We interrupt your regularly scheduled broadcast…..
I’m taking a quick break today from blogging Bootstrapped! to share a fun video and article with you. This past week, Ron and I did a presentation for the Brigham Young University Center for Entrepreneurship. In the presentation, we talked about some key principles from Bootstrapped! and shared insights from our experience building CastleWave as a test case for the book.
One of the highlights of the presentation had to be the $100 bill demonstration. After pulling out a crisp $100 bill and asking who wanted it (imagine a room of 200+ college students and you can probably picture the reaction!), I proceeded to crumple up the bill in my hands. When it was firmly wadded, I again asked who wanted the bill – and of course everyone still did. Then, I threw the bill on the ground and stomped on it repeatedly and even kicked it across the front of the room. The demand for the $100 bill did not subside (obviously!) and this was exactly my point; even though the bill was now worn and abused, it still had value, much like entrepreneurs. In fact, my argument was that entrepreneurs are more valuable when they’re experienced, when they’ve been kicked in the mud and worn down. At that point, I went on with the presentation and left the crumpled bill on the floor – one guy from the audience apparently couldn’t handle the money just sitting there, and kept darting to the front in an effort to pick it up (no, he didn’t get it). A student commented after the presentation that, “That guy must be an accountant!”
Overall, the presentation and the question and answer period that followed were a hit!
You can view the presentation at the BYU eBusiness Blog.
The BYU newspaper also has an article about the presentation in today’s newspaper – you can read that article at BYU News Net.
Enjoy! And have a great weekend!
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Today we begin Chapter 2: Juice to the Light Bulb of Bootstrapped! A No Bull Solution for Small Business Success. Have you ever wanted to start a business, but didn’t know if you could come up with a good idea? This chapter introduces seven strategies to get the juice flowing. We start with Ron’s introduction to the chapter.
One of the questions Rich is continually asked by aspiring entrepreneurs is, “How do you come up with all of your ideas?” Many of those who ask seem to have the impression that they’re not smart enough to come up with a great business concept. They tend to think that great business ideas materialize miraculously from nowhere rather than being easily accessible to “us common folk.” This chapter discusses seven different strategies that will help you generate the kind of ideas that can result in a successful startup business.
I know of an astute and successful businessman whom I have observed over the years. He owns a basketball franchise, numerous car dealerships, restaurants, entertainment complexes, and many other businesses. He wasn’t always wealthy, though; in fact, in the 1970s he was managing the auto parts department for a Toyota dealership when the first big fuel shortage caused gas prices to soar. Consumers were so desperate that siphoning and stealing gas became a common problem. Surveying the situation, this man saw a need. He discovered a small company that made locking gas caps, negotiated exclusive distribution rights with them, and became the only direct seller in the United States, locking down the entire market. He eventually bought his own Toyota dealership and established the cornerstone of the foundation for his financial empire.
Typically, you don’t think of a great idea. You find it. This requires you to open your mind and recognize what is already going on around you. While it’s true that part of success comes from being in the right place at the right time, entrepreneurship also takes a certain level of imagination and innovation, where you begin to see dollar bills everywhere you look. Be open to the possibilities that already exist. Any problem in the world can become a business opportunity if you get in the habit of asking yourself:
• How can I fix this problem?
• Do other people have this same problem?
• Would there be people willing to buy my solution if I fix this problem?
Was that gas-cap businessman a genius? No. He was simply in the right place (the auto parts department) at the right time (the 1970s gas shortage), and he looked for a way to solve a problem that was right in front of him. He did not create his business in isolation, and it was not the result of some light bulb magically going off in his head. He simply kept his eyes open and then took action. So, the question is, how can you learn to take action on the opportunities around you? How can you get juice to the “light bulbs” in your head?
Sorry to leave you hanging, but we’ll dive into my explanation of the strategies to get the business ideas flowing next time!
Today I address some things to consider before rushing headlong into entrepreneurship.
Now you know the truth. The corporate myth has been unveiled. You are ready to put in your two weeks’ notice and quit your day job. Not so fast! Let’s look at the other side for a second. Most people are not in a financial position to quit the corporate world and immediately make a go at their own business. As thrilling as starting your own venture might sound, life keeps coming at you and so do the bill collectors. As you build your own business, you may need to stick out the corporate job for a while.
During most of my corporate career, I actually had moonlighting businesses going on in the background. Was I able to devote full attention to my variety of ventures? No. Was it always effective? No. Was it a viable strategy? Yes. Some of my most valued assets to this day are my real estate rentals. While still working my day job, I’d come home at night and scour the newspapers for properties to buy. I’d take my wife on dates to see different houses, and we acquired quite a few. Those properties are still among my most stable incoming-generating assets.
There is no question: this dual lifestyle demands a delicate balancing act. How much time can you realistically spend at your job, building your business, taking care of yourself, nurturing your children, spending time with your spouse, walking the dogs, and snagging a wink or two of sleep? If you choose to keep your day job, you must be ready to purposefully carve up your day into segments–each one allocated for a different part of life. Very directly speaking, you will also have to make some very serious sacrifices.
When I was a newlywed getting my MBA, I worked a full-time job and, as always, had a few ventures on the side. To make ends meet, I drove a car that had been totaled four times. I bought my clothes at a thrift store. Our weekly food budget was $13; we lived on potatoes and love. For years of my life, it was a rare event to see a movie, rarer still to sit down and watch a television show. While I’ve grown fond of sleep in more recent years, for a long time I don’t think I could have told you what the word meant. Achieving your dream will demand hard work. It will test your mettle.
If you believe all of life’s demands will line up for you on their own, you will be buried in chaos. In order to be successful in all aspects of your life, including your business ventures, you must engage in thoughtful planning. I go into a lot more detail about how to accomplish a work/life balance in the chapter, “Climb High, Sleep Low.”
At some point, you will be able to bid a fond farewell to the shackles of living in someone else’s dream and in accordance with their ideals. For now, however, you may need to play the juggling game. Recognize your goals, know your limitations, and move forward. This, more than anything else, will test your devotion to entrepreneurship.
Porter’s Points – Your Day Job
• You need an effective time-management strategy–now!
• It doesn’t matter if you use a planner, a PDA, or a desktop calendar to help you manage your time. Just use something!
• You cannot, you must not, let time manage you!
• Get as granular as it takes, down to the quarter hour if needed.
• You will learn about the time requirements of each task as you move through the reality of building your business. Adjust as you go.
That completes Chapter 1: Grit! of Bootstrapped! A No Bull Solution for Small Business Success. We’ll dive into Chapter 2: Juice to the Light Bulb next time!
The percentage of those of us who feel secure in our corporate jobs has probably decreased over the past few months. Still, though, most people believe that a corporate job provides more stability than they could find working for themselves. I uncover that myth below.
When I first started at Novell, I belonged to a team headed by Dave Owens, the vice-president for Novell Labs. I had just completed my MBA and wanted more than anything to prove myself. Dave brought me into his office one afternoon and asked me one question: “Who do you work for, Rich?” I thought for a second and then answered, “You?” He looked at me and responded, “Wrong answer. I want you to go out and talk to Julia. Get on my calendar for next week.” I was dismissed without further comment.
The next week, I was sitting in the same chair. “Who do you work for, Rich?” This time I tried something different. “Novell.” Again, “Wrong answer.” I was instructed to make another appointment.
A week later, I was ready. “Who do you work for, Rich?” “I work for myself.” Then Dave explained. How I behaved and the work I did would have an impact on my entire life, and although I was employed by Novell, I worked for myself. Anything I did was exclusively mine to own: it would help or hurt only me. This conversation caused me to see things in a different light, especially in regard to loyalty and stability.
Corporations are bulging with people who truly believe that the company they work for provides them with far more stability than they could ever create in their own business. It is a lie! Plain and simple, it’s a façade created deliberately by companies to shackle talented, would-be entrepreneurs to their cubicle workspace. I concede there is a time and a place to allow the bonds of these corporate handcuffs, but don’t lose sight of the fact that the corporation will never represent your personal interests.
One of the strongest sentiments I try to teach my team members is the following: loyalty belongs to family, friends, and trust relationships. Never to a company. I have sat in the executive board rooms. I have not only heard the discussions, I have participated in them. Corporations are created for one purpose and one purpose only, to maximize profits for the shareholders. In all those meetings and executive discussions, I never once heard a discussion about loyalty to or creating stability for employees. This was one of the factors that motivated me to create my own businesses.
Think about it. Do you believe a large corporation is looking out for your stability? If you answer honestly, the answer has to be, “Of course not.” I’m not saying that you shouldn’t seek to have loyal and trusting relationships with the people you work with and for. You can, and should! But put trust where it belongs—with people, not with a company.
You will have more control over your future if you are the one pushing and pulling the financial levers. So why the apparent comfort level of working for a company? Blind bliss. It’s easier not to know. When you are the one at the controls, you get up close and personal with the finances, the near misses, and the visible realities. Corporations are extremely effective at creating a picture of relaxing perfection—that is, until quarterly projections are missed.
Still not convinced? Consider the following statistics.
According to the United States Department of Labor’s Mass Layoff Statistics from 1997 through June 2007, nearly 175,000 businesses with more than 50 employees each conducted mass layoffs. Those layoffs resulted in nearly nineteen million individuals seeking unemployment insurance. I’m willing to bet that those numbers represent something less than one hundred percent of the total number.
So, how secure is “your” corporate job, and where does your loyalty lie?
Porter’s Points – The Corporate Myth
• You work for you!
• Understand the data: you can create more stability for yourself than you’ll ever get working for someone else.
• Be loyal to yourself, your family, and your trust relationships.
So does this mean it’s time to quit your day job and start a business tomorrow?! Not so fast. We’ll find out why next time.
Even when you’ve faced your defining moments and learned some tough lessons, hard times will still come. In today’s section, I describe the terror that you’ll inevitably face as an entrepreneur.
I have never lacked fire in the belly, but I have not always had nerves of steel. This has been a trait I have had to develop. It took years to do so, and the corporate world was a great training ground for me. But when it is your money and your venture on the line, the stakes go up, causing you to lose more sleep. There is no motivator like sheer terror. This has been one of the most difficult aspects of entrepreneurship that I have had to learn to deal with.
I love to recount the story of Wilson Harrell and the way he described his battle with fear.
As a fighter pilot during World War II… I was shot down behind enemy lines. There, badly burned, I was picked up by members of the French Underground, who devised a unique and cynical way to hide me from the Germans: They buried me in a cornfield with a hose stuck in my mouth so I could breath. The first time they buried me, I lay there for four hours – time enough to consider all the bleak possibilities. I figured the Germans would 1) stick a bayonet through the dirt and into me; 2) riddle the hole with bullets; 3) accidentally kick the hose; or worst of all, 4) turn on the faucet. For 11 days in succession, I was buried. For 11 days I lived with a new unwanted friend – stark raving fear. (“Entrepreneurial Terror,” Inc. Magazine, February 1987)
Harrell went on to state that the only thing that matched the intensity of the fear was the exhilaration he experienced as he was unburied each morning.
And so it is with entrepreneurship. When everything is going as planned, you will feel higher than you ever have before. But if it starts to bury you, you’ll lie awake at night, just waiting for the bayonet to come through the dirt or for the water to seep down the hose.
Terror is like exercise. It is intimidating at first, but once you get intimate with it, you realize it is not as painful as you first imagined. It can function as a powerful motivator, keeping you alert and focused.
As an entrepreneur, you will have daily opportunities to confront and conquer your fears. If you let it, the fear will keep you alive and moving. There will be times when the uncontrollable fear of uncertainty surges into your throat. Thoughts like, “Will the receivables get here before the payables are due?” “Will the market sustain?” and “Will I be able to generate enough cash to make payroll?” will become your “unwanted friend[s].” These questions might not sound too scary right now, but connect the answers with your bank account, your home, and your family, and you’ll understand what I mean by terror.
Whatever questions or circumstances instill fear in your heart, work through them. You can and you must conquer them to achieve the exhilaration, confidence, and rewards that await you as a successful entrepreneur. I’ll never forget the absolute joy I felt when I made the first $100 of what would grow into a multimillion dollar venture, lying in bed after snapping my Achilles. Was I terrified? Yes! But I let the fear lead me to success. You can do the same.
Porter’s Points – Terror
• You will experience terror–allow it to be a motivator.
• Visualize the exhilaration you will experience as you confront and conquer your fears.
• Accept this truth: overcoming fear will write the first chapter of your success story.
So if the challenge ahead fills you with terror, let that fear motivate you to succeed!
Once you have discovered what your entrepreneurial strengths are, evaluate if there are areas that you aren’t strong in and find ways to compensate for those weak spots. I describe a great way to do that here….
If you don’t have all the skills or qualities necessary for success, you can either develop them, hire for them, or partner with team members who have strengths where you have weaknesses. Ron and I chose to team up for that very reason.
I consider myself a better-than-average idea man, but my real strength lies in getting the motor running. I specialize in taking a business from the early stages of unbridled potential and chaotic energy and transforming it into a focused, momentous venture. I make the big idea work. I love to attend to the overall structure and the important to-do items, but once the system is going, I have no desire to go back and slog through the details.
Ron, on the other hand, is the optimizer. After the business has been defined and is off and running, he gets the wheels running smoothly. He specializes in scaling, increasing efficiency, and protecting what has been built. He’s the detail guy.
Together, we make a team. Of course, we sometimes need to overlap, and we each have enough experience to fill each other’s shoes from time to time. We both work on the front end—coming up with new ideas—and on the back end—the dry legal work required as a venture matures. It isn’t about being a one-man show; it’s about recognizing your strengths, and combining them with others to get the job done.
In order to achieve success, you must face your Vishs, your torpedoes, and your purple elephants. This is not an exercise in what is right or wrong. You are who you are. This is an effort to help you understand what you have to offer, how you work, and what drives you forward.
Porter’s Points – Know Yourself
• Practice self-evaluation, honestly and often.
• Don’t shy away from your weaknesses, or your strengths.
• Pinpoint your personalized “purple elephants” and decide not to let them terrorize you.
• You are who you are. Find ways (and people) to work with it.
As you follow these steps to discover your strengths and weaknesses as an entrepreneur, you’ll be better prepared for the tough climb ahead!
Every life has defining moments – the kind that mold your character. Beyond discussing questions for would-be entrepreneurs, I share the defining experiences that shaped my entrepreneurial spirit.
When someone comes to me stating he or she is going to start a business, here are some of the questions I ask:
• What are the major reasons you want to be an entrepreneur?
• Do you care what others say about you?
• Does the prospect of a month (or more) with no paycheck panic you?
• Do you know, within five dollars, how much money is in your checking account right now?
• When was the last time you had a new business idea?
There are thousands of questions you could ask yourself, but these are just a few that give you a taste of how you’ll react to entrepreneurship. To help you further assess your aptitudes and inclinations, Ron and I have developed the Entrepreneurial Appetite Test, or EAT, designed to help you address your fundamental character and your appetite for entrepreneurship. This test can be found at www.bootstrapbusiness.org.
If you don’t feel ready quite yet, don’t despair. I have always had the appetite for entrepreneurship, but it took me years to develop the characteristics that allowed me to overcome the fear of launching my own full-scale endeavor. Thinking back, I can identify three critical moments in my life and career that forged my entrepreneurial character.
While working for Novell, I had a brilliant manager named Vish Vishwanath. Weekly, Vish would directly discuss with me in painful detail every mistake I had made in the previous week. It was agony, and my initial reaction was to deny the claims. When straight denial didn’t work out, I moved on to justifying my own actions, blaming the bad results on someone or something else. Then the epiphany came: what Vish was saying was true! I learned to embrace my shortcomings and look my faults in the eye. When I chose to own my weaknesses and took an active role in addressing them, I became empowered.
Later in my corporate career, I became extremely frustrated with an overly political work environment. One day, in a moment of total frustration, I created a banner stating, “Do the Right Thing and Damn the Torpedoes,” and hung it prominently on my office wall. The next day, I totally ignored all politics and simply “did the right thing.” I fully expected to get fired by the end of the week. Every time I turned around, I stepped on someone’s toes and had the nerve not to care. And yet an amazing thing happened. Before long, I was promoted multiple times. This mental shift launched my executive career.
In 2003 I took the big jump from corporate executive to bootstrapper. Several weeks into the transition, I blew out my Achilles tendon. Six weeks later, during a therapy session, I blew it out again. The doctor prescribed some potent pain medication, which resulted in some rather interesting hallucinations, including purple elephants dancing about my room. As excruciating as the pain was, what really terrified me was the realization that I would be physically out of commission for six months. This forced me to face the reality of being on my own. I didn’t have sick leave and there was no corporate backer providing health insurance or making sure I had time to recuperate. I had made my choice, and now I had to survive. My mindset shifted from hoping for success to demanding it. At this point, I literally willed myself to triumph.
These three experiences made me face various aspects of myself and how I react to different situations. I learned to address my weaknesses, do the right thing, and stand alone. Most important, I learned to know and trust myself. I was able to clearly see my vulnerabilities and make up for them with hard work and determination, as well as through relationships with others.
Take a few minutes to reflect on the experiences that have shaped your character and the lessons you’ve learned from them. Then consider how those lessons learned can assist you in entrepreneurship.
As I post sections from my book, ‘Bootstrapped! A No Bull Solution for Small Business Success’, Ron Porter opens each chapter and introduces the principles that I will discuss. Wondering if you have the grit of an entrepreneur? Read on to find out…..
Do you have a fire in your belly and nerves of steel? Are you determined enough to take $5,000 and build it into a multimillion dollar business? Rich and I will be the first to tell you that without fire, nerves, and determination (some call this grit), you won’t weather the storms that inevitably accompany entrepreneurship. It is not enough to merely ask yourself tough questions; you must be willing to answer them honestly and act accordingly. Here are a few to start with.
How’s your appetite for entrepreneurship? In this chapter, Rich explains that entrepreneurship isn’t about having all the talents and skills yourself; it’s about how bad you want it. You simply need to assess the attitudes and aptitudes you have, and then either develop the ones you’re missing or partner with people who have them. This, in large part, is how Rich’s and my partnership came to be. We offer distinct but complementary skill sets and talents, but we are the same in one respect: we are hungry for success and we expect to see it.
Does the thought of bootstrapping a business strike fear into your heart and mind? If so, good! Fear can be an incredible motivator. A little terror never hurt an entrepreneur; you simply need to learn to turn terror into triumph.
What about your day job; should you stay or should you go? A lot of people are tethered to the corporate claim that life in the world of big business is more stable than their own venture. When the time comes, are you prepared to cut the lifeline?
How will you survive? The grim fact is 50 percent of new businesses don’t make it. And if yours goes down, it can take your personal life with it. It’s all about timing. Liberation from the corporate myth is exciting, but you don’t want to jump out of the airplane without your parachute on. In the early stages of bootstrapping a business, you might want to keep that day job around for a while. Managing all the demands on your time will take planning, but you can do it.
In our next section, I’ll will walk through some questions to ask as you come to know yourself and your entrepreneurial appetite. Until then!
