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Good Entrepreneurs Can Grow A Business Without A Large Budget

This Bookstore Made A Business Out Of Selling Just One Title
One of the biggest myths I still see in the community of new entrepreneurs is the assumption that “All I need is a good idea, and some investor will give me the big money I need to build the business.” In reality, investors fund good business plans, not big dreams. It’s all in the execution.

A related myth is that it takes a lot of money to start a business. Investment requests of $500K and $1M seem to be the most popular. In reality, most business today can be built and reach breakeven for much less than these amounts, maybe $10K-$50K, with the exception of some medical related ones, and high technology content solutions.

Starting your business with a very low investment is called “bootstrapping,” and these entrepreneurs usually have the most fun. They retain full control of their business, they don’t have an investor “boss” second-guessing their every move, and they don’t have to spend months begging for money. According to experts, up to 99% of businesses are started this way.

Here are some fundamental principles for starting and growing your business with a limited budget, as outlined in a book last year by Patrick Snow, “Creating Your Own Destiny”:

Run your business from the comfort of your home. Even though the cost of commercial office space is down, you still need to sign long-term contracts, make payments up front, outfit the space, and staff it. With a good website built in your basement, your business can look big, and be small.Match your business to your passion. You can’t be successful doing something you don’t enjoy. Passion isn’t really a substitute for money, but if you love something enough, you will find a way to get it done without paying much cash up front.Don’t hire any employees. Managing employees is a whole separate discipline, and most true entrepreneurs aren’t very good at it anyway. Running a business is not rocket science, so you can learn how if you have enough passion. Make sure any employees needed are a function of your “bandwidth,” not your confidence or interests.Build a low-budget plan. This is the opposite of starting without any plan. Operating without a plan is a sure way to spend lots of money. Low-budget also means avoiding businesses that are capital intensive, or even a franchise, which often requires a big up-front investment.Make money whether you are working or sleeping. E-commerce on the Internet is a good example of this. There you can sell your products and services 24 hours per day, seven days a week, on a global basis. Other examples are recurring revenue streams, like subscription fees, or referral fees, or subcontracting where you take a percentage.Minimize inventory, or let the manufacturer carry it. Have you ever wondered who owns all the new cars in dealer lots? It’s not the car dealers. Another example is the Amazon.com model, where they order your product for direct shipment, only after they get your payment. Consultants don’t need any inventoryBarter your skills or equity for services you need. An example would be getting free office space by agreeing to be the property manager for the owner. Exchanging equity for services is worth negotiating with legal counsel, accountants, engineers, and even sales people.

Most experienced investors are convinced that too much money is a bigger risk than too little money. Good entrepreneurs can often find a substitute for money, but there is no substitute for time and determination. So keep your eyes and your heart focused on the business vision and the tips given here, and you won’t need a big budget to achieve your biggest dreams.

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A Playbook For Using Social Media In Your Company (INFOGRAPHIC)

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While everyone has observed the way social media has transformed everyday life, its impact on the world of business has been well defined.

Hoards of new companies have sprung up for the purpose of utilizing social media for business growth, while older, more established businesses are scratching their heads as innovation passes them by.

Whatever the long term effects of social media on business, it is generally agreed that any company will benefit dramatically from adopting a social business model, lest the newly-formed social customer move on to more modern alternatives.

Michael Brito, a leading expert in social business models, has organized an infographic detailing the who, what, why and how of the social business imperative.

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Why You Should Ignore Yelp Reviews

Six years ago two partners and I opened a small grab-and-go food business. The store was their idea, and it was a smart one: Nobody nearby was offering high-quality prepared meals. The business (which I won’t name because my partners prefer to stay out of the spotlight) has done well. Many customers adore our food. But if you go online, you might think otherwise.

That’s because of another business that took root around the same time: Yelp, a website that allows users to rate and review all kinds of service businesses, from restaurants to moving companies to churches. Yelp’s business model, like those of TripAdvisor and IMDb, relies on user-generated reviews. And, as online retailers have learned, comments can have a big impact on customers’ decisions. Think about it: How often do you check reviews before buying on Amazon?

For managers, this creates both an opportunity and a dilemma. In theory, customer feedback, whether positive or negative, is a good thing, because it allows a business to improve. In reality, it can be hard to figure out what kind of feedback is legitimate—and how responsive to be. In both my consulting work and my executive teaching, I’m asked about this issue frequently.

When we were getting started, my partners and I obsessed over Yelp reviews. It hurt when someone wrote, “If you have money to spare, I suppose you could do worse.” We were tempted to rethink our model when one critic complained, “The prices are seriously whacked—$6 for...basically schmancy gas station food.” We have plenty of good reviews, too, but even today our Yelp rating is just three out of five stars.

It’s hard to ignore feedback, especially when it is so frank. But because the reviewers in social media are usually anonymous, it’s hard to know whether they are representative. In 2009, we had a rare opportunity to meet some of them. That fall we attended an event where Yelp hosted several hundred “elite users”—the volunteers who write many of its reviews. As we handed out (free) food, I realized that these people looked nothing like our customers, who tend to be over 30 and professional. The Yelpers were mostly in their twenties. From my conversations that evening, I learned that most of them don’t want to pay premium prices for premium food. Economically, that makes sense. They are apparently less affluent than our customers. They may have many motivations for writing free reviews, but they are likely to have ample spare time and to be highly price sensitive—factors that undoubtedly color their postings.

This post originally appeared at Harvard Business Review.

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Whatever You Feel Compelled To Do, Don't

Remember the last time you pushed the "send" button for an email and then instantly regretted it? Or snapped at someone in a moment of frustration?

It's easy to recite the litany of all we do wrong in our lives — eat and drink too much, exercise and sleep too little, spend too much on things we don't need and run up too much debt, judge others too quickly and embrace them too conditionally, profligately consume resources and spend too much time obsessing about our own needs and too little focused on the needs of others.

We know better. We're capable of better. So why exactly do we make so many short-sighted destructive choices?

Let me suggest a very basic answer: Unbeknownst to most of us, we each have at least two very distinct selves. They don't know very much about one another. If you have any doubt this is so, think for a moment of what you're like at your best, and what you're like at your worst. Which one is the real you? The answer, of course, is both. Two selves — both you.

Under ordinary circumstances, our parasympathetic nervous system and our prefrontal cortex are running the show. We're capable of thinking clearly, calmly and logically. In our work at The Energy Project, we call this the "Performance Zone." It's here that we're capable of operating at our best.

In the face of a perceived threat, however, our sympathetic nervous system and amygdala take over and our second self steps up. A flood of stress hormones is released. Our pre-frontal cortex shuts down, we become narrow and more myopic in our vision, and we react more primitively and instinctively.

The physiology of fight or flight mobilizes us to attack, or run like hell. Think of this as the "Survival Zone." It's a great place to be if there's a lion coming at you.

It isn't great in situations where thinking is an asset. The problem is that our bodies respond to any perceived threat — say, a critical comment from a colleague or a boss — by fueling the fight or flight response. We lose our capacity for rationality and reflectiveness, and we mostly don't realize we've lost it.

Consider a classic question you've surely asked someone — or been asked yourself: "What were you thinking when you did that?"

More often than not, you weren't thinking anything at all. You were just reacting.

Once stress hormones stop circulating through your body, the capacity to think logically returns. But that doesn't mean we take responsibility for our bad behaviors. Instead, many of us use our prefrontal cortex to rationalize what we've just done without thinking. We seek to justify, or minimize, or deny our responsibility for behaviors that were in fact hurtful and destructive to others.

We misuse the gift of our cognition.

Think of all the bankers who made irrational, sub-prime loans that were sure to eventually fail, but have yet to take any responsibility for their self-serving misdeeds — or been held accountable.

So what's the antidote to behaving reactively — and badly — when we feel under threat?

The first step is to become more aware of when your emotions begin to turn negative. That may mean noticing your heart beating faster, or tightness in your chest, jaw, or forehead.

The next step, when you sense you're getting frustrated or anxious, is to apply "The Golden Rules of Triggers." It's very simple: Whatever you feel compelled to do, don't. Compulsions are not choices, and they rarely lead to positive outcomes.

The moment you feel yourself moving into the Survival Zone, label it: "Ah, there I go." Take a deep breath. Inhale through your nose to a count of 3, and exhale slowly to a count of six. That will quiet your body.

Finally, feel your feet, to get out of your head and ground yourself in the reality of the present moment.

You've just bought time. Now you should be able to ask yourself "How would I behave here at my best?" and make a conscious choice about how to respond.

This post originally appeared at Harvard Business Review.

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The 15 Best-Paid Jobs In America

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What jobs pay the most? It’s that time of year when the U.S. Bureau of Labor Statistics crunches through reams of data on 800 different jobs to tell us how much Americans earn and which jobs pay the most and least.

If you’re well established in a career, the news is merely voyeuristic — a matter of looking over your colleagues shoulders to see what they might earn. But if you’re young and seeking work — or older and retooling — the annual occupational wage data might suggest where to focus your energy.

Of course, the jobs that pay the most are also the hardest to get. The 10 largest occupations account for more than 20% of the nation’s 127 million jobs, according to the BLS. But only one of the 10 largest occupations paid more than the national average wage of $44,410. That one position: Registered nurse, which pays an average wage of $67,720.

It’s far easier to get a job as a waiter or fast-food worker, which account for nearly 5 million positions, but pay less than $10 an hour and make up some of the America’s worst paid positions.

Earning a really lucrative income is likely to require lots of schooling. An analysis of the government data shows that the top-paid professions in America are dominated by positions that require a medical degree — although there are 27 jobs that don’t require a medical degree. What jobs pay the most — and how much is that exactly?

This post originally appeared at BNET.

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INSTANT MBA: Accept Negative Feedback -- You're Better Off In The Long Run

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Today's advice comes from Jeff Bezos, founder of Amazon:

"[W]e allow negative customer reviews on the website. In the early days, I'd get complaints from mostly book publishers because we were mostly books at the time, and they would say: 'You don't understand your business. You make money when you sell things. Why don't you delete the negative customer reviews?'

"And our thought on that is very different. We think we make money when we help customers make purchase decisions. And that's different. It's point of view.

"There's a great Allen Kay quote, he said, 'Point of view is worth 80 IQ points.' And if your point of view is I'm going to be long-term oriented, then that long-term orientation allows you to align your behaviors and your activities with your customers. Because in the long term, take a sufficiently long investment horizon, customers and shareholders are very aligned.

"If you're trying to optimize things for the next three months, then you would go get rid of all the negative customer reviews, because for three months, your sales would go up. But if you're really focused on the long term, you want to help people make purchase decisions, and people will say, 'This is a very useful site because it helps you make purchase decisions.'"

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The Laws For Sexual Harassment In The Workplace Are Murkier Than You Think

The news about both Dominique Strauss-Kahn and Arnold Schwarzenegger has brought renewed attention to what seems like a myriad of past allegations of sexual harassment by the two politicians. Strauss-Kahn and Schwarzenegger have also both now acknowledged relationships with women who worked for them.

So, when something happens between a boss and employee, where’s the line between harassment and a consensual relationship? It turns out the law isn’t as clear as you might think.

In the United States, certain situations are considered inherently coercive. For instance, sexual contact between prison guards and inmates—even if it’s entirely consensual—is sexual abuse by definition. However, laws governing the workplace are far more permissive, though companies may adopt their own, more stringent policies. 

Under U.S. federal anti-discrimination law, sexual advances or comments in the workplace aren’t necessarily against the law, and that’s even if there’s a big power gap at play, Ernest Haffner, a senior attorney at the government’s Equal Employment Opportunity Commission, told me.

“If that were true, a romantic relationship could never be consensual or welcome in a particular workplace,” Haffner said. “I don’t think case law supports that.”

Instead, the test is whether the sexual comments or conduct was unwelcome . Sound simple? Not so fast.

Experts say there aren’t hard-and-fast rules for judging whether conduct is unwelcome. “Unwelcomeness is tricky,” said Haffner. “The person may subjectively believe that the conduct is unwelcome, but you have to objectively be able to show it.”

In some cases, a person may be able to show that advances were unwelcome even though he or she didn’t protest or say so at the time. “Consensual” isn’t the same thing as ”welcome,” experts say. It all comes down to a close analysis of any given situation.

Lawyers told us that power dynamics can be a factor. Past history between the two people can also be a factor. Even body language can be a factor.

“The bright line is it being unwelcome, but the facts that make that up are really going to depend on the circumstances,” said Fatima Graves of the National Women’s Law Center, noting that courts have ruled differently. “Some courts have said that it’s important for the employee to communicate clearly that it is unwelcome,” Graves noted.

That’s why the government and anti-discrimination groups encourage people who believe they’re being harassed to inform the harasser directly that the advances, comments or conduct are unwelcome. Legal Momentum, a women’s rights group, warns the targets of harassment, “Your legal claims can be hurt if you keep silent.” It also provides a sample letter [PDF] to send to a harasser, suggests reporting the harassment to the company and recommends holding on to all records documenting the harassment itself and complaints about it.

Once it’s established that the conduct was sexual harassment, it’s up to the company to prove that it’s not liable. If the harasser was in a supervisory role, the company is almost always liable, though companies can try to argue that the person didn’t make use of internal channels to report the harassment or waited too long to do so.

Under U.S. anti-discrimination law—civil statutes—there are caps on how much companies can be forced to pay if the case goes to trial. They’re based on the size of the company—and awards for even the largest companies are capped at $300,000, though this doesn’t include compensation for, say, medical or therapy expenses incurred as a result of the harassment.

More often than not, however, these cases will settle out of court. President Bill Clinton famously paid Paula Jones $850,000  to make her sexual harassment lawsuit go away, with no apology or admission of guilt needed on Clinton’s part. Just last year, former Hewlett-Packard CEO Mark Hurd settled for an undisclosed amount a sexual harassment claim brought by a company contractor.

Not all workers in the United States are covered by federal sexual harassment laws, however. The housekeeper with whom Schwarzenegger fathered a child out of wedlock, for instance, most likely was not.

“You have to have so many employees before you’re covered,” said Michelle Caiola, a senior attorney at Legal Momentum who previously worked for the government’s EEOC. “Being an employer of one person in a household—that wouldn’t be covered.”

This post originally appeared at ProPublica.

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