Monday, October 09, 2006
Becoming an Entrepreneur
Before You Quit Your Job: Real-life lessons every entrepreneur should know
My rich dad said, "In midair the entrepreneur begins building a parachute and hopes it opens before hitting the ground." He also said, "If the entrepreneur hits the ground before building a parachute, it is very tough climbing back into the plane and trying again."
For those of you familiar with the Rich Dad books, you know that I have jumped out of the plane many times and failed to build the parachute. The good news is that I hit the ground and bounced.
Many of my failures and successes were small ones, so the bounce was not that painful - that is, until I started my nylon-and-Velcro wallet business. The success of that business was sky high and so was the fall. The good news is that it was the best business experience of my life. I learned much about business and about myself through the process of rebuilding.
One of the reasons I fell so hard in the nylon surfer wallet business was that I did not pay attention to the little things. My business grew so fast that it was bigger than the capabilities of the three entrepreneurs who created it. In other words, our sudden success was accelerating our failures. The real problem was we did not know we were failing. When the dam finally broke, our parachute did not open.
Plan for Success
When I was growing up, my poor dad often said, "Go to school and get good grades, so you can find a good job with good benefits." He was encouraging me to become an employee.
My rich dad often said, "Learn to build your own business and hire good people." He was encouraging me to become an entrepreneur.
One day, I asked my rich dad what the difference was between an employee and an entrepreneur. His reply was, "Employees look for a job after the business is built. An entrepreneur's work begins before there is a business."
All over the world, entrepreneurs kiss their families good-bye and head off to their own businesses, their pieces of the rock. Many of them go to work thinking that working harder and longer will solve their business problems - problems such as not enough sales, not enough free cash flow to grow the business, rising prices and expenses, changing government regulations, increasing taxes, unhappy customers and nonpaying customers.
Many entrepreneurs do not realize that many of the problems their businesses face today began yesterday, long before there was a business. The world is filled with millions of small-business entrepreneurs who keep their leaky businesses afloat with hard work, sheer willpower, duct tape and baling wire. The problem is, if they stop working, the business breaks apart and sinks.
One of the primary reasons for the high failure rate of small businesses is sheer exhaustion. It's tough to make money and to keep going when so much of your time is tied up in activities that do not make you any money or that cost you money without offsetting income. If you are thinking about starting your own business, before you quit your job, you might want to talk to an entrepreneur about how much time he or she spends on non-income-producing activities to run his or her business. Also, ask how he or she handles this challenge.
As a friend of mine once said, "I'm so busy taking care of my business I don't have time to make any money."
A friend of mine quit his high-paying job with a large bank in Honolulu and opened a tiny lunch shop in the industrial part of town. As a loan officer, he saw that the richest customers of the bank were entrepreneurs, so he quit his job and went for his dreams. Every morning, he and his mom would get up at 4 o'clock to begin preparing for the lunch crowd. The two of them worked hard, scrimping and cutting corners, in order to serve great-tasting lunches at low prices. For years, I would stop by, have lunch, and find out how they were doing. "Someday we'll expand," said my friend. "Someday we'll hire people to do the hard work for us." Someday never came. His mom passed away, the business closed, and my friend took a job as a manager of a fast-food franchise restaurant. "The pay isn't great but at least the hours are better," he told me, the last time I saw him.
In his case, his parachute did not open. He hit the ground before he built a business. My friend and his mom were happy, yet they never got ahead despite their hard work. I only relate this story to make the same point. The business began to fail before there was a business. It was poorly conceived before he quit his job.
The Job of an Entrepreneur
The most important job of the entrepreneur begins before there is a business or employees. The job of an entrepreneur is to design a business that can grow, employ many people, add value to its customers, be a responsible corporate citizen, bring prosperity to all who work on the business, be charitable and eventually no longer need the entrepreneur.
Before there is a business, a successful entrepreneur is designing this type of business in his or her mind's eye. According to my rich dad, this is the job of a true entrepreneur.
After one of my demoralizing business failures, I went to rich dad and asked, "So what did I do wrong? I thought I designed it well."
"Obviously you didn't," rich dad said with a smirk.
"How many times do I have to do this? I'm the biggest failure I know."
Rich dad said, "Losers quit when they fail. Winners fail until they succeed." Shuffling the papers at his desk for a moment, he then looked up at me and said, "The world is filled with want-to-be entrepreneurs. They sit behind desks, have important sounding titles like vice president, branch manager or supervisor, and some even take home a decent paycheck. These want-to-be entrepreneurs dream of someday starting their own business empire and maybe someday some of them will. Yet I believe most will never make the leap. Most will have some excuse, some rationalization, such as, 'When the kids are grown.' Or, 'I'll go back to school first.' Or, 'When I have enough money saved.'"
"But they never jump from the plane," I said, finishing his thoughts.
At What Level Do You Want to Play the Game?
Rich dad went on to explain that the world was filled with different types of entrepreneurs. There are entrepreneurs who are big and small, rich and poor, honest and crooked, for-profit and not-for-profit, saint and sinner, small town and international, and successes and failures.
He said, "The word entrepreneur is a big word and it means different things to different people."
Rich dad wanted us to understand that anyone could be an entrepreneur. The neighborhood babysitter is an entrepreneur. So was Henry Ford. "Your job is to decide which entrepreneur you most want to be like - the babysitter or Henry Ford?" he said. "Both are important to their customers. It's like the difference between sandlot football, high school football, college football and professional football."
With that example, I understood. When I was in college in New York, playing college football, our team had the opportunity to practice with a few players from a professional football team, the New York Jets. It was soon obvious to the college football players that while we played the same game as the pro players, we were playing it at a completely different level.
As a linebacker, my first rude awakening was trying to tackle a New York Jets running back coming through the line. I doubt he even knew I hit him. It felt like I was trying to tackle a charging rhino. That running back and I were about the same size. But after trying to tackle him, I realized the difference was not physical. It was spiritual. He had the heart, the desire and the gift of natural talent to be a great player.
Today, older and wiser, I do not have illusions that I would ever be as great an entrepreneur as Thomas Edison, Henry Ford, Steven Jobs or Walt Disney. Yet I can still learn from them and use them as mentors.
And that is rich dad's entrepreneurial lesson No. 1: "A successful business is created before there is a business."
Network Marketing Business
The network marketing and direct sales industry is recognized by many to be the fastest growing business model in the world today. It is also the most controversial. Many people still have a negative reaction, claiming that many network marketing organizations are pyramid schemes. Yet in reality, the biggest pyramid scheme in the world is the traditional business corporation, with one person at the top and all the workers below.
We are not members of any one network marketing or direct marketing business, but we do speak favorably of the industry. People who want to be entrepreneurs should consider joining one of these businesses before they quit their jobs. Why? Many of these companies provide essential sales, business-building, and leadership skills not found anywhere else. One of the most valuable benefits from associating with a reputable organization is that it teaches the mind-set as well as the courage required to become an entrepreneur. You will also become more familiar with the systems required to build a successful business. The entry fee is typically quite reasonable and the education can be priceless.
If I were starting my entrepreneurial career all over again, I would start with a network marketing or direct sales business, not for the money but for the real-world business training I could receive.
Article by Robert Kiyosaki for Success From Home Jan 2007
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