Reward-risk Chart

Everyone will fall on different parts of the below reward-risk graph.  

The goal is to get to the fourth quadrant (high reward, low risk; bottom right hand corner). 




Of course the ideal quadrant is the Low Risk, High Reward quadrant. 
Yet many times, investors end up in the High Risk, Low Reward quadrant.




Always understand the risk-reward relationship in your investments and your work.







     

What They Don't Teach in Business School about Entrepreneurship

Kiss Your Boss Goodbye. It's Time to Be an Entrepreneur

Kiss your boss goodbye--it's time to become an entrepreneur

I recently read a reliable report on the attitude of the American workforce.  To my surprise I learned more than half of all employees are not engaged at work. In other words, most workers are not happy, not satisfied, not productive, not loyal, not inspired and will jump ship if another opportunity arises.  In fact, most are looking to leave now and have polished their resumes.   If this is the case, I would also assume that the managers who supervise these disillusioned employees are probably jerks, or are carrying out the mandates of thoughtless upper management.

If you’re a company leader who doesn’t focus on keeping employees engaged, make note; your days are numbered.  I suggest you change now, with sincere intent to take care of your people, or suffer the disastrous consequences of your own unemployment.

How to Create a Winning Business Idea--in Six Easy StepsAlan HallContributor

The 7 C's: How to Find and Hire Great EmployeesAlan HallContributor

5 Sure Signs A Startup Firm Will SucceedCheryl ConnerContributor

The Top Communication Traits of Great LeadersAlan HallContributor

I have more to say on this topic to company management.   Who do you think does all the work in your business?  Who do you think makes your products, sells them, provides support, collects receipts and pays workers? It’s not you, my friend.  Have you forgotten that you hired these people as a resource to help you build a highly profitable business? Have you forgotten they are a precious asset to be valued and protected? How long do you think you can mistreat quality workers until they bolt? In a word, it’s not very long.  Do you get the picture?  Am I making sense? In sum, your financial success, your promotions, your glory, all depend on how well you treat those subordinates who have placed their trust and confidence in you.

Now a word to Les Miserables.  If you are going to quit, for heaven’s sake, don’t go to work for another pathetic firm. Do something wild: Kiss your boss goodbye and launch your own business.  If you have had enough, become your own king.   The money you have made for others now shifts to yourself. Take that idea that’s been in your mind for months and turn it into a profitable company. If you are an engineer, a programmer, a salesman, a teacher, an accountant, a whatever, start today planning your escape from corporate prison.

I am sure you are similar to the entrepreneurs I spend time with everyday.   As a principal investor, I put money into emerging companies that have all been founded by someone who, for the most part, previously worked for a clueless company.  They left seeking their own destiny and fulfillment, hoping life would be much better on their own.  I know their employment history, their state of mind and the decision process they followed as they took a leap of faith to follow their dreams.

Over the last few months, I have spent several evenings giving advice to a gentleman who is a full time employee of a large company. He possesses a great business idea.  He is anxious to understand the steps he needs to follow to properly organize his own company.

Today, I am pleased to share with you the same information he is learning.  So, if you are ready to soar, please make note of the following initial guidelines:

1.  Keep your day job until the time is right to leave.  Keep in mind; you really have two options to consider:

A)  You can leave tomorrow if you have the resources in hand to sustain your efforts long enough to reach profitability. Give yourself at least one year to succeed.  If you can’t reach your goal in that time frame, look for other ways to survive and prosper, or, B)  You can ponder, prepare, organize, and execute plan overtime, at night and on weekends until everything is ready to go.

2.  If you have signed a non-compete with your current employer, honor it.  Wait until you can legally pursue your opportunity.  Find some form of income to sustain your personal life in the interim.

3.  Determine your purpose, your vision, your strategy.  Why are you in business? What do you hope to accomplish? What must you do to be successful? Are your answers sound and realistic?

4.  Test your assumptions.   Determine who your perfect customers are.  Know everything about them.  Talk to them, listen and respond accordingly. Know how many total potential customers there are.  Learn if potential customers will want to buy your product or service.   Learn about their needs, pain and current solutions. Determine the right price and where buyers expect to make a purchase.  Understand what they watch, hear and read. Know how to promote your offering.  Understand the competition.  Know their value proposition and why people buy their products.

5.  Evaluate a product’s viability.  Consider the design, development and manufacturing of the perfect solution at the best possible cost. Understand why your solution will be chosen by customers.

6.  Evaluate and test a plan to sell your product and collect revenues.  Will you sell directly to customers using the internet, your own sales team or independent reps; will you sell your products to distributors; will you sell to retailers or resellers; will you sell to the government?

How to Create a Winning Business Idea--in Six Easy StepsAlan HallContributor

The 7 C's: How to Find and Hire Great EmployeesAlan HallContributor

5 Sure Signs A Startup Firm Will SucceedCheryl ConnerContributor

The Top Communication Traits of Great LeadersAlan HallContributor

7.  Determine if you can make a profit. Know your costs, expenses, revenues, and margins.  Know how much working capital you will need to sustain the business and grow it.  Know where you can find money beyond your own resources.  Determine if financial resources will be available and committed.   Establish a financial system to provide accurate and timely reports to manage the operation.

With positive answers to these initial points, I suggest the following next steps.

• Determine your business location; street, city, and state.
• Name your company. Decide what your firm will be called by clients, vendors, employees and all other entities. Reserve this name for your legal documents and for your internet website. You do this by contacting the Secretary of State, Business Division, to learn if your chosen name is available. At the same time, search the internet domain names to learn if the name is also available for your use.  If available, proceed to register and pay the related fees to secure your ownership of your company name.
• Secure a business license and any necessary permits from your local city business office.
• Obtain a Federal tax ID number, form SS4, from the IRS. With this information, you will be able to establish an account with a local bank for checking, savings, merchant account and other services.
• Meet with an attorney to establish a legal entity.  The attorney will give you several options to consider, such as whether you should operate as a sole proprietor, a general partnership, an LLC, an S corporation or a C corporation.   He or she will explain to you the risks, responsibilities, costs, liabilities, taxes, duties, and reports that are associated with each entity. I also recommend you spend time understanding these various formats via the internet which covers in depth what you will need to know.  The law office will also prepare articles of incorporation, by laws, contracts, patents, stock/shares of ownership and provide guidance on company board agendas and minutes, key transactions and state annual reports.  In addition, you will be given advice on various labor laws – work hours, safety, breaks, immigrants plus any other legal service you might need.
• Meet with an accountant.  He or she will help you understand what responsibilities you will have with the IRS; namely, taxes related to the company, yourself, and employees. This vendor can also assist with state and federal tax filings. An accountant will also help you with financial reporting and various accounting software options.

Now that you are ready, meaning you have legions of customers who will buy your superior product for the right price yielding good profits, it’s time to act.  Yes, act, moving fast, with faith and a determination to overcome every obstacle on your way to greatness. Don’t look back. Keep your eyes on the bright horizon. It’s your time to shine. It’s your future to enjoy. You’re now the boss.  Be a great one! Good luck.

See Also:

How To Create A Winning Business Idea–In Six Easy Steps

5 Sure Signs A Startup Firm Will Succeed

The Top Communication Traits Of Great Leaders

http://www.forbes.com/sites/alanhall/2012/07/15/kiss-your-boss-goodbye-its-time-to-be-an-entrepreneur/

Jump-Starting Your Personal Finance - Achieving Higher Rates of Return

For many people, it is usually after years of not paying much attention to how they handle money, or after taking bad advice from others they've trusted (including professionals), that they finally realize: "Hey, this is my money and no one really cares more about it than I do. And it will not multiply unless I do something about it". At this point, the path you take can have long-term effects. Let me bring a few important points to your attention to help you on your journey.

Higher Rates of Return

When you finally come to the realization that you need to take a more active role in handling you personal finance there is a natural tendency to look to the stock market. That's usually because stock in a company is one of the easiest securities to acquire. There is also a sense of excitement or prestige with being in the stock market. However, lets put the emotions aside and look at what the real issues are.

One thing you must consider, especially when starting out is the return on investment. The stock market historically gives 7-10% annually. This is not a bad return if you are looking to park a huge amount of cash (say a few hundred thousand and up). But if you are starting out with not much excess cash, you need to get higher rates of return. If you have $5000 and you invest that at a rate of 10% a year, in 5 years you will have about $8000. That is not fast enough if you really want to take control of your personal finances. You will need to learn how to get higher rates of return than that. Remember the higher your rate the less time it takes for your money to multiply.

Assessing Your Options

The question then becomes how can you achieve higher rates of return. Many, at this point tend to gravitate towards using aggressive stock strategies or short-term trading to get higher rates of return. This could take years and many dollars (both in the cost of educating yourself and bad trades) to learn how to do and the probability of success is not very high. But if you are just starting out you don't have that kind of money to loose. Your best alternative for higher rates of return is to start a business that meets certain criteria.

The kind of business you want to start is one with low startup cost and high profit potential. Yes, it does take more effort to manage than a passive instrument such as stocks. But this is where you have a higher probability of getting returns that are in the 100% per year range, and even higher if you play your cards right. And these returns can be much more consistent than with stocks. Here are some other points to consider about starting your business for higher rates of return:

1. No longer is the option of starting your business limited to huge upfront investments (such as buying a franchise). Today it is possible to start businesses with very little money and have high profit margins.

2. The time requirement need not be prohibitive. Many successful businesses are started part-time buy full time employees. Also, depending on the kind of business you start, the internet can help to make it easier to manage.

3. You have more control of your investment. Once you place your money into a stock you have no control over what the price of that stock will be. With your own business, you control it. And there are many resources to help business owners.

4. The long-term prospects of starting your own business are good. You may not hit a home run on your first try (although that has been done before, and is far more likely than making a million on the first stock you pick) but if you keep at it you will improve and so will your personal finances.

Remember to approach your business like an investment. Learn how much is required to start, the expected rate of return, when you expect to make your money back etc. Even if you do decide to take a more active path in the stock market (i.e., trading stocks), take the time to learn how it is done before risking your hard earned money.

To your success.

Rodger Campbell is an entrepreneur and writes on various topics including personal finance and investing. For more insights similar to the article you just read, go to PersonalFinanceBuzz.com [http://www.personalfinancebuzz.com]

Article Source: http://EzineArticles.com/?expert=Rodger_Campbell

Article Source: http://EzineArticles.com/728466

Jump-Starting Your Personal Finance - Achieving Higher Rates of Return
by Rodger Campbell

How to Diagnose What’s Wrong With Your Business

January 18, 2012, 9:25 AM

By JAY GOLTZ

Over the years, I have met a lot of entrepreneurs who have been frustrated by low profits, lack of growth, or the stress of the never-ending demands. Many struggle with all three. While every business is different, there are common denominators. In fact, I believe there are 10. The tricky part is that failing to have a handle on just one of these areas can result in mediocre performance, a stressful existence, or ultimate and intimate failure. That is one reason the failure rate for small businesses is so high (here are some others).

This is the checklist I review when I’m not satisfied with my company’s performance.

Marketing

1. Targeting. Do you have a strategy to reach your best potential customers with your sales and marketing efforts? A shotgun approach is too expensive and inefficient for any company, especially a small one. What percentage of the people you approach actually buy a product or service like yours?

2. Advertising and Public Relations. There are many choices for where to place an ad and how to execute a public relations campaign. The problem with many small businesses is that their marketing activities are driven primarily by which salespeople happen to call on them. Ineffective advertising or public relations can be not only a tremendous waste of money but a tremendous waste of opportunity. If you are doing things the same way you did them 10 years ago, you are probably getting less response.

3. The Message. Lots of companies still use this line: “We will exceed your expectations.” I even saw it on the back of an ambulance. (I don’t know about you, but I have pretty high expectations when I call an ambulance! Are the technicians going to give me a haircut after they bring me back to life?) It was a good line when someone first thought of it. Now, it is old. It is tired. It needs to retire. You need to exceed people’s expectations by coming up with your own line. Maybe it is not a line at all. Maybe it is a message. Whatever it is, it should say something about your company that means something to potential customers.

Management

4. Hiring. I can’t think of anything more important than hiring the right people. Great hiring is a skill, one that frequently is not the strong suit of the typical entrepreneur. Do you have a hiring process? Hiring by trial and error is a very expensive and painful way to build a staff. I have found that hiring the right people is 75 percent of management. What percentage of the people you hire work out great? It should be 80 percent or 90 percent, and perhaps less in a low-wage environment.

5. Firing. This is never a popular subject, and it’s especially uncomfortable these days. But it is a harsh reality of business that some people are just not suited for some jobs. Many bosses avoid firing at all costs, including going broke, because they want to see themselves as being “nice.” In reality, customers and other employees just see them as irresponsible. Here is a simple test: Are there people who work for you who you would be relieved to have come in tomorrow and quit? If the answer is yes, that is not a good sign. Especially if the employee is a relative.

6. Operations. Training, standards, support, recognition, systems, key performance indicators, follow-up, etc. Is your company getting the job done? Are customers happy? Do you know? How is employee turnover? Are employees happy? Would they tell you if they weren’t? Do you have people who tell you the truth? Do you yell? (I know. You’re passionate.) Have good people left your company for more money? That is frequently an indication of other problems.

Accounting and Finance

7. Basic Accounting. Many seemingly successful companies have gotten into big trouble by neglecting accounting until it is too late. Accounting is not just about paying taxes. It is about information, insight, and control. Great accounting will not make a business successful, but bad accounting can destroy a business. Is someone staying on top of receivables, being careful about opening new accounts and making sure the existing ones are current? Could you walk someone through your financial statements and explain each part?

8. Pricing. This is probably the sleeper on this list. I can’t tell you how many times I have seen entrepreneurs either put themselves out of business, or never make the money they should have, because of bad pricing models. They charge prices that bear no relation to the costs or to the value proposition. This is just one of the reasons a company needs accurate accounting — so it can determine the true cost of a product or service. Do your salespeople have control of the pricing for jobs that they quote? If so, are they selling at a price that allows you to make a profit?

9. Financing. Most businesses need some kind of financing. Whether it comes from investors, banks, credit unions, factoring or even credit cards, there is a lot to know and understand. This is another place where a good accountant can be of great help. Or not. If you have one of the many accountants who just do tax returns and are not really experienced at helping businesses grow, you can find lots of information in books and online. Or you can hire a better accountant. Here is a test: Do you know your debt-to-equity ratio?

Leadership

10. Any one of these topics could fill a book, and leadership is no exception. Let me count the ways: vision, direction, inspiration, support. It is similar to management, but they are not the same thing. As my company has gotten larger, I have found that leadership gets easier because I now have managers managing. When a company is smaller, the boss has to manage and lead. One minute you are writing someone up for violating the late policy, and the next you are trying to inspire the troops. Perhaps management is pushing, and leadership is pulling. It’s not easy doing both at the same time.

Whether you score well or poorly on this list, keep in mind that it is an ongoing struggle. Personally, I’ve been doing this for 30 years, and I can assure you that I am constantly wrestling with almost every item on the list.

So how did you do?

Jay Goltz owns five small businesses in Chicago.

Acquiring "seed money" for investing

There are those who are born rich.  Excluding this group, what other ways are there for one to acquire the "seed money" to launch oneself into an exponential growth path in one's investing?

A good education is an asset.  However, this too does not ensure wealth.  One need to be able to use the knowledge productively to acquire wealth.  The young will need to choose the right profession carefully.  Certain jobs or professions earn more than others.  For example, doctors, lawyers and accountants are big earners.  Contrast this with teachers, psychologists and others.  Those with reasonable incomes will take time to acquire this "seed money".  The rich professionals with very high income jobs may earn in the region of $500,000 to $1,000,000 per year and can start on the exponential growth path of investing almost immediately.

Another group is the rag to riches entrepreneur.  These people lack the higher education of the professionals.  However, those who make it in business can be very very rich.  In fact, they are among the richest in societies.

I should also add that there is a fourth group, abeit a small one.  They marry into riches.

Having the "seed money" and with financial knowledge, time and compounding, all the above groups can launch themselves into the exponential path of growth in their investing, ensuring that their money works harder for them.  However, without the right financial knowledge and discipline, the "seed money" can also be easily squandered away.

Best Small Businesses to Start

Comments (18)

Best Small Businesses to Start

Learn from the examples of entrepreneurs who’ve succeeded in these hot start-up areas
By Matthew Bandyk

Posted November 13, 2008

America's economic future is uncertain. Unemployment is up sharply. Credit is tight. People are worried about their savings. So is it a great time to start a business? "Are you crazy?" might be the quick answer.

But it's not necessarily the right answer. Starting a business has always been a bold, risky move. Even in good economic times, the failure rate of new small businesses is high. But a well-conceived business can always catch on.

So how can a wannabe entrepreneur succeed? U.S. News's Best Small Businesses to Start springs from the idea that those who stand on the shoulders of giants can see the farthest. The entrepreneurs behind the types of start-ups we profile here have defied the odds, finding both profit and an enjoyable, independent lifestyle along the way.

We interviewed over a dozen experts, quizzing them about the economic trends that will most affect small businesses in the years ahead. Then we looked at where entrepreneurs can capitalize on these trends. The 15 start-up ideas here aren't about cashing in on hot fads. They're a way to help you be among the first to catch waves that won't crash down anytime soon.

"The first question you have to ask yourself [before you start a business] is which are the sectors where I have knowledge, skills, and contacts to operate in," says Jeff Cornwall, director of the Center for Entrepreneurship at Belmont University. The 15 Best Small Businesses to Start include a variety of sectors.

Start with this economic trend: the millions of baby boomers who are beginning to retire now. Small businesses like Guava Home Care in Hockessin, Del., are filling the increasing demand for home healthcare, helping seniors stay in their homes and be more independent. Small businesses can offer the human touch and specialized service that larger ones may find hard to provide.

Another trend is globalization. More U.S. businesses than ever are connected with the world. There's a huge market out there for American entrepreneurs to sell to, and it's growing. "There's going to be an equivalent to the U.S. middle class created each year over the next decade" in the developing world, says Steve King of the Institute for the Future.

Some entrepreneurs—be they companies going global or outsourcing firms—educate and train businesses in the new game of globalization. Export managers link domestic buyers with foreign sellers.

The demand for energy efficiency and an environmentally friendly footprint is also spurring entrepreneurship. Energy auditors help businesses and homes save money by reducing energy costs.

In the increasingly competitive field of education, fledgling higher education services like New Mountain Ventures are finding ways to keep people in school.
Parents worried about their kids' development are willing to pay top dollar to athletic trainers in hopes of creating the next star athletes. They also will hire professional tutors who can give their kids the individualized attention that the major test-prep companies maybe cannot.

Today's struggling economy may itself present opportunities. Businesses slammed by the economic slowdown often look to cut back and focus on their most essential tasks. That can mean contracting out jobs once done in-house. Outsourcing does not have to mean moving American jobs overseas. Indeed, the demand for corporate outsourcing has created a profitable opportunity for smart, nimble entrepreneurs who can help bigger companies save. With her website virtualhires.com, Rosemary Zalewski of Cleveland, Ohio places virtual assistants who do freelance administrative work at big companies. Similarly, freelance Web writer Melissa Rudy of wordsbymelissa.com lands projects writing online content for companies that don't have the staff to do it themselves. She now makes more money self-employed than she did working as a technical writer.

Modern communication tools also make it easier for start-ups to get off the ground. Social networking sites and blogs help entrepreneurs, like career counselors and financial advisers, establish their expertise and credibility. And customers can find you today with a mouse click. Sellers of fresh produce are using the Internet to cater to the growing demand for organic food: You can place your order on online farmers' markets and have it delivered to your house.

Many of the Best Small Businesses to Start can be run from a home office, cutting start-up costs. Alex Chamandy of Arlington, Va., runs a computer repair business from his basement. An art dealer is at home today online as much as in a gallery.

It's not just old businesses that are being revolutionized. Some start-ups, like online consignment stores, are a brand-new type of business. Purely online businesses may be more recessionproof than traditional small businesses, as they're not "tied into any particular slowdowns in that local area," says Pamela Slim, author of the Escape from Cubicle Nation blog.

Best Small Businesses to Start shows you how you can make your start-up more likely to succeed. The businesses on our list are certainly not the only way for entrepreneurs to succeed in today's economy (please let us know about your ideas for great start-ups by sending a message to smallbizcenter@usnews.com). But we hope this will get you started.

http://www.usnews.com/articles/business/best-small-businesses/2008/11/13/best-small-businesses-to-start.html


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