Young Entrepreneur Journey: Entrepreneurship Archives

January 14, 2006

Why Cash Is King

As a business person, would you rather receive or give a 0% loan? The answer to the question is obvious, but many young entrepreneurs end up giving 0% loans to their customers when they provide their product/service and get paid 30, 60, and sometimes even 90 days later.

Why Payment Terms Are Important

One of the most important lessons that I've learned as an entrepreneur is that cash is king. And, when I say cash, I'm not talking about revenue or profit. I'm talking about cash in hand. A difference in the payment terms you negotiate with customers and suppliers can make the difference between whether your business is in business or out of business.

Your cash is not only important for survival, but it's also important for making expenses necessary for growth and paying your bills on time so you can have good credit. Credit is extremely important because it is one of the major factors that determines whether your accepted for loans and what interest rate your given once your accepted. In fact, over 80% of small businesses depend on credit.

How to Get Good Payment Terms

Realize that Payment Terms are Negotiable. Although there are different standards for different industries, you should always try to get paid as quickly as possible, preferably before you even deliver your product/service.
Follow Up. You'd be surprised at how many checks get lost in accounting departments because one piece of information is missing. You'd also be surprised at how many people forget to submit or process your paperwork.
Keep Good Records. When you're starting a business, you will have a million things on your mind. Proceed at your own peril, if you think you can send an invoice to a customer and then just forget about it.
Know the Potential Payment Terms.The most popular payment terms are:
1. Pre-ordering (before a product is available for sale)
2. Upon signing of the contract
3. Upon satisfactorily completing project milestones
4. Upon full delivery of the product/service
5. Upon purchase of the product/service
6. Net 30
7. Net 60
8. Net 90

Posted at 05:23 PM | Comments (0) | Top

July 11, 2004

Surviving the Three Pitfalls of Business Ownership

If you're prepared for the worst, you might just be able to turn these hazards into opportunities.

TeenStartUps.com - March 2004
by Michael Simmons

The morning sun sheds its brilliance and warmth on your sleeping face. 10:00 a.m. 10:15 a.m. 10:30 a.m. Finally, after half an hour of lying in bed, you decide to get up and start your morning routines. Your work day officially starts fifteen minutes later as you stumble to your computer, still wearing what you woke up in, coffee in hand. And so goes the life of the entrepreneur. You get to decide when, how long, who with, where and what you work on. No boss. No politics.

While this idyllic life might be the reality for some entrepreneurs, it certainly isn't guaranteed. In reality, every entrepreneur has a unique experience depending on their decisions and plain, old luck. And while good luck may be hard to control, making good decisions isn't.

To maximize your decisions, you have to understand that entrepreneurship has its shadows?unforeseen challenges you may not learn about until you're deep in the trenches of operating your own business. The good news is that by becoming aware of these shadows as early as possible, you can structure your business for success. Let me then shine some light on the major challenges entrepreneurs face so that you can confront and effectively navigate them.

"I have not failed. I've just found 10,000 ways that won't work." As Thomas Edison found, if there's one thing certain about entrepreneurship, it's that things never go as planned. No matter how much market research or planning you do, or how certain an outcome seems, you can never eliminate uncertainty. This means that if you choose to start a business, thinking that it would be a good source of funds, you could very well make less money than your friend who works a minimum wage job.

Think of your business as an experiment where the outcome is uncertain, but where you'll be sure to gain valuable experience no matter the results. Beware of betting the farm when you don't have to. In entrepreneurship, you create a hypothesis (that is, a product), and you test it by marketing it to a potential market. As you continue to experiment with different business strategies, you'll be able to create better products and a better business.
Once you're in, you can't get out. When the clock strikes 5:00 p.m., most entrepreneurs, unlike their peers with a 9-to-5 job, have trouble forgetting about what happened during the past eight hours. In other words, an entrepreneur's business becomes a core part of their life, not just a time segment in it. This is because entrepreneurs aren't paid by the amount of time they work, but by the results they create. And with the large amount of uncertainty that comes with the territory, you may not know when or even if you're going to get paid.

Since it's going to become such a huge part of your life, be sure to choose a business idea your passionate about, one that gives you a lot of enjoyment, one that you might even do for free, given the opportunity. Think about partnering with good friends. Pick an industry and business structure that fits with your desired lifestyle. If you're doing something you don't enjoy or that's terribly stressful, you may end up thinking of it as a chore, especially when times get tough.
If half the journey involves taking the first step, the other half entails persistently following your chosen venture through its ups and downs. Your parents and friends want you to succeed?there's no doubt about that. However, to them, success often doesn't mean taking the risk of starting a business. What it really means is getting good grades, going to a great school, getting a job, and then working your way up the proverbial ladder of success. In addition to the internal challenges you might face as an entrepreneur, you'll also face pressure from your family, who may think of entrepreneurship as a distraction and discourage you from attempting it. Your friends may wonder why you're not hanging out with them as much and get angry at you.

Without the support of your friends and family, it will be that much easier for you to throw in the towel if the going gets tough. To help you find the resolve to continue, be sure to set realistic expectations and be prepared and committed to continuing on your entrepreneurial journey, no matter what.

Posted at 09:48 PM | Comments (1) | TrackBack | Top

January 01, 2004

How to Create a Professional Web Site in 24 Hours

Follow these three easy steps that won't break the bank, and you'll be online before you know it.

TeenStartUps.com - December 2003
by Michael Simmons

While creating a Web site may seem like a difficult, time-intensive and expensive process, it's actually possible to have a professional site up and running in less than 24 hours for under $50 with little to no prior Web development experience.

And whether your business sells products or services, you can use a Web site to increase your revenue and reduce your start-up costs. While you're at school, your Web site can take orders, answer common customer questions and introduce potential prospects to your business, among many other possibilities. For example, Ryan Allis, a 19-year-old entrepreneur now attending the University of North Carolina, was able to successfully create and market a Web site that sold a product that helps people with arthritis. As a result of his efforts, his company was able to generate more than $1 million in sales by the time Allis was seventeen years old.

If you're interested in taking your company to the next level with a Web site, simply follow the three easy steps below:

Register a domain name. The first step in creating a Web site is choosing a Web address where your site visitors will be able to find you, such as yourbusinessname.com. '.com' is the most common ending for a for-profit business, while '.org' is the most common ending for a non-profit business. When choosing a domain name, it's most common to use your business, product or service name or a variation of it as the address. You can register your domain name for under $10 per year at GoDaddy.com.
Register for Web hosting. Web hosting allows you to store your Web site on a server that's accessible 24 hours a day by anybody who has an Internet connection. For an introductory Web site, web hosting can cost less than $10 per month. For a list of Web hosting companies, visit WebHostList.com.
Design the site. You have three options for how to design your site: Do it yourself, hire someone or purchase a template. Designing the site yourself will take the longest amount of time, but it'll be the cheapest and give you a valuable skill you can use in the future. To learn more about creating your own site, visit WebMonkey.com.

Hiring someone else to create the site for you may cost the most money, but it will lead to a higher quality product in a shorter amount of time. Through sites like elance.com, you can hire professional Web designers from other parts of the world such as Asia, who charge as little as $10 per hour.

Using professional Web site templates allows you to get online in the shortest amount of time, but it may lead to a product that doesn't perfectly match the image of your company. Through companies such as Pimil.com, you can purchase Web site templates for as little as $36.

Once you've successfully completed these three steps and created your site, you have to keep in mind that you've only just begun and that your business won't immediately bring in millions of dollars. To have a business that effectively uses a web site, it's important to constantly improve upon it to meet the needs of your current and potential customers. In addition, it's crucial to promote the Web address on your marketing materials and through marketing campaigns so other people can find it. Good luck!

Posted at 06:16 PM | TrackBack | Top

November 03, 2003

Shattering the 7 Myths of Student Entrepreneurship

Why Starting a Business Now May Be the Best Way to Achieve Your Dreams

Young Money Magazine - October/November 2003
by Michael Simmons

According to a 1997 Gallup study, 7 out of 10 high school students say they want to start their own business. And why not? Starting and running your own business while still in school is a great opportunity to grow, learn, network, and accumulate wealth. However, only a tiny proportion of students actually start a business.

Because of a lack of direct experience with entrepreneurship, students develop unfounded beliefs about it that can stop them from starting a company. In this article, I will address these ?The 7 Myths of Student Entrepreneurship?:

I don?t have enough money Many of America?s largest corporations started on a shoestring budget out of somebody?s garage. A successful Web development company a friend and I started in high school cost only $80 to set up. To compensate for a low budget, you have to be creative, resourceful and make realistic plans. To get in the right frame of mind, you may want to read Seth Godin's e-booklet, The Bootstrapper's Bible, available on Amazon.com.
I don?t have enough time Many of America?s largest corporations were started in people?s spare time. Perfect examples are Hewlett-Packard, Microsoft, and Dell, all of which were started on part-time schedules. All of us have 24 hours in a day. If the business is important to you, you will prioritize it over less important activities and create a business model that fits your schedule. For example, one student at California State University started a business teaching financial skills to high school students during summers. With the money he earned from starting the business, he is putting himself and his brother through school in addition to paying off all of his other expenses.
I?m not smart enoughSays who? SATs and grades have very little correlation to people?s potential to be successful entrepreneurs. In fact, 50% of millionaire entrepreneurs never graduated college and 75% of U.S. presidents were in the lower-half club in high school, according to Mathew Lesko in his book, Free Money to Change Your Life. Some examples of businesses started by individuals while still in school are Microsoft, Dell, Napster, Netscape, Fedex, Apple, Tripod, and TheGlobe.com.
I?m not creative so I can?t come up with good ideasThere are many books in the library or book store with low-cost business ideas. One specific book of ideas for student entrepreneurs is Generation Inc.: The 100 Best Businesses for Young Entrepreneurs. Or you can find young entrepreneurs at your school or in the media and ask them how they came up with their business idea. Networking with other youth entrepreneurs will also adjust your own mindset to be open to ideas for a business. Also, there area lot of business ideas already out there that work, that you could replicate or modify slightly.
I can?t because the economy is bad Many of the most successful corporations were started during recessions. During recessions talent is easier and cheaper to find, rent is lower, and there is less competition. All of this adds up to recessions being one of the most opportune times to start a business.
I don?t have enough experience Microsoft, Dell, Kinkos, and Yahoo are just a few of the many successful companies started by people with no business experience. Your experience can certainly affect the success of your company, but you have to start somewhere. If your first business fails financially, then you still will have gained the unique experience, learning, network and growth from running the business that will give you an edge over your peers. I?ve heard many people say they?d rather employ somebody with a failed business than somebody with no experience at all. Companies would rather you fail and learn on your dime than on their dime.
I can?t because I?m afraid of failing According to most statistics, the majority of businesses fail financially after the first few years. In fact, the most successful people in the long-term often have the most failures in their life. So, it is OK to fail. The key is whether you fall forward. You can fall forward in front of your other classmates with the network, experience, and personal growth you got from starting your business. According to Napoleon Hill, a bestselling author who researched the habits of extremely successful people such as Andrew Carnegie, Thomas Edison, and Henry Ford, Every failure has within it the seeds for equal or greater success. It is your decision whether you plant these seeds.

Taking Action

Now that you are more aware of unfounded beliefs that you or others may have, you are more prepared to make the decision of whether or not student entrepreneurship is right for you. Below are resources to take advantage of as you begin your journey:

Youth Venture (http://www.youthventure.org)
Students in Free Enterprise (http://www.sife.org)
Collegiate Entrepreneurs? Organization (http://www.c-e-o.org)
Service Corps of Retired Executives (http://www.score.org)
Professors, mentor networks, or entrepreneurship centers at your school

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August 28, 2003

Starting a Company on a Shoe-String Budget

A lot of people never start businesses because they believe they don't have enough money to do so. Unfortunately, these same people don't realize that many of the world's most successful companies were started on a shoe-string budget by an entrepreneur with limited resources. Below is a list of tips to help you save money when you're first starting a company:

Manage your finances in MS Excel, not Quickbooks.
Manage your contacts in MS Outlook, not ACT.
Get free legal and accounting advice from law/business students or lawyers/accountants who are willing to do pro-bono (free) work.
Look for and join organizations that support youth entrepreneurs and small business owners.
Hire unpaid interns and make their job exciting.
Partner with somebody instead of paying them.
Use credit cards.
Get free, professional advice from SCORE, Teachers, and Professors.
Get investments from family and friends.
Find organizations who incubate startup companies or companies who might have office space that might be willing to let an aspiring entrepreneur use it. Perhaps, your school will let you use their copy machines and phone lines.
Swap services with a company instead of paying them.
Learn how to do graphic design and web design yourself. If you have these two skills, the startup costs of every business you have in the future will be dramatically reduced.

Posted at 10:47 AM | Comments (1) | Top

August 18, 2003

Why Every Student Should Start a Business

9 reasons to abandon your fear of start-up and launch a business today

Entrepreneur.com - July 2002
by Michael Simmons

With the economic downturn, students in all the major business schools have been dropping out of their entrepreneurship classes and transferring back to classes where they think they have a secure future. Students and professionals who were once planning to start businesses now have decided to go back to their cushy jobs. Everything is going back to normal. Or at least that is how it looks. Below are nine reasons why any student should start a business:

You gain experience. Owning and running your own business is an incredible way to gain experience and credentials regardless of whether you decide to stay in business once you graduate. Jaime Gonzalez of Oklahoma State University received the highest job offer in his entire graduating class. Now, there are two kickers: First, he was the founder of an IT consulting company, and second, he had a 2.4 GPA. Hmmm...I wonder if starting a business helps in getting a better job when you graduate?
You have nothing to lose. I think it's safe to say that most students dip into their parents' checkbook when it comes time to pay the bills. In general, students aren't paying child support, rent, utilities and many other expenses. The worst thing that could happen if your business fails is that you get a job, have an incredible credential on your resume, and have experience that will increase your chances of success in the future. The best thing that can happen is that you'll become the next Microsoft. I don't know about you, but I think that is better than choosing between no job and jobs that you're in just for the money.
Two-thirds of millionaires are entrepreneurs, according to Thomas Stanley and William Dank, authors of The Millionaire Mind. If it's the money you want, then consider entrepreneurship. You receive not only a salary, but also a lot of money if you're lucky enough to sell your company or take it public. Michael Furdyk, a successful young entrepreneur, was able to sell his business, MyDesktop.com, for $1 million when he was 16 years old!
You develop networking skills. You've likely heard that your network increases your net worth. Consider the fact that by running a business and constantly being in a business community, you will develop excellent contacts. If you choose to get a job after you graduate, you will have a great pool of people who will be more than happy to hire you or send your resume to somebody who wants to.
You increase your value. Put simply, starting a business in college increases the value of "the brand called you" and gives you more options. For example, an entrepreneur with a large brand value can publish a book, star in a documentary movie (i.e., Startup.com), or go straight to the top of another company. I recently met one of the founders of Diversity Planet, a job site for minorities. He spent a year working very hard on the company and has since left to take a reporting job with Dateline NBC at the ripe age of 20! People don't often don't get an opportunity like that until they are much older.
Operating a profitable business in the long term is less risky than being an employee in the long term. For example, just look at the recent economic downturn. Tens of thousands of people have been laid off. I can guarantee the owners of profitable businesses are still with the business. They will be the last people to go down with a ship. Business owners can have multiple streams of incomes from different customers. If you're an employee, you only have one stream of income and therefore are bearing more risk.
You will learn more about yourself and what they don't teach or prepare you for in school. Furthermore, entrepreneurship is the combination of all the disciplines of business. It includes knowledge of marketing, accounting, management and operations. Already having knowledge of these topics before you take classes on them allows you to see more clearly how everything applies. Also, you will be able to learn early-on what subjects you like so you can make better decisions on what to major in and what industries to target.
It is yours. You make the rules, create your own hours, work from wherever you want and choose who you want to work with. You can also pick what interests you the most in the world and then start a business that is related to that topic in some way. If you like art, you can start a design business. If you like marketing, you can create or choose a product and then market it. If you like writing, you can write a book and do your own public relations and marketing. If you like the Internet, you can start a Web development business.
You'll grow. I personally have grown a lot from owning a business. I used to be terrified to speak in front of others. Now I look forward to it. Before owning a business, I had probably read a total of five books outside of school, and I only read them because my mom made me. Since starting my business, I've probably read more than 100 books. The business has also allowed me to learn more about myself. I know that I will be an entrepreneur forever in some way, shape or form!

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