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Entrepreneur: Do you want to be one? Are you prepared to be one?

by Joe Vaccaro, CBM - Sounds good to me, but have you reviewed and analyzed what it really takes to be successful in building and maintaining a business in today's extremely competitive environment? Here are two basic questions that you should first take the time to carefully consider before proceeding forward.

What is really motivating you to go out on your own?

Do you want more independence, money, and quality time with the family? Are you experiencing career stagnation? Are you worried about downsizing, mergers, or going into an early retirement that you never wanted? Do you need a new challenge? You might be saying to yourself that you have always been successful in everything you have done in the past, so how difficult can going into business for yourself really be? For example, let's say you managed an division of consisting of 450 people with an operating budget of $35,000,000 for a large multi-national corporation, or that you and the sales team led were responsible for generating over a $100,000,000 in sales over the last 3 years. You may fool yourself in thinking that this alone will ensure success for your new venture. Guess again!! A positive attitude with a track record of accomplishments is good to always have but it will not guarantee success in the future.

First, let's dispel that notion about being independent. No one responsible for providing a goods and / or services for customers is ever independent. Your customers are always your bosses!! You need your suppliers who in fact are your strategic partners in fulfilling your customer needs. Start-up capital is another key variable in that it has to be readily available before you make your go or no go decision. For example, do you have enough cash or access to lines of credit to carry you for six months, for example, in the event that you may have a negative cash flow? You may find yourself spending more than you are collecting from clients / customers who always seem to pay their invoice late. Or what you thought was a "sure thing" and going to take the market like a storm is still sitting on the shelf! Remember that old saying, "The best laid plans of mice and men are subject to disarray".

Do you really think that when you do go into business, you will be happier and more satisfied than in continuing to work in corporate America?

You will spend more time working and have less time, if any, for family, friends, hobbies, and any other non-working activities. Your focus 24 hours a day, 7 days a week for 365 days a year will be" the business". Why? Because "the business" you believe will provide you with job security, financial independence, a summer home, a new car, pay for your children's education and last but not least enable you to enjoy a comfortable retirement free of financial worries. Are you willing to trade-off enjoyment today and many days to come for the chance to fulfill your needs and wants future? Are you emotionally, financially and physically ready to stretch your self to the limits of your being? Bear in mind that what you could do at age 30 may or may not be possible at age 50+. Life has a way of changing us over time. You have to acknowledge this and factor this in your decision-making process.

All life is risk. Are you willing now to roll the dice and bet on yourself? If not, thank you for taking the time to read the beginning of this article.

If you still want to start your own business and really be an entrepreneur, read on.

Research: Do It Now Or Pay The Price Later:

Listen and hear what other people did prior to going into business. Learn from their mistakes and incorporate in your business plan what was successful. Go to seminars. Attend lectures. Take courses. Read as many books and magazine articles on the subject. Listen to audiocassettes, watch videos and television shows and absorb and retain anything that you think will better prepare you for your new endeavor. Take your time. What you learn might make you change your mind. Think of how much time, sweat, money and effort you might save if your decision is not to leave the corporate world after doing all your homework. Then again, if you still decide to go ahead into business, you will be better prepared than if you didn't do your research.

The Business Plan:

You have to take the time to sit down and write, re-write and re-write again and again the plan for your business. What is your vision for your new enterprise? What is special or unique about the product or service that you have to offer? What segment of the market do you intend to present your goods or services? How do you intend to actively market and advertise your products or services? How will you structure your organization? Who will you handle the marketing, sales, and operations, accounts receivable, and accounts payable, purchasing, human resources and any other essential function in your own business? Where will your business be located? In your house? Sure, that will impress your prospective clients! How will you attract your first client? Friends? Former co-workers? How much capital do you have to put at risk? Is it enough? Is it ever enough? Can you support your self, spouse & children for at least six months without drastically altering your life style? How do you intend to grow the business in 1, 3 and 5 years? Remember, closing a deal and getting ink on paper is one thing, but collecting money due the business can be more difficult than the average person expects. The plan should be your guide for action. Having a well-developed business plan will not assure success but not having a plan (it must be written and not in your head) can lead to disaster! Back in 1992, I wrote the business plan for an outsourcing business that I co-founded with my partners who at one time were my consulting clients. My partners and I gave it a quick review and filed it away. In 1994, I looked at the plan. We never reviewed the plan until then. We far exceeded our expectations in the plan. Great!! However, we might have grown even more if we had periodically reviewed the plan and adjusted our views and actions accordingly. You never know. Remember, the business plan is not an academic exercise; it's a tool to be used.

To Truly Go It Alone Or Form A Partnership:

If you go it alone, you will receive all the rewards but you will assume all the risks! Is it worth it? Only you and only you can make that decision. If you begin to have a negative cash flow, do you tap into your 401K, IRA or your children's college tuition funds? There is definitely a thrill in being an entrepreneur. You have the opportunity to live the dream. The ideas that have long fueled your desire are now placed to the test. Your adrenaline is flowing! It's ShowTime!!

If you should decide to form a partnership, remember that you share the risks but also the rewards. Being in a partnership can be best compared to being in a "marriage". You begin with the honeymoon period, where all partners are thinking positive, happy and euphoric and share the same vision. Then as in all in life, things can and will change. If the money doesn't start rolling-in or if one partner feels that he is more committed and generating more business and working than his peers, anything can and will happen. Relatives and friends that you thought you knew and respected and maybe even loved, may turn on one another. Why you ask? Power, jealously, envy, and greed are just a few of the possible reasons. Success has many fathers. Failure is an orphan.

Some partnerships like marriages that last a lifetime. The people in these successful partnerships most likely shared the same vision and adjusted and adapted to changes in their business and personal lives. They must have had many differences of opinion over the course of time but they were able to communicate, respect and appreciate each other's point of view.

While other partnerships have a short life cycle either by design or through circumstances. There are occasions where people come together a form a partnership with the intent that the partnership will only last for as long as the deal or contract that they need and want lasts. Sounds similar to a marriage of convenience. Other partnerships may cease to exist because of poor financial planning, a down turn in the economy, a decrease in clients, a significant drop in sales and income, the death or desire to leave of the "rainmaking" partner and a host of other reasons. This happens all too frequently. Usually, the partners see this coming way in advance and start to bicker, fight or too often, not communicate with one another.

To Incorporate Or Not? That Is The Question:

Back in December, 1995 while on a plane, taking me from New York to Chicago to visit some of my clients and staff for outsourcing business that helped to create, I picked-up an INC magazine and saw an advertisement about forming your own corporation for slightly under $400. I quickly took down the phone number. When I arrived at my office in Chicago, I called the 800 number in the advertisement and using my credit card, started the process of forming my own consulting business. Three weeks later, my consulting business was formed as a Delaware corporation. No legal or accounting fees incurred. It worked for me in creating my new consulting venture at the time but it may or may not work for you. Do your research and only do what you feel comfortable doing.

You ask, what prompted me to do this? That's easy; I saw the handwriting on the wall. Two (2) years before, venture capitalists had put money into the business. Nothing is for free. They had systematically bought-out or arranged for some of the founding partners to be pushed out the door. Nothing personal. Remember, they were just looking for a return on their investment. By the way, when I returned from that business trip at 7am on the Monday morning of my return, my partner called me into a meeting with our corporate attorney and told me that "the investors wanted to put in more money and someone has to go". He quoted a price and I immediately said "done". I knew his negotiating techniques and that his best price would be his first price. My turn had come! Whatever happened to friendship and loyalty? Wake up! Business is about money. Was I surprised? No. I saw it coming long before that day. All the indicators were there. I was fortunate enough to pick-up that magazine on that December morning or was it fate? When I formed the outsourcing business with my partners, I thought it would be my last job until I retired. I should have had a contingency plan for my departure from the business. Lesson learned! However, I had already taken the first step in becoming a full-time consultant. My first engagement was with a client I had in the outsourcing business. A few years later I became an employee of that company.

Let's Go Back to the Beginning: The Entrepreneurship Begins!

I met my future partners in October, 1991. Some times it seems like a lifetime ago. Other times it seems like yesterday. I was their consultant on a project for a multi-national accounting firm. A mutual friend, owner of an air courier company, had recommended me to them. They owned a ground transportation and third-party logistics company in New York City. They bought their company in 1979. They were extremely successful and were looking to grow even more. They had been entrepreneurs their whole lives. They owned a diaper service in the 1950's (most people never heard of this type of business) and were in the food service business in the 1960's till the late 1970's. They were tough men and always focused on the bottom-line. They were neither saints nor thieves. They just knew how to make money by working hard. Nothing was handed to them. They earned their money.

I was still working for a law firm at the time. I had worked many weekends over the course of three (3) months on a move to a new building. The firm as a way of compensating me, for my time and effort allowed me to take time off. I could do what I wanted as long as it did not conflict with the firm. In early, October, my prospective clients and I had a meeting. We hit it off! They explained to me what they needed. We negotiated a fee, which was both reasonable and fair to all parties. The engagement was to propose, if feasible, an outsourcing solution for their client. Their client generated about ten percent (10%) of their revenue. I knew I had to be diplomatic and thorough as I conducted my review and analysis. I completed the project and we presented the findings and recommendations to their client. She loved it and planned to recommend it to the vice-chairman. She never got to present the report. Her position was eliminated two (2) weeks after we presented the report. I still got paid my fees and life went on.

Soon after the start of the New Year, I got a call from one of my future partners asking to meet me for breakfast at a coffee shop on 36th Street and Broadway in Manhattan. We met and over breakfast and Mike asked me why wasn't in business for myself. I said that I had a young child in intermediate school and a sick wife. He wanted to create a separate business with his uncles and me to provide outsourcing solutions. I would be one of the partners with twenty five percent (25%) ownership of the business. All I had to put up (no $) was my hard work and (sweat equity). I told him that I would get back to him. I discussed the opportunity with my wife. We weighed the pros and cons. We decided to go forward with the deal.

I contacted Mike a week later, scheduled a meeting with his uncles and him and began to plan for the new business. They had almost three hundred (300), yes 300 accounts! Their customers were in various industries. Their book of accounts included entertainment companies, investment banks, law firms, advertising agencies, accounting firms; etc. I knew with this potential client to start with that I could find clients that needed outsourcing. I was right. We booked our first deal three (3) months after we started the company in June of 1992.

Exit Strategy Or Knowing When & How The End Will Come, You Hope:

As part of your Business Plan, include, repeat, and include a section detailing your exit strategy. Maybe you should plan this first and work backwards to starting the business. All things end. Sometimes not the way we originally planned. By focusing on the end, you will direct your time & resources to this objective. Your exit strategy could be anything from going public in 5 years to selling and retiring in 20 years or anything in between. Periodically, you have to re-think your exit strategy. What seemed fair, reasonable and attainable last year may not be appropriate now. Think of your life in the long-term but don't forget about the short-term. Early retirement may seem attractive, if you have good health and enough dead presidents (money) to maintain your life style, but what other mountains can you climb? Then again, what if you stay in the game too long, do you want to die at your desk? There is no right or wrong answer.

Dipping Your Toes In The Water Before You Take The Plunge:

If you can, start working in your new business before you leave your job. As I stated before, I met my future partners when I did a consulting project for them The project consisted of reviewing, analyzing the mail distribution services function of one of their large clients to see if outsourcing was a viable alternative solution for the client organization. If it was viable, then presenting a proposal to outsource. I had done this before for other clients, with the written approval of my then employer, because it did not conflict with the confidentiality or business interests. In the job I had, I worked a lot of weekends and overtime on various facilities & construction projects and accumulated a lot of time that I enabled me to take time to pursue leisure or business activities. I chose business. This enabled me to see what was happening in the outsourcing industry. When the time came and I chose to be in the outsourcing business I was able to make an informed decision. I knew the competition's strengths & weaknesses. My time to venture into business and become an entrepreneur had arrived. Remember to be patient, don't rush in too soon. On the other hand don't let your "window of opportunity" close without you capitalizing on it. The combination of knowledge and instinct will enable you to make the best go or no go decision.

If after a while you still cannot decide, walk away.

Dealing With Conflict, Decreasing Revenue and Demanding Clients:

First, there will always be conflict. Whether it's with your clients, suppliers, bankers, partners or anyone else, it's there. Just because you are the boss or co-owner, it doesn't mean a thing. The problems you had in the corporate world remain the same, deal with it! Only now, you are involved in more details since your organization is smaller. You wear many hats during the course of the day and some fit better than others. Your job is to learn all those other functions that you had other people responsible before. Human resources is a good example. Now you may have to do all the recruiting, hiring, training, developing and if need be firing people!! Don't forget payroll and regulatory reporting. Sounds interesting. It's challenging to say the least. And you thought you would only be selling. Someone has to do the work and that's where the conflicting priorities begin.

Your business won't grow up like a straight line but more as a curve on a graph. There will be peaks and valleys. Your job will be to anticipate them and adjust your plans and resources accordingly. There will be clients that won't renew contracts. There will be times that you lose a deal due to things beyond your control. There will also be times where you bring on new clients and expand your business without breaking a sweat. You will live through these times and learn by both your successes and failures. Those demanding but fair and reasonable clients will be the ones that teach you the most. The higher the standard the customer raises and sets, the greater you will stretch to exceed their expectations. Because of them you will bring value more to your other customers.

Surrounding Yourself With Winners….Customers, Suppliers And Staff:

Seek out only the best in all your endeavors. Build your client base strategically and carefully. Taking on a new account because it has a highly recognizable name and reputation and may attract other new clients to you sounds reasonable but beware. Some of these companies may be dreadfully slow payers and your money could be tied up in accounts receivable and not in your corporate bank account. Do your due diligence on your prospective customers before you have ink on paper. You have to re-think your pricing structure to factor in slow or late collections. Remember, you have to pay your staff and suppliers before you pay yourself. Get to know your suppliers. Take the time to understand the nature of their businesses, corporate values and perception in the marketplace. Let them show you their most recent financial statements. If they are having problems, then how do you expect them to provide you with quality service?

Hire only the best people available. When you hire them, hire them with future positions within your organizations in mind. Encourage and support your staff to be free and open in their communication with you. Give them the time to share their experiences with you. Be patient, tolerant, and receptive to change. Have multiple people involved in all client relationships just in case someone from your team leaves. Make sure you compensate your staff for their contribution not their personality.

Separating The Wheat From The Chaff Or Selling Only What You Would Buy:

Don't allow challenging business condition (declining revenue; increasing overhead; surplus capacity; etc.) be an excuse for you to package and sell a good or service that does not fit the customer's needs. Your reputation, values and integrity are worth more than money. Better to tell a potential client that what he wants is not what he needs or if the occasion arises, tell him you can't do the job he needs but can recommend a better solution. Maintain your integrity.

Clients Will Surprise You, Some Good And Some Not So Good:

One time when I was working full-time in my consulting business, a prospective client who I had known for many years through my membership in professional organizations approached me. He wanted me to come in and help his people with a proposal for outsourcing. He wanted me to help improve the content and quality of their initial draft as well as give them pointers in making the actual presentation to his client. I quoted him what I considered to be a justifiable fee for my services. He agreed and we proceeded with the project. When I presented my invoice for payment, he smiled, said that he would have a check cut. When the check was ready, he handed me the check and I was surprised. He paid me 50% more that I invoiced him. I wanted to know why. He said that the job I did for him was greater than he expected and that he wanted to show his appreciation. I said he did not have to give me more money, since we had agreed on a fee for my services before hand. He insisted. I thanked him and will never forget him. By the way, they did win that contract.

While I was working on a consulting project for a major international health and beauty aids conglomerate I had a client contact that was different in his style and behavior than the one I previously mentioned. My associate and myself, were brought in to prepare a Request for Proposal for outsourcing various support services. The client contact was in fact, an interim project manager who helped to facilitate the move of the client's headquarters offices. I guess you can say he was a consultant himself. I was brought in to work on the project by a vice president of the company who then stepped back and let the project manager interface with us. While negotiating the terms and conditions of the consulting engagement, some issues did arise. I originally quoted him a reasonable price given the scope of the work. He wanted to reduce the costs considerably. After much back and forth discussion, we agreed on a price. I wasn't too pleased with the outcome but I still believed that I could deliver a quality product and make a modest profit. The project began and some communication issues began to arise between my associate and the contact person. Most of my time was spent in the background reviewing my associate's work product and meeting once per week with the client contact. My associate was upset with the way she was being treated by him. His comments and conduct were at times less than professional. He was overly critical of her work. I suspected that he felt threatened by our presence since his one-year project management contract was coming to an end. Also, he really had limited knowledge about support services since for over 25 years he was involved in real estate, building management and corporate moves for a large computer company. I arranged a meeting with him to review the status of the project as well as resolve the issue of invoices that were submitted and approved and not been paid. He started the meeting criticizing the performance of my associate's work. His comments were unfounded. We reached a point where I told him that unless he adjusted the tone of his voice and his abusive behavior I would terminate our engagement. He was stunned to say the least. I wasn't bluffing. I was prepared to stop work on the project. My associate and I had met previous to the client meeting and discussed our options. She agreed that it wasn't worth working on the project any longer unless he changed his behavior. I respected her opinion and was willing to accept the consequences. We had to stand on principle or we were nothing at all. Do you know what happened? He apologized for his behavior, had us continue on the project and we got the late payments that were due us within a week. Are you ready to stand for what you believe and face the consequences? Fortunately for us it worked out fine. The client was more than satisfied with the RFP and we got all our fees. No hard feelings. Feelings don't matter, only money is important.

Working For Dollars And Not Cents:

Establishing the right price or fee for the goods or services you are going to provide is crucial. Factor in all your associated expenses and don't take on any business unless you can make a good profit. Remember, you're working for money not love. If you quoted a price or fee that you later found to be too low and instead of making a profit, you will incur a loss, go back and try to re-negotiate and explain it to your client what happened. It might surprise you and agree to an upward revision in your pricing or he may hold you to the original terms. Either way it doesn't hurt to try.

No Nickel And Dime Management:

As you grow your business only hire men and women and not girls and boys. A boy could be a man at 18 or a man could act as a boy when he's 65. Maturity, dependability, integrity, good work ethics, values, creativity, ambition, tenacity, intelligence, tact and diplomacy come in all sexes and ages. Treat your staff, suppliers and clients as professionals. Don't over manage, stifle and frustrate people. Never become a micro-manager. It takes too much of your precious and valuable time. Learn to let go and let others take on more so you can do more.

New Beginnings Or One Thing Leads To Another:

Never say "never" to anything because you never know what will happen from one day to another. If you become successful in your business, enjoy, be happy and proud!! If not, move on with your life. If you return to the corporate world, you will have a greater skills-set than you had before you left. Just remember to run any organization that you are responsible for like it was your own. Be an entrepreneur only now be a "corporate entrepreneur".

Leaving the corporate world and going into business for yourself is not for everyone. You have to take the time to do your research before you commit yourself to any course of action in life. If for example, you want to open a hardware store in St. Louis, a temporary staffing agency in Miami or a web site design business in Seattle, you need to know before you start a course of action the risks and rewards. Carefully and patiently evaluate all your options. Select the one that you feel most comfortable pursuing. Prepare a detailed business plan and use it for what it should be, a guide for action. Be flexible, adaptable and realistic. If you see that your business is not generating the revenue you expected and needed, be prepared to execute your contingency plans. This, for example, may mean taking on a partner or possibly closing the business and moving on to another opportunity. Timing is everything. Whatever you choose to do, going into business and leaving the corporate world, will be a learning experience while traveling on the continuum of life.

About the Author:
Joe has returned to the client's side of the desk. He works for a state governmental agency. However, he still performs Small Business Consulting Services when called upon. He likes to help people succeed as entrepreneurs. He considers himself fortunate to have been helped along the road of business by many who shared their time and expertise.

He is a Certified Business Manager (CBM).

Joe is a Viet Nam Veteran with a 100% total service-connected disability.

He can be reached at 917-566-5147 (The Vaccaro Business Group) in New York City

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