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Entrepreneuring Your Personal Finances

personal_financeBigg success is life on your own terms. You are the entrepreneur of your life. Entrepreneurs look at the world through a different lens than do large company CEOs.

For example, large companies and small companies use different financial models. Large companies generally have the ability to raise large amounts of money when they need it.

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For small companies, it’s much more difficult. So it’s more critical for small business owners to watch their cash flow. For us as individuals, our financial model is much closer to the entrepreneur’s.

The two decisions

There are two types of decisions which we must think about: investing decisions and financing decisions.

For large companies, these two types of decisions are independent. They decide what they will invest in. They determine how they will finance their firm.

In an entrepreneurial firm and for us as individuals, these decisions are interdependent. We invest in the things we can finance. It could be a new business or a piece of real estate. But it could also include a new car or a new house.
 
If we have an idea for a project, we first must either have the needed financial resources already available or we have to sell someone on funding it.

If neither of those is true – if we don’t have the money or we can’t sell someone on funding it, we can’t do the project.

Now let’s look at four ways to think entrepreneurially about your personal finances:

Bootstrap
Entrepreneurs understand that they have limited resources. They recognize it, but still make the most of what they already have. You can carry that same attitude into your personal finances.

Retain earnings
This is what we call it when a business saves money. Pre-fund your projects when possible. If you know that you need financing to make an investment, why not finance it yourself? That’s financial freedom.

If cash is king, reserve borrowing capability is queen.
Protect and preserve both your credit rating and your credit capacity. Then you’ll have the ability to fund your bigg opportunity when you see it.

Create value with your projects
Simply stated, Value = Cash Flow ÷ Cost of Capital.
Entrepreneurs must understand that capital comes with a cost. It may mean giving up a stake in the company. It may mean sharing the money with partners or bankers. In all cases, it requires a reasonable return on the money invested.

As an individual, your capital comes with a cost as well. You have to share some of the money you will make in the future with your funders. So just like an entrepreneur, you need to understand if the benefit you will receive from the project makes it worth the money you’re investing.

To determine this, look at the incremental cash flow from any project you consider. If the return on your investment exceeds the cost of the capital needed to fund it, you should do the project and vice versa.

Let’s say you have an old car that’s requiring a lot of repairs. You see that you can save money if you buy a newer car and pay interest. That’s a project that’s worth doing.

Smart entrepreneurs and wealthy people look at every cash outlay as an investment. They want to make sure they’re getting enough value out of the investment to make it worthwhile.

Now that value may be somewhat fuzzy – like it makes you happier or adds to your sense of well-being. In any case, thinking entrepreneurially about your money leads to bigg success.

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Thank you so much for reading our post today. Please join us next time when we’ll talk about the long and winding road to bigg success. Until then, here’s to your bigg success!

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Get a Brand Over – Part 2

brandoverToday, we continue our discussion with John Tantillo, The Marketing Doctor. John is a behavioral research psychologist with over twenty years of marketing experience. He is the President of the Marketing Department of America and regularly appears on Fox News and Fox Business News. Last time, we discussed the difference between a makeover and a brand-over. Let’s get back to the conversation …

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marylynnJohn, let’s say you have a brand and it’s not working. You need a brand-over. How would you do that if you’re an existing business?

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johnThe first thing you have to do is reach out to your customers. This rebranding, or brand-over notion, comes from the marketing concept. It is not “build it and they will come” ala health care that’s being promoted. It’s find out what people want and give them what they want. For example, let’s say you have a car wash and you think hot wax is what everyone wants. But you’re not getting the number of people you want through your car wash. So you ask your customers, “Why aren’t you coming to my car wash?” They say, “It’s the hot wax. It interferes with my paint job.” Ah! What does that tell you? You shouldn’t be using hot wax, even though people in the business have told you that hot wax is great. Ask your customers. Stay in touch with them so you can give them what they want. How do you get somebody to like you? You tell them what they want to hear or give them what they want. That’s the secret.

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georgeThat’s how I got Mary-Lynn! Companies have kind of gotten this, John, although they don’t always deliver upon it. As individuals, isn’t it important to understand that a brand is a promise? We have to be careful about what we promise to be absolutely certain we can deliver it.

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johnAbsolutely. There’s nothing worse than promising a consumer something you don’t deliver. I’ll give you an example of this. Many years ago, in the New York area, there was a beer called Peel’s Beer. Their advertising was so clever that it generated a lot of initial sales. The problem was nobody liked the beer. They promised a great beer but they didn’t deliver a great beer. Not a good thing.

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george
Maybe they should have positioned it as the beer you drink after you’ve had a few?

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john
There you go! Are you sure not in marketing?

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marylynnJohn, you always offer a “Tantillo Takeaway” on your blog. I’d say our takeaway with you today is “know your target market.”

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john
That’s always the secret. Who is your target market?

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georgeYou recently had a great post about institutional communication versus individual. The example you gave is that John McCain now has more followers on Twitter than the White House. So the individual has power with new media that institutions don’t have.

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johnThat is correct. It’s driving the heck out of these Washington media types that the blogger, or the candidates themselves, can go directly to the voter. If we’ve learned anything today, it’s that the game has changed. You have to be on top of all the new social media. I’m 58 years old and I’m on Facebook with over 3,400 friends. I’m on Twitter and LinkedIn. I even went to my old high school web site and now I have a page there. The point is that you have to use every marketing tactic you can possibly use in today’s world. It’s funny. It’s the very reason President Obama became President Obama. He was sophisticated. Now, in the institution of the White House, maybe he feels that he has to move on or do things more traditionally.

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marylynn
He’s also more edited now than he was before.

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john
No question about it.

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marylynnLet’s talk about small business owners. We hear all the time that they don’t have the time to get out there and utilize these new media tools. They don’t even know how to get started. What would your suggestion be to them?

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johnYou have to do it. Enlist young people – high school students, college students home for break or friends of your own children. It doesn’t have to take a lot of time. To give you an example, I started Facebook about a year or two ago. I didn’t really do anything. Then I went down to my favorite place in the world – God’s waiting room – Miami Beach, Florida – at Christmas time. I’d picked up a book in the library, about how to market yourself on Facebook. It’s been an increasing positive function – how do you like that, George – in terms of Facebook friends ever since. I love it. And hey, if I can do it, anybody can do it. You have to make a little bit of time. It’s a good reason to go on a vacation where you don’t think about your business, but about yourself in terms of the business. It’s a little different. I’ve found it fun and exciting. You have to make it part of your day. It’s like doing cold call sales. Nobody likes to do it. But, at one point, when things aren’t moving, you just have to go and do it. You have to make time.

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Thanks so much for joining us today. Next time, we’ll wrap up our conversation about John. We’ll discuss social media marketing tips. Please join us! Until then, here’s to your bigg success!

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Direct link to The Bigg Success Show audio file:
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The Second Way to Create Wealth

money.jpgWhen we think talk about capital for a business, we usually think about money. One timeless wealth-building secret is to use other people’s money, commonly referred to as OPM.

The idea is to use a small amount of your own money, levered with a large amount of other people’s money.

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The most obvious example is making a small down payment for your home and then borrowing the rest. Over time, you pay off the mortgage and you own the home outright. You’ve used OPM to add a significant asset to your Balance Sheet.

Of course, with our homes we have to work to pay off the mortgage. It works even better with a business or a piece of investment real estate.

All we have to invest is the small amount needed to get started. If all goes well, our customers or tenants pay off the loan for us. Now that’s a deal!

The second form of capital

We can also use human capital to create wealth. It’s kind of the Cinderella of the capital world – it doesn’t get as much focus as money as a form of capital.

But other people’s labor, or OPL, is also a way to build wealth. Of course, by “labor”, we mean time and talent. Instead of levering money, we lever time and talent.

OPL is more important going forward

OPM and OPL are the two ways people have traditionally created wealth. OPM has received more focus because we’ve relied heavily on investments in assets and infrastructure to create wealth.

But for small business owners today, the model for building wealth in the future is likely to rely more on OPL. Thanks largely to technology, we can start businesses with less money than it used to take.

Here are three guiding principles for using OPL to build wealth:

You must consider all peoples’ interests equally.

This is the principle of equal consideration of interests. It’s all for one and one for all. As the leader, you have to consider all people in your charge equally and then do what’s best for the collective whole.

So we think going forward, the people who create the most wealth will not be focused solely on their own self-interest. You have to think about what’s best for everyone who is part of your team.

Think win / win or wait.

If you’re going to work with someone, you both must win or you should wait. A win by one is a win by none in the long-term.

As bigg goal-getters, we’re always looking for ways to add value which creates opportunities to create wealth.

Your people must buy your vision.

If you have to sell your vision, the game is over before it’s even started. You want people to see how your idea benefits them. But it has to be bigger than that. It also has to serve society in a larger way – it needs to improve people’s lives. And your people must see it.

It’s a higher form of salesmanship – of leadership – that leads to bigg success today.

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Thank you so much for reading our post today.

Next time when we’ll talk about what a popular HBO show has to do with organizational structure in the years ahead. It’s related to this post so please check back in with us.

Until then, here’s to your bigg success.

Subscribe to The Bigg Success Show in iTunes. 

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00416-061509.mp3

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Critical Keys to Business Success – Part 1

success Today on The Bigg Success Show, we were honored to have Deb Neuman as our guest. Deb is the host of the Back to Business Radio Show, talk radio for small business owners on WVOM, the Voice of Maine News Talk Network. Deb was recently named Small Business Journalist of the Year for Maine and New England by the U.S. Small Business Administration.

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Passion

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marylynnDeb, you've talked with thousands of entrepreneurs and you've found some critical keys to business success and they all start with “P”. Your first one is Passion. You have to love what you do.

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debIt’s not unlike a relationship; it’s not unlike love. You have to be passionate about the person that you commit your time and your life to. It certainly doesn’t mean that you’re going to like them every second. Similar to operating a small business, you don’t have to love every part of it. A personal example of that … I used to own an inn in Bar Harbor, Maine and I cleaned more toilets in five years of inn ownership than most people would ever want to do in a lifetime. So that wasn’t my favorite part, but I was certainly passionate about my business as a whole and I was willing to clean the toilets to make it work.

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georgeWhen you’re on the outside looking in, Deb, do you think there’s a tendency to romanticize that vision of what it means to own your business? I think a lot of people who have never done it before are disappointed that it’s not easy. It is hard, so you really do have to love it, but not romanticize it.

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Exactly. I always suggest that if you do have a romantic dream of owning an inn, for example, or operating a restaurant, that you go and work in one for a while. Really experience it; really find out what it’s going to take. Of course, it’s different when it’s yours, but you have to understand what the job entails.

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marylynnYeah, you definitely have to make sure you know what you’re getting into. That you see that toilet!

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Product

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george
Moving on to your next “P” for business success – it is Product.

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debYou have to have a product or service that people will actually pay you money for. Oftentimes, I’ve seen entrepreneurs romanticize their idea for a product or a service or an invention even. They just think it’s the greatest thing … that everyone will want this. They’re in love with it, but they really haven’t tested the market to make sure that other people will be as passionate about it as they are. And that these people will actually pay money for it because that is really a key.

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marylynn
Yes, because there are bills to pay!

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debThere are … that’s the reality! It’s worth it to take the time to do the market research to be as certain as you possibly can be that there is a market for your product or service.

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Persistence

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george
Next on your list, Deb, is Persistence.

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debThis is so important. When you start a business or when you’re trying to grow a business, things often can become challenging. They may not go the way that you want. Certain things may take longer than you hoped. You just have to persist through those challenging times. But you need to know when to cut your losses. It certainly doesn’t mean that you should just keep going and going and going if things aren’t going well. Sometimes you just have to say, “This isn’t working.”

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marylynnGeorge just worked with an entrepreneur who had to do that. She had to call it quits. But what’s interesting is that she has a great attitude. She’s not calling entrepreneurship quits, just that particular business. There was really no place else to go with it. She’s taken the lessons learned and regrouping, but then she’s going to launch another business at some point. I admire that in her.

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debEntrepreneurs are born with that genetic gift, as I call it sometimes. At other times, I call it a curse! We will come back with the next great idea and constantly be creating something. We just take those lessons, good and bad, and apply them to the next great idea.

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Planning

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george
And another one of your P’s for business success is planning.

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debPlan! Plan! Plan! You really do have to develop a business plan. If you’re just starting a new business, it’s critical to determine many things, including if a market exists for your product. But also planning has to happen every day and every week and every month. You have to plan the small things out and you also have to plan the big picture. You constantly have to be in planning mode. When you’re the boss, there’s nobody else telling you what needs to get done this week.

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georgeI think that’s one of the bigger challenges for people who just start a business. Not having that person to answer to. It could be a coach. In my former businesses, I met with one of my partners every week to make sure that he kept me on track. We try to do that with our coaches. You need that outside person to keep you focused and working on what you say you need to work on.

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Get more small business advice from Deb Neuman on her web site: debneuman.com.

Join us tomorrow when we discuss Deb’s last three critical keys to business success. Until then, here’s to your bigg success!

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00344-030509.mp3

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Marketing in Tough Times: Part 1

marketing1 Today on The Bigg Success Show, we begin a discussion with John Jantsch. John is the author of the great book, Duct Tape Marketing – The World’s Most Practical Small Business Marketing Guide. Forbes chose his Duct Tape Marketing blog as one of their favorites and Harvard features it on their marketing site. He also writes a monthly column and does a podcast for Entrepreneur magazine.

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marylynn
That’s a long intro and it’s not even everything!

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john
That’s good … we wouldn’t want to bore people right off the bat!

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marylynnJohn, I have to tell you. You’re the guy we wanted to come to because with everything going on with the economy, small businesses are struggling right now. A lot of the money that they might have had for advertising and marketing just isn’t there right now. So we want to talk with you about how to promote yourself on a shoestring budget.

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johnA lot of small business owners have done that. The headlines are that the Dow is down. Big companies are cutting back all kinds of jobs. The newspaper industry is in turmoil because of losing advertisers. But the typical small business owner is not putting out hundreds of thousands of dollars in advertising. In many cases, they have gotten to where they’ve gotten because they worked on a shoestring anyway. I wrote a column this week for a publication and talked about the natural competitive advantages of small business. I think that we can have this tendency to get in this “the sky is falling” mode and quite frankly, my experience at least is, that it’s not falling on the small business owner. The small business owner is now finding that the market momentum, sheer momentum, is perhaps not carrying them and that they have to get better at doing some of the things that maybe they should have been doing anyway. But my current soap box right now is to say, “Hey, everything is okay. Let’s just buckle in and do some things right.” So that was my long-winded intro to answer your question. Right now is the best time ever to get closer to your customer.

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george
So what are some customer-building strategies that don’t require spending a lot of money?

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johnYour customer, whether it’s a business or an individual, is feeling some of this economic pressure as well. This is a great time to huddle up and say, “What more can we be doing with you, for you? How can we get together and help each other?” Strategic partnerships have always been a great way to go for folks who are strapped for making the phone ring. Go out and find other people that have your ideal customer in mind. Find ways to co-brand some of your marketing materials, put workshops on together, or maybe just literally pass out each other’s materials. One of the greatest partnerships I ever put together was a plumbing contractor. They were going into people’s house every day. So we said to them, “Let’s find an electrical contractor, a roofing contractor, and three or four other people who treat their customers the way you like. Why don’t you all start going in and recommending each other?” You know how that happens – once you develop trust with a customer, they’ll ask you for every resource you can give them! So doing things like that – things people should be doing, good times and bad. It really does put the spotlight on them now if you haven’t been doing them.

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Thanks for reading today’s post. Next time, we’ll continue our conversation with John. He discusses ways to add value for customer loyalty. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00308-011409.mp3

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