What Does It Really Take to be a Successful Entrepreneur or Business Owner

In trying to predict something as complex as one's potential to be successfully self-employed, I believe it's wise to eschew rigorous research studies in favor of a subjective opinion rendered after observing lots of successful and unsuccessful entrepreneurs.

In my PsychologyToday.com article today, I offer my take on the eight things it takes to succeed in business. 

Conversations with Marty Nemko in Psychology Today

Psychology Today has a column called Finding the Next Einstein written by Duke University scientist, Jonathan Wai.

That column has profiled Steve Jobs, Carl Sagan, Stephen Hawking, Salman Khan and---and I'm truly honored--me, twice.

Here are the links to the first column and to the second column, which appeared today, and that Psychology Today's home page lists as one of its Essential Reads.

Should You Start a One-Person Business?: 14 questions

Today, it seems that more people than ever are considering starting a one- or few-person business. Perhaps that's because, in this terrible job market, ever more people can't land a decent job.

These questions may help you decide if you'd be wise to start such a business.

1. Running your own one-person business means you must be a self-starter: structure your days, and keep working hard, even in the face of setbacks. How confident are you that you'd work hard and well enough?
A) Very
B) Quite
C) Moderate
D) Minimally

2. How confident are you in the viability of your business concept or your ability to find a viable one?

A) Very
B) Quite
C) Moderate
D) Minimally

3. How confident are you in your ability to create an excellent (if brief) business plan that will address funding, cash flow, and marketing?
A) Very
B) Quite
C) Moderate
D) Minimally

4. How confident are you in your ability to persuade people to buy, invest, sell to you, calm down customers, etc.
A) Very
B) Quite
C) Moderate
D) Minimally

5. If you were buying furniture for your business, you'd mainly buy:
A) used items from Craigslist ads, garage sales, etc.
B) used items from a used furniture store
C) new items from Office Depot, Target, Ikea, etc.
D) new items from a higher-end furniture store

6. If you owned a store that sold eyeglass frames, you'd most likely buy them from:
A)  a manufacturer(s) in a low-cost country
B   a U.S. manufacturer(s)
C)  a wholesaler whose sales rep called and then visited you.
D) Costco

7. How confident are you that you would devote the usually-required 10-30 hours a week on marketing, especially in the business's first year or three.
A) Very
B) Quite
C) Moderate
D) Minimally

8. Even one-person businesses usually require significant paperwork: bill paying, bill collecting, answering emails, government forms, etc. How likely are you to keep up with it and/or to afford hiring someone to do it:
A) Very
B) Quite
C) Moderately
D) Not

9. Every business has problems that arise: technical, human, logistical, mishaps of all stripes. If you too frequently have to hire someone to solve them, your profits can erode quickly. How confident are you in your ability to solve such problems by yourself in a timely manner:
A) Very
B)  Quite
C) Moderately
D) Not

10. Many one-person businesses, especially service businesses can be started for under $2,000, especially if it's a home-based business. Of course, the business you choose to start could cost much more--opening a cafe, for example, usually costs six figures. How confident are you that you have the capital to start your business, plus the operating capital to keep it running for the months or even year or two it may take to become profitable? (You needn't have the cash yourself: You could borrow on your no-interest credit card, borrow from Uncle Ernie, and/or get an SBA loan, especially if you're a woman or minority.)
A) Very
B) Quite
C) Moderate
D) Minimally

11. Many one-person businesses operate at a loss or minimal profit for months or even a year. Can you afford that?
A) Yes
B) With modest strain
C) With serious strain
D) No

12. If your business ended up generating little or no profit and you lost all the money you invested in it:
A) You'd still be able to essentially retain your lifestyle and financial security.
B) It would hurt your lifestyle or financial security but you'd probably be okay.
C) It would hurt your lifestyle or financial security but it wouldn't be devastating.
D) It would be devastating

13. Facts aside, how worried would you be about your business failing?
A) Very
B) Quite
C) Somewhat
D) Minimally

14. Overall, how excited are you about the prospect of starting and running a one- or perhaps two- or three-person business?
A) Very
B) Quite
C) Moderately
D) Not

SCORING: For all items A=3 points, B= 2 points, C=1 point  D=0 points.
Obviously, no set of questions can definitively indicate whether you should start a business. But the closer you scored to the maximum of 42 points, the more the indication you'd be successful and enjoy running your one-, two-, or three-person business.

A Fairly Low-Risk, Fairly Fast Path to Wealth

This is the fourth in a series of five posts, each of which distills one of the presentations I made at the Commonwealth Club this month.

Of course, there is no guaranteed path to wealth, slow or fast, but my vote for the most likely approach to fairly quick wealth is to clone an ultra-simple business:

1. Pick one of the simplest businesses. There's less to go wrong and less start-up money needed so you can afford setbacks or even total failure. Examples:

• College financial aid counselor. They help families complete the forms so as to maximize aid--like a tax accountant but for college financial aid.
• Career coach in a niche: unhappy physicians or lawyers, people with Asperger's, etc.
• Relationship ad writer and/or photographer


The cost of rent can be prohibitive so, if possible, run such businesses from home, meet at a coffee shop, or at their home or office. Or rent space by the hour from a friend. There may also be rent-by-the-hour meeting rooms available in your locale. 


• Clean out and add shelves and cabinets to basements, garages, and attics. My favorite name: Spacemaker.
• Shoeshine stand. My favorite name: Shine On, or in California, Dianne FineShine
• Soup sold from a cart. My favorite name: Souper!
• Espresso cart in the financial district. My favorite name: Liquid Assets.


  Buy your major equipment used, at auction, etc. The cost saving can be enormous.

2. Visit a few successful businesses of your chosen type. It's easy to find which brick-and-mortar retailers are successful:: Just see which ones have long lines of customers. For not-retail businesses, check out the websites of businesses that get lots of excellent reviews on Yelp, Angie's List, ServiceMaster, etc. Incorporate their best features into your business.

3. If needed, hire one of those successful business owners to be your consultant in helping you start up. Agree to not compete in their geographic area.

4. Run the business yourself for a month or two. Resist the temptation to delegate. Not only will you save money, you'll learn the ins and outs of the business so you can keep improving it. 

5.  When the business is running optimally, even if it nets as little as $500 a month, clone it in another (excellent!) location. Take the time to find a wonderful person(s) to staff it. Pay the person(s) fairly, including profit sharing. At least as important, treat them with deserved respect and kindness.

6. Keep cloning the business until you're making $100,000 to $200,000 a year. That's enough to live well. Expand beyond that and the risk of quality and efficiency too greatly declines and of theft increases, not to mention the headaches of running a bigger business.

I'll be Making Five Presentations at The Commonwealth Club's Future of Work Series

The Commonwealth Club is America's oldest and largest public affairs forum. I'm honored that it has invited me to return for my fourth speaking engagement there.

This time it's five presentations in its Future of Work series:

Aug 1. What Every Career-Minded Person Should Know for 2013 and beyond.

Aug. 2: Ahead of the Pack Job Search Strategies

Aug 9: Keys to Beating the Odds in Starting a Business

Aug. 16: Getting Promoted (or at least not laid off)

Aug. 23: When Should and Shouldn't You Follow Your Passion?

For info and tickets, click on the previous links.

The Commonwealth Club has issued a press release with information on all the Future of Work series presentations. HERE it is.

So You're Thinking of Starting a Business

Here's my latest column in the German magazine, Business Spotlight.  It's quite applicable to Americans. 

So You're Thinking of Starting a Business

My father was a Holocaust survivor. He was psychologically healed not by psychotherapy but by work, by owning his own small business.

Perhaps owning a business can heal you, if only financially. And in today's slow economy, many people need financial healing.

Of course, most new businesses fail, but this article can help you beat the odds.

First some reassuring news: You don't need a new idea. Indeed, new ideas are more likely to fail--guinea pigs often die, the leading edge often is the bleeding edge, choose your metaphor. Large companies have deep pockets and can afford failures but you may not have such deep pockets. If you don't, a wiser rule may be: Don't innovate, replicate

So, for example, you might pick a proven business concept. For example, in the U.S., food trucks are big--selling sandwiches, burritos, felafel, etc from a truck parked in a high-foot traffic area---A great location with no rent, a great combination. Just visit a few successful food trucks and incorporate their best features in yours. Then hire one or more of the business owners as a consultant to help you launch your business. They well may agree, even if you ask for them for free advice. Many people are flattered to be asked and enjoy sharing what they know. If they're worried about your opening up shop near their place, agree not to.

But if such an unstructured approach is not for you, it might be worth paying the usually stiff fee for the more structured handholding provided in a franchise.

Alas, the workplace battlefield is littered with dead-broke franchisees so you must be extremely careful before plunking down the tens or often hundreds of thousands of euros it costs to buy a franchise.

These sites profile some of the many franchises available in Germany: http://www.franchisedirect.com/internationalfranchises/germany/76/ and

http://www.franchiseek.com/Germany/#.T8KhedVfHRY

But which, if any franchise should you choose?

According to Franchise.org, in Germany "there are no specific laws or government agencies that regulation the offer and sale of franchises." So it is wise to ask these questions.

Questions for the seller of a franchise (usually called the franchisor)

1. Describe what you'll be providing me.

2. Describe what your most successful buyers of your franchise do that average and below-average ones don't.

3. What are all the costs I'll be required to pay, both upfront and after the franchise is up and running?

If you're satisfied with the answers to those three questions, go on to these more probing ones:

4. May I see a spreadsheet showing last year's profit for each of your franchisees? Far less helpful would be a verbal representation, for example, being told the average or projected profit. Even if the seller gives you the spreadsheet, it is important to ask:

4a. May I have a copy of the current complete list of the buyers of your franchise and those who have sold or closed the business in the last two years? Of course, it's better if you can pick from the complete current list than to have to rely on a few hand-picked by the seller. The seller may reasonably withhold that list until you've demonstrated you're serious, for example, by completing a long application form.

If the seller gives you only a few names, you may find others by Googling the franchise's name.

5. What lawsuits are in process, especially, disgruntled franchisees or claims against patent.

Supplement their answer by Googling the name of the franchise plus the words "lawsuit," "complaints," "scam," and "reviews." A small amount of litigation is common even in good franchises but an excessive amount is a red flag.

Questions for people that have bought the franchise

It is critical that you speak with five to ten franchisees by phone and one or two in-person.

Tell each franchisee your strengths, weaknesses, work preferences and time availability and ask:

1. Now, knowing the franchise and a bit about me, do you think I'd be wise to buy one?

After getting an answer to that key overall question, ask about some or all of these:

a. the quality and pricing of products the seller requires you to buy b. the seller's ethics and the ethics inherent in this business. c. the accuracy of the provided estimate of costs d. satisfaction with the training provided e. satisfaction with the ongoing support f. satisfaction with the marketing support g. the typical work week, and how it's spent (including marketing) h. the skills that are critical to succeeding in this business i. Would you add another store/territory if you could?

Questions to Ask Yourself

1. Am I a self-starter, not a procrastinator? Often, long hours are required--and no one will be supervising you to make you work all those hours.

2. Am I willing and able to sell and market? For example, have you, in the past, consistently been able to close deals while remaining ethical?

3. Will I follow the franchisor's system? Everyone says they will, but many franchise buyers fail because they don't.

4. Does this franchise capitalize on my strengths and preferences? For example, cold-calling, night/weekend work?

5. Am I resourceful? Will I usually be able to solve the frequent problems that arise in running any business?

6. Am I resilient when setbacks occur, or am I too likely start procrastinating?

Starting a Consulting Business

Are you on the chopping block? Already been chopped? Or are you just tired of working for The Man?

 If so, you may be thinking about starting a consultancy. Here's how:

Sure, if you have great expertise in a high-demand area, consult in what you know about.  

But if your expertise isn't that strong or demand for it is low, you can still establish a successful consultancy. (See below for ideas.)  Like the big consultancy firms do, get the consulting assignment and then hire a contractor(s) with the technical expertise to do the job. 

By subcontracting with a technical expert(s), you may need only  enough expertise to get, not implement, the consulting contract.  Here's how:

1. Do the equivalent of a term paper's worth of research in the area so you know enough lingo and key issues to get a meeting with prospective clients.

2. With or without an introduction from someone in your network, contact 50 potential clients. The model I usually recommend is:

• Call to say you'll be sending an email with a link to your site.
• Email that link and a request to meet with them to discuss if and how you might solve a problem for them.
• Call to follow up. Your goal is learn about what, specifically, they might like you to do and to set an appointment for a subsequent meeting in which you'll bring a technical expert(s) to discuss details.
•  If there's no response, call once more.

2. Live or via phone or even webcam, bring the aforementioned technical expert(s) to your meeting. 

3. Pricing your consulting assignments: Charge a flat fee (with clearly defined parameters of what that will include) that will ensure that you and your technical person(s) are well paid yet still provides excellent value for the client.

What to consult in:

Pick a consulting area that meets as many of these criteria as possible: 

• in-demand
• is complex and technical (If it's easy, most of your potential clients would do it in-house.)
• will yield the client high return-on-investment
• is in an Obama priority area (for example, financial regulation, alternative energy, inner city education, health care for low income people, illegal immigrants).  This link shows you how to become a federal contractor. 
• meets a new government mandate.
• involves China (for example, manufacturing, import, export).
  
• you have considerable expertise

Finally, do a great job. Too often, consultants, especially in their early, hungry stages, focus only on getting the next consulting gig.  The successful consultant is excellent both at marketing and in providing the consulting service.