5 Mistakes That Can Threaten Your Liability Protection - And How to Avoid Them
By Darius M. Barazandeh
You may know that doing business as a corporation or LLC can maximize your financial reward while minimizing your risk. What’s less well known is that many business owners lose this valuable protection each year by failing to follow a few basic rules and regulations.
Even if it seems like a hassle now, ensuring that your corporation or LLC is properly managed could save you from IRS audits, lawsuits, or other headaches down the road.
Whether you’re a real estate investor, an independent contractor, or a small-business owner, forming a corporation or LLC can minimize your taxes and protect your personal assets.
Unfortunately, many people start businesses without proper instruction on managing agreements between parties, creating agreements with customers, internal paperwork, cash controls, voting rules, state and Federal reporting requirements, and a host of other issues.
In particular, there are actions, behaviors, or neglected tasks that can negate the value of your business - and leave your personal assets at risk. Here are five of the most common mistakes:
1. Using the Business for Fraudulent Activities
Do I have to say it? You cannot and should not use your business to cheat or defraud. Let’s say John Smith gathers money from investors, claiming he will use it to develop a new product for his company. However, he never intended to use that money for product development. When he is sued by the investors, John claims that his personal assets are protected since he was acting as the president of his limited liability company. But, because fraud was involved, no court will honor the limited liability company. So his personal assets and business assets are at risk.
You may think that this is an egregious example. That it would never happen to you. But if, for example, you’re a real estate investor, consider the fact that many deals struck with so-called “motivated sellers” could give rise to a lawsuit under your state’s Deceptive Trade Practices Act (DTPA) or a similar statute. Sometimes the line between a good deal and fraud is not so clear, so make sure your agreements are fair.
And if you’re a small-business owner, you can’t be wholly unfair or flagrantly one-sided when dealing with your customers. As in the real estate example above, a court can look at a one-sided transaction and decide against you. Even worse, a judge could declare that you are using your business to promote unfair dealings, a far more serious charge.
Avoiding this mistake is simple. Ask yourself if you would want to be the buyer/customer on the other end of your deal. There are plenty of legal ways to structure “win-win” deals and still make great profits. Ever hear of karma? Everything you do to or for another person will one day be done to or for you. So be fair!
2. Failure to Respect the Business as Separate From Its Owners
Don’t mix funds from business accounts with your personal funds and accounts. For example, don’t use company money to buy personal assets, groceries, etc. If you do this routinely (or perhaps only once), your business structure may not hold up in court.
3. Failure to Properly Capitalize the Business
Your business must have enough insurance or savings to cover expenses, liabilities, and obligations. If it doesn’t, a state court will likely “pierce” the business entity and hold the owners personally liable. The amount of capitalization generally refers to the total value of company assets (equipment, cash, etc.) and the amount of insurance coverage. This is a complicated area, because you may need more or less “capitalization” based on your type of business. Requirements vary, but, as a general rule, the more you deal with the public, the more capital you should have available.
4. Forgetting to File State Reports
Your secretary of state’s office will require you to keep up with reports and state taxes (sometimes called franchise taxes or business privilege taxes). If you don’t (even if nominal amounts are owed), your business privileges will likely be revoked. The privilege that goes first is - you guessed it - your personal liability protection.
5. Other Formalities
Other formalities that you need to pay attention to include meetings, paperwork, required records, proper roles and obligations among the parties, and transfers of ownership interests. Make sure all of these are in order to preserve your liability protection and, if necessary, satisfy IRS auditors.
Don’t be discouraged by how easy it can be to lose your liability protection by falling into these five common traps. Knowing that they exist will help you avoid costly mistakes, keep your taxes to a minimum, and protect your personal property.
[Ed. Note: Attorney Darius Barazandeh holds an MBA and is an active real estate and tax-deed investor in Texas. He is also a leading national speaker on tax liens and corporate entities for small businesses and real estate investors.
Don’t let the possibility of making the above mistakes prevent you from getting into the real estate business. Learn more about how to set up your business correctly from the start, protect your personal assets from lawsuits, and minimize the tax bite from your investing profits. Get the details here.]
10 Dumb Ways to Start a Business (and Waste a Ton of Money at the Same Time)
By Michael Masterson
Entrepreneurship is based on selling. You test the market with a product you think will sell well. If it does, you keep selling. If it doesn’t, you try something else.
This approach lent its name to my most recent best-seller: Ready, Fire, Aim. The main idea is that to start and grow a small business you must develop a pragmatic, action-oriented mentality. Rather than spend too much time and money refining theoretical ideas, you develop a prototype quickly and then see if the market will buy it.
As I said in the book, for every business that fails because of poor planning there are a dozen that never get off the ground because of too much planning.
The Ready, Fire, Aim approach obviously doesn’t apply to surgical procedures and rocket science. But it will be very useful for 90 percent of the new-business ideas you are likely to come up with.
Want to start a business selling diamond-studded collars for kitty cats? Fine. There are two ways to go about that:
1. You can spend most of your time and money manufacturing a line of such collars - and only after that is done, start to think about how you can sell it.
2. You can make a single collar and go down to the local flea market or your neighborhood pet shop and see if you can find a customer for it.
Most people start businesses the first way. That’s why most businesses fail.
But with the Ready, Fire, Aim approach, you devote 80 percent of your initial resources to discovering an efficient way to sell the product. Once you have done that, you have found the key to successfully market it. With that key in your pocket, you don’t have to worry about all the other problems that will arise in the natural course of business. You won’t have to worry, because you will be able to create the one thing that can solve almost every business problem: cash flow.
Here, in a nutshell, is what I mean by Ready, Fire, Aim:
Ready: Get your product idea ready. Make it good enough to sell. Don’t worry about making it perfect. There will be time enough for that later.
Fire: Start selling it. Sell it every way you can. Test different offers. Test different ad copy. Test different media. Keep testing until you discover something that works. This is your Optimum Selling Strategy (OSS).
Aim: Expand your customer base by focusing on your OSS. As your customer base grows, develop business procedures to accommodate that growth. Hire the best people you can to manage your business. Discover, through “back-end” marketing tests, other products and services that your customers will buy. Use those discoveries to refine and perfect a fast-selling line. As this back-end business flushes cash into your company, invest a good deal of that cash into front-end marketing.
That is the cycle of a successful start-up venture.
Ready, Fire, Aim doesn’t mean you are willing to be sloppy. Nor does it mean you are willing to sell second-rate products to your customers. On the contrary, Ready, Fire, Aim is the only truly practical way to find out what your market really wants from you.
And for a small business, Ready, Fire, Aim is the best way to get from good to great.
Think of it this way: When we say we have “a great new product idea,” what do we really mean? When I say that, I mean I have a strong feeling that the product will sell well - that it will be a big, commercial success.
But the truth is, I have only a hunch about how well my idea will do. Experience has taught me that my hunches are often right… but not always. If I spend too much time and energy preparing a business based on a hunch, what happens if the hunch doesn’t pan out?
What happens is that I’m left with nothing - no money or materials or energy - to start over again. The essence of entrepreneurship is the ability to try and fail and then try again. You can’t do that if you blow your wad the first time you try.
So nowadays when I get the feeling that I have a great idea, I figure out how I can test that idea as quickly and as cheaply as possible.
Once I know the idea has “legs,” then I can roll out a sales program. And once a successful sales program is underway, I can refine and improve the product. The truth is, I can never perfect a product in isolation. I used to think I could, but, once again, experience has taught me the arrogance of that kind of thinking.
To get from good to great, you need the help of superstar employees and, most of all, feedback from your customers. The best customer feedback comes not from surveys or focus groups but from marketing results. Find out what your customers want by selling things to them. This gets you back into the Ready, Fire, Aim loop.
If I had to pick one thing - one characteristic or quality of my work that is most responsible for the success I’ve had launching businesses - I’d have to say it was this Ready, Fire, Aim approach. It’s something I believe in strongly. That’s why I wince when I read the start-up advice of so many “experts” who advocate feel-good busywork over selling.
I was hoping that when Ready, Fire, Aim was published we’d see no more foolishness of this type in the business press. But here’s just a short list of the misguided (and even ridiculous) advice I’ve read since my book came out in January of this year:
Create an instant-impact message that describes the chief benefit of your business. Put it on business cards and brochures, which you should hand out at business functions and meetings.
Find a great office space and fill it with furniture.
Take a field trip to discover how your product or service will satisfy people’s desires.
Protect your “great ideas” by registering your business name, logo, and slogan.
Create a paper trail - tracking all meeting dates, attendees, and discussions.
Consult a lawyer and obtain his or her advice on how to best protect your business and make sure you set up the right legal structure.
Check with your municipal authority to make sure “they permit a venture like yours” to work out of the home.
Buy business insurance and “talk to an accountant or attorney” to make sure you’re not missing anything.
Get a toll-free phone number (to give the impression that your business is much bigger than it is).
Do these things before you find out whether your product can sell, and your business is practically guaranteed to fail.
Again, here’s my advice for starting a business:
1. As soon as possible, get the product ready to test.
2. Test it as aggressively and creatively as you can. Spend 80 percent of your initial resources discovering the most cost-effective way to make the first sale (your “Optimum Selling Strategy”).
3. Refine and adjust your sales process as market conditions change. At the same time, gradually develop business procedures to service your customers and improve your products according to your customers’ buying preferences.
[Ed. Note: There’s a TON of foolish business advice floating around the Internet and in bookstores. You can get proven, time-tested recommendations for starting and growing a business (from someone who’s built dozens of businesses himself) in Michael’s New York Times, Wall Street Journal, and Business Week best-seller Ready, Fire, Aim. Buy it here.
This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.]
7 Commandments for Creating Explosive Growth
By Clayton Makepeace
I don’t have to tell you that the U.S. economy is slowing precipitously… unemployment is rising… and consumers are spending less on the discretionary products and services most of us sell. But you can create explosive growth in your business - even in the face of these economic realities.
I learned the following principles the hard way: through nearly four decades in the trenches. They have served me very, very well - and if you abide by them, they’ll do the same for you…
I. Everything can be improved.
The three most idiotic things any marketer can say to a new idea are:
- “But this is how we’ve always done it. Why change now?”
- “That’s how our competitors do it, and it works great for them.”
- “We tested that once. It didn’t work.”
Ignore the idiots: Test everything. Let your prospects and customers give you the right answers.
II. A dollar delayed is a dollar forfeited FOREVER.
Every week, day, or hour a sales promotion is delayed during the year pushes more money OUT of the year. Those dollars will never be recovered. They’re gone forever.
Look at it this way: Let’s say your mission is to send 12 promotions to your customer file in 2008 - one at the end of every month. But your January promotion is a week late. It doesn’t go out until the first week of February. February’s promotion is a week late, too. It goes out March 15. And every other promotion takes just one week longer than you planned.
By the end of the year, those delays add up to 12 weeks. Which means three of the promotions you planned to send to customers in 2008 won’t happen. That’s 25 percent of your revenues and profits gone with the wind.
Creating procedures that move promotions through conception to creation to execution as quickly and as efficiently as possible is absolutely critical.
III. “Optimal” response and “maximum” response are two different things.
Marketing strategies, sales copy, and offers that compel prospects to buy - but leave them annoyed with or distrustful of your company or your spokesperson - only produce new customers who will avoid your future promotions like the plague.
And using overly aggressive or coercive or deceptive tactics with existing customers is the best way to destroy the bond you’re trying to build between them and your company.
A great rule of thumb: Think about every promotion - whether to prospects or to customers - first and foremost as a bonding tool.
Then, do whatever you can short of weakening the good will you’re creating to get the sale and maximize the size of the purchase.
IV. Every customer contact is an opportunity to make a sale and increase customer lifetime value.
Take a long hard look at every scrap of virtual or actual paper your customers get from you. Every order form… every thank-you page or letter… every package insert… every renewal or customer retention letter… and every telephone conversation they have with your customer service people.
At the very least, every one of these events gives you a great opportunity to strengthen the bond with your customers. At the most, it may offer you the opportunity to introduce a complementary product in a way that makes customers feel special.
V. Every sale is an opportunity to make another sale.
The simple fact is, customers are most likely to make another purchase immediately after they’ve made a purchase.
You offered them a product they’re excited about. Ordering was quick, easy, hassle free. The order confirmation/thank-you letter or e-mail answered every question about the delivery of the product and reminded them of your guarantee. The product was delivered in far less time than the customers expected. The product itself surpassed their wildest expectations. And, of course, you threw in an unadvertised freebie or two as icing on the cake.
You now have some very happy customers on your hands. So wouldn’t this be a great time for a follow-up mailing to every customer who ordered this month? Wouldn’t this be the ideal moment to send them a customer satisfaction survey along with a discount coupon for a complementary product?
VI. Every customer complaint is an opportunity to engender lifetime loyalty.
Something went wrong. Your customer is dissatisfied. And his experience tells him that setting things right is going to take forever and be a royal pain in the neck. So before you even hear from him, he’s already ticked off.
And then, you surprise him! You apologize abjectly and issue an immediate refund. You give him a discount coupon for a future purchase. You have the head of your customer service department (better yet, the owner himself) CALL the customer to ask for his help in trying to figure out what went wrong. And you send him a nice letter with a questionnaire to make sure the matter was handled fairly and efficiently.
RULE OF THUMB: Be willing to spend at least as much to keep a customer as you spend to create one. Better yet, be willing to spend double, triple, even quadruple if the customer has a long buying history with you.
It’s what you do at a time like this that proves your company’s character… and proves that he can trust you implicitly. Your customer will never forget how you handled his problem, and will never cease being grateful for making this easy for him.
VII. Never shoot in the dark.
Direct response is all about measuring and reacting to results. But you can’t do that if your IT department is doing a half-fast job of capturing or reporting the response, average sale, and ROI (return on investment) for every promotion.
Other numbers matter, too. Like who’s on your customer list. Where each customer came from. How long each has been with you. How many times each one orders per year. The average and largest purchase each one has made from you - and the cumulative value of those purchases. How long each customer continues buying from you. And, of course, average customer lifetime value.
Study your promotional history. Look for messaging/product/offer/price combinations that typically yield the highest ROIs for each segment of your file. Determine how the timing of the promotion and the delivery mode (e-mail, snail mail, overnight mail, etc.) affected results.
Think about the best ways to handle each file segment in order to progressively increase recency of purchase, frequency of purchase, and average sale - and to retain each customer longer. Then, determine how you can best stratify - carve up - your customer file in order to extract optimum response, average sale, and ROI from each segment.
If you can internalize these seven simple commandments, you’ll have the power to transform yourself into a world-class business builder.
[Ed. Note: As a direct-marketing consultant and copywriter, Clayton Makepeace has helped four major direct-marketing firms at least quadruple sales and profits to well over $100 million per year each. Clayton publishes the highly acclaimed e-zine The Total Package (www.makepeacetotalpackage.com) to help business owners and copywriters accelerate their sales and profits. Check it out. For dozens of proven strategies that can help you achieve your marketing, personal, and health goals, sign up for ETR’s Total Success Achievement program.
This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.]
Deal Making for Dummies
by MaryEllen Tribby (11/8/2007)
My son Connor turned seven years old a week ago Sunday. His birthday extravaganza started Friday at his school with a class party. Saturday, the festivities continued with 15 little boys at our local arcade. When he got home Saturday evening, he was surprised with an Xbox 360 from my husband and me. On Sunday, I took Connor down to the beach to experience his first sunrise, which was more of a present (and memory) for me. Later that day, we ended his birthday weekend with a family and friend gathering at our home.
As I tucked Connor in Sunday night, I asked him what his favorite part of his birthday celebration was. Expecting to hear rave reviews about the Xbox, I was astonished when he replied, “Going to the beach with you, Mom.” As I held back my tears, I asked him why. His answer was simple and honest: “Because it was just you and me talking.”
This got me thinking about all the partnerships and deal making I have done over the past 22 years. The best deals were not made sitting in a boardroom around a huge mahogany table with 10 or 12 people. They were done one-on-one over lunch or dinner with simple and honest communication leading to mutually beneficial agreements.
Early in my career, for example, I worked for a well-known publisher in NYC, and we wanted to partner with another well-known publisher in Boston. We had a great idea for a new product that would benefit both sets of customers. We organized a special task force comprised of marketers, editors, and customer service people. The other publisher did the same. We had in-person meetings that required flying eight people 300 miles to the other publisher’s office. This was followed up by endless conference calls with 12 to 16 people on the phone.
The entire time this was going on, my gut was telling me that this was not the way to do it. But everyone else was convinced that we needed the “collective brilliance” of the team. You do need input from smart people when you’re working on the product… but these meetings were just on contract negotiation. This was just to get the deal done!
You probably won’t be surprised to hear that we never agreed upon the terms (someone would always chime in with a last-minute concern), and hundreds of thousands of customers missed out on what would have been a great product. Plus, both my company and the other publisher lost the potential for millions of dollars in revenue.
Since that time, I try to do all my deals on a one-to-one basis.
My deal making success rate is high because I follow three simple guidelines. These apply to everything from making joint venture deals to developing new departments within the company to hiring copywriters. They even apply to vendor and service relationships, such as e-mail deployment, printing and media buying, and hiring freelancers. Here they are:
Rule #1. Know the person behind the business.
To the best of my ability, I try to meet, in person, everyone I do business with. This is the best way to gauge their business ethics and integrity. I will fly cross-country for lunch, or meet them at an industry event and have a drink. I’m not saying you have to like everyone you do business with, but personal contact helps expedite the deal and solidify the end result.
Earlier this year, I wanted to find a partner who could help our customers understand the importance of product launches. I mentioned this to my friend and business colleague Rich Schefren. Well, it just so happened he was flying to Denver in two days to speak at a conference being put on by Jeff Walker, the foremost expert in product launches. I ended up on the plane with Rich, met Jeff, and three weeks later Jeff was speaking at ETR’s sold-out “Five Days in July” Internet marketing conference.
But this is not an anomaly for me.
My friend and colleague David Cross introduced me via e-mail to Tim Ferriss, the author of The 4-Hour Work Week, and I phoned Tim immediately. After discovering that we were both going to be in New York the following week, we made a breakfast date. Two weeks later, Tim’s articles - including one that you may remember about creating a “paperless life” - started appearing in ETR.
These deals happened fast because not only did I get credible references from Rich and David, two people I respect and trust, I also took the time to meet Jeff Walker and Tim Ferriss in person.
Even if you can’t meet everyone in person, make sure you have reliable references. Always do your due diligence. Make it your goal to understand not just the company you want to partner with but the person behind the company.
Rule #2. Only make deals that will benefit your customers.
You may be passing up millions of dollars initially, but if a deal is not in the best interests of your customers, it will cost you more in the long run in dollars, time, and reputation.
Just this past summer, a “friend” in the industry came to us with a product he had developed. He showed us sales reports from his launch. He showed us his brilliantly written marketing copy. Our first impression was: “Our customers need this. They will love it. And it will be a nice contribution to our bottom line.”
Patrick Coffey, Charlie Byrne, and I told him, “Great. Just send us a sample of the product so we can evaluate it. If it is as good as you say it is, we are sure we can promote it to our customers.”
Well, our “friend” was a bit taken aback. He did not understand why we wanted to see the product when he had already shared his sales report.
We tried to explain that this is our policy - that we had to believe in the product.
He said if we would not just take his word for it, he would take it to our competitor. Well, he did. And we heard through the grapevine that it was a tremendous hit. Customers were buying it up, both parties were making tons of money - and I secretly questioned my decision.
But just recently, the word in the industry is that the product did not live up to the marketing hype. Refunds were coming in like gangbusters, and our “friend’s” new partner does not want to work with him anymore.
Had our competitor lived by the same rule that prompted us to say no to this particular deal, he would not have wasted his resources and lost the respect of his customers.
If you follow this rule, you may miss out on a good opportunity every once in a while. But you will also be able to pass up deals that just won’t satisfy your customers.
Rule #3. Only make deals that will benefit your organization.
At first glance, this rule might seem to contradict Rule #2. On the contrary, these two rules need to work in unison.
Let’s say you are asked to hire a vendor because he is the husband of your wife’s best friend. You know him, and you know his product will be good for your customers. But his prices are outrageous and you can get a better price and equal quality from another vendor. What do you do?
To me, this is a no-brainer. You go with the other vendor. That is a better decision for your company - and for your customers. Never forget: You are running (or starting) a business, and good businesspeople have to make tough decisions.
Deal making takes a lot of time. But it’s worth it, because you want to build relationships that last. You can’t make a good deal without a good partnership. You can’t have a good partnership without a personal relationship. And you can’t build a personal relationship through phone calls or e-mails or in a conference room. Know your potential partner well, understand his expectations and needs, and make sure he understands yours. Both companies will benefit.
[Ed. Note: MaryEllen Tribby is Publisher and CEO of Early to Rise. ETR has created a brand-new Info Marketing program - an all-inclusive, A-to-Z blueprint for starting your own powerhouse Internet business. Learn how to pick a product and set up a website. Discover copywriting secrets from the masters, techniques to help you create an e-mail list, the best ways to market your product, and more. We’ve limited the number of spots to 250, and, as of today, we’ve only got a few spots left. So sign up now to be part of this exciting new program.
This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.]
A Small Business Success Formula
Stuart and I clinked glasses, toasting our upcoming success. It was New Year’s Eve about 20 years ago. My entrepreneurial career had just begun. I was a college student living at home with my mom. I didn’t have much money, but I felt good about the $500 each of us had just invested.
About six weeks later, we’d lost our precious money.
We’d been suckered into investing in a poor business idea. The idea? Buying the rights to distribute video memberships where customers could rent videos through the mail for 35 cents. It sounded good, but there were a couple of catches. For one thing, the customer had to purchase an expensive membership. For another, the customer had to pay an exchange fee on every transaction. (Details that weren’t included in the sales literature we saw.)
Eventually, I picked myself up from the disappointment of that first business failure. But several other failures followed. And they all fit the same general pattern: Identifying a product that seemed great, trying to sell it, and then discovering it wasn’t all it was cracked up to be.
For the longest time, I couldn’t see what I was doing wrong. In fact, it took me several years before I figured it out and made a major change in the way I did business. That single change had an enormous effect on my success as an entrepreneur. By implementing it, I was able to create a string of profitable small businesses.
What I’m talking about here is a strategy I call the F.A.N. (”Fill A Need”) Formula.
What I had been doing was first coming up with the product or service to sell, and then going out into the marketplace to see if anyone would buy it. But with the F.A.N. Formula, I first studied the marketplace to look for customer needs that were not being met. Only if I discovered a hole would I create or find something and try to sell it.
And it’s not hard. You don’t have to come up with revolutionary new ideas. Sometimes you can find a need for a “bread and butter” type of business that just has to be tweaked a bit to make it stand out from the competition.
My first successful business was a pool maintenance service. I was cleaning my mom’s pool when a neighbor peeked over the fence and said, “Hey! You’re doing a good job!” Then he started complaining about how expensive and unreliable his pool company was.
A light bulb went off over my head. I realized that there was a big need right there in my own neighborhood. And where there is a need, there is an opportunity for an entrepreneur to make money.
I printed up some flyers advertising my “reliable pool cleaning services at good prices,” and began distributing them. Within hours of posting the first ones, my phone was ringing. This led to what eventually became a six-figure business… a nice accomplishment for a college student with no capital.
Later in my entrepreneurial career, I became interested in the ballroom dance industry. While working in a dance studio, I discovered two holes in the market. First, virtually every dance studio in the area aggressively sold “packages” and persuaded clients to learn all the dances. Second, I noticed that it was hard for many busy people to make the time to get into the studio.
So I came up with the idea of “pay as you go” lessons. People didn’t have to buy a package, and they could learn only the dance or dances they were interested in. Plus, they didn’t have to come to a studio. They could take the lessons at home.
My approach was so novel that several major metropolitan newspapers did feature stories about me. (Free publicity!) And the business took off. I was soon earning $40,000-$50,000 a year with it. And since I was only working that business part-time, I was able to develop other businesses simultaneously.
Applying the F.A.N. Formula to Your Own Ventures
Here’s how to start a business with the F.A.N. Formula:
1. Pay careful attention to markets that interest you. Then search out information about customer needs that aren’t being served efficiently.
Keep your eyes open. Just look around for things that annoy YOU. Keep your ears open too. You can sometimes hear about a need that’s not being met straight from a disgruntled customer. (That’s what got me started on my pool cleaning service.) You should also read local newspapers, particularly stories about consumer problems. And articles in national magazines can help you identify trends that could inspire you to come up with a business idea.
2. Once you’ve pinpointed a need in the market, figure out how you can fill it. What will your product or service offer? How will it benefit the customer?
My dance instruction business had three main selling points:
No contracts to sign or packages to buy
Learn only the dances you’re interested in
Convenient, private in-home lessons available
3. Evaluate the feasibility of the business.
Just because you see a need for the product or service you intend to offer doesn’t mean you can sell it profitably. Sometimes, the reason nobody is doing it is because there’s not enough of a market for it. So crunch the numbers first.
With my pool cleaning business, I figured out that by being a “no frills” operator with little overhead I could undercut the competition by about 20 percent. And I found that I could still make an acceptable profit even if I hired other people to do the work.
Operating your own small business is rewarding in many ways. It offers you job security. (You’ll never be afraid of a boss letting you go.) It’s a good way to accumulate wealth. And it allows you to spend your days doing something you can enjoy and be proud of. By using the F.A.N. Formula, your odds of success will increase exponentially. Try it.
[Ed. Note: Paul Lawrence is the creator of the Quick and Easy Microbusiness System, ETR’s program for starting a business for under $100. The F.A.N. Formula is just one of the techniques Paul teaches in his “Smallbiz Rocket Launcher Program.” Check out the details here.]
This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.
