Archive for December 11th, 2006
11
There are people arriving at ephosting.com by typing “how to make tons of money” into google’s search engine. If you are one such person, I’m afraid what you’ve found here is someone who, like you, is trying to achieve financial success, but has not yet achieved that goal.
By no means am I qualified to suggest to you how to make tons of money; but I can provide you with information from other sources that might be useful to you in finding the answers you seek.
I suspect you’re looking for some kind of concrete plan of action that once undertaken and completed will yield the desired result of tons of money, but you’re unlikely to find any such thing in your search of the Internet today. What you’ll find are lots of ideas, suggestions for what you might do to make tons of money, lots of false promises and outright scams. But no one can sell you the answer to the question of how to make tons of money because no one really has that answer. If there was a formula or a recipe to show you how to to make tons of money you can be sure everyone in the world who is able to follow the recipe instructions or perform the mathematical calculations, would be a billionaire.
If someone came to me and asked me how to make tons of money, I’d laugh first of all and say, “I wish I knew myself.” Then I might ask “What do you want to make tons of money doing?”, even though their question already implies an answer to mine.
I suspect the person might shrug and say that they don’t really have any ideas. They just know they want to make tons of money but they don’t know what they want to make tons of money doing. So I might then ask them what their capabilities are, what talents or special skills they possess, what kinds of things they’re interested in, what they’re passionate about.
Hopefully you’re not looking for ways to make money that would be illegal, that would involve scamming or ripping people off. We know there are many Internet millionaires who themselves once asked the question “how do I make tons of money”, and who came to the conclusion that the way to make tons of money was to scam people out of theirs. Hopefully you’re looking for ideas that will not require you to engage in any kind of criminal activity. That would mean you’ll be relying on a talent, skill or specialized knowledge you possess. So, identifying the talent, skill or specialized knowledge would seem to be the first step that needs to be taken towards arriving at an answer to the question of how to make tons of money.
Reading the article below might help you in planning how you’re going to make tons of money. Understanding ahead of time what might cause your business venture to fail, might help you as you construct your plan of action for making tons of money.
Why So Many Businesses Fail
According to a longitudinal study conducted by the United States Small Business Administration, approximately 60% of small businesses shut down within the first six years. Small businesses fail for numerous reasons. The most common reasons are because they:
> Grow too fast;
> Have a poor concept.
> Are not good at marketing or sales;
> Fail to plan;
> Start the company without enough money to get to breakeven;
> Have an inability to differentiate;
> Lack control of their finances and books; or
> Don’t build systems and processes.
Many entrepreneurs who end up unsuccessful do not build processes and systems and lack the ability or desire to sell. They do not carefully plan their business and often fail to raise the needed capital to sustain it until it is profitable. They do not focus on efficiency of operations or automation. They never make the investment in additional capital or employees needed to expand the company to the point where it can make a profit. As an entrepreneur, even if you have a great idea, you will have to plan well, build a good team, make sure you have adequate capitalization, build the proper systems, and execute your plan.
According to entrepreneur and adjunct business professor at UNC’s Kenan-Flagler Business School Colin Wahl, there are certain critical success factors in building a successful small business. These include:
> Vision of the management;
> Passion;
> A good idea;
> Clean, focused business objectives;
> A well thought through business plan;
> Persistence;
> Determination;
> Strong work ethic;
> Enthusiasm in the owners;
> A good team;
> Motivated employees;
> Good cash flow management;
> Adequate financial resources;
> A clear understanding of market need; and
> Execution of the management.
As you can see in the list above, a good idea is only one of many factors needed to succeed. As you can see in the list of business ideas a few pages back, ideas are a dime a dozen. Unless you have a Ph.D. and are doing cutting edge research at a top university, in most cases if you have thought of a business idea, someone else has thought of it too. The key to the success, then, is rarely the idea and nearly always good execution. To illustrate this principle, let’s take an example.
In 1967, an angel investor, Fred Adler, received over 50 business plans from entrepreneurs who proposed to start microcomputer firms. Only one of the teams presenting this idea ever made it. Its name was Data General. But why did so many entrepreneurs pitching a plan to sell microcomputers either never receive funding or if they were funded, never succeed?
They didn’t make it not because the idea was per se bad or didn’t have the potential to be a good opportunity. It was a great idea and enormous opportunity. Rather, it was because the other entrepreneurial teams were unable to execute.
Think of the dotcom era of four years ago. Many had good ideas, but lacked in execution. I have heard many a venture capitalist say that he or she would rather have an A management team and a B business concept that an A business concept and a B management team. It is not the idea, it is the people, and their ability to execute, that matters. It is not the idea. It is the people, and their ability to execute, that matters. While a business that ends up being successful could be started with a so-so idea, a successful business will never be built without a good team.
By ensuring you pass your ideas through the MAR Model I have created, you’ll be able to get a good idea of whether they are true opportunities. But as we can see, execution is just as important, if not more important than the idea.
Ryan Allis is the author of from Zero to One Million, a book on how to build a company to one million dollars in sales based. Additional information on the book and an extensive entrepreneurship resource can be found at http://www.zeromillion.com. Ryan is also the CEO of Broadwick Corporation, a provider of permission-based email marketing and list management software IntelliContact Pro (www.intellicontact.com) and CEO of Virante, Inc. (www.virante.com) a Chapel Hill, North Carolina based web marketing consulting firm. Additional information on the author can be found at www.ryanallis.com.
11
The Differences between Lifestyle and High Potential Ventures
Lifestyle companies include small consulting companies, local restaurants, laundromats, barber shops, hardware stores, or any kind of franchise. Generally lifestyle businesses are local businesses that will likely never have yearly sales greater than $2,000,000 in a year. The advantages of starting a lifestyle company include being able to control the company, being able to continue to do what you love without having too much risk, having a positive cash flow from the early going, only having to report to yourself, having a relatively constant cash flow, and being able to take time off whenever you want. Disadvantages include not being able to hire top talent (as talented people usually avoid companies that offer no stock options and only limited opportunities for personal growth) and not having the chance for huge gains.
High potential companies, on the other hand, generally are either developing a product (that they will sell internationally), are based on a technological breakthrough or change in regulatory environment, or are raising venture capital to explore a lucrative opportunity. These companies are usually C corporations, and if they succeed, have the possibility of getting at least to the $50,000,000 in sales per year level within five years.
Advantages of starting a high potential company include the possibility for large returns on your investment, the ability to attract outside investment, and the ability to build a great team who will work to make your company succeed. Disadvantages include the usual necessity for the company to take on large amounts of debt or lose significant amounts of equity, a loss of control as investors and employees dilute the founder’s equity, and the long wait to reach positive cash flow.
In deciding which type of company you want to build, you’ll have to take a close look at your personal goals. Do you want to attain a certain lifestyle, gain respect, create an innovative product, build an organization that will outlive you, contribute to your community, have an outlet for your talent, or be free from your job? What are the reasons that you wish to start your business? Do you want to become extraordinarily wealthy, increase efficiency in an industry, have enough income to provide a comfortable life for your family, or travel the world as you grow your firm? You have to take time to write down these reasons. I’d caution going forward building your business without first aligning your plan with you personal goals. If you don’t love what you do, it is very difficult to give it your all.
An entrepreneur’s personal and business goals are inextricably linked. Unlike the manager of a public company who has a fiduciary responsibility to maximize value for shareholders, as the founder of a company you have the ability to build your businesses to fulfill personal goals. If you are unsure of these goals, take out a pen and paper and write down every reason you have for starting a business and what your personal goals are.
On the topic of lifestyle versus high-potential ventures, Harvard Business School researcher Amar Bhide, in his article “Questions Every Entrepreneur Must Answer” writes:
The company of a lifestyle entrepreneur does not need to grow very large. A business that becomes too big might prevent the founder from enjoying life or remaining personally involved in the work. In contrast, entrepreneurs seeking capital gains must build companies large enough to support an infrastructure that will not require their day-to-day intervention.
There is surely no right or wrong choice here. You just have to make sure the choice you make syncs with your goals. If you are able to take a huge risk and are shooting at a five year payout of $10,000,000 then you will need to start a business that fits within the high-potential category. However, if you are unable or do not wish to take a large risk, or are content making a few hundred thousand dollars per year, a lifestyle business may be for you.
To better analyze which is for you, take a look at the following chart that lists the key differences between lifestyle and high-potential companies.
Hopefully this chart will be of help to you as you align your personal goals with your business goals. On this topic, Amar Bhide continues to say:
If entrepreneurs find that their businesses, even if very successful, won’t satisfy them personally, or if they discover that achieving their personal goals requires them to take more risks and make more sacrifices than they are willing to, they need to reset their goals.
If you have yet to do so, I encourage you to commit your personal goals to writing. Analyze the reasons you wish to start a business. Then take a look at the amount of risk you wish to take at this point in your life and the return you hope to achieve and go from there.
Ryan Allis is the author of from Zero to One Million, a book on how to build a company to one million dollars in sales based. Additional information on the book and an extensive entrepreneurship resource can be found at http://www.zeromillion.com. Ryan is also the CEO of Broadwick Corporation, a provider of permission-based email marketing and list management software IntelliContact Pro (www.intellicontact.com) and CEO of Virante, Inc. (www.virante.com) a Chapel Hill, North Carolina based web marketing consulting firm. Additional information on the author can be found at www.ryanallis.com.
11
If you’re like me there’s something about the whole idea of having to go through something step by step that makes you crazy; and when you’re talking about 100 steps your anxiety flies out of control just at the thought of even trying to start. You’d rather find something else to get into that won’t throw a hundred things at you that you must get through before you can hope to achieve your goals, or else you’d rather hire people and have them take care it.
I like to just jump right into things and get started. I don’t like to waste time with preliminary planning; but I think when you approach things the way I have done you make things harder for yourself. You actually waste more time because you more often than not find yourself stumped, trying to figure out where to go next. Had you taken the time to plan things out you could just follow the step by step guide you made for yourself. When you have an outline to refer to things run more smoothly. Once you complete step 1 you move to step 2; once you complete step 2 you move to step 3, and you always know what your goal is, where you’re going. You can measure your progress more accurately.
100 Steps to Building a Company to $1MM in Sales
By: Ryan P. Allis
I am a big believer in the value of step-by-step guides and reviews. In this section, I’ll review the one hundred most important steps in building a company to $1 million in sales. Do note that the following steps may not be in the exact order and may not apply to every type of business. The steps are customized for the business that is developing a product that will sell initially directly to consumers or directly to businesses and do not have a lot of money initially to spend on paid advertising. The general order remains, however, and the majority of steps will likely apply to your business.
1. Come up with a business idea.
2. Determine what you will sell—your revenue models.
3. Use the MAR opportunity evaluation model to evaluate that idea.
4. Research suppliers of your product.
5. Complete market research and evaluate whether your idea will succeed in the marketplace.
6. Come up with a name for your company.
7. Write your business plan.
8. Complete your pro forma income statement.
9. Determine how much you’ll need to raise to get your business to cash flow positive—the point where you are making more than you are spending.
10. Get feedback on and improve your business plan. Go to your local chapter of the Service Corps of Retired Executives and review your plan with them.
11. Determine your financing strategy.
12. Determine who will own what percent of the company and discuss if you wish to use vesting (granting equity to initial founders over time based on how long they stay with the company and what they do).
13. File your articles or certificate of incorporation with your Secretary of State. Incorporate as an S or C corporation if in the United States. Incorporate as a C corporation if you wish to raise investment or sell the company one day. Incorporate online or through your law firm.
14. Obtain an Employer Identification Number (EIN) from the Internal Revenue Service so you can open a bank account and hire employees.
15. File form 2553 with the Internal Revenue Service if you intend to be an S corporation.
16. Have your law firm create non-disclosure, non-compete, and confidentiality agreements and have all involved with your company sign them.
17. Hold your initial board meeting and sign the Organizational Consent document.
18. Decide if you want to have a stock options plan and create an options pool.
19. If you decide to do vesting, have your law firm write a stock restriction agreement, have all involved in your company sign a copy, and then have each person consider filing an 83(b) election if in the United States.
20. Issue your stock certificates.
21. Have your law firm draft consulting agreements for any independent contractors and employment agreements for any employees. Sign these agreements.
22. Open and fund a bank account and order checks.
23. If you decide you’ll need to raise money, look into the different sources of money, including debt capital from family, friends, or the bank or equity capital from accredited private investors or venture capital firms. If you think you can start out small, bootstrap, and grow organically from revenues, evaluate whether you wish to grow your company in this manner.
24. If you decide you’ll need to raise the money from private investors, have your law firm create a private placement memorandum and work with you to refine your business plan.
25. Raise the money you will need.
26. Purchase small business accounting software such as QuickBooks and keep track of all expenses and revenue, or hire an accounting firm to take care of this for you. You also may wish to outsource your payroll.
27. Come up with the name for your product(s).
28. Trademark the names of all your product(s).
29. Trademark the name of your company.
30. Develop your product(s), if you will be selling a product. Ask for quotes from different suppliers.
31. Have a logo created.
32. Either purchase or lease office space.
33. Furnish your office with desks, chairs, couches, filing cabinets, and light fixtures.
34. Purchase needed office supplies such as computers, laser printers, desk blotters, pens, paper cutters, shredders, staplers, staples, paper clips, pen holders, envelopes, and stamps.
35. Purchase any software you will need.
36. Call your phone company and have them install a phone line or purchase a VOIP system.
37. Purchase regular phones or install a digital phone system.
38. Obtain broadband internet access and a wireless router and set up a wireless office network.
39. Decide what roles you need additional help in and can afford to pay someone to fill, then hire those persons.
40. Obtain insurance for your business.
41. Have business cards made.
42. Have letterhead made.
43. Have a brochure made.
44. Design the packaging and labeling for your products.
45. Have your labeling reviewed by your lawyer.
46. Print enough labels and packaging for your initial production run.
47. Obtain a Universal Product Code (UPC) bar code if you will be selling your product in stores or to retailers.
48. Order an initial inventory of products.
49. Have professional pictures of your product(s) completed.
50. Register the domain name for your company site, product site(s), and informational site(s).
51. Obtain hosting for your web sites.
52. Establish a free account with a dynamic DNS service such as Sitelutions to make it quick to switch hosts in case a host goes down.
53. Design your company web site.
54. Make sure you have log analysis software installed on your site and check your visitor count and traffic details often.
55. Add sales copy to your web site that is written to first attract attention, generate interest, establish credibility, create desire, and provoke action.
56. Install a shopping cart on your web site.
57. Apply for a merchant account so you can accept credit cards on your web site and in your business or sign up with a service such as PayPal or ClickBank.
58. If you are a service based company, and will be paid via checks, there will be no need to apply for a merchant account. Start doing business right away, making sure to always leave extra business cards with clients in order to leverage word of mouth. You may also want to purchase an ad in the local phone book.
59. Sign up to an email list management service such as IntelliContact Pro and add a newsletter sign up form to your web site.
60. Sign up for an autoresponder service and add an eight day informational ecourse in order to generate leads, build trust with customers, and recommend your product.
61. If you sell a product nationally or internationally, and not just locally, build an informational web site at a domain with your target keywords separated by hyphens.
62. Add content to your informational web site. Ask others for permission to syndicate their content and write a few articles yourself to start to portray yourself as an expert in your industry.
63. Optimize the informational web site for the search engines.
64. Build a few hundred links to your informational web site.
65. Add a discussion forum to your informational site.
66. Wait 12 weeks for your informational site to be in the top of the search engines for your targeted keywords.
67. Once the merchant account is approved, obtain a gateway such as VeriSign or Authorize.Net and sync your shopping cart or point of sale terminal with it.
68. Install an autobill/continuity program and integrate it with your merchant account, shopping cart, and affiliate program. Decide on what type of incentive you will give to those who sign up for the autobill program.
69. Decide what your money back guarantee will be.
70. Decide what you will charge for shipping.
71. Start selling!
72. Sign up for a live person chat so customers on your site can chat with your customer support team.
73. Consider starting a contest/sweepstakes for your product in order to obtain additional prospect data and leads.
74. Investigate regulatory issues in other countries and determine which countries you can export your product to.
75. If you are selling a product, hire someone to fulfill orders or use a fulfillment house.
76. Establish relations with local media.
77. Write and mail out a press release to local newspaper, radio, and television media or hire a public relations firm to handle this for you.
78. While you are waiting for the search engines to update their rankings, purchase affiliate program software.
79. Install your affiliate program and decide what commissions you will pay on referred sales.
80. Go through the search engines and trade journals to find potential affiliates.
81. Contact the potential affiliates in person or via phone, mail, or email.
82. Build a few hundred affiliates that promote your product(s) for a percentage of each sale.
83. Start sending out a monthly email newsletter to those who signed up on your web site and to your customers.
84. Mail the commission checks to your affiliates each month.
85. Follow-up with your customers once per month to ask how they are doing with your product.
86. Ask for and add testimonials to your web site and marketing materials.
87. Look into upcoming trade shows and attend them.
88. Keep close watch on the search engines. As soon as your informational site is in the top position for your targeted keywords, add a popup to promote your ecourse and your newsletter. Add in recommendations for your product to bring persons over to your product/company site.
89. Once you have some data on your visitor to sale conversion rate and the amount affiliates are paid per visitor sent to your site, work on building joint ventures and strategic alliances with larger partners.
90. Consider establishing a wholesale price for your product and looking for distributors of it.
91. If you decide to offer your product via stores, design and create point of sale items such as a display case and print collateral.
92. Take a look at the operations of your company and see what areas you can make things more automated or more efficient.
93. Bring on a bookkeeper to handle your accounting work for you if you have not already.
94. You may wish to create an employee benefits program if you have not already, to ensure you retain your most valuable workers.
95. Write a company handbook and begin to establish formal systems and processes. Make things efficient and try not to overload workers with forms and red tape.
96. Once you become cash flow positive, look into paying for cost per click, newsletter co-registration, print, radio, or television advertising or advertising via direct mail. Keep a close watch on return on investment at all times.
97. Look into sponsoring athletes or related events or providing your product to high profile persons free of charge.
98. If your product(s) fit the proper criteria, look into creating an infomercial to promote them.
99. Allocate some funding for research and development and attempt to develop additional products.
100. Once you have obtained a top ranking in the search engines, built a solid team and efficient systems and processes, automated operations as much as possible, built a thousand or so affiliates who are incented to sell your product, opened your sales channel up to international markets, and started selling to larger and larger distributors you should be well on your way to one million dollars in sales. Congratulations!
Ryan Allis is the author of from Zero to One Million, a book on how to build a company to one million dollars in sales based. Additional information on the book and an extensive entrepreneurship resource can be found at http://www.zeromillion.com. Ryan is also the CEO of Broadwick Corporation, a provider of permission-based email marketing and list management software IntelliContact Pro (www.intellicontact.com) and CEO of Virante, Inc. (www.virante.com) a Chapel Hill, North Carolina based web marketing consulting firm. Additional information on the author can be found at www.ryanallis.com.