GEC 4110 Module 02 Strategy PDF

**PRELIM** **MODULE 02:** **STRATEGY** **GEC 4110** **ENTREPRENEURIAL MIND** **PREPARED BY:** **FAITH B. BALASABAS** **TABLE OF CONTENTS** +-----------------------+-----------------------+-----------------------+ | **TOPICS** | **Page** | **Time frame** | |...

**PRELIM** **MODULE 02:** **STRATEGY** **GEC 4110** **ENTREPRENEURIAL MIND** **PREPARED BY:** **FAITH B. BALASABAS** **TABLE OF CONTENTS** +-----------------------+-----------------------+-----------------------+ | **TOPICS** | **Page** | **Time frame** | | | | | | | **No.** | | +=======================+=======================+=======================+ | Overview | 5 | 30 mins. | +-----------------------+-----------------------+-----------------------+ | Strategies of Elite | 6-30 | 4hrs. 20 mins. | | Entrepreneurs: | | | | Beliefs, | | | | Characteristics, and | | | | Habits | | | +-----------------------+-----------------------+-----------------------+ | keypoint | 30 | 10 mins | +-----------------------+-----------------------+-----------------------+ | Activity | 31 | 1 hr 30 mins. | +-----------------------+-----------------------+-----------------------+ **TABLE OF REFERENCES** +-----------------------------------+-----------------------------------+ | **References** | **No.** | +===================================+===================================+ | **The Entrepreneurial Mind- By: | 1 | | Kevin D. Johnson** | | +-----------------------------------+-----------------------------------+ | http://www.1000advices.com/guru/c | 2 | | reativity\_entrepreneurial.html | | +-----------------------------------+-----------------------------------+ | | 3 | +-----------------------------------+-----------------------------------+ | https://www.google.com/search?q=p | 4 | | ropensity+to+innovation&tbm=isch& | | | hl=fil&chips=q:entrepreneurship+c | | | reativity+propensity+to+innovatio | | | n,online\_chips:creativity,online | | | \_chips:entrepreneurial+intention | | | &sa=X&ved=2ahUKEwjs9q\_mgK\_vAhWN | | | G6YKHdVoCyIQ4VZ6BAgBEBo&biw=1349& | | | bih=657\#imgrc=4C-SO-tkbY\_1\_M | | | ================================= | | | ================================= | | | ================================= | | | ================================= | | | ================================= | | | ================================= | | | ================================= | | | ================================= | | | =============================== | | +-----------------------------------+-----------------------------------+ | **https://steemit.com/economy/\@k | 5 | | risosa/the-nature-of-entrepreneur | | | ship** | | +-----------------------------------+-----------------------------------+ | **Entrepreneurship in the | 6 | | Philippine Setting : by Winefreda | | | T. Asor, Ph.D.** | | +-----------------------------------+-----------------------------------+ | **https://www.google.com/search?q | 7 | | =organizing+function+of+managemen | | | t&sxsrf=ALeKk00W0X92\_125YNugHd\_ | | | JuzghxNrWyg:1615717448829&tbm=isc | | | h&source=iu&ictx=1&fir** | | +-----------------------------------+-----------------------------------+ In this module you'll learn about strategies and tactics to improve your businesses, ranging from testing a new market to devising an exit plan. Mastery of these important concepts will put your business ahead of the rest. **LEARNING OUTCOMES** **STRATEGY** "*Strategy is a style of thinking, a conscious and deliberate process, an intensive* *implementation system, the science of ensuring future success."* - Pete Johnson, British businessman -- **OVERVIEW** The author of Entrepreneurial mind , Kevin Johnson begins the book by advocating the importance of a well-crafted strategy in the success of an enterprise. Successful entrepreneurs adapt to market demands and technological innovations. They take calculated risks and, above all, have the discipline to overcome procrastination. Keep in mind that the success of an idea lies in its execution, not its originality. Referring to the book "[**The Blue Ocean Strategy**](https://pocketbook4you.com/en/read/blue-ocean-strategy)", the author recommends devoting himself to creating new markets. Before thinking of a business plan, focus on developing your product, discuss the idea with potential customers, and examine the competition. The self-reliant professional is a myth. For your business to work, it is essential to have employees **aligned with your goals**. Its function is to plan the growth of the company, so the idea is that it should be able to operate autonomously. In fact, the author recommends that you hire a lawyer to ensure the legal protection of your interests and intellectual property. ***DISCUSSION**:* All entrepreneurs must ask themselves **three** vital questions that concern their business strategy: 1. Where are we now? 2. Where do we want to be? 3. How do we get there? If you don't know the answers to these questions, you don't have a strategy for success. Instead, you have an aimless, business pursuit and a likely failure on your hands. Businesses with a clear and a solid strategy are prepared to win. Companies with inferior products often beat companies with superior products because, while the big dogs rest on their laurels, the underdogs are implementing and executing a better strategy. In addition, they may have better partners, employ sharper lawyers, or automate more processes. A company's strategy and tactics can help it surmount what seem like impossible obstacles. **34 Strategies of Elite Entrepreneurs: Their Beliefs, Characteristics, and Habits.** 1. **THINK BIG:** **The Two Types of Failure in Business:** 1. Not surviving beyond its start and , 2. Not reaching its full potential. While shutdowns receive the most attention, failure to reach full potential is much more catastrophic. On the one hand, measuring and understanding why so many businesses fail in the traditional sense is relatively easy. Statistics tells and giving us a solid idea of why about 75 percent of businesses do not survive fifteen years or more. Some of the reasons for failure include undercapitalization, overexpansion, poor planning, and a declining market. On the other hand, measuring and understanding why a business fails to maximize its potential is quite difficult. Studies and statistics aren't readily available. Also, the default measuring stick for success in business is often the very existence of the business itself. There are some businesses who have survived their first five years. While this accomplishment is honorable, it's more impressive to have a profitable and a highgrowth business after five years. Instead of flattering business owners who have reached a certain number of years, the goal should be to challenge and to help solid businesses ascend to the next level ---**to think big.** **"Thinking Big" Defined** The phrase **"Think big"** is ubiquitous, whether it's from an ESPN commentator or Donald Trump. Likewise, a popular T-shirt carries the phrase**, "Go big or go home**!" Apparently, we have an epidemic of small thinkers, and we must be cured of this contagious inability to **think big**. Despite its popularity and ascendancy to pop culture status, the saying has no clear meaning, especially as it relates to business. In business, **"thinking big"** simply means pursuing ideas that maximize the scope of your potential. Likewise, it can mean pursuing ideas that have maximum impact in the world. Despite its simple definition, thinking big is difficult to do for many reasons, but if you are aware of the obstacles you can avoid them altogether. 1**. *One of the main obstacles to thinking big is the inability to outgrow your environment***. Some of the mentors to several young entrepreneurs, and one of the common disappointments they have about their mentees is their inability to create businesses that go beyond the confines of their reality or environment. In other words, their environment restricts their thinking to the point that their business suffers limited growth or even death. For example, many college students wish to start a business that targets only college students on their own campus. Instead, why not expand their markets by applying their product or service to additional segments. Students, for instance, could sell their product or service to colleges across the nation or the world. If the idea has broad appeal, it could be even larger. Also, some mentors incourage their college mentees how Facebook, originally for college students only, was founded on an ideology that appeals to people all around the world. It was just a matter of time before Facebook's cofounder Mark Zuckerberg expanded his company's target from college students to everyone on the planet. 2\. ***Many entrepreneurs lack the motivation to pursue big ideas***. This mentality prevalent among entrepreneurs who have had some level of monetary success in business that diminishes their willingness to pursue bigger ideas. These entrepreneurs strive to maintain their comfort or have become accustomed to going for low-hanging fruit. As business author Michael Gerber says, **"Comfort makes cowards of us all."** Moreover, these entrepreneurs could simply be overwhelmed with running their own business and don't have the bandwidth to do anything else. For overcoming lack of motivation, entrepreneurs should find an individual or team to hold them accountable for pursing their big idea, step by step. Staying motivated can be difficult. However, having people hold accountable for their goals has really worked. Moreover, if you have several businesses like , you have to delegate tasks to others and carve out priority time to develop your idea. Otherwise, you make little progress. 3. ***Several entrepreneurs lack the self-confidence to think big***. They don't see themselves running a large organization, or they are frozen by the immensity of their idea. They may ask themselves, Where do I start? How will I build a team capable of pulling this of ? Where will I get the start-up capital for such a huge idea? To boost your self-confidence, devise and take small steps that start you working on your idea. For example, do some basic research about your idea or write down your ideas. If you are like most people, these small wins will add up to increase your confidence and to propel you forward. ***4. Entrepreneurs often lack the diversity and expertise of influencers required to think and eventually to execute in a big way***. I am a fan of the television show **Shark Tank** in which entrepreneurs pitch their business idea to a panel of investors, or sharks, who then decide whether to place an investment with the presenting company. Entrepreneurs who appear on the show seek investment capital as much as the valuable experience of the sharks. In one episode, a shark suggested that an entrepreneur license his product instead of selling it to individual retailers, an arduous process. The entrepreneur had not thought about licensing his product, a strategy that would yield him profits faster and minimize risk. In this case like so many others, the founder needed the experience and influence of seasoned entrepreneurs to maximize the potential of a business idea. To jump this hurdle, you must establish a diverse network of individuals who think big and understand what it takes to arrive at that level. Likewise, they can help you to vet and improve your idea. **Reid Hoffman**, founder of LinkedIn, recently told a group of aspiring entrepreneurs in **Cambridge, England**, "*Talk to as many people as you can. What you want are the people who will tell you what's wrong with your idea. They are the ones you can learn from."* **Where Thinking Big Helps the Most** The aggregate loss of value by businesses that fail to reach their potential is much greater than the value lost by businesses that cease to exist. For this reason, economists, entrepreneurs, and others interested in economic development should not necessarily emphasize fostering start-up growth. Instead, they must emphasize helping established businesses and leaders transform their operations from medium to large. In other words, increasing the number of new start-ups is less important than ensuring the full maturation of established companies that have tremendous and sustainable growth potential. How do we move medium-sized businesses to become big enterprises? Many economic developers are asking themselves that question today and are working diligently to answer it. The model seeks to create jobs by supporting existing companies in a community. Making the jump from thinking small to thinking big can be extremely difficult, but it is worth it. In fact, all of the greatest achievements of humanity started with a daring**, big idea.** Imagine where we'd be if the inspiring words of the great **Benjamin E. Mays** that encourage us to think big hadn't inspired a young student at Morehouse College who dreamed of living in a different world than the one in which he found himself**. Martin Luther King Jr.,** one of the most known icons in the world today, could have settled for being just a preacher in his hometown of Atlanta, Georgia. He never would have set out to accomplish his dream, a vision that changed our world forever. **People with the ability and the audacity to think big carve the path to greatness.** **2. CREATE NEW MARKETS** *" If I had asked people what they wanted, they would have said faster horses."* ---Henry Ford, founder, Ford Motor Company - **The two kinds of entrepreneurs** 1. those who create markets 2. those who do not. The entrepreneur who creates markets is considered a **revolutionary.** On the other hand, the entrepreneur who competes in well-established markets is considered **ordinary**. Both approaches can lead to success in business, but research indicates that the creative entrepreneur has a better strategic position. *Blue Ocean Strategy*, a best-selling business book, makes a cogent argument that creating new markets known as "blue oceans" is better than competing in overcrowded industries known as "red oceans." The authors, W. Chan Kim and Renée Mauborgne, studied 150 strategic moves spanning more than one hundred years and 30 industries for their book. They also looked at 108 companies that launched new businesses to quantify the impact on revenue growth and profits of creating blue oceans. Which kind of entrepreneur are you? **3.** **WORK ON YOUR BUSINESS, NOT IN YOUR BUSINESS** Until an entrepreneur's company runs without the founder, that person is just self-employed, the lowest rung in the hierarchy of entrepreneurs. The unfortunate reality for millions of entrepreneurs is that their business depends on them way too much. You know the type, and perhaps that type describes you. They are often overwhelmed with their business, doing everything from their own taxes to taking out the trash. They work nonstop not because they want to but because they have to. They may act as though they have a team that takes care of everything, but they don't. It's all just a façade. The harsh reality is that if they were hit by a bus and died, their business would die, too. **4. ALL RISK ISN'T RISKY** Among the several definitions of an "entrepreneur," a common word among them seems to be "risk," which is what truly defines an entrepreneur. The following simple definition by *Merriam-Webster* is : "An entrepreneur is one who organizes, manages, and assumes the risks of a business or enterprise." Entrepreneurs have a higher tolerance for risk than the average person when it comes to starting and running a business. According to the Kauffman Foundation, less than 80 percent of businesses last after their fifth year of existence. Moreover, according to Saratoga Venture Finance, less than 1 percent of businesses ever go public. Despite these daunting odds, entrepreneurs are not deterred from pursuing their goals. This higher tolerance of risk among entrepreneurs, though, doesn't tell the whole story. Entrepreneurs surely take on high probabilities of failure, but they don't necessarily like to gamble. Instead, they take calculated risks, stacking the deck in their favor. They find ways to minimize or to spread the risk of their endeavor to increase the odds of their success or minimize the odds of loss. Entrepreneurs have the confidence in themselves to avoid and to overcome obstacles that could cause great loss, whether through expert knowledge, solid relationships, or even personal wealth. In short, all risk isn't risky, and entrepreneurs know this rule. Put another way, the reality of becoming an entrepreneur isn't so much about the high probability or risk of failure as much as your ability to beat the odds. Ironically, the entire world has learned this lesson from the Great Recession. **5. DON'T WASTE TIME** The best entrepreneurs create environments of stressful urgency. Entrepreneurs know that startups rarely get anything done in a relaxed, take-your-time environment. For example, Steve Jobs, the cofounder of Apple, was notorious for pushing his team beyond its limits by setting seemingly unrealistic timelines. As a result, his company created products quicker than they had ever imagined was possible and thus gained a huge competitive advantage over rival companies like IBM. If you lack the sense of urgency to grow your business, evaluate why you want to be in business. Perhaps you are not passionate about the business idea. Maybe your subconscious tells you that the idea isn't worth pursuing. Maybe the idea isn't yours and you feel no allegiance to it, or maybe you lack the self-discipline to be an entrepreneur. Whatever the reason, your lack of enthusiasm is not a good sign. **6. BUILD A COMPANY THAT IS SYSTEMS-DEPENDENT, NOT PEOPLE --** The pioneer in creating systems that increase work efficiency was Henry Ford, founder of the Ford Motor Company. Ford created an assembly-line system that enabled him to mass-produce the Model T car. Before his introduction of the assembly line in 1913, a small team of specialists made cars, and the process was lengthy. Ford's methods, though, reduced the time from more than twelve hours to two hours and thirty minutes. His innovation put the car in the economic reach of an average family and improved productivity rates across many industries. Not only did Ford's system boost productivity, but it also cut the need for the jack-of-all-trades. Instead, workers on the assembly line could be specialized, which also made them easier to replace. Before the assembly line, if an employee who built most of a car was out sick, productivity would slow down and the arduous process of building a car by hand would be much more difficult to continue. Even if you are a one-person show, take the time to delineate the roles and expectations that people in your business will play. Write a job description for crucial positions like CEO, CFO, vice president of sales, vice president of operations, and so on. You may be doing one, two, or all of these roles at the start, but this activity forces you to conceptualize how each role, not an individual person, relates to your business. As alluded to earlier, people come and go, but the functions needed to keep your business going do not. **7. ASK FOR HELP** When you start your business, lose the ego immediately. It's the main reason that entrepreneurs don't seek help. An overinflated ego even prevents those who ask for help from receiving it. Rarely do people want to help those who act as though they don't need it. And there's a difference between being confident and having an ego that's too big for your own good. Confidence attracts people; ego repels them. **8. BUSINESS COMES FIRST, FAMILY SECOND** Why do top-performing entrepreneurs put their businesses first? I'll use an analogy to explain. When informing passengers of emergency procedures on airplanes, flight attendants always tell adult passengers traveling with a child to put on their oxygen mask first before they put one on a child. It's counterintuitive, but it makes sense when you think about it. Children depend on adult passengers to protect them because they cannot put on their own mask. If you do not follow this procedure, you could lose consciousness before giving a child a chance to live. This simple step saves lives. Similarly, business is a life-or-death situation. If you don't take care of your business first, everyone could eventually "die." As one of the saying , quoting a Bible passage, " if you don't work, you don't eat". **9. DO WHAT'S MOST IMPORTANT FIRST** Doing the tasks that are most important in business is counterintuitive. Normally, these crucial tasks demand more time, energy, and focus than we care to give. Thus, we avoid them, doing those simpler tasks that really don't have a major impact on our business. Like a novice golfer who struggles with the basics, many entrepreneurs can't seem to master the habit of doing what's most valuable for their business. This basic discipline is the key to continued success as an entrepreneur. If you are like most entrepreneurs, the lure of crossing something off your task list is too great to pass up. As you bask in the happiness of having crossed off another menial task, the more important tasks are pushed further down your to-do list and often forgotten. It's ironic how the most important items keep getting put off and therefore become, in reality, a low priority. We fool ourselves into believing that we are actually making significant progress by doing several little things. On the contrary, veteran and smart entrepreneurs give priority to those tasks that are painful but which pay off in the end. They have the ability to ignore the fleeting satisfaction that may come from finishing small tasks. As a result, they seem to have the unique ability to accomplish so much more in a smaller time span. They don't have superpowers. Instead, they have super priorities and habits that make it easier to do what's most important. A few simple tips can help you focus on the most important tasks that will take your business to new heights. 1\. *Do important tasks first thing in the morning when you get up.* This is perhaps the most useful habit that has helped me become much more efficient. If I am working on a book, writing music, doing research, or producing computer code, my mind is freshest in the morning. Also, with fewer distractions in the morning, your focus is at its best. 2\. *Change your environment*. Sometimes all you need to boost your productivity is a change in environment. If you work at home, steal away to a small park, or if you are in an office, go to a cafe. It's amazing how something so simple can improve your output. Some environments may subconsciously cause you to have more anxiety or stress than others. Identify and avoid them. Who knows? When you change your surroundings, maybe you'll receive an infusion of creativity like never before. It has happened to me. 3*. Disconnect from the real world*. Don't check your e-mail before or during work. Turn off the television and telephone. These interrupters cloud your focus. Research has shown that multitasking negatively affects your productivity. Also, the brain is most effective when it focuses on doing one thing. 4\. *Take substantive breaks.* Do something that takes your mind completely off the task at hand. For example, I like to go for a run, go get the mail, or dance. Moving around helps me rejuvenate and gets my blood flowing. Whatever you do, don't take a break by staying at your desk or by staying in the same room where you work. Definitely change your scenery, and if you can, do a physical activity for at least five minutes. If you follow the preceding tips, your business game will improve, too. You will start to accomplish a lot more, and doing what's most important will be automatic. **10. HIRE A GOOD LAWYER** If you've been in business long enough, sooner or later you will need sound legal advice from an attorney. Yes, you can use an Internet legal services firm, but you'll eventually need face-to-face counsel. Here are **three common** uses for legal services among start-ups and a few real-life examples of how an attorney helped your company. **First**, *when you are ready to start your business, an attorney will recommend a legal entity that is best for you.* Do you set up a sole proprietorship, a C corporation, an S corporation, a limited liability company, or a limited liability partnership? Which is best? Although you can find plenty of information online about different business classifications, discuss your specific situation with an attorney who can assess your needs and ultimately help you make the right decision. **Second**, *an attorney helps you protect your intellectual property (IP).* There is a good reason you cannot take The Coca-Cola Company's name and logo and use it to sell a beverage product---or any product for that matter. Not only is such behavior unscrupulous, it is also illegal. Specifically, it violates U.S. trademark law. In the same way that The Coca-Cola Company needs to protect its intellectual property, you want to protect yours. Intellectual property, defined generally as creations of the mind, includes mainly patents, copyrights, and trademarks. If you believe in the value of your products and services, protect your IP from the very start, no matter the cost. Many start-ups fail to protect their IP because of the relatively high cost. Cutting corners now costs more later. In particular, you could be forced to change your product's branding, restricted to sell in specific regions, or ordered to pay damages to someone suing you for abusing their own IP. **Third**, *an attorney reviews the legal documents your company creates and receives from others to ensure that your interests are protecte*d. These documents may include contracts, agreements, and insurance policies. By the way, many generic contracts can be found online for use, but be careful. These contracts may not provide you as much protection as you need. In fact, some of the contracts could do more harm than good. Generic contracts are sometimes a good start, but ultimately an attorney should review all contracts to be safe Attorneys often get a bad rap, I suppose from people who have lousy or no legal counsel during unfortunate circumstances. However, if you are prepared and proactive with your legal strategy, you will love your lawyer. Make sure that you protect the most important asset you have, your company, with adequate legal services from an attorney. **11. THE BUSINESS PLAN IS OVERRATED** When you get a new business idea, working on the business plan is one of the last things to do. The three crucial steps you should follow before even thinking of writing a business plan will work for you, too. **First**, examine the competitive landscape to see what companies are already there. What do they do poorly? What can you do differently to create a competitive advantage? **Second**, discuss the idea with potential customers, asking basic questions that determine how much they would value your product or service, which is perhaps the most important preliminary step to writing the business plan. **Third**, develop a sketch or basic prototype of the product. If it's a service, map out vital steps and describe customer experiences. **12.** **REQUIRE CRITICISM AND DISAGREEMENT IN YOUR COMPANY** Michael Jordan is the laughingstock of the National Basketball Association (NBA). Jordan---who dominated the NBA for years, won six championships with the Chicago Bulls, was crowned Most Valuable Player of the league five times, and still continues to be one of the most recognized sports figures in the world---is shooting air balls, as it were. As owner of the Charlotte Bobcats, he has been unable to translate his success on the court into success in the front office. During the 2011--2012 NBA season, his Bobcats had the worst winning percentage in NBA history. They reached their nadir. As their season ended in total shame, the players and owners prepared for a different game during the off-season: the blame game. While the heated debate continues about what's needed to save this franchise from complete collapse, most people already agree that the lack of Jordan's leadership is a major problem. Charles Barkley, a former NBA player turned commentator, has chided his friend in public, implying that Jordan is an aloof owner who lacks management ability and has no interest in running a winning team. Many of Jordan's closest confidants agree that the Bobcats' leadership must be changed. Furthermore, they point to a culture of acquiescence that prevents the franchise from moving forward. In other words, Jordan is surrounded by yes-men minions who are afraid to tell him what he needs to hear in order to improve the team. This defeating culture can shoot down a business as easily as a basketball franchise. Going from celebrated champion to ridiculed loser is not what Jordan had in mind when he decided to assume ownership of the Charlotte Bobcats. However, he may be out of his league, and it's largely his fault. He now understands, like so many other business leaders, that he must employ people who tell him when he is headed in the wrong direction. Otherwise, his odds of turning around his franchise are next to nil. Take a lesson from Michael Jordan's ownership woes. Surround yourself with honest people who tell you the good, the bad, and the ugly. If you don't, you may become the laughingstock of your industry, too. So much for the theme of the classic Gatorade commercial that featured Jordan: **"I wanna be like Mike!"** **13. FIRE YOUR WORST CUSTOMER** *" Successful organizations (and I include churches and political parties* *on the list) fire the 1 percent of their constituents that cause 95 percent of the pain".* ---Seth Godin, entrepreneur, author -- When most entrepreneurs start their business, they take every customer they can get. Entrepreneurs often do more damage to themselves and their team by making haphazard attempts to score every potential customer. Every veteran entrepreneur has scored for the other team, so to speak. In other words, we have all had customers who take advantage of us, and we allow them to do so. In some cases, this situation can be perfectly fine, but it is not ideal when your business loses money. Frequently, we only realize at the point of no return that the unfavorable situation in which we find ourselves could have been avoided; we could have passed on the customer altogether. Making the decision to pass on a customer is especially difficult for young or new entrepreneurs who are hungry for business and revenues. However, choosing bad customers can cause a lot of frustration, drain resources, damage your reputation, and eventually put you out of business. To help you decide what customers are worth your time, consider four important signs which indicate that you should not take a client and gracefully move on from the relationship. These signs apply especially to entrepreneurs who run a service-oriented or consulting business. 1\. **Be skeptical of a client who seems not to know what is needed or who constantly makes changes.** For example, if you have a web or graphic design company, explain clearly your creative process and the time needed for the project. Quantify all expectations. Some designers, for instance, agree to do three prototypes. Afterward, the client must choose from those three prototypes. Avoid at all costs a situation in which you are designing or creating indefinitely, only to have the client make a choice on the tenth iteration. Also, a client should be comfortable with your capabilities and what to expect from you. Find out from new clients what attracted them to your work. Show your portfolio. 2\. **Be careful if a client is not willing to pay an hourly rate or a piece rate of some kind**. Agreeing to a fixed cost for your work is not bad per se. However, it's not so great if you end up doing more work than you anticipated. Many clients encourage you to lower your cost to lock in a good rate. In a gesture of good faith, sometimes the client will pay you all the money up front. That way, you are beholden to the client until it receives a deliverable it likes. These types of arrangements can be especially stressful and strain a relationship to the point of litigation. 3. **Avoid any client who hesitates to sign a well-written agreement**. This is a true test of whether a client is worth your time and effort. An agreement or contract protects both parties and outlines expectations. Without a comprehensive agreement you have no way to protect your interests, assess the progress of the work you have done, and verify the deliverable. 4**. Take heed of any less than good feelings you have about a potential client.** I have learned to accept my business intuition, and I would say that 80 percent of the time it leads me to make better decisions about a potential client's value. Don't be afraid to fire a client. Just because some customers want you doesn't mean you need them. **14. MAKE MONEY WHILE DOING NOTHING** ***"** \$1,000,000 in the bank isn't the fantasy. The fantasy is the lifestyle of complete* *freedom it supposedly allows."* ---Timothy Ferriss, author, The 4-Hour Workweek - In the 1200s, the Third Council of the Lateran, a group of Christian bishops, declared that anyone who charged and accepted interest on a loan would be denied sacraments and Christian burial. Usury was eventually determined a heresy and outlawed, relegating the practice to Jews, whose holy law, the Torah, allowed them to loan to non-Jews. Christian leaders and their followers strongly believed that charging interest on a loan was an abomination to God. Their reasoning was based on the Holy Bible and the interpretation of relevant passages by contemporary scholars. Many reasons were given, but one is especially noteworthy: They believed that labor without the expenditure of energy was a sin. The reactions of people throughout history and in my own experience are understandable. Entrepreneurs who have figured out how to make money while doing nothing have reached the upper echelon of entrepreneurship. These overachievers have mastered the strategies that allow them to reach this level, which is where all of us want to be, and it is a major accomplishment. Having a profitable business that can run well without you is true freedom. But what is meant by "**doing nothing"?** In my opinion, the term isn't so absolute. For simplicity, I'll use the term popularized by a best-selling book of the same name. If your business can run while you enjoy The 4-Hour Workweek or less, then you fall into the doing-nothing category. By the way, the work that goes into setting up a business that runs without its founder is often overlooked. "Doing nothing" disregards the work the entrepreneur put in beforehand. For example, it took me years of trial and error and diligent work to master the concepts needed to be free. So what strategies can carry you to this high level of entrepreneurship? In a nutshell, the strategies---already covered in this book---*are removing yourself from your business, building systems that are not people-dependent, automating activities using technology, and outsourcing to the right partners*. These suggestions certainly aren't comprehensive, and you don't have to employ all of them in any order, but they provide a general idea of the type of thinking that will get you to independence Drawing profits from one business while starting the next is a great feeling. That's the life of an entrepreneur's entrepreneur. **15. OUTSOURCING MAKES SENSE** "*If you deprive yourself of outsourcing and your competitors do not, you're* *putting yourself out of business."* ---Lee Kaun Yew, former prime minister, Singapore -- In at least two episodes of Shark Tank, the popular ABC show in which entrepreneurs get a chance to pitch their business idea to and receive funding from investors, some stubborn business owners refused to manufacture their products where costs were lowest for the desired quality. Each entrepreneur had a solid business with customers and significant revenues, but neither company was profitable, largely because production costs were so high. The sharks, who immediately realized the problem, suggested that the entrepreneurs produce their goods in China, where costs would be much cheaper and thus profits much higher. However, both owners were adamant about continuing to manufacture in the United States and creating jobs at home, an admirable but naïve decision that would likely shut them down altogether. Ironically, while trying to create more jobs in the country they love, they would likely add to the high unemployment rate. The investors, who were originally excited about the businesses, ultimately lost interest because of the owners' reluctance to outsource. Since our economy has taken a turn for the worse, "outsourcing" has become a dirty word, tantamount to "traitor" or "anti-American." What true American wouldn't want to create jobs here at home, right? The United States, where outsourcing was once a popular trend and great for business, suddenly threw globalism by the wayside and adopted an ideology of isolationism. Quite simply, the benefits of outsourcing outweigh any negatives as its opponents describe them. Besides, you must do what's best for your business. Whether you're sending work to a contractor in Singapore or a vendor in South Carolina, outsourcing is good for business.. **16. MOVE ON FAST FROM A BAD BUSINESS IDEA** **"***Nothing is more dangerous than an idea when it is the only one you have.*' ---Emile Chartier, French philosopher, journalist "My company is headed for sure failure, and I think the best thing to do is to shut it down before things get worse." How many times have you heard such a candid assessment of a business by its founder? Some entrepreneur has been saying that a company is doing poorly or is destined to crash and burn. Why is that? Entrepreneurs are naturally tenacious, and expectedly so. They never give up; they stick with an idea until the death. We have all heard a miracle story or two that involves a founder who overcame great odds. Pandora, a company that Tim Westergren founded and that took ten years to turn a profit, comes to mind. It's quite an inspiring story of patience and persistence, but far from the norm. Some problem is common among novice entrepreneurs. They tend to think that the idea they have is the only good one they've got, demanding an all-or-nothing response with no retreat possible. However, serial entrepreneurs and those who have built massive amounts of wealth in business rarely make this mistake. Through their experience, they have learned how to determine whether to stay with an idea and for how long. Their previous success enables them to admit their failures freely and move on to the next opportunity. Regardless of your business experience, you want to avoid the untamed-tenacity syndrome. Unfortunately, no definitive list of signs lets you know if you should abandon your idea. One reason is that signs can be specific to an industry. Reiterating Chartier's statement at the beginning of this section, an entrepreneur with a single idea can be catastrophic. Don't let a bad idea derail your plans for greatness. If it isn't working, move on or adjust quickly. **17. A BAD ECONOMY IS A GREAT OPPORTUNITY** ***"** A pessimist sees the difficulty in every opportunity; an optimist sees the* *opportunity in every difficulty. "* ---Winston Churchill, prime minister, United Kingdom (1940--45, 1951--55) **-** Many of the biggest companies in history---and smaller ones, too---thrived during a bad economy. For example, Microsoft, founded by Bill Gates and Paul Allen, was started during a recession in 1975. During that time, unemployment was high and gas prices were through the roof due to OPEC's decision to increase prices drastically. A few other companies founded during difficult economic times are Disney, IBM, and General Motors. Similarly, many companies already in existence have made comebacks during challenging financial periods. Perhaps the most familiar and recent example is Apple, which began its resurgence in 2001 during the dotcom bust and the effects of the September 11, 2001, tragedy. Entrepreneurs do not allow a bad economy to hold them back from accomplishing their goals. Ironically, poor economic conditions often have the opposite effect; they motivate entrepreneurs more and propel them to success even faster. Entrepreneurs ignore the zeitgeist and create positive circumstances. They roll up their sleeves and get to work, anticipating the next growth period. That's where you want to be: ready to grab the bull by its horns and ride. **18. ADOPT TECHNOLOGLY EARLY** ***"** Any new technology tends to go through a 25-year adoption cycle."* ---Marc Andreessen, cofounder, Netscape; venture capitalist -- Most Entrepreneurs were exposed to new and exclusive technologies at an early point, allowing them to master these technologies and adopt them for eventual commercial use. For example, cofounder of Apple Steve Jobs infiltrated Xerox's PARC and "borrowed" the graphical user interface. Similarly, Reed Hastings, founder of Netflix, was exposed to early DVD technology that would inspire his business idea, and so on. The media glorification of so many successful tech entrepreneurs would lead you to believe that their achievements are the result of pure genius. However, we know better. These entrepreneurs were often exposed early to technologies that gave context to and inspired their genius. What does all of this mean for you? Not only are entrepreneurs early adopters, but they also explore technologies way before they are even introduced to the general public for consumption. Thus, find every opportunity to learn about what technology is the next big thing. This practice pays tremendous dividends. **19. IGNORANCE CAN BE BLISS** ***"**To succeed in life, you need two things: ignorance and confidence. "* ---Mark Twain, author, humorist -- Pete Kight has a success story that is simply amazing. The company he founded, CheckFree, was acquired in 2007 by Fiserve for approximately \$4.4 billion in cash. In many ways, his story sounds like other millionaire success stories that include dropping out of school, being ridiculed for pursuing a big idea, receiving rejection after rejection from prospective customers, having little money, and so on. But one aspect of his story is truly inspiring, and it serves as a profound lesson in entrepreneurship. Pete story was about how he became a manager of health clubs and began exploring the idea of deducting monthly health-club payments from checking accounts. He was frustrated with a payment system that required high-pressure sales and a lot of manual work to collect payments. Convinced by his vision to change the financial industry, Pete eventually hired a computer programmer and operated his new electronic bill payment business out of his grandmother's basement in Ohio. The most compelling part of Pete's story was his admission that he knew nothing about computer software. In fact, he emphasized this fact. He commented that he didn't believe he would be as successful as he was in business if he knew how to program computers. Put another way, his ignorance about computers enabled him to focus on the more important aspects of growing his business. What a profound insight, considering that many of the millionaire or billionaire stories we hear come from individuals whose success largely depended on their technical talents and knowledge of their particular industry. In other words in order to be a wealthy individual or successful entrepreneur, you should probably be an expert in or knowledgeable of the industry you strive to dominate, although there are exceptions to that rule. Look at individuals like Pete Kight, founder of CheckFree; Sara Blakely, founder of Spanx; and Kevin Plank, founder of Under Armour. Conceiving of an idea that puts you outside of your area of expertise or comfort zone does not equal failure. Perhaps your outside perspective enables you to see things in a fresh way, seizing dormant opportunities. As Pete Kight proves, your ignorance could actually be your biggest advantage and account for your ultimate success. **20. ADOPT TO CHANGE QUICKLY** ***"** Change before you have to.* " ---Jack Welch, former CEO, General Electric - The average lifespan of a Fortune 500 company is getting shorter and shorter, largely because of the ascendancy of disruptive technologies and companies. Small and nimble start-ups are often overlooked by big corporations and now have the ability with little resources to topple billion-dollar companies. \` Substantive data show the increased attrition rate of big companies. An analysis of the major stock market indexes over the past few decades reveals that companies have shorter runs. For example, only a fraction of the companies listed on the Dow Jones Industrial Average in the 1980s remain on the list. What does this mean? Many things, but a closer look at the index's rejects sheds light on why companies were removed: Many of the companies vanished for failing to adapt to changing times and evolving with customer demands. Thus, it's safe to say that companies that do not embrace change and reinvent themselves are headed out of business fast. Companies that have reached a degree of success are most likely to resist change and to stretch their pain threshold. If something is not broken, don't try to fix it, right? Wrong. There are countless examples of large companies that dominated the market for long periods, but now are struggling just to stay alive. A prime example is Sears Roebuck and Co., which dominated the retail market for decades. Now it struggles to turn a profit. Sears rested on its laurels and missed opportunities to conquer the new business frontier in the 1990s: e-commerce. To Sears's great misfortune, competitors like Amazon.com and Walmart aggressively pursued the retail market and are now winning big. A business that ignores change is a business that welcomes its own extermination. The products or services you offer today won't keep you in business tomorrow. The very nature of business includes changing to meet customers' demands in a better way. If you have no strategy to proactively deal with change in your business, save yourself from a slow death and just shut down shop now. **21. TECHNOLOGY IS AN OPPORTUNITY, NOT A THREAT** ***"** Technology has always been important, but we are standing on the precipice of an inflection point in human history. Technology is reaching what I call the knee of the curve, a point in time which its exponential growth is taking off at a nearly verticalslope.... The pace of progress is itself accelerating."* ---Ray Kurzweil, author, The Singularity Is Near **--** The most challenging thing to do in business is to stay in business. According to the U.S. Department of Commerce, "Seven out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more." Evidently, as time increases, the odds of your company surviving decrease.. As an entrepreneur, you must be well aware of technology's power to alter your business. On the one hand, ignoring technology can mean your quick demise. On the other hand, if you adopt it early, it can catapult your business to tremendous growth. One way to stay on top of technological innovation is to implement strategies that promote and reward forward thinking in your company There are countless stories of people resisting technological innovations and getting it wrong. These people claim that Facebook is spooky; Twitter is a waste of time; and Pinterest... what is that? These skeptics are the progeny of Ken Olson. Sooner or later, they, too, will be out of business. Don't let that happen to you. **22. ALWAYS FOLLOW UP** ***'**Success comes from taking the initiative and following up. '* ---Anthony Robbins, author, professionalspeaker Those who master the art of following up are more successful than those who do not, yet so many entrepreneurs overlook and underestimate this simple rule. Why? 1*. **Fear of rejection causes many entrepreneurs to fail to follow up**.* When you follow up with people, especially during a sales call or a negotiation, do it with complete confidence. If you receive a no, ask open-ended questions to learn why the situation didn't turn out the way you wanted. For example, if someone doesn't want to buy your product, ask, "What was the determining factor in your decision?" Turn a negative into a positive. ***2. Entrepreneurs lack the dedication and energy to follow up.*** Following up takes concerted effort and planning. A customer relationship management tool to assist you in following up regularly with people who can help you simplifies the task. ***3. A misunderstanding of business etiquette prevents many entrepreneurs from following up.*** The entrepreneur who commits this error is self-absorbed, following up but doing a lousy job at it. An entrepreneur might assume that the contact should always take the next step. Meanwhile, budget planning periods pass, investment priorities change, contacts leave the company, and so on. On the contrary, the entrepreneur who calls back several times, ignoring the "volley protocol," more often gets the prize. Sometimes people simply forget or want you to do all the work, but that's sometimes a small price to pay for a big payoff. In brief, don't let these three common reasons for failing to follow up cripple you. Entrepreneurs don't miss opportunities; they seize them. The surest way to do this is to follow up with everybody, especially people who can help your business excel. As for the elusive entrepreneur who sought funding from angel investors, his company has not made much progress. No surprise there. **23. NON PROFIT REALLY MEANS PROFIT** **"** *Opportunity often comes disguised*." ---Napoleon Hill, author, Think and Grow Rich For-profit companies and nonprofit organizations have more similarities than differences. For example, nonprofits have the same major challenge that corporations have: generating revenue. In fact, many CEOs and directors of nonprofit organizations lead with a profit mind-set. Furthermore, like corporations, nonprofits devote a large portion of their budgets to purchasing products and services to help generate revenue. This fact translates into opportunity for entrepreneurs to meet that demand. Consequently, nonprofits are likely a viable market for your business. There are differences, too, between the two entities. Most people focus on the fact that nonprofits use surplus revenues to achieve its goals rather than to distribute them as profit or dividends. In other words, nonprofits can have more revenues than expenses in a given fiscal year, but they must use what would be considered profit to fund more programs or to establish an endowment, and so on. Some people classify this difference as a small one, considering that you could interpret a nonprofit organization as a corporation that is reinvesting its surplus back into the business. Nevertheless, the takeaway is that nonprofits certainly have money to spend, just like corporations. Here are three reasons you should be doing business with nonprofits and perhaps even making them a priority. ***1. Nonprofits do spend money***. A large part of nonprofits' budgets are dedicated to operations, which can include things like utilities, rent, software, training, and travel. They also spend a lot on sales and marketing to find donors or to support ancillary sources of income. According to the Forbes list of the 200 largest U.S. charities in 2011, the rankings and annual expenses of five popular charities are as follows: 1\. The Mayo Clinic, \$5.1 billion 2\. YMCAs in the United States, \$4.5 billion 3\. United Way, \$3.8 billion 15. Boys and Girls Clubs, \$1.1 billion 4\. Habitat for Humanity International, \$781 million. By the way, many nonprofits are required to spend money they received through grants that have very specific guidelines. Certain grants require nonprofits to spend money before a deadline. Thus, an organization may be looking to spend money quickly to remain in compliance with the stipulations of a grant received from a private donor or a government entity. ***2. Nonprofits are willing to take risks with new vendors to save money or to generate solid revenues***. If your product helps nonprofits save money or generate significant income, you are well on your way to gaining great customers. Nonprofits are under constant pressure to watch their spending and keep expenses in check. A quality product or service that aids them in this area is like pure gold. ***3. Nonprofits are loyal and will refer you if you are excellent***. In many large cities, you'll find that nonprofits tend to be located in a certain part of the city. Maybe a designated building offers subsidized rent, or that's just where the nonprofit community has thrived. It is a great indication of how close-knit the industry is. Accordingly, executives and employees of different organizations often share resources. They are especially willing to recommend good resources to for-profit enterprises, too. If you think that serving the nonprofit sector is a waste of time, just ask Facebook. The social media giant has profited greatly from its popular Causes application. Causes serves hundreds of thousands of nonprofit organizations every day, making Facebook millions of dollars in processing fees and from customizing fundraising campaigns. Not only Facebook, but also many other companies consider the nonprofit sector to be an important business segment. Hence, from the very beginning, see how your product or service can serve nonprofits. Chances are that you will realize that nonprofit really means profit---at least for you. **24. EXPLORE NEW ADVENTURES FOR INSPIRATION** ***"** Exploration is really the essence of the human spirit."* ---Frank Borman, retired NASA astronaut Whenever you have the chance to travel, do so. International travel is great, but inspiration can also come from a day trip to another city in your own state or country. Seeing how people do things in a different environment sparks creativity. Stepping outside of your immediate box, whether it's your office or home, also helps to foster inspiration. Placing yourself in new environments and exploring new things enables you to apply those experiences to other facets of life. You become a synthesizer, a skill that, honed properly, could be the key to your next big opportunity in business. **25. FAILURE DOESN'T KILL YOU ; IT MAKES YOU STRONGER** ***'** Failure is simply the opportunity to begin again, this time more intelligently*." ---Henry Ford, founder, Ford Motor Company Failure is inevitable in entrepreneurship, but how you deal with failure determines whether you are ultimately a winner. **26. SEEK PARTNERSHIP FOR THE RIGHT REASONS** ***"**For entrepreneurs looking to build a new business or expand an existing one,* *a strong partner can be key."* ---Barry Horwitz, president, Horwitz & Co. Partnerships can significantly boost your business. The key to establishing an effective partnership is best described by start-up guru Guy Kawasaki: "The gist of good partnering is that it should accelerate cash flow, increase revenue, and reduce costs. Partnerships built on solid business principles like these have a much greater likelihood of succeeding." However, a partnership built improperly wastes your time and hurts your business. As Kawasaki suggests, some reasons not to form a partnership include covering your weaknesses and generating press coverage. These are two sure ways to start off on the wrong foot, but several entrepreneurs believe that these are perfectly tenable reasons to pursue a partnership. Partnerships should be built on strengths, not weaknesses. Each company's goal should be to enhance something the other company does well. Furthermore, partnerships established to impress or placate the press inevitably backfire. Sooner or later, the true intentions of the partnership surface, especially if it's yielded no tangible results. In short, partnerships should not be taken lightly or rushed, and they should be pursued for the right reasons. If you follow the suggested guidelines, you will be less likely to enter into a partnership that does more harm than good. **27. BE A MASTER AT LEVERAGING RESOURCES** **"***People with leverage have dominance over people with less leverage."* ---Robert T. Kiyosaki, author, Rich Dad, Poor Dad If you want to conserve your cash, find ways to leverage what you have to get what you want. For example, An Entrpreneur was able to secure a deal with a multimillionaire simply by offering to make a substantial donation to his charity. That check, while significant, was much less than the check I would have had to write in order to secure his involvement in the deal the normal way. This type of creativity pays both ways. As you begin to implement this strategy, be very careful not to overdo it. Choose only certain companies to engage in this type of arrangement. You must be strategic about every deal and understand the motives and desires of all parties involved. A common problem is that once a vendor knows that you are willing to trade or do nontraditional deals, you may be held to that standard or less. Thus, you run the risk of being able to change expectations about types of payment and terms. Also, influencers in the same circles may share the details of your deal with others who under normal circumstances would pay you. Finally, entrepreneurs are great at leveraging resources to get what they want. When one competitor shuns the idea of a trade or nontraditional deal, another competitor accepts it and uses it as an advantage. **28. AN IDEA'S EXECUTION, NOT ITS UNIQUENESS, YIELD SUCCESS** **"***Ideas are easy. It's the execution of ideas that really separates the sheep from the goats.* " ---Sue Grafton, author There are likely other entrepreneurs or companies with "your" idea, equally inspired to dominate the business world and to make millions. And when your idea becomes a solid business generating lots of revenue, you can be sure that someone is just waiting to capitalize on your idea, too. In Silicon Valley, copycat companies are called "me-too" companies. You know them. For instance, once Groupon became popular, all sorts of me-too companies sprang up. According to a recent MSNBC.com report, over six hundred companies have the same business model as Groupon or a variation on it. Despite the fact that your idea is not unique and thus for the taking, you can still boost your probability of success over your competitors. How? Focus on the execution of your idea and make it work better than anyone else on the planet. **29. FIND AN ENEMY** ***"** A man can't be too careful in the choice of his enemies. "* ---Oscar Wilde, Irish writer, poet One of the biggest rivalries in business history is between Apple and Microsoft, two behemoths that have ruled the technology sector for decades. Wherever you go in the world, whether it's to the United States or to China, you find the same scenario: Apple users hate Microsoft users and vice versa. Even the founders of these two companies shared a personal rivalry tantamount to an East Coast--West Coast rapper feud. On the one hand, cofounder of Apple Steve Jobs said this about the cofounder of Microsoft Bill Gates: *"Bill is basically unimaginative and has never invented anything, which is why I think he's more comfortable now in philanthropy than technology. He just shamelessly ripped off other people's ideas."* On the other hand, Gates had this to say about Jobs: *"\[Steve Jobs\] really never knew much about technology, but he had an amazing instinct for what works." Gates also called Jobs "fundamentally odd" and "weirdly flawed."* The evidence of these two founders' mutual disdain is quite obvious.. Like Apple and Microsoft, there are numerous other rivalries in business. Just to name a few, there's *Coca-Cola and Pepsi-Cola, McDonald's and Burger King, Ford and General Motors, Verizon and AT&T, the Boston Red Sox and the New York Yankees*, and the list continues. All of these companies fight one another for market share and world domination. It can get pretty dirty, too, with firms spying on and suing one another. Despite the negatives, these fierce rivalries have a benefit that is seldom mentioned: They fuel a competitive environment that motivates each company to excel. Entrepreneurs should be well aware of this phenomenon and how to use it to their advantage. **30. DON'T UNDERESTIMATE YOUR COMPETITION** ***"** I hate competition. "* ---Marat Safin, tennis champion, Russian politician When entrepreneurs approach me to invest in their companies, I naturally want to know *who their competitors are*. It's a basic question that any investor would ask. Some entrepreneurs answer the question thoroughly and confidently. They are not afraid to acknowledge what the competitive landscape looks like. Others equivocate, either because they don't want the fact that competitors exist to diminish the appeal of their idea or they simply haven't done their homework. Theoretically, every company in a free market has competition, even if it is pioneering a completely new market category. A customer's dollar can be spent in millions of ways, and with millions of businesses. The competition may not be obvious or simple to find, but it's there. Your job as an entrepreneur is to find and to assess the most threatening competition. A more in-depth step includes identifying and analyzing companies that could easily leverage their resources---like distribution channels, investment capital, or intellectual capital---to enter your market and to compete with you. A common mistake that mostly start-ups make when researching their competition is overlooking substitutes. *What are substitutes?* According to N. Gregory Mankiw, an economist from Harvard University, "*Substitutes are often pairs of goods that are used in place of each other, such as hot dogs and hamburgers, sweaters and sweatshirts, and movie tickets and video rentals.*" Substitutes can also be defined as "*two goods for which an increase in the price of one leads to an increase in the demand for the other.*" Substitutes can harm a company, especially in a price war. Never tell a potential investor that you have absolutely no competition. Any seasoned investor interprets such a statement as, "These guys are full of themselves and naïve enough to think that they have no competition. This is a waste of my time." Instead, introduce your competition, but describe the severity of the competitive threat. Moreover, no matter if you are in the initial stages of developing your start-up or if you are a developed company, don't underestimate the competitive threat of substitutes. Committing either one of these mistakes will likely cause you to have a Blockbuster ending. **31. ASK FOR WHAT YOU WANT** ***"** Ask and it will be given to you.* " ---Matthew 7:7 To get what you want , you have to ask for it. Yet a fundamental truth in life is that it is by asking that you receive. If you don't ask, you don't get. This applies to everything in life. If you want something, I encourage you to ask for it. You will be surprised to see what it gets you from time to time. **32. COMPETITION MEANS YOUR IDEA PROBABLY HAS LITTLE MERIT** **"** *Competition is very good.... It's what makes one strive to be better*." ---Christine Lahti, actress, film director Ninety-five percent of the time, arrogance leads entrepreneurs to believe that they have no competition in the marketplace. However, on rare occasions, arrogance isn't the true cause of this belief. Instead, arrogance is an effect of a more basic cause, and veterans of business know this. What's the cause? It's actually a thorough and accurate assessment of the current competitive environment that yields no competitors. The difference, though, is that arrogant entrepreneurs think that the nonexistence of competition means sure success while veterans know that this likely means that the idea is not viable for various reasons. Considering this, entrepreneurs must learn how to interpret the results of their research on competition when it produces no threats. Assuming that no threats were identified and that your research methodology was solid, you must take your market research to the next level, which includes discovering specific reasons that an idea has no competitors. The most common and important reason is that the idea isn't good. **The four most common reasons that a business idea is unfeasible and therefore has no competitors in the market are as follows:** *1 **. No demand exists for the product***. For example, due to low demand, the DeLorean, a futuristic sports car that debuted in 1981, was a failure. In fact, few people today know that the DeLorean was indeed a real car and not just a fictitious, flying car in the popular Back to the Future movie series, which began four years later. Apparently, when the DeLorean hit the market, there was little demand for an overpriced sports car that went from 0 to 60 mph in a slow 10.5 seconds. The magazine Road and Track gave the car a poor review, saying, "It's not a barn burner." Perhaps the Back to the Future series was on to something---if only the makers of the DeLorean could go back in time and warn themselves that their invention would be a flop because of lack of demand. ***2. The market is too small.*** Perhaps the most recent surprising example of a market being too small is the story of the Segway, the two-wheeled electric vehicle that was all the excitement before its launch in 2001. What was once the most anticipated invention to the hit the market is now all but a complete failure. The company that produces the vehicle expected sales to reach as much as one hundred thousand units within the first thirteen months, but it didn't even come close. In a stark contrast to company expectations, only about thirty thousand Segways were sold between 2001 and 2007. Segway greatly overestimated the market size for its new category of vehicle, and thus its signature product has become a novelty, not the revolutionary means of transportation it was proclaimed to be. ***3. The business is not profitable.*** How long is too long to wait for profits? Two years? Five? Ten? Well, for the hipster car-rental company Zipcar, the wait for profits will have to be longer than twelve years. The company has yet to make a profit since its founding in 2000, and it doesn't look like profits will arrive any time soon. According to The New York Times, Zipcar has accumulated losses of \$65.4 million, including a net loss of \$14.7 million in 2010. How long one should wait to reap profits is debatable, but what isn't debatable is the fact that profits are an important measure of success. After all, you are in business to make a profit. At some point you run out of possible adjustments or lose hope that the market will develop. A business that isn't profitable, let alone not profitable for twelve years, is a red flag. ***4. The barriers to entry are too great***. The pharmaceutical industry in the United States has quite a few high hurdles that make it difficult to enter into the enormous drug market. Perhaps one of the biggest and most unpredictable hurdles is the Food and Drug Administration, a government agency that approves and regulates new drugs. In 2011, Contrave, a weight-loss drug developed by Orexigen Therapeutics, was denied FDA approval---a huge blow to the company. According to The New York Times, the FDA told the drugmaker that to win approval it must first do a long-term study to demonstrate that the drug does not raise the risk of heart attacks. Hundreds of millions of dollars are at stake as the company regroups. Investors hope to get the drug approved as soon as possible to recoup their investments. To that the FDA would reply, "Fat chance!" In short, no competition probably means you have a bad business idea on your hands. There are several reasons for bad business ideas, but these four are quite common and useful to remember, especially when analyzing a barren marketplace. Therefore, each one warrants your special attention. Often what looks like a harmless path to success is really a dangerous path leading you right off a cliff. **33. PUT OUT FIRES QUICKLY** ***"** The man who has no problems is out of the game.* " ---Elbert Hubbard, writer, philosopher Most important ways to handle urgent, customer complaints. We use this simple five-step process: 1\. Respond quickly and calmly. 2\. Listen attentively after you offer a sincere apology. 3\. Tell the customer how you plan to address the problem in detail with a specific time frame. 4\. Give updates often on the progress of your resolution. 5\. When the issue is resolved, make sure the customer is satisfied. Not only will this process help you to handle similar problems in a professional way, but it will also provide a guideline by which you can evaluate the effectiveness of your response. To be great in business means to be great at putting out fires quickly. They are inevitable, and one of the biggest fires you'll have to put out is an urgent customer complaint. Making sure that you resolve customer complaints in the best way possible, so as to ensure that customers stay with your company, should not be something you learn while on the job, if you can help it. Prepare for the fire, and your chances of avoiding a customer conflagration will be much better. **34. HAVE AN EXIT STRATEGY** ***"** Begin with the end in mind. "* ---Stephen Covey, best-selling author, The Seven Habits of Highly Effective People - The biggest benefit to planning your exit from the very beginning is that it helps you to make good decisions for your business. For example, had I planned an exit, I would have been looking for opportune times to sell my magazine. I would have realized, after reaching record profits in 2006 and after the tremendous growth in popularity of digital devices and digital advertising, that it was the perfect time to cash out. Of course, there is no guarantee that I would have avoided the Great Recession, but at least I would have given myself a chance to pursue great opportunities. As one of my favorite entrepreneurs, Earvin "Magic" Johnson, said, "If you fail to plan your exit strategy, you can pretty much plan on failing." Johnson knows what he is talking about, as he has sold many businesses and continues to build his business empire. In 2010 Johnson sold his 4.5 percent equity stake in the Los Angeles Lakers, making a huge profit. He knew it was time to move on to bigger things, like purchasing the Los Angeles Dodgers recently for \$2 billion. Magic Johnson is one example of several elite entrepreneurs who seem to have impeccable timing and good fortune, but when you look closer, you find the secret to their success: an exit strategy planned from day one. Despite how awkward or how uncomfortable it may be, plan an exit strategy when you start your business. Smart entrepreneurs not only focus on creating their business but also plan how to get out of it the best way possible. Key Point: - Strategy - Tactic - Failure - Think big - Self employed - Legal documents - Lawyer - Feasibility study - Business plan - Customer - Entrepreneur - Partnership **HONESTY CLAUSE "As a student, a member of the Academic Community, I am expected to recognize and uphold standards of intellectual and academic integrity. Philippine State College of Aeronautics assumes, as a basic and minimum standard of conduct in academic matters, that students should be honest and that they submit for credit only the output/accomplishment of their own efforts."** \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Signature Over Printed Name =========================== **Prelim Module 02** **Activity** Name: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Date: \_\_\_\_\_\_\_\_\_\_\_\_\_ Course/Year: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Time Schedule: \_\_\_\_\_ ***Instruction:** Read and respond carefully to the questions. **Turn in your answers to google classwork.*** **Assessment Activity \#1**: How about you? Assuming, that you have already established your own business in Module 1. So, you are now one of the new Entreprenuers in business world. What would be your Beliefs, Characteristics, and Habits for you to be one of the elite Entreprenuers.? **Assessment Activity \#2:** I want you to close your eyes for a moment and imagine what it will be like when your business is successful. I want you to fill in the rest of this sentence: 1. **When my business is successful, I will be able to** \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ What's in that blank for you? When your business is successful, what will you be able to do? I want you to write at least 5 answers and get very clear on your vision of success for your business. **Rubrics for Scoring:** +-----------------------+-----------------------+-----------------------+ | **Category** | **Description** | **Points** | +=======================+=======================+=======================+ | Content | Addresses each | 2 pts. | | | question and all its | | | | parts thoroughly; | | | | incorporates relevant | | | | course | | | | | | | | content into | | | | responses; uses | | | | specific information | | | | from case in response | | +-----------------------+-----------------------+-----------------------+ | Understanding/Applica | Demonstrates deep | 2 pts. | | tion | understanding of | | | | course theories and | | | | ideas applied to | | | | analysis of case | | | | situations | | +-----------------------+-----------------------+-----------------------+ | Original Thinking | Demonstrates original | | | | thinking that adds | | | | insight to analysis | | | | of case; meaningful | | | | elaboration beyond | | | | text, notes, class | | | | discussion in | | | | strategy development | | +-----------------------+-----------------------+-----------------------+ | Structure | Response to each | 1 pt. | | | question is well | | | | organized and clearly | | | | written; there is | | | | evidence of planning | | | | before writing | | +-----------------------+-----------------------+-----------------------+ | Grammar and mechanics | Response is virtually | | | | free of mechanical, | | | | grammatical writing | | | | errors | | +-----------------------+-----------------------+-----------------------+ | Total | 5 pts. | | +-----------------------+-----------------------+-----------------------+