School for Startups: The Breakthrough Course for Guaranteeing Small Business Success in 90 Days or Less - Softcover

Beach, Jim; Hanks, Chris; Beasley, David

Softcover

ISBN 10: 0071753931 ISBN 13: 9780071753937

Publisher: McGraw Hill, 2011

Synopsis

The Beginner's Guide to Low-Risk Entrepreneurship
You want to start your own business, but "risk" isn't your middle name. You're not alone. Many successful entrepreneurs are averse to risk--but they have learned the tricks to working around it. And now you can too, with School for Startups.
This practical guide shows you how to build a business the smart way--without risking major assets such as your house, savings account, or health insurance.
You'll learn how to increase your chance of success by:

• Funding your venture without investors
• Entering international markets
• Taking full advantage of tools on the Web
• Marketing your product or service for little or no cost
• Deploying a third party to package and ship products
• Taking control of an existing business or franchise

The authors present hundreds of the best ideas for new businesses, along with case studies proving the effectiveness of their approach. Also included with the book is a code you can use to register for School For Startups (schoolforstartups.com), where you can access exclusive webinars and supplementary material.

About this title

About the Author

Jim Beach is a serial entrepreneur, Radio Host at School for Startups Radio, International Speaker, and founder of International Entrepreneurship (internationalentrepreneurship.com).
Chris Hanks is an entrepreneur and lecturer at the University of Georgia, where he is Head of the Entrepreneurship Program at the Terry College of Business.
David Beasley worked for twenty-five years as a reporter and editor for the Atlanta Journal Constitution. His stories have appeared in many publications, including the New York Times, Bloomberg News, and GlobalAtlanta.com. His new book "Without mercy: The Stunning True Story of Race, Crime and Corruption in the Deep South" comes out in January 2014.

Excerpt. © Reprinted by permission. All rights reserved.

SCHOOL FOR STARTUPS

The Breakthrough Course for Guaranteeing Small Business Success in 90 Days or Less

By Jim Beach, Chris Hanks, David Beasley

The McGraw-Hill Companies, Inc.

Copyright © 2011 The McGraw-Hill Companies, Inc.
All rights reserved.

ISBN: 978-0-07-175393-7

Contents

Introduction: Building a Business, Building a Life
1 Anyone Can Do It
2 The Myths of Entrepreneurship
3 Where to Find Your Great Idea
4 Bootstrapping Your Business
5 The Power of International Trade
6 The Internet: An Entrepreneur's Powerful Global Tool
7 The "Wow" Factor
8 Marketing Your Product
9 Reduce Risk by Reducing Inventory
10 Hiring Employees
11 Buying a Business and Franchising
12 Knowing What Your Business Is Worth
13 When Can I Quit My Day Job?
Conclusion: Determination Is Everything
Appendix: Low-Risk Businesses You Can Start Today
Index

Excerpt

CHAPTER 1

Anyone Can Do It

A belief common among would-be entrepreneurs is that only a chosen few are cutout for this kind of work, and everyone else is destined for a life in thecorporate grind. Some people think entrepreneurs have some genetic trait thatmakes them capable of taking big risks, skirting colossal failure, and achievinggreat success while all others are addicted to the security of a monthlypaycheck and health insurance. But in helping thousands of people start theirown businesses, we have discovered over and over again that this myth is simplynot true.

We believe that anyone, yes anyone, can be a successful entrepreneur.People love to argue this with us, and they always lose. Exactly what skill isrequired for starting a business? Do you have to be smart? No. Most businessowners are far from geniuses. Do you have to have earned some prestigiousgraduate degree? No. Education in the form of a degree is irrelevant if you havethe proper tools for success in place. We challenge you to find any criteriathat a person must have in order to become a successful entrepreneur. The onlycharacteristic that comes close to being necessary is raw desire and drive, andanyone who has picked up this book has demonstrated the requisite desire.Successful businesses can be launched quickly and profitably out of yourbasement, in your garage, or even, as shown in the following example, in acollege classroom.

How Timeless Chair Was Born

The world was in turmoil in the months after the September 11, 2001, terroristattacks. It was a tense period, marked by a swooning stock market. Todayuncertainty and fear are with us again, this time due to the recession thatstarted with the bursting of the subprime-lending bubble in 2008. In the fall of2001, Jim Beach was teaching entrepreneurship to graduate students at GeorgiaState University in Atlanta. The enthusiasm of the students was palpable, butthe university, as large institutions so often do, had him teaching the coursewith a textbook of fifteen-year-old case studies. The students, already upsetabout paying $129 for an old textbook, could not relate to stories about LarryEllison, Bill Gates, or Oprah Winfrey. They realized that replicating thesecareers was about as likely as winning the lottery, maybe even less likely.Instead, they were anxious to start their own small businesses after college, sothey could avoid entering the draconian corporate world.

Jim had a different idea. Why not use the classroom as an entrepreneuriallaboratory? Why not start a company in the classroom? He was so confident ofsuccess that he let students choose the product and the country. Jim wouldprovide the startup capital. If the company did not make a profit by the end ofthe four-month semester, he would give every student an automatic A. Earlier inthe class, Jim had told the students how hard the furniture business was, howlow the profit margins were. So the students joked about potentially starting afurniture company. In what country? Pakistan, of course, which was right in thecenter of the post-9/11 conflict and therefore not exactly the optimum locationfor starting a new business venture. Jim accepted the challenge, and the clockstarted ticking.

As students researched the furniture industry in Pakistan, they discovered thatthe country also had a very large rug industry, mostly producing handmade rugs.Jim and the class came up with the idea of combining the rug industry and thefurniture trade. They would buy antique Persian rugs (sometimes called kilim)direct from the markets of Pakistan, cut them up, and use the pieces asupholstery for chairs. By the fourth week of class, they had only just gottenthe idea off the ground, so time was running short to turn a profit.

Jim contacted the U.S. Department of Commerce (DoC) office in Pakistan. The DoCruns a program called the Gold Key Service, which introduces American companiesto possible partners overseas. One of the federal government's best-keptsecrets, this service helps American businesses flourish globally. Thedepartment asked several questions about the price range and qualityexpectations, so it could get a better focus on what types of furniture makersthe class was looking for. Jim responded with the requested information, and twohours before class the next day, he received a two-page faxed response listingabout twenty companies that might be able to satisfy the requirements. One ofthe students in the class was from Pakistan, and he was able to provideadditional names based on information from his family.

During the fifth week of the class, the students gave their new enterprise aname, based in large part on the availability of the Web domain name (the nameof a website). They called their business Timeless Chair—and registered thedomain name timelesschair.com—because these were new chairs covered with oldcarpets, giving them a timeless look. (A quick point about naming your low-risk,high-speed entrepreneurship venture: You can spend months of your time andthousands of dollars hiring a marketing firm to come up with a name for yourcompany, but if the Web domain name is already taken, you'll need a differentWeb address. It's better to check first for domain name availability and shapethe name of the company around those that are available. A domain name can bepurchased for a very small amount of money, often for as little as $10 a year,from domain name registration sites such as GoDaddy.com or Register.com.)

After they decided on a name, Jim's students set out to obtain books on chairdesign so they could refine their product. Soon they chose two high-back chairs,a classic dining room chair, two overstuffed chairs, and a library reading chairto emulate. These designs were then faxed to the list of possible suppliers inPakistan. Three companies quickly responded. Within twenty-four hours, onecompany had a sample chair constructed and agreed to ship it UPS air express.Meanwhile, the students started working on creating a company website—nothingfancy, using just a $59 standard template design.

The first sample chair that arrived was a disappointment. The kilim fabric wasboring and rough, hard to sit on. The polyurethane coating looked dusty. Afterthe class complained, the manufacturer agreed to find better-quality fabric. Arepresentative visited the local market, took digital photos of forty to fiftycarpet samples, and e-mailed them back to the class for review.

Jim, seeking to improve the look of the chairs, also shipped the manufacturer acan of higher-quality polyurethane from the United States. There was simply notenough time left in the semester to locate another polyurethane supplier, so Jimdecided to ship it himself directly. The owner e-mailed back, saying he could befinished with the original order of eighteen chairs and about ten ottomanswithin two weeks. This was about the right number to fill one shippingcontainer, a practical consideration that entrepreneurs need to constantly keepon their radar screen. Too much inventory would force the class to pay for anextra container. Too little would have forced them to pay for empty space on theship. Jim also started contacting various shipping companies that said theycould have the container to the class in Charleston, South Carolina, thirty-onedays after that. In terms of winning the bet with the class, it would be veryclose. The class would need to sell chairs within a week of them arriving inAmerica. Jim might have helped them with some of the ideas, but the studentswould have to do the heavy lifting on their own.

The cost of the finished chairs was only $375 each. The ottomans cost about $175each. So the total original bill was just under $7,000 plus about $3,500 for thecontainer and shipping charges, bringing the grand total to about $11,500 to getthe chairs into Charleston. The chairs themselves, in the end, were absolutelystunning. The fabrics were smooth, with bright, vibrant colors and excitingpatterns. The manufacturer used solid mahogany even in the interior of thechairs, and the quality of the woodworking was close to perfect. They evenproduced the difficult Queen Anne chair leg that turns in two directions at onceimpeccably.

Jim advised the students to price the chairs at around $2,000 each, believingtheir uniqueness justified that price. That would also mean the class would needto sell only six chairs to make a profit and for Jim to win the bet.

From then on, it was all marketing. As soon as the website was built, completewith pictures of the chairs and ottomans from Pakistan, the class was ready toget the word out. The goal was to sell as many of the chairs as possible beforethey arrived in Atlanta. With that in mind, the class let it be known on thewebsite that each chair was an individual work of art with a limited supply, andthat the furniture would be sold on a first-come, first-serve basis. Since eachof the chairs had a unique carpet pattern on it, buyers would have to actquickly to ensure they got the pattern they wanted.

From a list broker (a company that sells lists of every conceivable specialty),Jim purchased a list of eight thousand interior decorators in the United States,and the class e-mailed them a sales pitch about the chairs, complete withphotographs. In the first twenty-four hours after the e-mail, the websitereceived about five hundred visits. Quickly, most of the ottomans and a coupleof the chairs sold—enough for Jim to win the bet. It was not the sales mix thestudents had predicted, leaving them with a huge shortage of their most popularproduct, the cheaper ottomans.

The chairs arrived in Charleston one day ahead of schedule, and after clearingcustoms, they were trucked to a warehouse in Atlanta. The shipments were sentout the same week as final exams took place, but by that point, the class hadalready conceded that Jim had won the bet and they would not be gettingautomatic As, so they were studying hard for the final exam. Ultimately, Jimkept the profits from the chairs, since he put up all the capital. The studentsgot the As. Although Timeless Chair is no longer operational as a business, thesite is still up and visible at http://www.timelesschair.com if you wantto see how beautiful the product was.

If They Can Do It, You Can, Too

This exercise proves that any person, working from home with little money, evenin the most challenging of economic times and the most hostile and turbulentpolitical climate, can create a company from scratch and turn a profit quickly.Furthermore, any person can do all that even while operating acrossinternational borders, involving different currencies, time zones, and cultures,as well as customs forms and other shipping paperwork.

There could have been few more difficult environments in which to start acompany than Jim's class experienced, and the business you start will likely befar less complex. But the point is to adopt a mind-set that it can be done for asmall amount of money in a short amount of time. More than anything, that iswhat we hope will be this book's major lesson. We have already introduced you toRandy, and you will meet many more entrepreneurs in the following chapters. Theyall have several things in common: most particularly, the initiative necessaryto go to war to create the future they want and deserve. The only thing thatdistinguishes these people from anyone else is this initiative. They are notsmarter, prettier, better educated, funnier, or more resourceful than anyoneelse in the world. But they have chosen to control their income streams, ratherthan live at the beck and call of a corporation.

When given the correct advice, anyone can break free and become his or her ownboss. This process is repeatable and reduces risk in a way that will allow youto keep your health insurance. All you have to do is break it down into a seriesof manageable goals. Running a marathon seems totally impossible, for instance,but walking a mile seems doable for most people. Starting a billion-dollarcompany seems totally impossible, but supplementing your income with an extra$25,000 of income is doable by everyone. Anyone and everyone can do this, and ifyou read this book, you will be able to do it, too.

CHAPTER 2

The Myths of Entrepreneurship

In the previous chapter, we tried to dispel the most common myth aboutentrepreneurship, the belief that entrepreneurs are born, not created. The truthis that there is only one basic requirement for entrepreneurship: the drive tosucceed. Once you have that, all the rest can be taught. We will teach you thesteps, and by taking the initiative to read this, you are taking the importantfirst step. The other ingredients are simple: hard work and persistence. Theseattributes can conquer all other obstacles. They are not genetic traits butdecisions you make. You can't decide whether to be left-handed or right-handed,but you can make a choice to work hard each day, to do whatever it takes to makeyour business thrive, and to never give up.

Starting a Business in a Down Economy

The second major myth of entrepreneurship is that new companies thrive only in agood economy. This is totally untrue. There are, in fact, many advantages tostarting a small business when times are tough, particularly if the entrepreneurtakes the low-risk approach advocated in this book. A down economy reduces yourcompetition. The inefficient companies die while the low-risk businesses surviveand even flourish. A down economy forces you to have a lean, mean operation withno debt. Excess debt is a greater threat to a business than a slow economy. Yourlow-risk startup will not use debt and will have positive cash flow early on. Ifyou need proof, just look to us—the authors of this book—who have startedprofitable businesses in a down economy.

Chris Hanks started his first business to pay for college, largely because thejobs he found didn't pay enough to cover tuition. First, he hawked T-shirts inthe dorm rooms. Then, after applying for a job delivering flowers, he realizedthat all the flower shops in town delivered to the same places—the churches,hospitals, etc. Soon enough, he had contracts with four shops to deliver theirflowers, thus eliminating the need to hire additional staff. The business costnothing to start and had zero risk. By delivering for four different shops, hereduced risk even further. After all, if he lost one shop at that point, hestill had others to work for. The state of the economy was completely irrelevantto his success. People get sick in bad economies, and flowers must be delivered.It's a recession-proof industry—one of many.

Jim Beach started his first business, which provided technology training foryoung people, because he could not get a job during the recession of the early1990s. He had made a lot of mistakes with his education, it turned out. Jim wastrained to be a Japanese business professional and to live in Japan. He evenspoke passable Japanese, but after living in Japan for two years, he found hedidn't like it. So he was stuck with minimal job opportunities in areas hedidn't want to pursue. He realized that perhaps he had to do something on hisown.

In search of a solution, Jim and a friend, Doug Murphy, sat down one day andtried to think of a good business to start. Doug was also underemployed, havingjust finished a contract working as a Spanish translator for Ted Turner'sGoodwill Games. Both of these men needed work, and they had the drive to want tostart a business. Could they wait to get started until two years later, when theeconomy was likely to have improved? No, they needed to support themselves atthat moment, and they did, as you will see later in this chapter.

Advantages of a Down Economy

Surprisingly, there are many advantages to starting a business in a downeconomy. Remember back in the late 1990s, when you could sell anything toanyone? It was easy to sell stuff then. So you didn't know if your product wasgood or if you were just benefiting from a hot economy—it didn't matter, yourproduct was most likely getting sold. But then, in 2001 and especially 2002, itbecame very difficult to sell things. It was probably about as difficult as itis now. The companies with great products and services suffered but survived.The companies with weak products and services died a painful death.

Here's the main advantage, though: If you start a company during the good times,the flaws in the company are less likely to show. You don't know if your productis great, if the service you are offering is superior, or if sales are theresult of a strong economy. In contrast, learning to sell your product during abad economy is a blessing, because you will learn to sell it well. If somethingisn't working, you will know about it immediately and have the chance for acourse correction. You become reliant on the superiority of the product, not thestrength of the economy.

Another advantage of starting a business in a down economy is that it is hard tofind financing when times are tough. This may sound counterintuitive, but easymoney has often been the kiss of death for companies. It encourages companies togrow too quickly, to accumulate excess inventory, staff, and overhead costs. Weadvocate starting a business with very little money, a pay-as-you-go approachcalled "bootstrapping," which will be discussed in more detail later in thebook.

Bootstrapping is at the core of our philosophy of low-risk entrepreneurship. Itmeans starting small with little or no overhead or debt and building slowly overtime as sales and profits increase. You let your sales and profits, not debt,pull the company up. You should start your business with $5,000 or less. Doingso forces you to create a business slowly, sustainably, without taking onexcessive debt or overhead. It may limit your upside potential early on, but itlowers your risk in the short and long term. You will not be an instantmillionaire, but you will have a sustainable, long-term business that willprovide you and your family with a comfortable living and can be sold or passedon to your children when you retire.

Also, starting a new business during bad times forces you to be more persistent.It makes you hungry; it forces you to go out there and sell harder, focus onstrategy, and hustle—which is all going to make your product and your salespitch better overall. If you have to sell your product or service in order toeat or make your mortgage payment, you are going to work so much harder, andthat will make you better at the tasks you've set out for yourself. If you learnto sell a product today, when times are bad, how easy is it going to be to sellwhen times are good?

(Continues...)

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Excerpted from SCHOOL FOR STARTUPS by Jim Beach. Copyright © 2011 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Edition details

• Publisher: McGraw Hill
• Publication date: 2011
• Language: English
• ISBN 10: 0071753931
• ISBN 13: 9780071753937
• Binding: Paperback
• Edition number: 1
• Number of pages: 208