The Juicy Important Info (Notes I took from reading) In The Reluctant Entrepreneur

I’m starting to look into creating my own business. To that end, I’m going to learn exactly what steps need to be done by reading a variety of books on the subject. Underneath will be my notes for the first book I’m reading. I plan to read a lot of business books in the coming weeks.

INTRO:

• Ready Fire Aim is a previous book Michael wrote. He thinks you should read it.
• Gambling is not the approach to successful entrepreneurship, neither is going all in most of the time.

Chapter 1: What is an Entrepreneur?

• Entrepreneurs are often timid when starting out. They typically don’t go into it alone
• Many people hatch their business while keeping their day job
• Compromise he accepts is he will work 60 to 90 hours a week for several years before he can abandon his idea or fire his boss. – if you own a product or a divisin, you operate autonomously.
• It requires discipline, faith, integrity, hard working, and an understanding fashion to succeed.
• It also requires doing something you know about, on an interest you have. You need to undersatnd what kinds of products the marketplace desires, and at what price points, how to sell, without spending too much money acquiring the customer. How to upgrade customers to spend more. Basic business skills of marketing, salesmanship, and negotiation are essential.
• Avoid telling the market, instead listen to it. Start off with better or cheaper than what currently exists.
• Formula: Invest the minimum, spend a reasonable but limited amount of time acquiring knowledge, take action as soon as you can.
• Learn what you need to know to get started. Take action by testing your business idea in the marketplace, and then fine tune.
• Most academic or journalistic work is not made by people who themselves are successful in entrepreneurship empires.
• Risk tolerance may not always be a good thing.

Chapter 2: The First Question You MUST Be Able to Answer

• Only one way to find out if product is good, selling it.
• You need to decide on a business to start
• Get an internship or part time job in the business you want to be in. You will use this experience to learn everything about how business sells its products
• Allocate at least 5 hours a week to studying the industry you’re interested in. Ten hours will be better
• Your first challenge is getting positive cash flow.
• You should learn business along the way. Read the business press voraciously but efficiently. Be selective about reading, focus on articles that cater to your industry, focus on people who’ve done it before. Also, go to seminars and attend conferences. Take meaningful correspondence courses.
• Your job should be big enough to hire you as CEO. This will allow you the time and energy to focus and get results.

Chapter 3: What It Takes To Be A Successful Reluctant Entrepreneur

• You need to test your idea first before starting out.
• Here are some bad reasons to start your own business: You’re currently out of work; Desperation is a lousy motivator, You don’t want to work for someone else, you want to work fewer hours, You don’t like to deal with people, You want easy money.
• Generally, you want to take one step at a time when you’re figuring out what to do next. Do something you’re great at + a little bit.
• Be careful of the conceit of outside knowledge: I love reading therefore I’d be good at running a bookstore. When you enter a new field, you’re starting over.
• If you push through the mistakes, will you have enough resources human, capital, and emotional to continue.
• You need to add value to prompt the customer to pay you for the good.
• Once lead product is done, you spend 80% of time on first profitable sales. You must also turn new customers into repeat buyers

Chapter 4: Hatching the New Business: Overcoming Fear and Taking Action

• First 3 Action Steps: 1. Find time. 2. Find Money. 3. Get Yourself Up to Speed
• Become a five-to-niner. 9-5 and focuses on their own business at that point.
• You will need a system to keep yourself on track. Find a time management system.
• Know how much time you are willing to invest. You will break down goals into monthly and weekly objectives.
• 3 Money Strategies: Your Money, Other People’s Money, or Customer Financing. Other People’s Money often comes with a lot of obligations.
• Best way of growing wealthy is starting your own business. Get yourself a mentor who can help you. Mentoring is a brain to pick, an ear to listen, and a push in the right direction.
• There’s 3 stages: Novice – you want someone who can commmunicate basics to you, Journeyman- Learn things teachers cannot teach you. From understanding to doing, Master-in-Training- You would be ready to practice your skill at a world-class level.
• To find a mentor: Look for successful businesspeople who retired 2-5 years ago. During first two years, they’re golfing. After 5, out of touch.
• Your strategy needs the following: Time Management System, Financing Options, Mentorship, Specific Business Idea, Marketing Department, then learning how it sells product, testing through direct sales.

Chapter 5: The Magic Happens When You Hire Superstars

• You need to hire employees to help build your business.
• Fire bad employees quickly, give good employees a small window to become excellent, and treat excellence well. Excellent employee is worth the work of 3 good employees. A superstar is priceless.
• Superstars are great. Your superstar will learn secrets faster than you can explain them, figure out solutions before he tells you about problems, and will share your vision.
• Everyone you hire should have: Strong sense of urgency, strong work ethic, and respect for your customers.
• If you want an entry-level, try a trade publication, make sure your ad is better than others. If there’s room for advancement, it’ll happen.
• Attend networking events. You can network everywhere. Show interest, follow career, offer to help, drop hints. Treat superstars like partners in trainings.
• Hire people who are better than you are, leave them alone to get on with it. Look for people who will aim for the remarkable.
• Let superstars know why you think they’re special, tell them the truth. Spend time with them, teach them everything you know, give them room to grow. Give them authority, and enough rope to hang themselves.
• Give them feedback, mix positive and negative. Praise people publicly and sincerely, and criticize them privately, when it is warranted.
• Great people can learn the basic techniques. You can teach them tricks of the trade you’ve discovered the hard way. Don’t make your proteges learn these on their own.
• Make superstars jobs interesting, complex, difficult, and hard. Pay them at least 10 more than market, but don’t think they’ll be loyal. If you’re stingy, you risk losing them.
• Schedule time, at least once a year, to talk to them about the work they’re doing. Ask them questions to assess how they’re doing. See if they’re experiencing problems, and if they have ideas to make business better.
• Having six people reporting to you is ideal. You want them all to be superstars. Insist all top people have replacements for themselves.

Chapter 6: Mastering the Art of Business Relationships

• Who you associate with is extremely important in business and personal life. You want to develop relationships with the smart, hard-working, and well-connected. You want to deal with relatively trustworthy and honest people, and you want to share values with people
• Intangible rewards of being around the right people: More fun coming up with ideas, enjoying successes more, feeling better about yourself.
• When you see a story written by a powerful person, she writes a personal note telling them what you liked. Write handwritten notes expressing your feelings. Don’t fawn, but be direct. Ask “if you ever have a spare half-hour, I’d love to the chance to get some advice from you on my own business.” You will eventually be on a first name basis with a handful of very influential people.
• Trade Shows are good ways of making contacts. (I can personally vouch for this)
• 12 ways to become more charismatic:
  • Behave in a way that makes you likeable. Be polite and patient. Avoid being crude, rude, gruff, or impatient
  • People appreciate those who keep their word. Do by the deadline you promised, or sooner
  • People trust people who have their best interests at heart. Give people advice that benefits them more than you
  • People want to do business with experts. So, become an expert in your field that demonstrates your expertise
  • People feel comfortable giving money to people who are honest, ethical, and above-board
  • People like physically attractive people. Eat well, Exercise, Stay fit, be well-groomed, and pay attention to personal hygiene.
  • One way to show you’re ‘real’ is to be cordial, friendly, and interested in others.
  • Listen more than you talk- than use it to cement bonds
  • Be humble, and never discuss how much moneyh you make
  • People are impressed by those who seem busy.
  • You want to be helpful- people who make lives easier and save them time. You should be flexible and accommodating, not rigid and difficult.
• Two other ways to make a good impression: Flattery, and asking questions about things they’re expert in.
• Make a list of six people you’d like to get to know. Speak with them personally, phone them, e-mail or write them. Lead with smiling, and ask a question that allows them to talk about something they know.
• Some questions to ask of smart people: What is your biggest business challenge this year? What is the accomplishment you are most proud of? Meet any interesting people? Letting people answer these questions will often reveal secrets and unique information.
• Make eye contact, smile, make your hi hello sound friendly, extend your hand first, shake hands strongly, lean towards him. Also, know what you want out of every encounter before you begin it.
• Ideal partners have the following characteristics. Something besides money to offer that you don’t offer. Long-term oriented. Fair-minded. Loyal.
• Your network is technically unlimited. If you write one personal note or email per day, you can easily keep in touch with 300 members of a power network. It is well-worth it.

Chapter 7: How to Become a Marketing Genius

• Every business is about the selling skills. How can I bring in new customers cost-efficiently? How can I keep those customers buying?
• Optimum Selling Strategy = Advertising Media + Promotional Copy + Front-End and Back-End Offers
• Direct Marketing is the way to go. You can do work on radio, television, magazine and newspaper ads, sales letters. This all allows you to test different media, products, copy, and offers, accurately measure the results, and determine what works.
• Two extremely effective strategies: Selling info reports on other people’s websites, then giving a free subscription to their own daily e-zine, and targeting search engine users with pay-per-click offering a free special report.
• Some good books on advertising: Scientific Advertising- Claude Hopkins, Ogilvy on Advertising – David Ogilvy, Tested Advertising Methods- John Caples and Fred E. Hahn, How to Make your Advertising Make Money- John Caples, Breakthrough Advertising- Euguene M. Schwartz, Changing the Channel- MaryEllen Tribby and Michael Masterson, Influence: The Psychology of Persuasion- Robert Cialdini, Yes! 50 Scientifically Proven Ways to be Persuasive. How to become a rainmaker- Jeffrey J. Fox
• Your customers don’t really need your products, you need to make them want it. You should know the difference between wants and needs, features and benefits, benefits and deeper benefits
• How to get want: Promise certain action will result in satisfaction of desire, Create a picture of how prospect will feel when desire is satisfied, specific claims about benefits of product, and then prove claims, equate feeling your prospect desires with purchase of your product.
• Features vs Benefits: Features describe objective qualities. To sell you must convert your features into benefits. You want to focus on benefits rather than features.
• Deeper benefits- This is asking the why behind the why. For example, if you want an easier pencil sharpening, why would they care about that? Do they want to be productive, have a nicer home?
• Make your product stand out, position it as different from and better than other products of its kind. Unique Selling Proposition. If you are doing something that’s not being mentioned in other copy, you can do that. Have a trendy appeal. Straightforward concept behind them.
• You want one Big Idea, and one Big Promise. Your bi idea is the main idea to sell your product, and the big promise is what you can prove you’ll deliver.
• How to make this copy: List every feature you can think of, make a separate list of every possible benefit, identify a rising trend, which benefits tie into this trend? pick the strongest examples, come up with a big Idea, create headlines for those. For every claim, find evidence to back it up. You write at least two versions of your promotion, and test them, take the idea that works best and roll it out.
• Short term marketing results don’t necessarily determine long term profits. Hype can undermine trust. Customers value honesty, sincerity, integrity, and value in the long term.

Chapter 8: Maintaining Control of Your Growing Business

• Pushing is a big part of your job in management. Going through new ideas is good, repeatedly going through old ideas is bad.
• How to get progress: 1. Put someone in charge. 2. Have him come up with a list for why stuff isn’t done. 3. Meet with him to discuss ways to overcome obstacles. 4. Faster you can get things going, faster you can fix the problems. 5. Come up with an agreed upon list of tasks that need to be accomplished. Assign deadlines. 6. Rotate this task list through your monthly to-do file so you can keep pushing. Ask for progress reports
• You constantly need to push on every front: Your customers want to get the most and pay the least. Your employee wants to get paid highly with little work, and your competitors want to give the impression they can get more and pay less by buying from them. Without concentrated effort, you start losing. Profits require pressure. Double the pressure to produce, sell, save, and improve. Find other people to do this.
• Dilemma between paying yourself more, and there being less value in the business or taking too little and working for scraps. One fair way to assess it is what you would pay a different CEO to do the same. Reward yourself for the extras you bring to the business. Total performance-based compensation should be around 20-30% of profits. Persons on top should get about half of that. Your base compensation should be a fraction of total compensation.
• Create a culture where money is respected, outside of salaries. Do not buy new if you can repair old, be willing to switch vendors, and reprocess paper.
• Keep a close eye on cash, cash on hand, accounts payable, and balance sheet items that aren’t accounted for in profit statements.
• Set high standards for customer service and make sure they stay high. 2 ring standard for answering the phone.
• Questions to ask: Could you sell your business in less than a year for a lot of money? Would your employees be able to run this business without you? If you stopped working, would customers continue to buy. You need to move beyond personality based to systems based

Chapter 9: Leadership: Keeping your Vision Alive

• Effective Leaders Motivate Others to Do Great Work
• Competition is not as important as cooperation and sharing, generally.
• Leaders care about their customers, and get support for their ideas
• 5 part strategy: identify biggest benefit of idea, turn into a promise so people can visualize it happen, offer proof you can make good, anticipate objections and come with solutions for problems, and make assurances.
• Should delegate most things except sales and product quality. Use delegation as an opportunity to keep your employees challenged and allow them to learn new skills.
• How to delegate: Meet with person you’ve chosen to delegate and tell him why you chose him, define success metrics, set deadline for completion, explain why it’s important, schedule intermediate deadlines to give progress reports, monitors his progress but let him do work without interfering.
• Do not micromanage, and create a culture of accountability.
• Tips to successful communication: In writing and speaking, say less often says more. Listen and keep listening, Focus on other people’s concerns
• How to run an effective meeting: Decide if you need to meet at all, determine what you want from meeting, set and maintain time limit, restate meeting purpose at beginning, break meeting into two parts. In first part, problem is presented and comments are invited. Second part, questions and objections are dealt with. Turn questions around, “what do you think about it”, appoint someone to put action plan group comes up in writing with deadlines, close meeting on an upbeat note.
• How to negotiate well: Learn as much as possible about the other party, set a bottom line goal, search for value-creating differences, face worst-case scenario (so you can understand what compromises work for you), make sure to meet the person you’re negotiating with prior, set an agenda, control your temper, learn to avoid a stalemate, know how to approach a deadlock.
• It’s good to understand other people’s feelings and avoid throwing your weight around. Also important not to become buddies or dump persronal issues on people.

Chapter 10: Build Your Business Like a Go-Cart