of hard work and many, many weekends spent in the kitchen.'

Conclusion As we have seen, the food market has risks and benefits. But now that you know the basics, you can build your success story.

Get to work!

How to Start a Million Dollar Business for $25,000 #25: Best Way to Get Funding for Your Business

When it comes to attracting potential investors, it takes more than an idea - even if it's a really fantastic idea. You also need to prove that your idea has legs by turning it into a working model.

But then what? Once you've got a working model, where do you go for the money you need to turn it into a business?

In general, there are four sources of capital: venture capital firms, government schemes like the Startup India Standup India one, commercial banks, and private - nowadays also known as angel investors - or partners.

For the average entrepreneur, venture capital isn't a possibility. Paul Lawrence explains in an article 'Raising Capital for Small Business Ventures':

Yes, some venture capital firms will invest in new businesses, but such businesses are usually involved in technology or some other high-growth area. Frankly, for most small businesses, venture capital isn't even an option. It's rare for a small-business concept to have the kind of mammoth payoff venture capitalists look for.

Plus, the cost of doing business with these companies is high. It's basic economics. Their risk is high, so their reward must also be high. Even if you were to interest a venture capital company in your business, you'd be aghast at what they'd want in terms of their ownership position. What about government schemes supporting startups? Well, the Indipreneur Launchpad Course, that you have access to as a WBC member, talks about this in detail in two of its reports in the resources section titled: The 11 Ways to Fund Your Venture and What Kind of Legal Entity Will Your Startup Be?

You can also find out if your business idea might be a candidate for government money by checking out its website (http://startupindia.gov.in/) and understanding the requirements your business needs to have before you apply for funding.

As for getting money from a commercial bank, I can make this short: Forget about it. The only way a bank will lend you money these days is if (a) you have excellent credit and (b) you can collateralize your loan with assets. If you have good credit and tons of money, you don't need a bank loan. You can loan yourself the money.

This brings us to the fourth and final option…

Finding a Private (Angel) Investor or Partner At first blush, private funding seems like the least likely way to go. You may not know anybody who has money. Or if you do, you may not be willing to risk damaging the relationship by mixing it with business.

Some business experts advocate hitting up friends and family. I never did that because my personal relationships were always more valuable than my desire for money. But I did ask business acquaintances to invest with me. My relationships with them were based on money, so I didn't think it was inappropriate.

One of my first businesses, a house-painting service I started with a buddy when we were still in high school, required a very modest investment. About $400 to pay for ladders and tools. We didn't have the money, so we got a job with a painting contractor and saved up to buy what we needed. It took six months - and during that time, we were making all sorts of good contacts. We were getting to know paint wholesalers, equipment rental providers, and even future customers.

When we were ready to go off on our own, we spent a few weeks knocking on doors and offering discounted service. Before we knew it, we had all the work we could handle.

Years later, I funded an idea I had for a new publication by asking my boss if he wanted to invest in it. When he found out I had no money of my own, he took 75%of the deal and made me sign notes to repay him the 25% that I was liable for. I was a little unhappy with the arrangement at the time - but eventually, I realized he was being very generous.

Once I recognized that when it comes to funding 'good ideas,' money talks, I switched strategies. I decided I'd never attempt to sell an idea again. Instead, I'd sell a working model. Nowadays, when I'm looking for capital, I wait until some version of my idea has already proven itself to be profitable. At that point, I can go to any good businessperson and show him the numbers. Sales and cash flow can persuade in a way that market research and computer charts can't.

The Difference Between Getting a Loan and Taking on a Partner Let's say you have proven your idea in the marketplace with a working model. The next step is to figure out whether you want an investor or a partner.

The advantage of taking on debt (getting a loan from an investor) is that you do not give up equity in your business. It can still be 100% yours. The disadvantage is that you will owe the money even if the business fails.

The advantage of accepting investment capital (taking on a partner) is that you don't have to pay the investor if your model doesn't work out in the bigger world. A second advantage is that you will have someone to bounce ideas off. (The best investors are successful people in the industry you are entering.)

In between getting a loan and taking on a partner, there's room to play. You might be able to structure a deal that has the best of both worlds - a loan that gives the lender a limited (though significant) upside if the business takes off. To get that, you would have to make some concessions. You may have to pay back some of the loan if the business fails, for example. Or you might take, say, 50% of the salary the business intends to pay you and use that to pay down the loan over time.

Ultimately, the guy with the money decides what the deal is. You'll do better negotiating your stake if you present a very exciting and trustworthy picture of the business's potential. And that will depend on having detailed financial reports on costs and cash flow and profits, if there are any.

Prepare to Make the Pitch Before you can contact prospective investors or partners, you need to figure out how much money you need. Come up with three scenarios: ideal, less ideal, and minimum. Of course, there will be advantages in having the ideal amount of capital - but don't get your heart set on that. Chances are you will get option two or three. Be prepared to work with either.

In making the pitch, follow Paul Lawrence's SIPE process - Solicit, Interest, Persuade, Execute:

Solicit Begin informally. Casually ask your prospect, 'If I happened to come across an interesting business opportunity, would you like to hear about it?'

It's important to note that you're not asking him if he would invest in a business, but if he'd like to hear about potential opportunities. Since he won't feel that he's being pressured, it's more likely that he will give you a positive response.

You also immediately rule out people who have no interest in any business proposals… without putting them (or you) in an uncomfortable position.

Interest Give your prospect a one-sentence description of your business. A long-winded explanation can sound like you don't have confidence in your business idea or that you don't really know what you're talking about. You then follow up with an estimate of the business's profit potential and a couple of supporting statements that provide strong reasons to believe it is viable.

Persuade If the person you are pitching seems interested, set up a second meeting to present him with a written proposal.

Make it short and to the point, no more than eight pages. If you are presenting it to the right person - someone already successful in the industry - he will not need more than that.

The proposal should have two goals:

First, to prove the substantial profit potential of the business. Rely heavily on actual numbers. (If possible, have the numbers prepared by a neutral accountant.) Based on your working model, estimate your gross revenues, expenses, and profits over a three- to five-year period. If it adds up to a healthy estimated net profit, you're off to a good start. Second, to demonstrate the low-risk nature of the investment. Although you can't ethically or legally guarantee that an investor won't lose his money, you can explain why there is a good chance he won't lose it. Since much of your evidence is coming from a working model, this should be easy to do. Although Paul doesn't include this in his SIPE formula, I'd add this: Put some of your own money into the deal. Even if you haven't got a lot, you should have something in it. As a rule, I never invest in a deal unless my partner has some 'skin in the game.' The money you put into making the working model counts. But pledge some more money, too.

Execute Once your prospect agrees to the terms you've negotiated, arrange for a third meeting to sign a 'deal memo' (or in India - the MOU-Memorandum of Understanding) - a basic outline of your understanding. The main reason to have a deal memo is so that, in the future, there will be no debate as to what was originally agreed to. If your deal is large or complicated, you may want to have a formal contract. But in many cases, a deal memo is strong enough to be legally enforceable.

If none of the above works, don't beat yourself up about it.

Face the possibility that your idea might not be as good as you think. Or it might be good, but not designed or formulated properly. Or it might be good and well-designed, but too advanced for the current market. Or perhaps the terms of the deal you wanted were not perceived as being fair. Resist the temptation to view the people who said no to your idea as fools. See them, rather, as helpers.

If you still feel strongly about your idea, don't give it up. But do go back to the drawing board - back to the basic questions, such as:

Is there really a proven market for this product? If so, is it growing, flat, or receding? Does my product idea add something new/better/less expensive? Is it priced competitively? Do I understand how to reach customers cost effectively? And so on. Go back to spending 80% of your time making money, as you've always done, and spend the other 20% rebuilding your idea until you feel confident that this time around, you'll get your money.

The Virtue of Laziness, Part 1

“What the Hell, I Might as Well Get Rich” The desire to work less is not a vice but a fundamental aspect of emotional intelligence. When combined with commitment, persistence, and common sense, it creates economic efficiency, an essential component of building great wealth. - From Principles of Wealth by Mark Ford

The unpaid bills are stacked next to the unwashed dishes. You've been short about Rs 30,000 per month since retirement. You need something to fill that income gap - some sort of moneymaking scheme that's feasible, flexible, and profitable. It can't be a financial investment because you've got no more savings. What to do?

Before going to sleep, you check your email. You see an advertisement, but before you delete it you notice something in the message about extra income. “What the hell,” you say; you decide to give it a try.

So you join something called the Extra Income Project (EIP). The author of one of the reports, a braggart rich entrepreneur named Mark Ford, makes the case that someone like you should start a part-time “service business.”

“Compared to other side businesses, a service business has the lowest barrier of entry,” he writes. “It can be grown with minimal marketing and the simple application of quality work.” You like planting flowers and trimming bushes and just hanging around plants. You have a thriving balcony garden, and some gardening tools too. So you choose to try becoming a home gardening consultant.

Following the EIP report, you spend Rs 150 to print 500 colourful flyers advertising your new business. You alter one of the suggested pitches:

Landscaping With Love! I'll Make Your Home Come Alive with the Best Plants For Your Health and Serenity, Guaranteed First Service Only Rs 500!

The Rs 500 offer is an advertising trick - a “loss leader,” to prove what you can do. It works. You get six responses on week one and land two gigs. By week four, you have Rs 15,000 worth of weekly contracts. Because you are good, you get your work done in seven hours. Your Saturday is now a workday, but you're making an extra Rs 60,000 per month.

Your work is good, so you start getting referrals. You can, if you want, make another Rs 20 or 30,000 working Sundays. That's money you could use towards a new car. You'd have some left over for saving.

But do you want to work seven days per week? Hell no. You're 52, not 22. You want the money but not the work. You hatch a plan…

To Hire or Not to Hire, That Is the Question: Do Less Work, Make More Money You're making an extra Rs 60,000 per month running your own part-time home garden consulting business on Saturdays. You're tempted to expand it, but you aren't willing to work seven days per week.

There is one obvious solution: Hire help. But is it worth the hassle? You sit down with a pen and a sheet of paper and make two lists, one marked plus and one marked minus. On the minus side you add things like “the trouble of finding someone” and “managing people” and “figuring out the right compensation” and so on. The more you think about it, the longer the “minus” list grows. And yet you can't think of anything to add to the “plus” aside from “do less work” and “maybe make more money.”

You think, “This is exactly why I never wanted to have my own business. It's just one long list of worries and concerns. Why is that Mark Ford idiot so hot on side businesses?”

For now, you decide against hiring someone else. Instead, you accept a few more jobs to do on Sunday mornings. You'll make another couple thousand per week, and still have Sunday afternoon to rest. A month later you realize that you didn't take into account rainy days and the occasional “Can you come back tomorrow?” You are making more, but working every sunlit hour of every weekend. It is wearing you down quickly. It's even affecting your weekday work performance.

You think about the math. Doing everything yourself, you're making about Rs 1,000 per hour. You can hire someone to do the grunt work and pay him/her Rs 150-200 per hour. That difference, that Rs 800, would be your company's gross profit. There would be some additional costs you know, like accounting. But on an hourly basis, that couldn't be more than a couple hundred.

That leaves you with a gross profit of around Rs 600 for each hour's work. That's Rs 400 less than you are making now, but overall you'd be making about more per month while personally working the same number of hours.

“This doesn't feel like laziness,” you think. “This feels like common sense. Maybe that Ford guy is right.”

But how do you make this work? Where can you find a good worker?

The Virtue of Laziness, Part 2

By Hell or High Water, You're Going to Work Less In your home gardening business, you've moved beyond what Mark Ford calls the “self-employment business” stage. You are ready to make more money by working less. In other words, you are ready to hire, train, and manage employees.

You know from one of my essays in the Extra Income Project that the quality of person you hire is one of the most important factors in making your growing business successful. Since you're gardening, not curing cancer, you figure you don't need an educated person. You need a hard worker, someone willing to do manual labour 8-10 hours per day. You also need someone who will be pleasant to work with and treat your clients respectfully.

You ask around at your job and your building. Someone has a brother looking for a part time job after college - maybe he would like to try. You call him in, but he doesn't want to work in some neighbourhoods, at some hours, in some buildings… his list goes on. You forget about it. Sounds like he doesn't want to work at all.

Then you see someone working in a garden. He's not young but looks strong and happy. He knows plants, he looks like a hard worker, and has a pleasant manner. You take a chance. His name is Ramesh and he asks for Rs 6,000 a month for part time work. You offer him Rs 10,000 and he works hard and never misses work.

A month later your little weekend landscaping business is getting you an extra Rs 100,000 per month - after Ramesh and expenses. You have that new car. You've moved into a nicer apartment, and you're banking money for the future. But somehow you are still too busy. Between working manually, drumming up business, and managing Ramesh, you have no time on the weekends for enjoyment.

“I want to work less because I'm smart, not lazy,” you say, looking at your tired reflection in the mirror on Sunday night. And then you make a pledge: By hell or high water, you will find a way to work no more than eight hours next weekend.

The next morning you wake up excited. You think you know just what to do…

Crunching Numbers, Hiring Brothers It's breakfast when you put pencil to paper to crunch some numbers. Starting your own home gardening business and working for yourself was lucrative. By “hiring” affluent customers and being efficient, you were making over Rs 1,000 per hour.

Employing Ramesh was a great idea, although it added to your expenses, but not by that much. Your idea was simple: Instead of working alongside Ramesh, you would hire a second employee to work with you. You'd still make about the same - minus the labour charges - but you'd have the weekend mostly free!

And what if you hired two more people? You could start accepting the new clients you've been turning down, covering more ground in the same span of hours. The numbers in your calculation start going up. Though of course there would be some more work on your part at first: posting more fliers, making appointments, initial consulting sessions… You ask Ramesh if he knows two people who are good and reliable workers. “Yes,” he answers. “Sandesh and Sunil - my brothers.”

Nine months later your weekend business is no longer a weekend business. You have three two-man crews, each working six days per week. Your gross revenue is now Rs 5 to 6 lakh per month. Expenses are up. You've had to rent two trucks, more gardening equipment, and you're renting a small warehouse outside of town to store all the equipment. Ramesh is now making Rs 12,000 per month and his brothers Rs 10,000. The good news is that you are personally netting over Rs 300,000, which means you are living well and saving serious money. You can see how, if this continues, you are going to be “sort of rich.”

The bad news is that running a growing business is more complicated than you ever imagined. There are bills to process, forms to file, legal and tax issues to deal with. Then there are the people problems: problem employees and difficult customers.

Once again, you are working too hard. But you have a solution, something you've been dying to do for a long time…

The Beginning of the Rest of Your Wealth-Building Career Your landscaping business is growing bigger and faster than you ever thought it would, and the amount of work and attention it requires is eating up more and more of your day. So you make a decision to finally do something you've been wanting to do for a long time. You go into the 9-5 job you've kept this whole time and step into your boss's office. You give him the good news. “I'm firing you,” you say.

“Huh?” he replies. You leave the office with a big smile on your face, as big as Ramesh's smile was when you increased his compensation to Rs 15,000. Your newfound extra time means you won't have to work weekends any more. In fact, you can't imagine having to work past noon during the week either.

Yes, you are giving up the steady paycheque that your cranky old boss used to pay you. But you are still making more than twice that with your gardening business, which is still growing!

A year later the business is considerably larger. You now have six three-man crews, are doing building gardens and community gardens and not just home gardens, and the gross billings are approaching a crore per year. You hired an assistant at Rs 30,000 to do most of the office work and your niece as an intern on a part-time basis to help with the sales, and listing your business online. (She's thrilled to be getting the real business experience while she gets her commerce degree, and getting paid for it). Other expenses - legal and accounting mostly - have also grown. Still, your net profit is more than double your salary and you are working less - only four hours per day, five days per week, with your weekends free and clear.

While on a family holiday in Paris one summer evening, you can hardly believe it's been less than four years since you read that Extra Income Project report and decided to spend Rs 150 on those flyers. Your success, you realize, came not so much from the courage to take a risk, because you never risked anything more than Rs 150 and some extra time. Your success came from persistently figuring out how to do less work than you were doing!

You suppose Mark Ford was right when he wrote, “The desire to work less is not a vice but a fundamental aspect of emotional intelligence. When combined with commitment, persistence, and common sense, it creates economic efficiency, an essential component of building great wealth.” The only thing left to do, then, is decide what you want to do with the wealth you've earned.

How to Start a Million Dollar Business Series for $25,000 #26: How to Make Business Deals That Last

If you think making good business deals is all about driving hard bargains and writing binding contracts, you are thinking with half your brain.

There are times when being tough and tenacious is necessary. But there are also times when you have to be soft and flexible, too.

Like everything in life, being a good dealmaker requires both the yin and the yang.

Yes, you may be able to get what you want by acting the bully or by strategically backing the other person into a corner. But that sort of approach to dealmaking can and probably will backfire on you - if not immediately, then almost certainly over time.

JSN, the man who first taught me (and helped me) get rich, was a ruthlessly 'successful' negotiator and was widely known for his ability to get business associates to agree to his terms. And he was quick to follow up on those agreements with iron-clad contracts that bound them to those deals. The combination of the two almost always resulted in an advantageous position. Later on, after the ink had dried, people often regretted what they had agreed to. JSN felt that was “on them.” It never felt right to me.

By watching what he did, I came to understand how he was so effective in negotiating deals. It was a combination of being prepared and employing negotiating “tricks” and sheer force of will. But when it came time to make my own deals, I rarely followed his example. Partly, as I said, because it didn't feel right, but also because I saw the long-term effect of his approach, which was generally bad.

What happened was this: In four cases out of five, the deals fell apart after it became clear that the other person had gotten the short end of the stick. This was true even though the contracts were very clear.

Business partners who felt outmaneuvered found ways to circumvent the agreed-upon terms. Or they simply reneged. Battling it out in court? JSN tried that once or twice. It was very expensive and ultimately fruitless.

Meanwhile, with each dispute, his reputation as someone 'you don't want to do business with' widened. Eventually, his window of opportunities got very narrow.

I'm not against preparation and strategy when it comes to negotiating deals. But the goal should always be to make win-win deals, not to 'take care of number one.'

And that is not even enough. If you want to have the best success at making great business deals, you have to be able to change the deals you make if and when, for whatever reason, they become unfair to your partners.

I've done that many times. I've taken less and given more when it was clear to me that the original deal was no longer fair. In most cases I made those adjustments before they were asked for. My reasoning was simple: If I wanted the deal to last, then I had to demonstrate at all times that I could be fair.

What I'm saying, in short, is this: Negotiate only win-win business deals and be prepared to change them if and when they become unfair to your partners.

You would be right to wonder whether, given my views on making deals, there is any reason at all for written contracts. You may think, 'Wouldn't it just be better to make all relationships oral, non-obligatory, and temporary?'

The answer is no.

I do believe in using contracts. But their purpose should be primarily to define expectations and anticipate change, not enforce whatever decisions seem right at the time.

Here's an example:

You and I come together to start a business. I have the money and the knowledge to get the business going, but I don't have the time. You have the time, but neither the money nor the knowledge.

The natural course of this sort of business relationship is going to be one-sided one way for several years…and then one-sided the other way for many years thereafter.

In the beginning, I'm going to be providing most of the value - in terms of money and knowledge. Once the business has matured, you are going to be providing most of the value. In fact, I'll be providing little if anything at all.

Still, we might say that a fair deal for such a situation, assuming you are going to be paid a salary from the business, is that we are going to be partners for life. I couldn't get the business going without you, and you would never be in the business without me. I am giving you the chance of a lifetime, and you are giving me the means to add to my wealth.

In such a case, we might have a contract that lays out the framework for a 'fair' deal. We might, for example, allocate a salary to you from the beginning that increases, according to some arms-length parameter, as your skills improve. In addition, we could include a bonus based on the company's profits. The equity and profit distribution could be 50/50.

This is a deal that will seem generous to me and fine to you when we first make it. But years later, when you are doing all the work and the business doesn't need my money or knowledge anymore (when, in fact, your knowledge will have exceeded mine), the 50/50 part may no longer seem fair.

That's why you have a written contract instead of just a handshake agreement. You negotiate for fairness in the beginning - and you use the contract later to remind you of why you thought the deal was fair.

Memorials, Not Guns MT has written more contracts for me than anyone else. He's not only one of the most capable attorneys I know, he's also a great natural businessman. Here's what he has to say about contracts:

Contract law is more esoteric than you might imagine. Judges first must ask (and this is the standard contract question), “Did the parties have a meeting of the minds?” In my law school days, I thought to myself that this sounded more like Star Trek than what I thought law would sound like. But it's true: For a contract to be valid, it must first show that there was a “meeting of the minds.” And this means your language cannot be ambiguous. The terms must be clear. The exit strategies must be straightforward. The payment terms cannot be based on conditions that are unclear. In short, clarity is the key. If not, the other side says, “Well, Your Honor, I understood the language to mean this and not what he said.” And if the language is unclear, your contract may not be a contract after all. The judge may say, “Well, there was no meeting of the minds here, and I can see why - because the language was ambiguous. I hereby rule the contract null and void, since it was never truly formed.”

As for creating one-sided contracts and thinking you're getting away with something, I could not agree more with Mark Ford. Legally, a one-sided contract only leads to breaches and litigation. Make a contract clear and fair, and you've got yourself a good deal. In the end, the process of signing a contract is really just a way to ensure that each party understands the deal. It's a 'memorial,' not a future gun. Memorials make money. Guns kill.

Three Things a Good Contract Must Have What I said about formal business contracts applies to informal contracts, too.

Say you make a deal with your employees: Sell 100 tickets to the conference and we'll take you to Las Vegas.

It's a great promise. And it serves its initial purpose of motivating them. But you have to clearly articulate the deal - and put it in writing. (Are those fully paid tickets? What about cancelations? How many days? What kind of hotel? Who pays the mini-bar? And so on.)

If you don't do that, the original incentive, which was meant to produce sales and increase morale, could actually backfire.

So when it comes time to make an agreement, here are four things a good contract should include:

A clear explanation as to why the deal, as agreed to, is fair, along with the principles of fairness that govern the deal. Clear and detailed examples of who gets how much for doing what. Contingencies for when things change - as they inevitably will. A well-written contract should serve as a very useful tool to make any adjustments that are necessary. (Assuming, that is, both parties are still operating in good faith.) A clear description of what would terminate the agreement. Make fair deals - and document them in writing. And remember that the purpose of a contract should never be to enforce an unfair deal…but to remind you of how and in what specific ways you thought the deal was fair in the beginning.

How to Start a Million Dollar Business Series for $25,000 #27: The Most Powerful Way to Break Into a New Market

Let me tell you a business principle that is behind many - if not most - of the world's America's greatest business fortunes.

It is amazingly obvious but often ignored. Yet it is the most powerful and reliable way to break into an existing market and make your small business grow.

Here's the secret I'm talking about: In an established market, nothing sells better than price.

If you have a relatively good (or better) product and you want to sell into a strong, competitive market, then you would be wise to sell your product at a much better (i.e., cheaper) price than the competition…

Let's look at history. Consider how many billion-dollar fortunes were created by cheap pricing.

Rockefeller dominated the oil industry by buying up production and delivery. Doing this allowed him to offer oil and gas at prices his competitors couldn't touch. By keeping the prices of these fuels relatively low during his reign, Standard Oil increased the size of the fuels market in a huge way. Because oil and gas were cheap, people used more of them.

Likewise, Andrew Carnegie made a fortune by producing inexpensive steel. Sam Walton is known for his discount stores (Walmart). Henry Ford for making autos within financial reach of the average person.

To break into a competitive market, you need either (a) a big advertising budget (to establish demand for your product/service) combined with a superior-in-some-way product… Or (b) a way to sell your product/service CHEAP so word will spread on its own.

While the Tatas and Reliances can use the first strategy, for most small businesses, (b) makes more sense.

This may seem too obvious to mention, yet you're not likely to find it in business seminars, audiotapes, or marketing books. I simply don't remember reading or hearing advice of this sort - ever.

I remember when I first got into the newsletter business. I was hired to improve the quality of the newsletters themselves - as editorial director.

The marketing director had created a growth strategy based on the one used by the large company she came from. She favoured expensive products and high prices. We were going nowhere.

One day, my boss came into my office to tell me he had fired this woman. I had already decided I wanted to be his most valuable employee, so I was eager to offer to help him do what she did not do: grow the business in leaps and bounds.

We spent a month studying the market and determined that the fastest-growing area was publishing investment advice. We spent the next few months closing and selling our business newsletters. We replaced them with ones that analyzed and recommended stocks and bonds.

Since I was new to that world, I couldn't help my boss make better products. But I did conspire with him to make facsimiles of the best-selling investment newsletters at the time and embraced his idea of selling them at a steeply lower price.

At that time, investment newsletters were selling for between $99 and $198. We came out asking for only $39.

Our competitors were not happy. But it worked wonders for us. We were profitable almost immediately.

Within 12 months, the business went from less than $500,000 in revenues to more than $5 million. Five years later, we were one of the largest newsletter publishers in our industry. Our sales topped $50 million.

Those early newsletters were, frankly, not all that great. I did my best to make them as good as the competition, but looking back now I can see how far from the mark they were.

Nevertheless, our marketing, which emphasized our low price, won the day.

How does this apply to you?

If you are starting a new business or thinking of starting one in a competitive market, you'd be crazy not to make this concept a core part of your marketing strategy.

Or if your business is mature but flagging, coming out with a super-cheap version of what you sell now (but under a different brand, of course) could be the Gravy Train ticket you are looking for.

Take a look at your lead product(s) - the one or ones that bring in most of your new customers. Ask how are they priced in relation to the rest of the market.

If you don't have at least one product that is super cheap, think about developing and selling one. There are problems and pitfalls with selling price, but when it comes to breaking into (or breaking back into) a competitive market, price almost always wins the race.

How to Start a Million Dollar Business Series for $25,000 #28: The Second Most Powerful Way to Break Into a Competitive Market

In a previous essay, I talked about price competition - and why in some situations nothing else is more powerful to the success of a new business. When the market is sizable and competitive, underpricing the competition with a new product is simply the best (if not the most obvious) way of getting the attention (and buyers) you want.

Today, let's talk about another related business-building secret - one that's nearly as important, yet sometimes overlooked. It is a secret you can use in conjunction with 'selling price.'

I was reminded of this secret while shopping with my wife in New York City some years ago. She took me to H&M, a very hot European department store that had recently opened in America.

From the outside, it could have been any one of a dozen upscale stores on Fifth Avenue. Inside, the place was jamming. There were literally thousands of shoppers on the first floor alone. The cash registers were smoking.

If you have been inside an H&M store in India you will be familiar with this scene.

Since none of the stores we had previously visited that day were doing much business, I wanted to know why H&M was so packed. It was more than just the novelty of a new store.

I bumped into the answer almost immediately. Someone brushed by me and knocked me into a mannequin on a pedestal. It was a male figure outfitted in a lemon-yellow papier-mâche-type shirt and lime-green, calf-length parachute pants. Very trendy.

The styles I was looking at - the materials, the colors, the cuts - were just what you'd expect to see at Gucci, Fendi, or Versace. But when I looked at the price tags, I was shocked.

Instead of $250 or $300 for the shirt, the ticket said $18! And instead of $150 to $250 for the pants, the price was $13!

It was one of those wonderful moments of dumb epiphany - realizing in a profound way something that is profoundly simple. H&M entered America the right way: with steep discounts. But they are also selling into a large and growing demand.

H&M does not feature standard brands. The stylish clothes I saw on the first floor were all trendy knock-offs manufactured in Indonesia. In place of name brands, they sell style - the look of famous designers for a fraction of the price.

This is an entirely different tactic than that employed by many discount department stores that sell off-brand and out-of-date clothing at discounts. (How many near-empty discount department stores have you wandered through where the clothing is so unappealing, you wouldn't be paid to wear it?)

H&M took a double-barreled approach: hot and trendy, in-demand products sold for amazingly cheap prices.

This is not an easy combination to achieve. But it can be done. If you are observant, you can easily identify what products are hot and, if you are clever, you can figure out how to make and sell them cheap.

H&M's strategy was a bit like what the Japanese carmakers did when they decided to enter the luxury car market. Rather than creating styles of their own or coming up with something mundane like a Japanese Cadillac, the Japanese went right after the world's hottest luxury car manufacturers-BMW, Jaguar, and Mercedes. They knocked them off (both in terms of style and performance) and introduced the Lexus, Infiniti, and the Acura NSX.

Now Americans could drive the cars they had always wanted but for half price. It was an irresistible offer. The Japanese quickly dominated the market.

So if you have decided to use price as your entry into a vibrant, competitive market, give yourself a huge additional advantage by shaping your product into something that is currently in strong demand.

Put differently, resist the egoistic urge to sell something that is 'the best' or 'unique and different.' Instead, figure out exactly what people currently want most… and give it to them… cheap.

If you can do that, then your marketing will be stronger and cheaper. And when word gets out - and it will - that people can get what they want most for an affordable price, they will come knocking down your doors, like they were doing every day at H&M.

(I need to clarify one point. By selling into the trend, I don't mean selling things that are ultra trendy. The appeal of far-out, avant-garde stuff is very restricted. If you want to gain market share in a big market, you need to select the big, long-term trends.)

It seems to me that this strategy applies to most markets at most times. If, for example, you are starting a restaurant on a street where there are four steakhouses, you wouldn't specialize in Turkish cuisine. You'd sell steak, but cheaper.

If you are starting a travel, tour, or conference business, you wouldn't feature discounted trips to Albania and Pretoria. You'd sell London and Paris and Orlando.

In every business, no matter how mundane, there are trends. If you are naturally contrary, as I am, you might be tempted to swim against the stream. Don't. Find out what's hot. Figure out how you can sell it cheaper than anybody else. Later on, when you have a strong foothold and solid profits, you can develop higher-priced, specialized back-end products - even lines of products.

In business, as in the stock market, the trend is definitely your friend.

How to Start a Million Dollar Business Series for $25,000 #29: How to Knock Off Your Employer and Start Your Own Business

Two engineers, Fahri Diner and Xiang-Dong Cao, were the 'brains behind [a] Billion Dollar Deal.'

They were sitting around after work having tea (I'm making up the details) and complaining about their employer, Siemens Information and Communication Networks in Boca Raton, Florida.

Cao was saying that their bosses did not properly appreciate them. Diner replied, 'Hell, we should start our own business.''

'You're damn right,' Cao replied.

Several months later, they said goodbye to their employer and moved into a dusty warehouse. They telephoned former colleagues until they found two willing to work for them for stock.

With this meager core of four, they started their own fiber optics transmission company, doing essentially the same thing they were doing before but with a few of their own improvements.

In a few short months, they had gone from wage-earning employees to brave new entrepreneurs.

How I Became an Entrepreneur My first real job was 'backseat wiper man' at the Rockville Centre Car Wash on Long Island. I was 14 and happy with the $1.25/hr they paid me.

A couple years later, when I was working as a house painter's assistant in swank Hewlett Harbor, a 20-minute drive from my home (a ramshackle house literally on the other side of the tracks), I became an entrepreneur.

Well… a chicken entrepreneur.

What happened was this: My friend Peter and I were scraping the shingles of a big yellow mansion - I can still remember the details - when the lady of the house, a Mrs Bernstein, came out asking for Armando, our boss. Armando's routine was to drop us off at the work site at 7:00 a.m. and disappear until 5 or 6 in the evening.

We were left to do the work, with virtually no experience and only Armando's advice on watering down paint and 'dry rolling' the second coat to guide us.

(In case you're about to get your house painted…dry rolling is when your painters pretend to be giving you a second coat when in fact the rollers are dry. This allows them to get the job done twice as fast and save a bundle on the cost of paint.)

'I'm onto your boss,' Mrs. Bernstein said. 'How much does that cheap bastard pay you?' We told her. She harrumphed and disappeared inside. When she came out a half-hour later, she announced, 'I just fired that good-for-nothing. And if you know what's good for you, you'll be here Monday morning. I'll pay you an extra dollar an hour to finish this job properly.'

Some other time, I'll tell you what happened when Armando discovered our duplicity.

But the point of this little memoir is to illustrate how I accidentally started working for myself…and to highlight an important principle of wealth building.

Starting your own business is a scary process. You give up a steady income and go without any assurances for an unknown period of time. You risk embarrassment and failure. Most people - and I mean 99 out of 100 - don't have the brass for it.

I didn't. But I was lucky. Mrs. Bernstein gave me the impetus I needed. Had it not been for her, I might be a college teacher today, earning a modest living and complaining about the administration.

New Shoots From an Old Vine I wonder how many new businesses start this way - as new shoots from an existing vine. Many, I'd guess. Even most.

The advantage of doing this is clear. Spinning off from an existing enterprise gets you past two of the biggest hurdles facing new ventures: knowledge and contacts.

Having the right contacts - vendors, marketers, and consultants - is equally as important as having knowledge.

The great thing about starting a business you're already in is that you can gain the knowledge and make the contacts while you're still an employee.

Start by 'promoting' yourself. Do the job you want, not the job you have. Learn everything about it. Find out what makes your business grow, how your sales are made, and what, if anything, makes your product or service special.

Also very important:

Figure out what is less than perfect about the business you are in. Get friendly with the key suppliers, bankers, and consultants your business uses. After doing these things, you are only one decision away from going off on your own.

This is basically what Diner and Cao did. Within days after jumping ship, they had an ongoing business competing with their former employer.

Two years later, their company, a developer of high-speed fiber optics transmission equipment, was acquired by Nortel for $3.25 billion.

4 Steps to Knocking Off a Business No, you don't have to be a self-starter to have your own business. You can start as a wage coolie, just as Diner and Cao did, and take advantage of what you have to create an opportunity for yourself later.

Interested? Here's what you need to do:

Learn everything you can about your business, especially how sales are made and what, if anything, is unique about the product or service you provide. Read about business. Take seminars. Educate yourself. Become known as a 'can-do' employee. You will attract good people, individuals you may want to team up with later. Figure out how to make your company's products or services better. This will become the key to your eventual success. When you go out on your own, you want what MBAs call a 'competitive advantage,' something you do better than your former employer can. Start saving. You are going to need a bank account to get you by, even if you find a venture capital partner. Try to stash at least 10% of your take-home pay. Twenty percent would be better. If this is not possible, consider - seriously - a weekend or evening job.

How to Start a Million Dollar Business Series for $25,000 #30: The One Sales Strategy That You Can't Avoid

An “urgent” email I got I from the CEO of small movie production company I have a small stake in:

…Growth is so good that we're struggling to keep up. We find ourselves in a cash-strapped position created by cash flow issues (specifically, the production and printing of books required to meet our growth), so we're exploring our options to ensure we do the right thing for our authors and community.

There's a strong probability that a pool of Hollywood executives will invest about $500,000 in our business within the next few weeks.

$500,000 creates the working capital we need to bridge our cash flow gap and then some. By using this cash to grow, we'll be able to pay back these investors - with a nice return on top.

We've been doing this already for our early investors - in fact, last year, we returned 47% of profits to our funders.

That's why this opportunity is closing very soon. There is huge interest in it, and we definitely won't need this money forever.

If you want to become a shareholder in an amazing and growing business… you need to respond immediately - like today. I'm sending this to you because you are a friend and colleague, and I wanted you to have first shot at it. As a teacher of sales and marketing, I was impressed with the pitch. It had all the required components. A big promise, a story to make it more real, several relevant “facts” to back up the promise, a “velvet rope” invitation, and a sense of urgency.

As an investor, I had a different response. I responded immediately. I said no.

There were a number of small indicators in the email that made me doubt the promise and the proof. But the no-brainer no-thank-you for me was the requirement to act “today.”

When someone tells me I have to make an investment decision quickly, alarm bells ring in the planes of my limbic brain.

I've fallen for urgent investment deals in the past. None that I can remember worked out well.

Creating a sense of urgency is a time-honoured selling technique. It is used by marketing and sales pros from top (private jets) to bottom (used cars).

It's also a very common technique used by the investment industry.

I'm not saying there aren't good deals that require an urgent response. I'm saying, in my experience, nine out of 10 of them are bogus.

So my default position when “given an investment opportunity” with an urgent deadline is to ignore the call for action and politely explain how much time it would take me to analyze such a deal. Most of the time, that's all I need to say.

Saying no to all act-now opportunities might mean I'll miss out on a good deal from time to time. But my goal as a wealth builder is not to get in on every good deal. My goal, as always, is to invest in deals where there is little or no chance of losing my money!

When you first say no to a great but urgent moneymaking opportunity, you may feel conflicted. You may fear missing out on something that could be a once-in-a-decade deal. But after you've done it a few times, that anxiety will diminish or disappear. You will look at deals like passing trains. If you miss one, another will soon be coming by.

Okay, that's the most important takeaway you should have gotten from this message.

But let's take this a step further. Let's look at the techniques he used to make his pitch so enticing. Let's take a look at them so you will be alert to them the next time someone comes to you with an urgent opportunity.

The Anatomy of a Sale In his email, my CEO “friend” and colleague used a thinly veiled suite of marketing tactics that - however impervious I was to them - will work on most prospects.

So if you are interested in becoming a better marketer, here's a chance to learn something (new or already learned) that can improve your game.

Let's look at five of the sales tactics used here: promise, specificity, proof, scarcity, and urgency.

Let's begin with the promise.

We've been doing this already for our early investors - in fact, last year, we returned 47% of profits to our funders. The CEO, here, is conveying an indirect promise: that my investment might give me a return as high as 47%.

That's a big promise. Generally speaking, big promises outsell small ones.

And notice: The promise isn't 50%… It's 47%. That precise number, not rounded, makes the promise more believable. It doesn't sound made up. It sounds like it came from a spreadsheet - perhaps even an audited spreadsheet. That's the power of specificity.

That sort of specificity feels like proof.

And finally, scarcity and urgency are created very efficiently with this:

There's a strong probability that a pool of Hollywood executives will invest about $500,000 in our business within the next few weeks. My friend the CEO is giving me a big opportunity that I'm very lucky to be offered, because the last time this was done, investors made a huge return. Of course, the insiders already know about this and are begging to get in. So I must act now!

Since I've long ago learned never to “act” when they say, I don't have to worry about what I should do.

But after spending a few more minutes looking at the email, I find some problems with the pitch.

The promise is definitely big. And it is also specific. But is it believable?

It's impossible to say for sure, but you have to ask: If this business has been doing as well as the CEO says in the beginning of the pitch, why are they running out of money now?

He doesn't answer that question. That's disturbing.

Then you have the story about “the Hollywood executives” clamoring for this deal. He doesn't give you names. But it would be nice if he did. You could call them and see what they think.

As far as scarcity and urgency are concerned, his proof is vague at best. Again, it is this unnamed group of Hollywood executives and their commitment isn't certain. It's a “strong probability.”

This is the language of a certain type of selling. In common parlance, it is called bullshit.

I'm not knocking these techniques. Salespeople - whether working for the biggest companies or slinging watches on a street corner - have been using these tactics for centuries.

Most do it to bring in new customers. When done honestly and well, it spurs commerce and leaves everyone richer and happier. But make no mistake-all the wealth stealers out there who want to separate you from your hard-won money use these same techniques.

Some of these techniques were identified and explained in Robert Cialdini's best-selling book, Influence.

It's not by any means the final word on sales and marketing (although many journeymen think so). But it is good.

In Influence, Cialdini breaks down six core psychological “Weapons of Influence” that marketers and salespeople use:

Exchange of Value - This one's simple. People are more inclined to return favors than make them outright. Framing a pitch as a “favor” will generally cause the target to reciprocate it. Offering you something lets the salesman get a foot in the door. Making and Keeping Promises - People almost always hate to back out on a promise. Getting a customer to commit to something, even something free, can feed their interest in a product. Crowdsourced Verification - If others are doing it, it must be worthwhile. This is why sitcoms have laugh tracks: Hearing laughter and applause makes you want to do the same, so you fit in with the crowd. People need social proof to verify a common value. A good example is user reviews and testimonials. Seeing other people enjoying something will make you regard it more highly. Silver-Tongued Devilry - Anything a salesperson can do to make the customer like them is sure to amplify their chance of success. Flattery goes a long way here, and it can be seen quite clearly in the last line of the CEO's email above. The Allure of Expertise - No potential customer is going to buy in to an opportunity if they suspect the salesperson doesn't know their stuff. Credentials and an impressive backstory are often enough to reel someone in. To avoid getting taken advantage of here, always do your research before committing to something, and stick to things you understand. Constricted Demand - This is the key tactic used in the CEO's message above. People place more value on things that are scarce, in short supply, or only available for a short time. Salespeople use this to make a product seem special, even if it's readily available to anyone. Becoming familiar with these six marketing tools (as well as others mentioned above) will make you a better entrepreneur and marketer. But more important to me today is that they could make you a much better investor.

Wealth seekers who swing for the fences sometimes get lucky. But most of the time, they strike out.

If you want to get wealthy the way I did - very, very safely - you will learn to recognize sales techniques and resist them… most especially the trick of creating a false sense of urgency.

How to Start a Million Dollar Business Series for $25,000 #31: Match the Business to the Market with Keyword Research

“Desperate to escape her hand-to-mouth existence in one of the poorest regions of Brazil, Maria Benedita Sousa used a small loan five years ago to buy two sewing machines and start her own business making women's underwear,” The New York Times reported.

Today, her business is thriving. She employs 25 people and produces 55,000 pairs of cotton panties a month. With the income she's earning, she has bought and renovated a house for her family and a car. Her daughter, who is studying nursing, will be the first family member to finish college.

Sousa is living the entrepreneurial dream. “You can't imagine the happiness I am feeling,” she said. “I am someone who came from the countryside to the city. I battled and battled and today my children are studying with one in college and two others already in school. It was a gift from God.”

A gift from God? I don't know about that. But I do know that it was partly due to a loan she got from a private bank - that and her ambition, her persistence, and her instinct to start a business she already understood. We've talked about that many times in WBC. I've written about it in almost every one of my books.

If you want to have the best possible chance of making your new business work, learn about it from the inside before you start. Sousa did exactly that. Before creating her own clothing business, she worked for minimum wage sewing clothes for someone else's clothing business.

By the way, Sousa doesn't begrudge the years she worked for a dollar an hour. She was happy to get the work when she had none, happy to earn the money so she could help pay the family's bills and - most important - she is grateful she had the chance to acquire the skills she uses today to run her business.

Sousa's story is a life lesson in Ready, Fire, Aim too. She didn't wait till everything was ready before she set up shop. She didn't have any training in business. She didn't have a facility to work in or any sewing equipment. All she had were the skills she'd developed from working and the money she got from a micro lending institution.

And she had one more thing: She got into the right business at the right time.

This is the aspect of the story I want to highlight.

Sousa was successful because she did all the things we talk about all the time in WBC: She set and pursued goals. She acquired financially valuable skills. She took a Ready, Fire, Aim approach to her business. But the reason her business did so well - grew so quickly from a one-women operation to employ 25 people - is because she went into the right business at the right time.

Business gurus like to tell people that you can be successful at any business, so long as you do X or Y or Z. But the hard truth is that some businesses will do much better than others. It's not just your personal qualities that count. And it's not how much capital or human resources you have either. It's picking the right business for the market you are in.

I can illustrate this point by telling you about Y, the woman who takes care of our house in Nicaragua. Like Sousa, Y was very poor until she got a job earning $5 a day cleaning one of the upscale homes in our development. She didn't know much about cleaning fancy houses at first, but she was a quick learner. And when my place was finished, she applied for the job and I was happy to give it to her.

It was a good deal for Y, because, with two houses to take care of, she doubled her income. It was a good deal for me, because I got a very good and reliable person at a fraction of what I'd have to pay in the States.

Because I can't help but preach entrepreneurship, I several times suggested to Y and E (the young man who takes care of the outside of my property) that they should start their own businesses. To help them along, I offered them loans that could be repaid by doing little extra jobs for me on the side or even during their regular working hours.

E started a little sundries business. He built a shack in front of his house on the main road that runs by the development. And his wife and kids sell snacks and drinks and batteries and soap and other odds and ends that he somehow manages to get his hands on.

Y built a little store on the side of her house and opened a children's clothing shop. She buys cute little outfits in the capital city, hauls them to her shop, and sells them to the locals. Her store is busy once a month - on the first (pay day for most of the workers). Otherwise, she has little traffic.

Y is learning to be a good businesswoman. She runs her store profitably and has reinvested those profits in a small truck (to save money on transporting the clothes) and an expanded inventory. At the end of every month, she also takes cash out and puts it in the bank for her children's education.

So she is doing well. But she is not doing nearly as well as Maria Sousa. And she is not likely to do much better.

The reason is simple. Y chose a business that could not possibly grow quickly in her little corner of Nicaragua. Selling children's clothing was and is a fine idea. It filled a need and it works. But no matter how hard she works, how much advertising she does, or how much money she reinvests in her business, her market is limited by the number of local people who can afford her wares.

When you decide to become wealthy, you should take some time to consider your goals and ambitions before you select the business you will start. Don't believe the gurus who tell you any business will do. Yes, you can start a children's clothing business if it suits your fancy, but don't expect it to become a big moneymaker if the marketplace can't give you the support.

For fast growth, choose a hot business in a hot market in an economy that is expanding. Manufacturing cheap clothing in Brazil fits the bill. Selling children's clothing in Nicaragua doesn't.

Now if you plan to take your business to the Internet - and I highly recommend that you do - you have a little more wiggle room. Because then your market expands to include not only India, but the entire world.

But you must still be in the right business at the right time.

For example, there are thousands of options for getting into the Internet information publishing business. But if you decide to sell information about some obscure interest/hobby, such as bookbinding, you are going to have a smaller market than if you choose a more popular interest/hobby, like fencing or golf. And if you get into a market that is in a growth stage, such as yoga or Pilates, you'll do better than if you choose a market that is shrinking, such as aerobics.

How do you determine the size of your market?

According to Edwin Huertas, a Search Engine Optimization specialist, keyword research should be your first step. “The first thing I do to show a client the potential for their business,” says Edwin, “is research the keywords for that industry - the words that are being searched for on the major search engines. Each search engine has its own set of keyword tools that will tell you how many people have searched for any given keyword phrase (and any combination of words in the phrase). I like to 'see' what people are looking for online instead of guessing.”

If your keyword research indicates that there's a big pool of potential customers for the product or service you intend to sell online, you can start testing. Because there's a good chance you're about to enter into the right business at the right time.

How to Start a Million Dollar Business for $25,000 #32: Stuck on an Idea? 5 Steps for Turning Your Idea Into Money

Sometimes you will have an idea that you know is the one. What Mark Ford calls the 'big-money idea'. These ideas can be nerve racking - usually you end up with a vague impression of what it should be, but the enormity of it befuddles you - and you either give up, sit on it till someone else makes it happen, or implement it without a plan, which often leads to too many insurmountable challenges and leads to abandoning the idea in distress.

Which is why, you need a plan - you need a vision, clearly defined goals and objectives, and timelines. Most importantly, you need persistence. Because, however much excruciating detail you put into a plan, however much thought goes into it, there will be obstacles - and you must be ready to stick it out - mentally, physically and emotionally.

I am in the process of creating my first complete, independent project. Here are some things I have learned from Mark Ford that I must do along the way…

Step 1: Articulate a clear and complete statement of your objective A statement will help you not only define and document your idea, but give you a way to share the idea and get constructive feedback.

Start by writing a one-page statement that clearly lays out the big idea and defines the business objective, eg, bringing in 10,000 new customers. Add some timelines, eg, in the next 6 months, and specific strategies you will use to reach the objective eg, through an online marketing campaign. Make sure to include a budget eg in under Rs 500,000. And finally, the customer-value objective eg, to offer customers your new product.

This statement presents your idea to the world. By sharing this one-page document to all possible partners and any trusted advisors, you can solicit feedback. Use the constructive feedback to rework your document - and you have a plan.

Step 2: Follow up with a 'Workflow document' Armed with a plan, you now need a breakdown of tasks that you can start working on. The best way to do this is create an Excel sheet and list out the specific tasks that have to be completed to get the show on the road. This will become your workflow document (there are some great apps to create these as well such as Workflowy).

Add to this list the deadlines by which they need to be completed, and the names of the people responsible for the task. Make sure the person responsible is comfortable with the responsibility and the deadline - or the process could be disrupted, or the project completely derailed.

Step 3: Manage. Manage. Manage some more. Often, people begrudge management because they think managers are those who tell people what to do, but don't do anything themselves. The fact is, it is much harder to manage a process, and especially people, than to just sit down to a task and do it yourself. It is probably one of the main reasons people hesitate to start a business - because then it's not just using your skills of working, but your skills of managing that are tested.

To manage well, you have got to track what everyone is doing at all times. Your calendar should be marked with all tasks - and following up with the people in charge becomes your responsibility. Make sure things go as planned, so your idea and your business to not spiral out of your control and die an untimely death.

Step 4: Be flexible and ready to change the plan Implementing a big idea is not a straightforward process. Anticipate that things will go wrong, little things and big things. Be ready to make some changes, adjust the process, revise the plan, extend deadlines. Be open to some 'jugaad' solutions - innovate as you go.

Step 5: Recognise 'wins' and reward Achieving a big-money idea calls for celebration. You and your team has achieved something significant, and of value, hopefully both to the business and to its customers. If the idea is big enough, remember to reward the key players by thanking them personally and, where required, financially.

Follow this process and soon you will easily overcome the hesitancy that make implementing these ideas so challenging. The more big ideas you put into action, the easier it gets. Soon many of your outstanding ideas that will continue to make you and your customers richer and happier.

How to Start a Million Dollar Business for $25,000 #33: Six Employee-Motivating Myths

Myth #1: Employees need job descriptions in order to know the scope of their responsibilities. This is a popular belief among corporate types - even the best of them. They are usually operations people accustomed to working with formal standards and complicated processes where precision matters and mistakes can be costly.

Reality: Job descriptions aren't necessary. For entry-level operational jobs, it makes sense to spell out responsibilities and procedures. But for operations managers and almost everyone on the innovation and marketing side of your business, job descriptions are unneeded and can be counterproductive because they are, by their very nature, limiting.

My philosophy is simple: If you are responsible for growth or the management of operations, there is nothing you shouldn't be willing to do. Saying “That's not my job” is equivalent to saying “I don't want to work here.”

Great people see limits as boundaries. The most motivating thing you can tell a future star or superstar employee is this: “You can do anything you want to do here, so long as it contributes to our goals and objectives.”

Myth #2: Employees are always motivated by money. It's naive to think differently. This oft-refuted myth is still common among CEOs and entrepreneurs, especially younger ones who have limited experience leading people. Just yesterday, I heard it from a young man who had taken his business to Stage Three in less than six years.

He was looking to hit the $50 million mark, and felt he could do so only by locking in his best employees. But he mistakenly felt that the way to do that was to throw more money at them.

Reality: Money is not even the second-most-important motivating force for very good people. Sleazy salespeople and officious managers are motivated by money. But very good and great employees are motivated primarily by the opportunity to become more than they are. Next on their list is recognition. Very good people thrive on being appreciated.

There have been countless studies on what motivates employees, and money is never among the top three. That doesn't mean money doesn't count. You can't expect to underpay good people and get away with it. Pay your employees just a little bit more than the going rate so they don't ever feel like you're taking advantage of them - but keep in mind that the main reason they'll stay with you is because of the challenge of their jobs.

Myth #3: To win your employees' loyalty, make them all owners. This, I admit, was a myth that I held near and dear for many years. It seemed to me that if we could make our employees feel like they had a stake in the future of the business, they would work harder and smarter and stay longer.

Reality: Most employees don't want to be business owners. That's why they are employees. In my younger days, I tried various ways to motivate employees through stock incentive plans - even creating a cooperative-like structure where every employee had actual stock in the company.

None of those strategies ever made a positive difference. The good employees worked no harder. The superstars were no more common. The bad employees were just as bad, and they groused because they felt their stock shares were too few.

The only substantial difference was that because the people at the top owned only a small percentage of the business, they lacked the motivation needed to grow it. That was bad for everybody. I learned my lesson and promised myself I'd never make that mistake again.

Myth #4: Flat organizations create more efficient employees. The idea here is that employees work more effectively when you eliminate tiers of management. The ideal is to run a business of peers, where every employee can go directly to the CEO to ask questions or get directions.

Reality: Employees like hierarchy. Hierarchy gives employees a sense of structure. They know who they report to and who reports to them. Our working lives are confusing enough. It makes it worse, not better, to seek some phony egalitarian flatness by demolishing hierarchy, which is entirely natural and ubiquitous in any form of human enterprise.

Myth #5: Employees should have lots of amusement in the workplace. This was a popular myth during the Internet boom. Every company featured in Inc. magazine boasted about its basketball court or Frisbee field or pinball arcade. The idea was that if you allow employees to have fun at work, they will be happier and work longer and harder.

Reality: Happiness comes from doing good work, not from distractions. Turning your office into an amusement park is foolish and counterproductive. Your stars and superstars will not bother with the toys, because they find happiness in their work.

Your laggards and goof-offs will use the toys - but those people should be working for someone else, not you. I have seen good results from sponsoring workout classes for employees during lunch hours. Other than that, the only “toys” that are helpful are new tools that help people work better and faster.

Myth #6: A good boss is a sensitive boss, one who is willing to respond to employees' personal problems. This is the management philosophy of Michael Scott in the TV sitcom The Office. The concept, in a nutshell, is that a boss who is also your friend is a boss you will work harder for.

Reality: Mixing business with friendship is always a bad idea. You shouldn't do it as an employee. And you shouldn't do it as a boss. When you treat an employee like a friend, you are giving him the wrong message: that in the business environment, his personal life comes first.

Every enterprise can have only one primary purpose, and your purpose should be to make your customers happy. When you put your employees' interests above those of your customers it is a violation of your primary reason for being in business.

The bottom line is this: The best and easiest way to grow your business from $1 million to $10 million to $50 million to $100 million and beyond is to fill it with very good and great employees and to turn those very good and great employees into stars and superstars.

The way to create stars and superstars is to create as much upward mobility as possible in your business so that your employees can do what all good employees really want to do: exercise their talents as fully as they can, doing something that matters.

Happiness comes from working hard and well at something we care about. If you want your employees to work happily (and you should), you have to communicate your vision for the business, and then give them the chance to realize that vision by working hard and well in an environment of limitless responsibility.

How to Start a Million Dollar Business for $25,000 #34: Innovation - The Secret to One Superstore's Success

There's an old axiom about business that every successful entrepreneur comes to appreciate: “If it ain't broke, don't fix it.”

Why, then, is Brad Anderson, CEO of Best Buy, fiddling with his $30 billion a year machine?

Anderson believes that if your company ain't broke, you should fix it anyway. Despite the fact that Best Buy is the most successful consumer electronics retailer in history, he believes that unless it is constantly getting better, it is going to get worse.

Anderson joined the business as a salesman in 1973, and worked his way up to being founder Dick Schulze's right-hand man in 1981. In the decade that followed, Schulze and Anderson built Best Buy into a regional retail success story…while continuously tinkering with its working model.

Best Buy's innovation strategy has been a combination of doing the obvious things (like aggressively opening up new stores), thinking ahead (getting into the computer service business), and challenging convention (getting rid of employee commissions).

Today, they continue to innovate by opening up superstores in China, peppering U.S. cities with technology boutiques, and radically expanding their “Geek Squad” computer service business. In addition, Anderson is challenging the company's traditional marketing program by implementing a new business model popularized by Columbia Business School professor Larry Selden: “centricity.”

In a nutshell, “customer-centric marketing” goes like this: Not all customers are alike. Some cost a lot to acquire and then spend very little. (Selden calls them “demon” customers.) Then there are those who, however expensive they are to acquire, end up spending a lot. If you can segment your buyers, and cater to the big spenders, you will increase your profits considerably.

When Anderson applied this model to Best Buy, he realized that the company had five kinds of buyers: the busy suburban mom, the price-conscious family guy, the gadget fiend, the affluent tech enthusiast, and the small-business owner.

So he asks his stores to figure out which type of customer is delivering more to their bottom line. Once it figures that out, the store changes itself. It changes its inventory, its advertising, even the way it stocks its shelves - all to focus on that key demographic.

Anderson tested the idea on about 50 stores, and it seemed to make a big difference. He then pushed to have another 154 stores quickly centricize - but, with those, saw little return on the investment. (A typical conversion can cost a store $600,000.)

He and Schulze are not giving up on the new model. The company has billions in cash, so they're not worried about temporary setbacks. They are convinced that the long-term success of the company depends on centricizing and on other innovations that they haven't yet thought of.

I think there is a great deal of good sense in the old “If it ain't broke, don't fix it” approach. But it's the kind of business truth that is best followed in some circumstances and ignored in others. In my own business career, I can recall several times when I changed something - some product or pricing or marketing formula - only to see results go south. But most of the time, the great businesses I've been involved in have succeeded due to constant evolution. Point is, you can't be afraid to change things just because they are working. All businesses operate in vital, ever-changing markets. Competitors change. Circumstances change. And the needs and interests of customers change too. If you don't keep up with the changes your market is going through, you will gradually lose your share of it. If you maintain a consistency in what you do, the decline will be so gradual that you will likely attribute it to a weakening of the market.

And that's the problem with the “Don't fix it” philosophy: If you keep doing everything like you used to, your business will slowly but surely deteriorate. And you'll never understand how and why it is falling apart. (I've warned about this process of “incremental degradation” several times in past issues of WBC.)

If you have a growing business - and you want it to keep growing - change it. Don't change it radically (if it's not broken). Change it in small degrees. Push it. Prod it. Ask challenging questions. Work always with this mantra: “If it's good, then good. But how can we make it better?”

These are the three key areas to focus on:

Management Structure

Your business won't grow quickly if your key employees aren't willing to change their roles on a regular basis. Everyone should understand that flexibility and speed are essential components of success. If the business as a whole is to grow, the important people involved in that business must be willing to change their roles as often as is needed.

Marketing

What worked last year might not work this year. Growing companies need to be alert to new marketing practices, both within their industry and without, and to test out those new practices whenever possible. By testing new product concepts, marketing schemes, pricing structures, and media, advertising departments can keep up with (and possibly jump ahead of) the market.

Operations and Customer Service

The objective here is simple: to always, always improve. Company growth naturally and inevitably creates problems that reduce the quality of the customer experience. Only by having a staff of people who are dedicated to making things better can you hope to at least keep them as good as theywere. Smaller businesses move faster and must change more. In the start-to-$20 million phase of business development, you must be prepared to “re-invent” your business frequently - maybe as often as twice a year. Everything needn't change at once and not all changes will take place quickly. But if you want to keep pace with your growing company's potential and keep it growing, you will have to teach your management team to accept (more than that, to desire) change.

Today's Action Plan The natural process of “incremental degradation” isn't limited to business. It can affect your personal life too. So take a few minutes today to think about how much change you allow yourself. Are you always tinkering with “good,” trying to make it better? Or are you afraid to make adjustments, worried that you'll damage what you already have?

How to Start a Million Dollar Business for $25,000 #35: Marketing the Man in the Hathaway Shirt

Have you seen The Most Interesting Man in the World?

I'm referring to the TV commercials for Dos Equis beer. They star a rugged-looking, silver-haired man who is always surrounded by beautiful women.

In one version of the commercial, he arm-wrestles a Third World general and releases a grizzly bear from a trap. In another, the narrator relates that even his enemies list him as their emergency contact and that the police often question him just because they find him interesting.

If you are a student of advertising, you know this is a knockoff of David Ogilvy's famous ad campaign: The Man in the Hathaway Shirt.

If you don't know the history of this ad, you should.

In Brief: It was 1951. Ellerton Jette, a shirt maker from Waterville, Maine wanted to grow his little business into a national brand, but he didn't have much money. He had heard about the advertising prowess of David Ogilvy. So he booked a meeting with him.

“I have an advertising budget of only $30,000,” he told Ogilvy. “And I know that's much less than you normally work with. But I believe you can make me into a big client of yours if you take on the job.”

If he'd stopped there, Ogilvy would have thrown him out of the office. But then he said something that sold the great salesman.

He said, “If you do take on the job, Mr. Ogilvy, I promise you this. No matter how big my company gets, I will never fire you. And I will never change a word of your copy.”

There is a big lesson here. So let's stop for a moment and talk about it.

What Ellerton Jette did was a little bit of genius, in my opinion. In two short sentences, he changed the mind of one of the most powerful men in the world of advertising. At the same moment, he made himself a very rich man.

Not a week goes by when I don't get a letter from a complete stranger who sees me as his David Ogilvy. They are direct and to the point. “I know I can get rich if you help me, Mr Ford,” they say. “So how about it?”

What makes them think I have the time, if not the inclination, to help them? It never even occurs to them to offer me something in return for what they are asking.

Jette's $30,000 budget might have put $3,000 in Ogilvy's pocket. Though it was a paltry sum then and a mere pittance now, at least it was something. But what really cinched the deal was the two promises Jette made.

Going into the meeting, Jette knew he had one chance to forge a relationship with Ogilvy. He somehow understood that Ogilvy, as successful as he was, had two big problems. He worried that his biggest clients would walk away from him. And he hated it when his clients screwed with his copy. So, instead of thinking only of his own goals, Jette took the time to figure out how he could offer Ogilvy something that would be of immense value to him. (This, by the way, is one of many lessons you will learn when you read my Automatic Wealth.)

When Jette made his two promises, Ogilvy realized that he was talking to a businessman who would eventually become a partner. He could see that Jette was a man of good faith who would let Ogilvy be in charge of his marketing. And that he would reward Ogilvy with a lifetime of loyalty.

Now, let's get back to the story of the Hathaway shirt ad…

After accepting Jette's offer, Ogilvy spent days doing in-depth research on Jette's client base. He came up with dozens of ideas. The one he settled on was a campaign built around the image of a distinguished man in a romantic location dressed in a Hathaway shirt. He selected a model that looked like William Faulkner and booked the first photo shoot.

On the way to the shoot, he passed a five and ten cent store where he bought a few cheap eye patches. At the shoot, he asked the model to wear an eye patch for a few shots.

The moment he saw the photos with the eye patch, he knew.

The Man in the Hathaway Shirt campaign was an instant success. The ads were carried in papers around the country, and were mentioned editorially in Time, Life, and Fortune. Before long, hosts of imitators appeared. Other companies ran ads featuring eye patches on babies, dogs… ven cows. A cartoon in The New Yorker shows three men looking into the display window of a shirt store. In the second panel, they are coming out of the store, with eye patches on.

Ogilvy got the idea for the patch, he said, from a photo of Ambassador Lewis Douglas, who had injured his eye while fishing in England. But he got the idea itself - the idea of this aristocratic man with a romantic life - from the James Thurber story “The Secret Life of Walter Mitty.” (Actually, Kenneth Roman pointed out in The King of Madison Avenue, it could have been from the secret life of David Ogilvy. As a young executive, Ogilvy was prone to wearing capes and bowties while everyone else was in grey flannel suits.)

Of course, it wasn't just the eye patch that made the ads work. It was the combination of the model, the situation he was in, and the copy itself.

And the copy was brilliant. Here's the first line of the first ad:

“The melancholy disciples of Thorstein Veblen would have despised this shirt.” Most readers of the ad had no idea who Thorstein Veblen was. But they got the idea. Veblen was some sort of snobby aristocratic. By posing a handsome, silver-haired model with an eye patch in a Hathaway shirt and putting that line underneath the photo, Ogilvy struck a chord in the American imagination. We all hate aristocrats, but we would like to be one.

There was another brilliant thing about the ad. Putting the model in a romantic location gave the pitch a fictional element. It had “story appeal,” as Ogilvy put it.

Ogilvy said he discovered the concept of story appeal in a book by Harold Rudolph, a former ad agency research director. This was the first time, Roman says in his book, “that shirt advertising focused as much on the man wearing the shirt as on the shirt itself.”

And now, back to The Most Interesting Man in the World… I am a fan of these Dos Equis commercials. I like them both because they are a salute to David Ogilvy and also because they successfully replicate the key elements in Ogilvy's ads for the Hathaway shirt. They have the handsome, silver-haired model. They have the eye patch. And they have the anti-aristocrat touch. (The product is beer, after all.)

They also have the romance and the story. Each new edition of the commercial is another episode in this most interesting man's life.

They fall short only in one respect. They don't do a great job of equating the product with the concept.

When I remember a Dos Equis ad, I remember the actor's face. I remember the pretty girls in the background. I'm aware that he is a man that women find irresistible. And that when he drinks he drinks… Wait a minute. What does he drink?

There's the rub.

We find out that The Most Interesting Man in the World drinks Dos Equis. But he could just as well drink Pabst Blue Ribbon. The creative people behind this very good ad campaign get a big demerit for that. Ogilvy, on the other hand, put the name of the product in the headline. The fact that his man was wearing a Hathaway shirt was integral to the story.

Grabbing the prospect's attention with an entertaining story or idea or photo is essential for any sort of advertising campaign. But you have to do more than that. You have to sell the product. And to do that, you must link the initial sentiment created in the headline with the final emotion needed to close the sale at the end.

In AWAI's copywriting program, I call this “the Golden Thread.” It's pretty simple. The product is at one end of the thread. The prospect's heart is at the other end. Every element of the copy must be connected to the product as well as to the prospect. And the connection must be taut. If the thread goes slack, even for a second, you lose the sale.

I will end this essay by saying this: You have just read about half a dozen of the most powerful marketing secrets I know. If you put this essay down and forget about it, you will be making a terrible mistake. Read it at least half a dozen times and think about it. If it doesn't make you a multi-millionaire, I'll eat my shirt. Hathaway, of course.

How to Start a Million Dollar Business for $25,000 #36:10 Dumb Ways to Start a Business (and Waste a Ton of Money at the Same Time)

Entrepreneurship is based on selling. You test the market with a product you think will sell well. If it does, you keep selling. If it doesn't, you try something else.

This approach lent its name to my best-seller: Ready, Fire, Aim. The main idea is that to start and grow a small business you must develop a pragmatic, action-oriented mentality. Rather than spend too much time and money refining theoretical ideas, you develop a prototype quickly and then see if the market will buy it.

As I said in the book, for every business that fails because of poor planning there are a dozen that never get off the ground because of too much planning.

The Ready, Fire, Aim approach obviously doesn't apply to surgical procedures and rocket science. But it will be very useful for 90 percent of the new-business ideas you are likely to come up with.

Want to start a business selling diamond-studded collars for kitty cats? Fine. There are two ways to go about that:

You can spend most of your time and money manufacturing a line of such collars - and only after that is done, start to think about how you can sell it. You can make a single collar and go down to the local flea market or your neighbourhood pet shop and see if you can find a customer for it. Most people start businesses the first way. That's why most businesses fail.

But with the Ready, Fire, Aim approach, you devote 80 percent of your initial resources to discovering an efficient way to sell the product. Once you have done that, you have found the key to successfully market it. With that key in your pocket, you don't have to worry about all the other problems that will arise in the natural course of business. You won't have to worry, because you will be able to create the one thing that can solve almost every business problem: cash flow.

Here, in a nutshell, is what I mean by Ready, Fire, Aim:

Ready: Get your product idea ready. Make it good enough to sell. Don't worry about making it perfect. There will be time enough for that later.

Fire: Start selling it. Sell it every way you can. Test different offers. Test different ad copy. Test different media. Keep testing until you discover something that works. This is your Optimum Selling Strategy (OSS).

Aim: Expand your customer base by focusing on your OSS. As your customer base grows, develop business procedures to accommodate that growth. Hire the best people you can to manage your business. Discover, through “back-end” marketing tests, other products and services that your customers will buy. Use those discoveries to refine and perfect a fast-selling line. As this back-end business flushes cash into your company, invest a good deal of that cash into front-end marketing.

That is the cycle of a successful start-up venture.

Ready, Fire, Aim doesn't mean you are willing to be sloppy. Nor does it mean you are willing to sell second-rate products to your customers.

On the contrary, Ready, Fire, Aim is the only truly practical way to find out what your market really wants from you.

And for a small business, Ready, Fire, Aim is the best way to get from good to great.

Think of it this way:

When we say we have “a great new product idea,” what do we really mean?

When I say that, I mean I have a strong feeling that the product will sell well - that it will be a big, commercial success.

But the truth is, I have only a hunch about how well my idea will do. Experience has taught me that my hunches are often right… but not always. If I spend too much time and energy preparing a business based on a hunch, what happens if the hunch doesn't pan out?

What happens is that I'm left with nothing - no money or materials or energy - to start over again. The essence of entrepreneurship is the ability to try and fail and then try again. You can't do that if you blow your wad the first time you try.

So nowadays when I get the feeling that I have a great idea, I figure out how I can test that idea as quickly and as cheaply as possible.

Once I know the idea has “legs” then I can roll out a sales program. And once a successful sales program is underway, I can refine and improve the product.

The truth is, I can never perfect a product in isolation. I used to think I could, but, once again, experience has taught me the arrogance of that kind of thinking.

To get from good to great, you need the help of superstar employees and, most of all, feedback from your customers. The best customer feedback comes not from surveys or focus groups but from marketing results. Find out what your customers want by selling things to them. This gets you back into the Ready, Fire, Aim loop.

If I had to pick one thing - one characteristic or quality of my work that is most responsible for the success I've had launching businesses - I'd have to say it was this Ready, Fire, Aim approach. It's something I believe in strongly. That's why I wince when I read the start-up advice of so many “experts” who advocate feel-good busywork over selling.

I was hoping that when Ready, Fire, Aim was published we'd see no more foolishness of this type in the business press. But here's just a short list of the misguided (and even ridiculous) advice I've read since my book came out:

Create an instant-impact message that describes the chief benefit of your business. Put it on business cards and brochures, which you should hand out at business functions and meetings. Find a great office space and fill it with furniture. Take a field trip to discover how your product or service will satisfy people's desires. Protect your “great ideas” by registering your business name, logo, and slogan. Create a paper trail - tracking all meeting dates, attendees, and discussions. Consult a lawyer and obtain his or her advice on how to best protect your business and make sure you set up the right legal structure. Check with your municipal authority to make sure “they permit a venture like yours” to work out of the home. Buy business insurance and “talk to an accountant or attorney” to make sure you're not missing anything. Get a toll-free phone number (to give the impression that your business is much bigger than it is). Do these things before you find out whether your product can sell, and your business is practically guaranteed to fail.

Again, here's my advice for starting a business:

As soon as possible, get the product ready to test. Test it as aggressively and creatively as you can. Spend 80 percent of your initial resources discovering the most cost-effective way to make the first sale (your “Optimum Selling Strategy”). Refine and adjust your sales process as market conditions change. At the same time, gradually develop business procedures to service your customers and improve your products according to your customers' buying preferences.

million-dollar-business.txt · Last modified: 2018/06/14 19:58 by 171.60.242.59