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Entrepreneurial Life:

Are You Cut Out For It?

by Bill Corbin


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2000 by Bill Corbin

All rights reserved. Except for brief review excerpts or quotations, no

part of this book may be reproduced in any form without written

consent from the author or an authorized representative of

CorbinGroup.com

Printed and bound in USAby UN Printing, Division of UN Communications, Inc.

Cover Design: Tim Tobias

ISBN #: 189345602-1

First Printing: March 2000

For Information:

Bill Corbin CorbinGroup.com.1429 Chase Court Carmel, IN 46032 317 800 222 0590 x330

http://www.CorbinGroup.comemail: [email protected]

LEGAL DISCLAIMER

An entrepreneur is a risk taker. The purpose of this book is to help the readertoward a positive outcome. However, there are no words or ideas in this book

powerful enough to guarantee success. Therefore, Bill Corbin accepts nopersonal liability should your business results be unsatisfactory (nor will he

claim any credit for your success).


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Table of Contents

Entrepreneurial Life: Are You Cut out for It?

Introduction...................................................................................1This is a book that presents the good, the bad and the ugly of

entrepreneurial life. No sugarcoating. No get-rich-quick

nonsense. The 15 Questions asked in this book will challenge

you to look deep inside for the ingredients of entrepreneurial

contentment and success. (Author credentials are presented.)

Chapter 1: Can You Come Up with

an Idea Good Enough?.........................................................7Is your idea good enough? Will you subject it to critical

objective analysis? Have you thought through the multiple

avenues to start-up? Most importantly, are you committed

enough to start?

Chapter 2: Do You Have the Right

People Support?... .....................................................................21Do you have the necessary moral/emotional support? Can you

develop the operational support youll need? What about a

partnership as a means of adding supportmoral, operational

or both?

Chapter 3: Will You Risk and Can You

Deal With Failure? ...................................................................29The most fundamental question facing a prospective

entrepreneur is simply this: Will you risk, and could you deal

with failure? The answer requires family discussion and intense

introspection. It is a crucial issue.


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E-Lifestyle for You?

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Chapter 4: Can You FaceFear? ...........................................33

Failure is an event. Fear can be an ongoing companion along

the entrepreneurial journey. The ability to face fear and operate

effectively through it is vital.

Chapter 5: Patience, Perseverance, &

Willingness to Sacrifice...........................................................36

A growing business makes ongoing demands on your time,

energy and money. Will you wait, persevere and sacrifice as

necessary if your success comes more slowly than expected?

Chapter 6: Can You Take Bitter Disappointment?......42Can you take bitter disappointment? The potential sources are

multiple: poor results, customer defection, employee or partner

behavior. And disappointments sometimes come in clusters. The

entrepreneur must absorb and bounce back.

Chapter 7: Can You Be a Leader?.......................................46

Leadership does not require General Pattons toughness, but

involves multiple elementsamong them are vision and the

ability to articulate and communicate your vision. You must also

be a disciplinarian, teacher, coach and mediator.

Chapter 8: Can You Sell? ........................................................55Even if you dont personally sell to customers, an entrepreneur

must become skilled at leadership selling. This involveseffective

communication and persuasion with employees, prospective

employees, financiers and others.


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Table of Contents

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Chapter 9: Are You BasicallyHonest? ..............................60

Less-than-honest entrepreneurs can make businesses work, but

there are multiple risks including the possibility of legal

repercussions. In the long run, a dishonest entrepreneur likely

creates a culture of dishonesty that will be destructive.

Chapter 10: Can You AnalyzeObjectively?....................65Can you, or will you learn, to carefully and objectively analyze

important issues? Many of an entrepreneurs natural traits run

counter to careful analysis. A process must be developed for

thorough, timely, numerical (when possible) analysis.

Chapter 11: Are You Decisive? .............................................72

The entrepreneurial experience may include nearly non-stop

decision-making. It is necessary to prioritize, analyze and reach

decisions within the relevant time window. Both attitude and

process are important elements of decision-making.

Chapter 12: Do You Have Personal Discipline?.............79Personal discipline is necessary as the entrepreneur invests the

time and energy necessary for effective launch. Organizational

discipline results from the entrepreneur defining and enforcing

the operational system necessary for smooth operation.

Chapter 13: Can You Delegate?............................................84

Can you delegate responsibility and authority? Delegating is

definitely optional but has enormous impact on growth potential

and the entrepreneurs life and lifestyle.


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Chapter 14: Are You Flexible ................................................91

Flexibility is not a requirement to start. It is likely a requirement

to survive, involving willingness to adapt to changes in your

industry or in the general marketplace. Flexibility along with

objective analysis and decision-making are the three-legged

stool of preparation for the future.

Chapter 15: Are You Willing to Learn and Grow?......96As the business grows, the entrepreneur must grow. It is vital to

be an ongoing student on subjects from technology to trends

affecting the business. It is important to learn and grow to

overcome personal weaknesses.

Chapter 16: Why It Can Be Well Worth The Trip.... 101

The fruits of a successful entrepreneurial lifestyle.


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1

Introduction

The fact you are reading these words likely places

you in one of three categories:

1. A person thinking about becoming an

entrepreneur and wondering whether it's a good

idea;

2. A person whose loved one is thinking about

becoming an entrepreneur and you're wondering

whether it's a good idea;

3. A person who has made the entrepreneurial

plunge and is wondering whether to hang tough or

try to find a real job.

I promise this book will speak to you; and it will

speak in an unusual way. Too much of entrepreneurial

literature is either get-rich-quick nonsense or sugarcoated

description of the good life youll find as a business owner.Anyone seeking fast and easy wealth should

probably use this book as fireplace kindling. Overnight

success visits now and then, but it is rare. After 25+ years

of observation, Im convinced that get-rich-quick schemes

are designed to let the original schemer get quickly rich

and folks like you and me provide the cash. So Im a

believer that entrepreneurial success comes from intense

effort over a considerable period of time.

I can also state, from the trenches, that the

entrepreneurial life isnt all fun, freedom, glitz and

glamour. I suppose there are a few charmed souls who start


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a business and experience smooth progress all the way tothe Promised Land. I'd confidently estimate that for every

charmed soul there are 100 people like me who have

struggled, fallen, struggled some more and (hopefully)

eventually made it work. A book on the entrepreneurial

lifestyle does you no favors if it sugarcoats the reality.

So heres my promise. This book is reality based. It

will challenge you. It will paint a realistic picture of the

entrepreneurial experience, and it will ask you hard

questions about your capability, commitment and

willingness to learn and grow. Because it asks you to

examine core personal issues, this book might occasionally

remind you of the oft-told exchange between the

parishioner and pastor: I loved the first part of your

sermon, Reverend, but in that second part you really

started meddling. It is tough duty to look inside and

honestly assess strengths and weaknesses. But it is crucial.

So remember, Im on your side. The purpose of this book is

to help you make a good decision about the entrepreneurial

life. If you look at each of my challenges and decide toplow on, thats wonderful. I welcome you as a fellow

knight at the entrepreneurial roundtable. If the points in this

book cause you to cancel or delay your launch, its likely

the correct decision. If you are truly ready to be an

entrepreneur, nothing I can say here will dissuade you.

The Corbin Credentials

A book like this should only be written by a person

who knows of what he speaks. Here is a brief resume that I

present as evidence:


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Intro

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19621968: A great deal of higher educationincluding a BSIE and MBA

[Note: Formal education is a good thing, but you wont

hear any more about it in this book. The community of

failed entrepreneurs is full of MBAs. There are millionaire

high-school dropouts. A hunger for continuing increased

knowledge seems important. A wall full of degrees is A-OK,

but doesnt seem to be a crucial ingredient.]

19681971: Lower to maybe middle management,

General Motors

19711972: Middle management, RCA

19731974: Founder, Concepts 4, Inc. Failed

miserably, including loss of home and all personal wealth

[In chapter 1, well talk about why Concepts 4 failed. For

the purpose of my credentials statement, suffice it to say

that Bill Corbin learned the hard way that America is a

land where a person can dream a dream, invest his time

and money, and absolutely lose his shirt. In hindsight, this

was an educational experience, but a major goal of this

book is to help you avoid education by dismal failure.]19741988: President, Unified Neighbors, Inc., a

localized consumer magazine spun from $100 of invested

capital that grew nicely and was sold profitably

1977present: Owner, UN Printing & Mailing,

originally developed to process the magazine but later spun

into an independent business called UN Communications,

Inc., with revenue now in excess of $3.5 million

19841996: Co-founder and husband of the

president of Carmel Publishing, Inc. Carmel Publishing

developed The Highflyer, a local magazine concept sold


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very profitably to Thomson Newspapers of Toronto andStamford, CT

[The successful operation of Carmel Publishing by Janet

Corbin brings important depth to this book. Carmel

Publishing was a classic woman-operated business that

developed an excellent operating system. Its primary

product was The Highflyer, a community magazine. It also

became a skilled consultant in direct mail projects.]

Miscellaneous:

1988, co-founder, Bereavement Publishing

1993, founder, Beckett-Highland Publishing and co-

author The EDGE Resume and Job Search Strategy, still in

national distribution

Additional failures include The Printing Place (early

1980s), Unified Neighbors of America (early 80s), Carmel

Happenings (early 80s), UN Fulfillment (early90s).

More obscure efforts include a To Your Home

Auto Service business, a Family Photographer business,

and a firewood cutting and distribution business; all closedshortly after launch.

Other Corbin-Family Ventures:

ProSound Entertainment operated by daughter Lisa

and her husband Jason; Kim Corbin Communications,

iSkip.com, and related personal growth ventures operated

by daughter Kim; UNWebDesign and multiple dot com

businesses operated by son Brandon.


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Intro

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The Bottom Line:Bill Corbin has seen all kinds of bottom lines, red

ones, black ones, little ones and pretty decent ones. The

failures were a tremendous education. The successes have

been hard earned, delivering knowledge that can be helpful

to fellow entrepreneurs. And along the way, hes observed

and counseled scores of start-up operations. I submit that

this book is written by a cowboy who has earned his spurs.

Before we dive in, there are a couple of important

cautions.

The book asks you questions such as Can You

Lead? or Can You Delegate? Some readers dont know

the answer because theyve never had a chance to try.

Others would give a qualified no answer because they

dont feel comfortable with their skill. These are not

necessarily reasons to abandon the dream. The

entrepreneurial life should be viewed as an ongoing growth

process. So the relevant interpretations of my questions are

Can You Visualize Yourself as an Effective Leader? andAre You Willing to Do the Work to Become an Effective

Leader? (delegator, etc.). In many respects, effective

entrepreneurial leadership is like public speaking. It may

not come naturally. It may be very uncomfortable. But it

can be learned.

Other issues in this book are related to your

personal goals or philosophy. For me, Can You

Delegate? is a key question because I believe long-term

growth depends on building a team of empowered

employees. I also enjoy the idea that, someday, my

business will run profitably without my direct daily


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involvement. But there are successful entrepreneurs whochoose to be extremely hands-on, delegating almost no

authority. This kind of issue is essentially philosophical,

and you can rightly discard my approach when your goals

or philosophy differ from mine.

One more intro item: The last chapter of this book

discusses why, on balance, I am a committed lifetime

entrepreneur. Between here and there is some pretty tough

sledding. You are welcome to flip to the back of the book

whenever you become fearful that dog-catching sounds

preferable to many aspects of business ownership.

And a brief style-note: This book does not include a

chapter titledDo You Have a Sense of Humor? but many

veteran entrepreneurs would argue that it should. Humor

(or at least an attempt at it) has been very important to me

personally and is so much a part of my communication

style thatfor better or worseyoull find it scattered

throughout this book. Sometimes, in this entrepreneurial

life, there is nothing better to do than shake your head,

chuckle, and move on.

Well, enough introductionlet's dive in.


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Chapter 1

Can You Come Up With an Idea

"Good Enough"?

Not everything in this book is positive, but we can

definitely begin on a positive note. YES! You can come up

with an idea good enough to support a successful

entrepreneurial launch. In fact, the role of the idea is less

important than you might think. Too often, potential

entrepreneurs sit and wait (and wait and wait) for that

spectacular brainstormsomething like plastic or the

personal computer, or maybe a great gimmick like hula-

hoops or pet rocks. Unfortunately, the years will become

decades before most of us hit on a brilliancy.

At the risk of sounding like a double-talker, I

contend that the real key to starting your own business is

starting your own business. The operative word is start.Tonight, in pubs across the land, people will talk about

starting a business. Many of them will talk about an idea

plenty good enough to support the launch. But tomorrow

theyll be back at Acme Corporation working for the man

(or woman). Why? Because they didnt make the firm

commitment to start.

Once a genuine startdecision is made, you can

begin looking for opportunities that fit your interests, skills,

goals and lifestyle. The opportunities are there.

The next several pages discuss some of the issues

related to a sound start-up idea.


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Full-time or Part-time Launch?

There are several reasons to consider a part-time

first business, the strongest being experience. You can

begin climbing the entrepreneurial learning curve before

giving up your regular income. If your idea is market

testable on a part-time basis and turns out to be a stinker

like my Concepts 4 launch, you can gracefully exit without

sending your loved ones to the street to beg for food.

(Actually, I must confess to a bit of melodrama here. When

Concepts 4 tanked, we sold our house and moved to a

decent apartment. Our kids, then about 5 and 3, were elated

because we gained a swimming pool. Janet, though, wasnt

nearly as pleased.)

If you do elect a part-time launch, the idea must be

compatible. If your part-time business requires full-time

energy, you will soon be in trouble with the boss. Ideally it

is an idea strong enough to eventually support full-time

effort. If so, you can transition smoothly from part-time to

full time. Some part-timers, though, are aiming solely atexperiencetime in the entrepreneurial saddlebefore

making a full-time commitment. If so, the part-time

business may be in an arena entirely different from the

eventual full-time effort. For some, this book may lead to a

no go decision about the entrepreneurial life. For others, the

conclusion may be part-time makes a great deal of sense.

If this books 15 questions suggest weaknesses that should

be worked on, a part-time business may be an ideal

personal growth opportunity.

An argument against the part-time launch was

illustrated by that legendary military leader who landed his


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Good Enough Idea?

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troops on the shore of an island he meant to conquer andordered his aides to sink all their landing craft. We are

committing ourselves to success was his clear message to

the troops. A full-time business launch is definitely

motivational, especially as car payments, grocery and

dental bills come due.

As is true throughout this book, the right answeris

up to you, depending on issues such as skill, risk-aversion,

available capital, and the relative familial power of your

mother-in-law.

Inside or Outside Your Direct Skill Base?

An attorney or accountant who leaves the big firm

and hangs out her shingle is classically inside her skill base.

An attorney who buys a bagel franchise has moved a mile

and a half outside it.

While it makes sense to be as close to skill base as

possible, opportunity often knocks elsewhere. In my

experience, flexible people who are willing to become

serious students of new fields can develop and/or hire theskills necessary to operate a variety of businesses. My

personal path led to publishing, printing and mailing, fields

in which I had zero prior expertise.

Purchase an Existing Business or Start a New One?

In theory, purchasing an existing business helps

assure success. Issues like location, market acceptance and

operating system are proven. This may be true, but I advise

great caution. A sizable percentage of business

opportunities are for sale because the present owner is

operationally sick of the whole mess, losing his shirt, or


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both. Too often, it is a game played among you, the sellingbusiness owner, and the selling broker to see whether you

can find the weenie before you become the not-so-proud

owner of the sellers headaches.

Here are steps Id take before purchasing a

business:

Find out the real reason for the sale. Retirement

is a good reason. Sometimes genuine life change (spouse

moving to a distant city, for example) is a good one. Just

tired of doing it or seeking opportunities elsewhere are

caution flags deserving careful scrutiny.

Be sure the purchase price makes sense. This

may require serious study of methods of evaluation in

various industries. The purchase price should be considered

in three ways: (1) Is it fair, given industry evaluation

methods? (2) Can I make an adequate return on my

investment? and (3) Could I take the same amount and start

my own business from scratch?

Look at a minimum of three years of actual

financial statements and have a person knowledgeable inthe field review those statements. Consider, but be

suspicious of, claims of fabulous owner perks such as

cash, vehicles and trips that are notumexactly clearly

shown on the financial statements.

Carefully review and fully understand any

negative trends affecting the business: changes in fashion

taste, technology, competitive activity, availability of

skilled employees, community growth and shopping

patterns, and the like. Remember that an intelligent seller

will try to sell at peak value. It may not be intelligent

buying to buy at peak value if things are likely to go south.


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Good Enough Idea?

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Physically watch the business run for severaldays. Talk to key employees if this is acceptable to the

owner. Observe them, in any case.

Invest in a carefully crafted purchase agreement

that spells out both the assets you are purchasing, the seller

representations that were key to your purchase decision,

and your recourse if the businesss value has been

misrepresented.

Escrow a sizable share of the purchase price with

release based on your learning that things are as theyre

supposed to be once youve assumed operation.

Of course, starting a business from scratch

eliminates the risk of buying a turkey, but it brings its own

set of risks and potential gremlins.

Franchise Vs. Independent Start-Up?

Franchising is immensely popular in America,

primarily because it blends the best features of a new

business and buying an existing business. You have your

own ribbon-cutting ceremony but are utilizing a (hopefully)proven business system. There are a bevy of issues related

to this decision. These are among them:

You pay well to become a franchisee. There are

almost certainly an initial fee and ongoing royalty

payments. There may be assessments of various kinds.

Understand these fees well and be absolutely sure they

make sense in terms of value you receive. You should be

receiving substantial benefit in terms of trademark,

marketing support and ongoing operational support in

return for your payments. The alternative of going it


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alone should be considered when value doesnt matchcost.

Some franchises are so operationally restrictive

that youve really bought a well-defined job. This may be

OK, and profitability may justify the giveaway of

flexibility, but free-spirited entrepreneur types may chafe

under franchise regulations.

Some franchises carry a risk similar to

purchasing an existing business. An entrepreneur sets up

shop in Peoria. The business has some glitz and

glamourmaybe even an article in the national business

press and a mention or two on talk-TVbut isnt working

well enough in Peoria for the owner to support his family.

So he decides to sell franchises! The logic flaw is hopefully

obvious. I would not consider a franchise purchase unless I

could visit two or more randomly selected locations of

existing franchises. While there, I would speak directly and

frankly with people who are actually operating the

business. Government regulation requires franchisors to

provide considerable disclosure detail. Read carefullyand skeptically and seek analysis help from knowledgeable

sources.

Enough Investment Capital?

When fledgling businesses expire, the autopsy

report often names inadequate capital as the primary

cause. This is likely true for reasons obvious or subtle.

Obvious Reasons: Start-up capital must cover

initial costs of getting organized; equipment, facilities and

furniture; inventory; announcement marketing programs;

and overhead, including labor costs until revenue reaches


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Good Enough Idea?

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break-even levels. One of businesss wise old sayings isYour start-up will take twice as long as you think...and

cost twice as much. While the math may not be precisely

right, the sentiment usually is. A very large number of

entrepreneurial start-ups simply dont have enough capital

to survive until sales revenues are adequate to support the

enterprise.

Less Obvious Reason: A closely related, but less

obvious need for capital is the learning curve. Some

ideas, especially highly creative ideas, cannot be fully

visualized on spreadsheets or in written five-year plans.

The idea must go to market, be tried, be fine-tuned, be tried

again, etc. until we get it right. An enormous advantage of

giant companies is their resource base. They can afford the

time, talent and money necessary to test and refine.

Experienced entrepreneurs build contingencies into their

business plans. Many first-timers dont have a clue. But

whether vet or rookie, having the cash to support the

learning curve can be a tough challenge.

Investment Capital Continued: What Source?

The majority of start-ups are financed with personal

savings often supplemented by some family loans. This

approach is simpler than most of the following discussion.

It also leaves you with 100% ownership of your business.

If you need capital beyond family needs, the issues

quickly become complex. In general your bank wont

advance a loan based on a start-up idea. If they think you

can repay the loan whether or not the business works,

youll get the loan. Hardy souls willing to battle through

Small Business Loan application processes (SBA) have a


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decent shot at securing a start-up loan beyond theestablished ability to borrow and repay. Some states and

communities have business development funding available.

If loans are not available, sale of equitya

percentage of your companys ownershipmay be

required. Here are some possibilities:

Individual Investors: Most towns have a wealthy

person or two willing to invest in good-looking start-ups.

The search can be long and the turndowns hurtful, but this

is a possible source of funding. As a wildly rough estimate

of cost, you may need to give up 20 to 40% of the business

for meaningful capitalization. Some start-ups may include

an informal consortium of investors, perhaps five or even

more, who share the opportunity and risk.

Venture Capitalists: This avenue is similar to

individual investors except the industry is established. You

can find prospective investors in the yellow pages or on the

Internet. Application procedures are more formalized. The

percentage of control you relinquish is probably similar to

the individual investor scenario, but the oversight afterconsummation of the transaction is likely to be more formal

and more intense.

Partnership: Individual investors and venture

capitalists, along with legal entities such as general

partnerships, are variations of the silent partner concept.

The partners provide money but are not actively involved

in day-to-day operations. The possibility of one or more

active partners, involved in day-to-day operations, is

another potential source of revenue. This concept is

discussed in the next chapter.


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100% of a midget or 25% of a giant? My personal path hasincluded 100% ownership of various businesses, but when I

read the proxy statements of small public companies and

note that President Mary Smith owns 800,000 shares of her

companys $15 stock, I realize that 100% ownership is a

debatable strategy.

Creative or Competitive Business Idea

Creative businesses tend to be entrepreneurial

inspirationsan invention, a brand new service, pet rocks,

pet sitting, golf balls that beep in the rough.

Competitive businesses slug it out for existing

markets: bakers, printers, restaurants, gift shops.

There is more glamour in creative businesses. There

is probably more chance of big bucks in creative

businesses. But there is a vastly higher risk of failing in

creative businesses.

My Concepts 4, Inc. adventure was a classic

creative concept. Long story short: I had learned that large-

company R&D departments generate inventions thatarent suitable for their distribution channel. RCA, for

example, had developed a wristwatch with built-in

television in the early 1970s. They also had a TV-calculator

combination that looked amazingly like early personal

computers. But they correctly analyzed that their dealer

organization wasnt geared to sell or repair watches or

calculators. So the products (along with others) gathered

dust on R&Ds shelf. I talked to friends in other industries

and learned that this mismatch of product and established

distribution channels is a typical big-company dilemma. I

was a restless entrepreneurial spirit at the time, and


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assumed, almost certainly correctly, that there werethousands like me around the country. Eureka! Well build

a national network of aggressive entrepreneurs and make

ourselves available to RCA, other large companies and

smaller inventors. Well become the distribution system

they need to exploit new inventions. Still sounds pretty

good when I write it, but I totally missed its chicken-egg

problem. I couldnt interest RCA if I didnt have a network.

I couldnt interest entrepreneurs if I didnt have products.

After a forlorn 15 monthsthe highlights of which were a

weak novelty greeting card line and a $49.95 grandfather

clock made of cardboard (which could be crumpled by any

passing 3-year-old on a Big Wheel)Concepts 4

disappeared beneath the waves of the entrepreneurial

ocean.

The idea was novel. It made sense to a lot of people.

But it was unproven and apparently unexecutable, at least

with my resources and skill base.

I next invented Unified Neighbors, a localized

consumer magazine that would tell you who to call to fixyour washing machine or roof. Again, the concept was

brand new. Making sales was like carving granite. But this

time the idea worked.

Because the magazine required printing, I secured

some equipment, originally just to save a few dollars on our

own printing costs. Since the magazine was monthly, our

equipment sat idle much of the time. I notified readers that

well be your printing company. It was wonderful! They

came, with budgeted money in hand, and suddenly I

understood the advantage of a competitive business. The

dollars are there! Theyre already flowing to somebody.


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Sure, I need to find ways to be distinct and offer real value,but I dont need to carve granite.

On balance, as a long-time veteran of both kinds of

start-ups, Id vote for competitive businesses, but there are

great successes and unhappy outcomes in both categories.

What about a Dot Com?

As I write these words, Internet ideas are

everywhere. Some are extremely creative. Some use the

power of the Internet to deliver traditional products or

services. There are business-to-consumer ideas, business-

to-business ideas, even business-to-pet ideas. Only fools

are confidently predicting the direction of e-commerce as it

applies to the small business entrepreneur, but all this

chapters cautions apply; and there is one more caution.

Many Internet start-ups are based on appeal of the idea

not whether the idea can demonstrably make a profit. The

apparent hope is that website traffic can eventually be

turned into dollars somehow. Unless your pockets are

extremely deep, this is very risky thinking. The good olddays when ideas were tested by their clear ability to earn a

profit provided a much firmer foundation.

The KEY Step Regarding Your Idea

Whatever idea you decide to pursue, take this step.

Find people, knowledgeable peoplemaybe even people

who dont like you very muchand ask them to brutally

analyze your idea. Whats wrong with it? What might be

wrong with it now? Later? Beat it. Smack it. Give it your

best shot.


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If the idea is good, itll survive this scrutiny.Defending it will be good practice for you (usable again

when meeting with people like bankers).

If the idea is bad, better to have it exposed before

youve invested your savings and much of yourself.

In hindsight, I think Concepts 4 was a demonstrably

bad idea that would not have survived serious scrutiny. But

a combination of excitement, ego, and don't mess up my

enthusiasm with negativism! kept me from seeking tough

scrutiny.

Dont make that mistake!

Each of our chapters includes a section called To

Ponder and Discuss. The purpose of these questions is

to challenge you personally and to provide discussion

points with others.


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To Ponder and Discuss

1. Why, for many people, is starting the elusive first key to

starting a business?

2. What is the key advantage to a part-time start-up? The

key disadvantage?

3. What are the pros and cons of creative vs. competitive

businesses?

4. What are the pros and cons of starting a business vs.

buying an existing business?

5. What are the pros and cons of buying a franchise?

6. What are the pros and cons of using your own money vs.

seeking investors?

7. Would you rather own 100% of a small business or 20%

of a national business? Why? What are pros and cons?

8. Is it smart to risk discouragement by having a negative

horses fanny analyze and maybe beat up your business

idea?


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Chapter 2

Do You Have the Right

People Support?

Two kinds of support are vital: moral and

operational. It is important to understand both and not

confuse one with the other.

Moral Support: As well see in the next several

chapters, the entrepreneurial life includes some tough

times. You may work harder than you thought youd work.

Success may take longerand involve more

sacrificethan you dreamed it would. As you face

operational trials, tribulations and disappointments, youll

be affected in ways that impact both your business and

personal life. This reality should not be sugarcoated.

As I look back to 1974, the number-one critical

success ingredient has been support from my family. They

realized how much I wanted to be an entrepreneur, were

willing to share in the sacrifices, and gave me vital moral

support in the tough times. I cant imagine a happy

outcome without that kind of support, and I would strongly

advise you to secure it in advance.

Operational Support: Your operational support is

the network of employees and associates who help operate

the business. Especially in the early going, it is tempting toconfuse operational and moral support. As president of


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your own company, you soon understand the phrase Itslonely at the top, even if your top isnt very high yet.

Before you are comfortable with the process, you must do

things like set strategy, make decisions, and patch the

problems caused by not-so-good decisions. You may be

personally involved in business details for which you feel

poorly qualified. For example, many entrepreneurs, me

included, were jolted when they first realized they were

their own bookkeepers.

For these reasons, it is tempting to consider an

active business partner. You gain someone to share the

burdens of leadership and someone to fill in the weak spots

in your skill base. The whetherand if so who questions of

business partnership are remarkably similar to what

happens in the marriage decision.

For this discussion, partner is (1) a person (or

conceivably more than one person) who owns a substantial

percentage of the business and (2) is an active day-to-day

participant in the business.

When I was younger and more rash, I advisedagainst all partnerships, saying, A partnership has all the

drawbacks of marriage with none of the advantages. There

is a kernel or two of truth in the statement. Indeed there is

enormous pressure on business partnership relationships.

They tend to operate on an equal-in, equal-out premise

that is rarely true in practice. They require compatibility of

goals that is difficult to achieve. As a simple example, lets

say the business has been quite successful and could

financially afford a dividend of $200,000$100,000 to

each partner. One says, This is great! I can finally afford

the cabin in the woods Ive been dreaming about. The


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other says, This is great, but obviously we should investthe $200,000 in another part of the business so we can grow

the business faster. That kind of goal difference is tough to

reconcile. Because spouses and families are often involved,

the difficulty multiplies.

When businesses are struggling, partners, being

human, tend to blame the other for problems. Both tend to

feel theyre working harder and sacrificing more. Conflict

can be intense.

Over the years, though, Ive seen partnerships work

grandly. So my old neveris now a qualified maybe. Here

are some of the issues:

Fear (Moral Support) Is a Terrible Motivation

In Chapter 1 we discussed those timid souls whose

business start-up planning is done at the pub, over a beer.

Fairly often (especially after the beer has worn off), the

participants still like the idea of owning a business, but are

fearful to take the plunge alone. So our pub buddies decide

to become business partners primarily for moral support. Itmight work out, but the challenges of business partnership

are vastly different from the challenges of swapping good

stories or golfing and bowling together. The odds of

partnership incompatibility are extremely high, and the

ensuing conflict can destroy friendships. Fearof going it

alone is simply not a good motive. Entrepreneurs can find

comfort and fellowship among key employees, in

entrepreneurial clubs, even in Internet chat rooms.


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What If You Need Money?As discussed in Chapter 1, the source of start-up

capital is a key issue. You may need to give up some

ownership to raise enough capital for a sound start. If so,

its probably best to divide the issue of cash from the issue

of operating talent. The phrase silent partner denotes a

relationship in which the partner is involved as an investor

only, NOT as a day-to-day participant in your business.

If your primary goal is raising capital and you

secure that cash by adding an active partner who happens to

have some cash, youve essentially allowed someone to

buy a job in your business. Your partner will assume that

job is hisbought and paid forand will be inclined to

continue feeling that way even if his job performance is

pitiful. As you realize that a doofus is permanently

entrenched in the office next to yours, the significance of

his initial investment soon pales.

Fairly often, active partners do invest substantially

in the business. This is A-OK if the primary goal of the

original partnership was addition of key capabilities asdiscussed below.

What About Key Skills You Lack?

Lets say youre working on a restaurant concept,

but youve never owned a restaurant and youve never

cooked anything more complicated than Pop-Tarts and

frozen pizza. This reality would definitely inspire the

thought, Maybe I should add a partner who knows how

this business works.

As mentioned, its extremely common for an

entrepreneur to lack one or more of the critical success


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25

skills: marketing, accounting, whatever. Without doubt, itcan be tempting to consider seeking a partner who brings

the skills you lack.

As a general rule, it is not necessary or wise to add

specific skills by giving away ownership in your business.

The reason you hire employees is to add skill. In my own

case, Ive successfully operated a sizable commercial

printing operation (complete with thousands of gears,

pulleys and electrodes) with no prior background and with

pitiful personal mechanical aptitude. Our key employees

make it possible.

If your start-up is on a financial shoestring, yet you

feel the need for a marketing VP and cant afford one, it is

particularly tempting to offer a partnership position. I

would enter such a partnership only as a last resort. Its

better than becoming paralyzed and never starting your

business, but all possible alternatives should be explored.

[I should pause here, in the interest of balance and

objectivity, to say that not all successful entrepreneurs

agree with the idea of maintaining ownership to the extentpossible. There are strong success stories built around the

concept of achieving teamwork, loyalty and dedication by

sharing ownership with key employees. This kind of issue

is discussed in more detail in Book 5,Entrepreneurial

Savvy. I would argue that most first-time, start-up

entrepreneurs are not ready to deal with the complexities of

this kind of equity distribution, but I sure wouldnt say

stop to an E (our time-saving abbreviation for

entrepreneur) who is philosophically dedicated to this

approach.]


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What If There's One Person Crucial to the Business?A few business concepts are built around a single

persons persona or skill. Examples might be celebrities

lending their name or artists bringing a specific talent. In

these cases, as your business would be an empty bag

without that person, you may need to consider a partnership

arrangement. Even then, consider all possible alternatives

firstfor example, an attractive royalty arrangement that

would assure ongoing participation in the business.

What If You Lack Key Entrepreneurial Qualities?

There is a crucial difference between business skills

and entrepreneurial qualities. If you cant successfully add

a row of numbers, you lack a meaningful business skill. If

you are paralyzed by quick decision-making, you may lack

a critical entrepreneurial quality. The next 13 chapters

discuss key entrepreneurial qualities. Some of these

qualities are coreyou really need them. For example,

willingness to face risk and accept the possibility of failure

is fundamental. A well-chosen partner might bring othersof the qualities to your enterprisefor example, objective

analysis and decision-making. You still need to clearly

define roles, goals and expectations. You still face multiple

pressures. But that person may be key to your comfort with

entrepreneurial life and, accordingly, deserves

consideration as a partner.

Securing Equal Commitment

Business owners often say, No one cares about my

business like I do. This is usually true and, for some,

carries the high price of being yokedphysically and


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27

emotionallyto the business. Vacations become too rare.The vacations that are taken can be interrupted by crisis in

the business. The entrepreneur may be unable to fully enjoy

relationships and activities because of mental

preoccupation.

In some cases, the problem is workaholism and will

likely continue for a lifetime unless addressed at a core

level. A partnership wont help.

But in other cases, the business is so demanding that

breaking free from the physical/emotional yoke is

legitimately difficult. If by entering a partnership, you

achieve a fellow soldier willing to carry an equal burden

and willing to fully cover for you while your family enjoys

the fruits of your hard work, the partnership may be well

worth it.

Choose Carefully with Complete Understanding

This book cannot detail all considerations of an

effective partnership, but find books or people who can.

Take the time to make a very good decision including theissues of personal compatibility, business philosophy,

skills, approach to risk, and both short- and long-term

goals. Invest in an excellent buy-sell agreement. This

document covers the what-ifs of a partnership: What if a

partner dies? Is disabled? Wants to sell his interest in the

business? What if the business cannot support both

partners? Who stays? How much does the surviving partner

pay the departed partner? When? A buy-sell is crucial to a

sound partnership arrangement.


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1. Why is the support of family and loved ones soimportant?

2. Why do partnerships rarely achieve an equal-in, equal-out equilibrium?

3. Why is partnership goal conflict so difficult?

4. Does it make sense to secure a partners money as wellas his/her capability? Why yes? Why no?

5. When do partnerships make sense?

6. Is fear of a poor partnership reason to postpone yourstart-up?

7. When should you take action if its clear yourpartnership is not sound?

8. What is the role of a buy-sell agreement? Why is it so

important?


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Chapter 3

Will You Risk,

and Could You Deal with, Failure?

This chapter covers, with zero sugarcoating, the

least pleasant issue facing a prospective entrepreneur. The

sword has two edges. Your business may succeed; you may

prosper grandly. But your business may fail.

Our purpose here in Chapter 3 is not to discuss

failure avoidance. Sure, you will do everything possible to

succeed. You will do good prior research; you will plan

your start-up capital and working capital well; you will

develop a sound business plan; and you will carefully

execute that plan. All these things reduce the odds that you

will face failure. But the ugly truth remains: there is a

chance that your business will not survive.

As already discussed, your author knows of what hespeaks. The tragedy called Concepts 4, Inc. was failure

most grand, including the symbolic and literal loss of our

second-mortgaged house. I might have failed less

catastrophically, perhaps by pulling the plug earlier while

there were still resources to finance a reasonably graceful

exit. But even that would have been clear failure. I would

know it. My friends would know it. My enemies would

know it. My wifes mothernot to mention her bridge

clubwould know it. All the skeptics who told me I

shouldnt have tried would know it. There is no way toduck a humiliation bath when a business fails.


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Lets be deadly serious for a moment. In periods ofAmerican history like 1929, it was apparently raining

bodies on Wall Street. The market had crashed. People had

lost fortunes. Some, no doubt, lost their own fortunes and

the fortunes of clients who had trusted them. So, in several

tragic cases, people said, I cannot live with this collapse,

and quite literally ended their own lives.

I do not relate this story to be melodramatic. I

certainly am not predicting some dire end for you if your

business fails. Here is the key point. Those defeated souls

of 1929 had entered a business arena that had a huge upside

and corresponding downside. They knew it. They

undoubtedly talked about it, maybe even joked about it,

over coffee or cocktails. But when the potential downside

became reality, there was not enough personal resilience to

absorb the defeat and move on.

The resume of many successful entrepreneurs

includes at least one failure. Viewed philosophically, the

failure is highly educational and an important, though

certainly traumatic, step toward eventual success. Even ifthe outcome is a life-decision to return to a non-

entrepreneurial career, the correct philosophical view is At

least I tried. I wont be sitting in my rocking chair someday

regretting that I never even stepped up to the plate.

These are the key issues:

You must understand and acceptintellectually andemotionallythat failure is a potential outcome of your

decision to become an entrepreneur.


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You must accept the possibility of a substantialfinancial setback along with loss of the time and energy

you invest.

To the extent that your self-worth is defined by theopinion of others, you must be willing to face the

possibility of failing in full view of those people. Some

will be disappointed in you. Others may laugh, cry or

simply shake their heads at your folly.

Your immediate family must be willing to face theagony of defeat and its potential impact on lifestyle and

reputation.

You must have the personal emotional stability toabsorb failure and move on.

This subject requires intense introspection and open

communication with those who might be affected. A useful

technique is scenario projections. Visualize the complete

experience, making a worst possible set of assumptions

about outcomes. Your start-up costs more than expected.

The market demand is weaker than expected. There is morecompetition than expected. There is a run-up of key costs

that you didnt anticipate. And the ship sinks.

Can you, and those you hold precious, deal with

that possibility? If not, the entrepreneurial life is a highly

questionable choice for you.

If so, you can lay claim to a vital entrepreneurial

quality. Then, make it a point not to think about this issue

again. There is immense wisdom in the quote, That which

you fear will come upon you. Put the thought of failure

behind you and concentrate on success.


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1. Have you accepted at the intellectual and emotionallevel that an entrepreneur is a risk taker and risk involvespotential negative outcomes?

2. What is the role of family and loved ones in the risk-of-failure issue?

3. Are you tough enough and secure enough as a person toabsorb failure and rebuild?


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Chapter 4

Can You Face Fear?

The ability to face fear is a close cousin to the

ability to risk failure. Failure, though, tends to be an

eventa grim moment when the business must be

diagnosed as being in a hopeless condition and removed

from life-support.

Fear is more like a nagging condition than a single

event. Hopefully you won't face it often, but I'd bet heavily

that every entrepreneur faces more than enough.

Here are just a few of the challenges and dilemmas

that might inspire a bit of justified fear:

Business is not growing at anticipated rates; workingcapital is running out; bank is running out of patience;

not clear where more cash will come from.

Major new competitor enters the market. Key customers begin defecting to new competitor. Major new technology or market trend threatens to

make your approach to business obsolete.

Key employee gives two-week notice. Key ex-employee then opens competitive business. IRS notifies you of impending major audit. Some key financial records are not in quite the audit-

worthy state they should be.

Your business is targeted by a consumer or politicalgroup. Unfavorable media coverage results and you

face interviews.


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You uncover dishonesty among employees and aren'tyet sure the extent of your losses.

Key customer who owes you a great deal of moneydeclares bankruptcy.

This list could be vastly longer, but I'm sure you get

the idea. There are several topics in this book to which our

it's lonely at the top phrase applies. Fear is certainly one

of them. In our personal lives, fear is buffered by support

from loved ones. In our corporate career, fear is usually

shared among supervisors and other employees. The

entrepreneur tends to face fear alone. Worse, the

entrepreneur must often suck it up, put on a happy face, and

convince employees and customers that all is well. A leader

who has assumed a figurative (or literal) fetal position in

the corner of the office will not inspire confidence.

Note an important distinction. This chapter is not

aboutfeeling fear; it is about dealing with fear. World-class

entertainers, reportedly including Barbra Streisand,

experience intense stage fright before performances. Youwill experience a bit of business fright when first the IRS

visits or other calamities befall. The issue is what you do

with the fear. If you are paralyzed, depressed, or otherwise

reduced to a less-than-effective state, that is bad. It will

impact the situation you face, your self-confidence, and the

confidence of those who rely on you. If you take a deep

breath, square your chin, and plow ahead, you are doing the

job that a leader must do.

Note, too, that you can grow personally in your

ability to deal with fear. With luck, your challenges will be

small while your business is small. As the business grows


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Facing Fear

35

and you gain experience as a fear-processor, you will beable to face bigger issues.

However, if the entire notion of facing fear and

fighting through it is extremelywellfrightening,

entrepreneurial life may not be for you.


1. Envisioning yourself in an entrepreneurial role, whatkinds of problems or issues seem frightening?

2. How do you deal with fear in general?

3. How well do you hold up under pressure? What kind ofexample would your attitude and behavior provide foremployees in your business?

4. If fear is a problem, can you imagine growing in your

ability to handle it?


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Chapter 5

Patience, Perseverance &

Willingness to Sacrifice

This book includes several irritating chapters. This

may be the most irritating one of all. The entrepreneurial

life of fiction and fantasy includes an initial financial

investment and some hard work to get things going. Then

its supposed to generate excellent profits that will support

the good life: cars, boats, trips, lake cabins, pursuing your

special life-interests, whatever.

It might happen that way, but most veteran

entrepreneurs would recommend you not bet the family

farm on that scenario. Heres the problem. It is widely

understood that start-ups take cash and hard work. It is less

widely understood that growing businesses take cash and

hard work.Lets look at cash first. The reasons your growing

business will need cash depends on the kind of business. It

may be more inventory, supporting higher receivable totals,

new equipment, new store locations, ongoing hiring and

training of new employees. There are many reasons. But

the bottom line is this: The need for capital tends to suck

the money your business can put on the bottom line. If

youll pardon the double pun, taxes do some significant

sucking too. When the sucking is done, the puzzled

entrepreneur often sports a good-looking P&L and an

empty billfold.


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Patience, Perseverance, Sacrifice

37

A clear road to entrepreneurial ruin is impatience. Ifyou say, Ive worked hard, I deserve a much better

lifestyle, and prematurely begin funding boats, cars, etc.

rather than growth, something has to give. The only other

sources of growth capital will be selling equity or

increasing debt. As already discussed, equity is an

extremely expensive source of capital. Excess debt is also

expensive and can make your business vulnerable to an

economic downtown.

Very often, the right answer is patience. As I write

these words, I am still driving my 1990 Acura Legend. The

reason is not entirely sacrificial. It has been a great car that

runs today pretty much like it did when I got it. It looks

fine. So my Scottish ancestry tells me to drive on. But

another reason is habit. Over the years, Ive learned to fund

my business before my pleasures. The printing business has

nonstop need for new equipment. Much of our equipment

base has been internally financed through company profits.

This is good for growth and good for the market value of

my company, but not good for my line-up of boats and carsand such.

This subject clearly involves your loved ones as

well as yourself. If a spouse, for example, is not fully on-

board your entrepreneurial ship, the potential need for long-

term financial sacrifice will become a source of conflict. In

approximately 1979, I first said to Janet, If I just get a

_______ (fill in name of piece of printing or mailing

equipment), well be all set. I meant it. She believed it.

But the business grew, so in approximately 1980, I said to

Janet, If I just get a ________ (fill in name of a larger

piece of printing or mailing equipment), well be all set. I


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meant it. She didnt quite believe it, but was hopeful.Eighteen years and maybe a hundred pieces of equipment

later, I dont say and she doesnt ask. As will be clear in

Chapter 16Why Its All Worth Itwe havent missed

much that we feel is important; but, along the way, there

have been many sacrifices, and family support has been

crucial.

The ongoing investment of time and

energyphysical and emotionalis somewhat similar to

the need for more cash. A growing business sucks time and

energy. You must serve a growing clientele while making

the plans that will support future growth. You likely have

more people to train and supervise. Your problem count is

up. For a host of reasons, you will probably work harder in

the growth phase of your business than you did in the start-

up. Willingness to make this kind of ongoing sacrifice is

important to the entrepreneur. Again, family support is

vital.

It is important to be clear that willingness to

sacrifice time and energy does not mean forever. Ifbecoming an entrepreneur meant eternal forced labor in

your own sweatshop, it would be a highly debatable choice.

As we discuss in Chapter 16, you can build toward an

enterprise that supports your desired lifestyle, including

time outside the business. It may require team-building,

delegation, even willingness to forego some income in

favor of other perks, but it can be done.

A less obvious, but highly relevant, area of sacrifice

is ego. To illustrate, allow me to replay a phone

conversation from a day when I was doing president and

reception duty.


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BC: Hello, Bill Corbin here.Caller: Hey, Corbin. Wow, Ive reached the

president of the company!

BC: Well, thats true, but youve also reached the

janitor.

I do not relate this tale to suggest entrepreneurs are

doomed to latrine duty. But I will suggest that it reflects an

important attitude. You need to say, Ill do what it takes.

If funding supports a hired janitorial crew, thats great. If it

supports hiring a necessary sales person or a bookkeeper,

thats great. But if you cant afford to hire for it, and its

gotta be done, guess whod better do it?

Another ego blow relates to one of the fundamental

goals and misconceptions, of entrepreneurial life. I want to

be my own boss! shouts the new entrepreneur. Youre

gonna have more bosses than youve ever had! responds

the grizzled veteran. This issue is subtle. I left corporate

America because I wanted more control of my destiny. I

didnt like political games and I wasnt confident that my

superiors had my best interest at heart. They were clearlytoo concerned about their careers to worry about mine as a

high priority. For me, the more control of destiny goal

has been attained and is important. But the idea that

entrepreneurial life generates a mini-kingdom in which you

rule supreme is just plain not true. My earliest clear lesson

was a summer day in 1977 when, unannounced, an IRS

agent walked in to conduct a routine field audit. I spent

most of a week jumping through hoops at the command of

that boss. Many entrepreneurs become so dependent on key

employees that, as a practical matter, the employees

become bosses in multiple ways. This is to be avoided, and


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is the subject of Chapter 7, but it can happen. The clearboss for most entrepreneurs is the customer. If you

establish a customer-oriented enterprise, you will soon

realize that key customers have major power. Entrepreneurs

who dont grasp and adapt to the need to share and

sometimes relinquish power will face tough sledding.

Perseverance

The willingness to sacrificemoney, time, egois

likely essential to entrepreneurial success. Now lets turn to

its equally important first cousin: perseverance.

In preparing this book, I conferred with many

entrepreneurs. Whats the most important quality? I

asked. The answers were many but the single most

common theme was perseverance. In various ways, it

impacts most of this books chapters. Simply stated,

entrepreneurial perseverance says, I am going to make this

enterprise a success. I will work as hard as it takes and as

long as it takes. If there are things I dont know, Ill study

until I know them. When times are tough, Ill be tough. Illfight my way through the bad times with faith and

optimism that problems will be solved and good times are

ahead.I will be a winner!

Heres a recommended exercise. Buy lunch for a

successful entrepreneur. Explain your business concept and

ask for a realistic worst-case scenario of what you might go

through to make it a success: How long? How much work?

How much money? If you survive that lunch, without

losing yours, thats a good sign.


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1. Why do growing businesses require cash rather thangenerate a great deal of cash for the entrepreneur tospend?

2. Is your primary goal as an entrepreneur to (a) build yourbusiness or (b) support your lifestyle?

3. Do you have the kind of patience required to sacrifice

until the business is on sound footing?

4. Are you prepared to invest the time necessary to buildyour business even if it means foregoing favorite interestsand hobbies?

5. Can you suspend your ego and dive in at any level ofyour business?

6. Can you accept that customers, governmental regulators,even employees will sometimes feel like the boss?

7. Are you tough enough and patient enough to persevere

through tough times on your way to success?


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Chapter 6

Can You Take Bitter

Disappointment?

At the risk of having you declare me a total gloom-

meister, lets look at another of the real negatives of

entrepreneurial life. Now and then, you will bespectacularly disappointed. Were not talking here about

those wee issues like darn it, sales are 4% below forecast.

Were talking about punched-in-the-gut-serious

disappointment.

While I am writing this book without benefit of a

crystal ball, Id predict disappointment of one or more of

these types for 99% of entrepreneurs:

Result Vs. Expectation

Say you come up with a new business idea or

develop a major program for serving a new account or a

new market. Youre sure youve done everything 100%

right. You are 100% sure your efforts will be rewarded.

You execute your plan, proposal, seminar, and things dont

work out as planned. Perhaps you receive a combination of

both business and personal rejection. For example, an

indication (subtle or blatant) that not only was the idea bad,

but whoever dreamed it up was an idiot. That kind of

feedback can be very hurtful to the psyche. If your


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Disappointment

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companys business plan relied heavily on a successfuloutcome, it can also be very hurtful financially.

Customer Defection

If your business depends on repeat activity from

loyal customers, you will likely develop close

corporateperhaps even personalrelationships with key

accounts. Veteran entrepreneurs know that the great ebb

and flow of business includes gaining new accounts and

losing some existing ones. But the losses can carry a

boatload of emotional and financial implications. If your

maturity level is well developed, you will take these

actions:

Learn immediately why the loss occurred. Try to save the account by appropriate remedies. In any case, learn as much as possible about the

cause and thoroughly analyze your business system

for flaws that need fixes.

Take decisive action.If your maturity level isnt well developedor if

the account was central to the plan for financing your

childs college educationyou may feel tempted to curl up

in a little ball and cry. Again, this is not productive and is

not inspiring to employees or other customers.

Employee/Partner Disappointment

There is no body blow worse than learning of a

major breach of trust on the part of a trusted member of

your business team. Breaches can include these:


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Out and out theft Negligence so severe that the result is similar to

theft

Blatant lying about matters on which the truth wasimportant to you

Breaches of confidence that destroy internalharmony or aid competitors

Sexual harassmentThis list could be extended ad nauseum. The result

is the same; you have a trusted team member who bitterly

disappoints you. In smaller businesses, it is quite possible

you view this person as a friend. It may be a relative. Yet

job termination may be necessary.

Problems in Clusters

When entrepreneurs gather to exchange war stories,

a recurring theme is the multiple body blow. We no

sooner got those OSHA boys out of our hair when the dam

up yonder broke and flooded the whole dang warehouse.About that time, Mildred announces shes suing because of

what Freddy said to her, and the bank got wind of that and

called our loan. Man, that was a tough three days. OK,

you may never face quite the multiple blasts of this

fictionalized account, but problems will likely befall you in

clusters.

Whether one at a time or in groups, disappointment

will enter your entrepreneurial life. You must be able to

absorb the jolts, take necessary action, and move on.


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1. In general, can you absorb disappointment and bounceback in a reasonably short time frame?

2. If bitterly disappointed by another person, can you setaside the emotional issues well enough to continueoperating effectively?

3. If battered by multiple problems at the same time, canyou absorb and bounce back?


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Chapter 7

Can You Be a Leader?

When you first select a business idea, you

consciously or unconsciously(!) make a secondary

decision: Will the business have employees? There are one-

man or one-woman shops, usually service enterprises,

involving the owners energy and personal skill. There arebusinesses that succeed nicely without staffing beyond a

receptionist and a part-time bookkeeper. However, the

majority of growing entrepreneurial efforts will require a

team of employees. The roles of good employees are

important:

They allow you to multiply your effortsthe keymathematical concept stressed by many books on

how to become wealthy.

They bring skills that you may lack. They are the best chance you have to take a two-

week vacation before your 80th birthday.

They can be part of a business family that becomesan important part of the fabric of a satisfying career-

life.

On the other hand, our entrepreneurs trading war

stories might be overheard to say You know, Id love

running that business if it werent for two things: customersand employees. Customers can be demanding and


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Leadership

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unreasonable. Your employee group can give you closeidentity with the lonesome cowboy whose herd is

bellowing loudly and running in all directions.

If you have selected a non-employee business

concept, this chapter is not key to your success. If you will

have employees, read carefully

The concept of leadership is complex and

subjective. Some important points:

Effective leadership does not require a gung-ho,

General George Patton style. It does not require an

imposing physical presence or high-level oratorical skills.

There are extremely effective leaders who are reserved and

soft-spoken. Many weigh in at 125 pounds or less.

Effective leadership often involves honest

recognition of leadership weakness. If your business

requires strict cost accounting and you are a wild and crazy

record keeper, you must hire and empower leadership in

that area. If your sales team will require ongoingmotivation and your own mother occasionally dozes off

while you are speaking, youll need to hire and empower

leadership in this area.

There is ongoing debate about whether leaders

are made or born. For entrepreneurial purposes, I believe

they are made. You can learn to be an effective leader even

if you never won a high school election, served as captain

of the team, or were voted queen of the May Festival.

HOWEVER, learning leadership requires hard work and

willingness to step outsideperhaps far outsideyour


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comfort zone. This willingness involves personal courage,one of the key qualities for entrepreneurial success.

Courage is necessary to start in the first place; it is the real

subject of Theodore Roosevelts tribute to the man who is

willing to enter the arena rather than sit in the bleachers

with lifes timid souls. Courage and toughness are required

to face and overcome the disappointments that will surely

come your way. But these qualities, like muscle, will get

stronger with practice. As we discuss various examples of

entrepreneurial leadership, you need not say, Yes, Im

fully prepared in this area. But you do need to say, I can

visualize myself, through practice and hard work,

becoming effective in that area of leadership.

I will now attempt to list on-the-job entrepreneurial

leadership requirements:

Vision: You must correctly define a market and

envision your new companys products, services, marketing

methods and administrative systems. This strategic visionmust be correct for the present and must extend far enough

into the future to allow ongoing business success. It may

involve the need to anticipate and navigate rough seas,

things like intense competitive reaction to your moves and

fluctuating economic conditions.

Articulation of Vision: Attracting employees in the

first place requires that they believe your company is sound

and will be successful. Employees will pull together, in the

same direction, only to the extent that they buy into your

strategic vision. They will remain energized and excited to


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the extent you continue to paint a picture of success andprogress. As your business grows, you will need a

leadership group, perhaps department heads. These leaders

will delight you if they are able to articulate the companys

strategy and value system. They will disappoint you if they

articulate their own or someone elses strategy and value

system. It is your job to communicate the vision. Devices

can include newsletters, company meetings and staff

meetings. However the primary device should be short,

ongoing, one-on-one discussions.

Disciplinarian: This area is so important it has its

own chapter. Well talk about the need to develop and

enforce procedures such as quality control and accurate

accounting. Well also talk about the need to communicate

and enforce the culture of your company.

Tough Decision-Maker: This area also has a

chapter. You must be able to (1) identify problems that

must be addressed; (2) objectively analyze alternatives; (3)make firm decisions on a timely basis; and (4)

communicate and enforce those decisions. This process, in

many businesses, is daily and intense.

Fearlessness Regarding Employees: As

mentioned, many entrepreneurs experience an early bubble-

burst related to the notion that Im the boss. It is quickly

apparent that customersparticularly the demanding, high-

maintenance customersare the big boss. Less obvious,

but more painful, is the possibility that one or more

employees become your boss. Hey, how can that happen?


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you might ask. Well, they arent really the boss on anorganizational chart, but if they become so important to you

that you literally fear the possibility that they would leave

the company, they gain a power that can be very boss-like.

Real-life examples include these situations:

A highly skilled employee whose personal skill iscentral to your ability to provide the companys

basic service;

A computer-literate person who installs andbecomes the only truly trained person in complex

computer applications;

A sales person who is bringing in a large percentageof your business but could likely take that business

to a competitor;

A popular foreman who has built a cult-likeadmiration among his/her employee group, causing

your to fear the loss of multiple employees if their

guru departed.

Genuine entrepreneurial happiness is impossible

unless you can reach a position of fearlessness regarding

the possible loss of any employee. This doesnt mean you

must be hard, cold and indifferent. Positive personal

relationships are enjoyable and improve the chance that key

employees will remain lifelong employees, but you must

not fear their loss. This fearlessness is required to maintain

control of your business, to be able to negotiate reasonably

during salary-increase discussions and to sleep peacefully

at night. It also requires a dose of courage (a recurring

theme in this book for sure). You must be willing to


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sayand believe in your heartIf this key persondeparts, the company will be just fine. It may be bumpy for

a few weeks, but well be just fine.

Note that your courage level can be helped if

youve developed a corporate discipline that all employees

are to be backed up, through systematic cross training.

This helps, but you will still have key employees whose

departure would hurt. Can you be tough enough to rise

above fear and remain firmly in control of your

organization?

Problem/Crisis Handler: Every seasoned

entrepreneur has numerous when it hit the fan stories:

someone dropped a pipe wrench into a machine running at

full speed; a customer rejects a huge job and demands that

it be redone immediately; a lightening strike sizzled the

computer system andthe phone system; a fire destroyed

valuable inventory; the IRS auditor paid a surprise visit;

three key employees departed in the same week; three key

customers declared bankruptcy in the same week; a keyemployee was conducting his marijuana marketing

company on company time and on company phone lines;

one key employee was showing nude photographs of

himself/herself to another key employee who really didnt

want to see them. The list could fill several pages. The

leader has two key roles: (1) Absorb the crisis personally

and operationally; and (2) avoid chaos or panic in the ranks

(usually involving employees, but sometimes, depending

on the nature of the disaster, customers). It requires genuine

leadership to calm your own fear, attack the problem, and

communicateusually by observable behaviorthat the


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ship will be patched and will sail on. It is not good if thecaptain is standing on deck sobbing loudly or throwing

women and children out of the lifeboat to make room for

himself.

Mediator: Some sections of this book may or not

apply to you. This one is 100% assured. As the employee

group grows, there will be conflict. Some conflict is rooted

in personality conflict. Some is rooted in honest differences

of opinion; some is politically motivated; some is

hormonally motivated; some seems to come from nowhere

when the moon is full. Whatever the source, there will be

conflict and the entrepreneurial leader mustbe strong

enough to mediate differences and get people back to work

on a positive basis. Our company operates with a mandate

of professional cordiality, the idea that employees need

not like each other but must operate cordially in the

conduct of company business. This approach, if

successfully instilled in your corporate culture, helps, but it

will not eliminate conflict. It does give you a basis to bringpeople together; to make it clear that the purpose of the

enterprise is to serve customers, not to provide employees

an opportunity to practice for the Olympic debating or

fencing teams; and to demand, then help facilitate, swift

resolution of conflict. Sometimes you feel like a counselor;

sometimes like a referee. But you must be able to handle

this area effectively.

Teacher: The role of teacher is extremely important

and often neglected. If growth requires a growing number

of employees, it is crucial that they have (1) technical


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skills; (2) administrative skills to the extent they areinvolved in record keeping of any kind; and (3) culture

knowledgeawareness of the goals and value system of

the company. Department heads must have these skills and

the ability to communicate and lead. Formal and informal

training is a key element of entrepreneurial success.

Motivator/Morale Builder: There are several

parallels between the entrepreneurial life and marriage. One

is this: It sounds exciting and glamorous to a newcomer and

it is, in fact, exciting and glamorous in the early stages. But

it lasts a long time. If time and familiarity lead to boredom

or conflict, the bloom is soon off the rose. Entrepreneurial

leaders must consciously work on maintaining the morale

and attitude of employees. One method is activities or

programs. These are fine. The best way is leadership by

example. If the leaders attitude is good and the working

atmosphere is positive, even fun, the odds of a positive

employee team are much higher. The leader must also be

aware of factors, from rumors to disruptive employees, thatthreaten company morale and must be willing to move

swiftly to eliminate those negatives.

The leader must wear many hats. Many are crucial

to success.


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Chapter 8

Can You Sell?

Entrepreneurial selling has two broad categories.

You can probably survive without handling one of them,

but probably not both.

1. Marketing-related selling. This processinvolves advising prospects of the existence of your

business, drawing them close enough to potentially transact

with you, then inspiring them to part with their cash. It may

be as simple as locating your hot dog stand near a crowd. It

may be as complex as national advertising, a website, 800

phone inquiries, and face-to-face selling. There are a

thousand variations and, for the most part, the skill-set

required to conduct this kind of selling can be hired. So a

potential entrepreneur who couldnt sell water to a thirsty

camel-ownercan probably develop a business idea and/or

an employee group that allows a talent gap in selling to be

minimized. (As an aside, it is my personal advice to

become a good salesperson within your own business, even

if youre uncomfortable with the process. It is the best way

to understand the clients needs and the competitive

marketplace. It allows you to directly gauge your

companys ability to fulfill customer need. But, again, an

intelligent entrepreneur can probably survive without direct

customer selling.)


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2. Leadership-related selling. The previouschapter discussed leadership. It may go without saying that

leadership is a form of selling, but in case it doesnt, lets

stress it. When you sit down with a potential investor, you

are selling. When you interview a high-potential prospect

to fill a key employment role, you are selling. When you

tell the IRS auditor that your intentions were pure even

though certain aspects of your bookkeeping system fell

below his standards, you are definitely selling. When you

discuss a new project with your banker, you are selling.

When you explain a sub-par financial report to your banker

or investors, you are selling. The

Documents

Entrepreneurial Life A