A Small BusinessA Small BusinessA Small BusinessA Small Business

A Business - in All RespectsA Business - in All Respects

By Jack GearyBy Jack Geary

Outline of This Presentation

Snapshot of the Business & Cautions!

• About Small Business Models• Any Business• It helps to read Rich Dad Poor Dad

by Robert Kiyosaki before you review this outline.

SNAPSHOT # 1Independent Business Owner’s Model

PURPOSE of ANY BUSINESS• To earn Immediate Income + Residual &

Passive Income• Develop Wealth through Capital Gains rather

than wages/salary.

CAPITAL INVESTMENT REQUIRED• Most business require 30K to 200K ++ Operating

Cash• What businesses require less than business sign; cash

register; or 1/8 Yellow Page Ad

Snapshot # 2

WHAT YOU DO! – Day in Day Out?

• Most IBO spend hours working • IN the business rather than

working ON the business. M. Geber, E-Myth

SNAPSHOT # 3Independent Business Owner’s

Model

HOW – ANY BUSINESS!

– Invest your time in activities that result in highest probability of generating most gross revenue and

– moving products and/or services through the channel that you build.

– Find and keep customers or clients

– Read this a number of times and focus on every word!

SchizophreniaYes, it’s true. A IBO in an

‘independent operator’ type business must perceive themselves as two people: 1. As a ‘business owner’ who invests and

owns the business;– 2. As an employee or worker who spends

‘time’ in the business;

It is vital that you keep the two personalities separate. Each plays an important but difference function, e.g., beautician who rents space; child care person who establishes a daycare business; a plumber, carpenter who operates a contracting business; a truck driver who owns his/her own rig.

What Is This Concept Called “Channel”

How does a person providing a personnel service business establish or become part of the distribution channel?

• Answer: You provide access to vendors who sell yellow pages, licensing, schools where you received training, business taxes, supplies purchased. These vendors depend on you.

Caution - Danger

The Sales Dog BITES• With low $ investment + low

operating cost you may Underestimate Commitment Required.

• You must be treat business as if you invested 200K, financed by a 2nd mortgage.

ANY – BUSINESSWhere Are You?

Where Do You Want to Be?

R. Kirosaki, Cashflow Quadrant

The Truth About Every “Any” Small Independent Business

Owner

Every IBO must sell & promote. Every IBO part of a supply chain Every IBO must constantly find customers

Every IBO must constantly retain customers

Every IBO must turn customers into distributors

If you can! Not all quadrant ‘S’ & ‘B’ business models allow for ‘distributor’ formation or growth!

What IBO does not want distributors?

Recap - Any - Small Business

PURPOSE: Immediate Draw + Residual income or (Passive) + Most “S” Few “B” Quadrant

INVESTMENT: $15K-500K+; 401K; Seller Note-with monthly paymentsMonthly Royalty Fees +

Operating Cash; 2nd Mortgage; Golden Parachute

Recap - Any Small Business

EXAMPLES of BUSINESS MODELS Bakery, Mail Box, Copy, Sign, Coffee, Candy, InkJet Refill, Barber

• Sole Proprietor• Franchise (Turn Key)• Network Marketor (like a franchise:

Avon, MaryKay, Shacklee, Quixtar)

Recap: Any Small Business

OPERATING EXPENSE (Every Every Month)

Employees (massive drain on $$$, admin. Time.) ER’ becomes a Social Service Dept)

Contractual commitments (debt service, leases, copier, cash register)

Immediate sales receipts (less Visa-Check Guarantee Service) or invoices, factor – every day, week, month, year!

Recap: Any Small Business

GROSS REVENUEBased entirely on sales volume of

products & services moved through your distribution channel (Markup, Performance Bonus Not Guaranteed).

Probability of success IS poorAsset loss IS great;

Recap: Any Small Business

HOW: 70-80 hrs/wk operating + managing + supervising + administrating + solving employee problems + interruptions

Not much time invested in high revenue generation activity, e.g., finding new customers, selling, promotion, training, building the channel. (Remember the two personalities.)

LocationLocationLocation just a means of finding new customers plus

High TrafficInteriorsRadio/Print/TVDirect MailOutside Sales

Sales ClerksYellow PagesTrade OrgsChambers

Personal Effort* Finding New Accounts Customers or SELLING

+ Net Revenue

OPERATING COST TO FIND NEW CUSTOMERSAny - Business

“System” not a tool to avoid selling; rather, it is a tool to free-up time to sell, promote, & train, to be efficient & to be creative; *show the plan, build the distribution channel

+ Cost of acquiring a customer

Cost of Finding CustomersThe graphic illustrates that a typical brick

& mortar store where the owners uses advertising, location, and employers to find customers and therefore has a very high cost of acquiring and retaining customers.

Direct selling-eye ball to eye ball-where the IBO finds and keeps customers eliminates these high costs.

Finding Customer Base Keeping Where Do You Find Then???

6000 to 9000 customers per month- every month

SUPPLY CHAINMultiple Distributors & Levels in the

Traditional Market Economy for Any Business

To what supply chain are you connected?• Everyone is connected to someone’s chain at some level!

S

IBO

W

Services

Products

A distributor at any level in the chain seeks stability & profitability– no account more than x % of the business.

This is how business is done in a market economy!

End Consumer

Typical Retail Operation or sole proprietor/professional

‘S’ Quadrant

May be a business but an end consumer none the less

M D IBO

Always Looking for Distributors of Wholesalers

Factory DirectFO

Entrepreneurial Myths Fatal Assumptions for Any IBO

“You are suddenly stricken with an Entrepreneurial Seizure to start a business.” M. Gerber, E-Myth

“If you understand the technical work of a business. You think that you understand the business that does that technical work.” NOT!

Entrepreneurial Myths Fatal Assumptions for Any IBO

You want to start your own business because you want to: R. Kiyosaki, Cashflow Quadrant

“Be your own boss,” “do your own thing,” “do it yourselfer,” “fiercely independent” “the product or service is so good that it will sell itself.” “NOT”

You do not “want security, benefits” BUT! Small business is a team

sport!

How to Avoid Consequences of Fatal Assumptions

• “Work on the business rather than in it.”– establish and work a system. Michael Gerber, E-Myth

• Duplicate - do not invent the wheel again“why do it yourself when you can hire someone to do it for you, “they can do it better.” Cashflow Quadrant, Robert Kiyosaki

• Build relationships- a team; no ‘lone ranger’ mentality!

RECAP REALTY CHECKANY - BUSINESS

• Sales & Marketing + technical knowledge• A typical retail coffee shop:

– 500 to 9000 customers per month, every month;

– $ 3 to $ 10 average sale/customer ($ 1000 to $20,000 average sales per day)

– Must operate + manage + PROMOTE + SELL (the sell word)

– Always finding new accounts and customers - always

– Where do you spend time? Operation or Building customer base?

RECAP - REALTY CHECKANY BUSINESS

• YOU WANT TO BE A CAPTAIN OF INDUSTRY - EGO – News - PR about your businesses-

about sq.ft.leased -,– # employees- investment (bank, SBA

Loan) (advertising)– ‘News’ is never about traffic,

customer counts, gross revenue, profit or investment yield

– It is all about ‘ego.’

Why Did We Get In This For- in the First Place!

We Want Business Model – a System

leverage time, i.e., cash flow is not dependent on your personal time.

maximize your “earning yield,” “critical mass” (Bob Brinker, Money Talk)

“tri-net” income,” or income available for “investment” in income producing assets that do not depend on your personal time.

Free up time for family, leisure or Quality of Life

Tri-net: Net income after all taxes, operating costs, living costs, leisure, living expenses, mortgages, usual insurance & retirement responsibilities. (Jack Geary, Career Economics).

Change of Perception About ‘Selling.’

R.Blake, J.Mouton, The Grid for Sales Excellence

Change of Perception About – ‘Selling’

CRM MODELCustomer Relationship Marketing

• Businesses succeed by getting, keeping, and growing customers.

• Customers are the scarcest resource- not capital!

• Customers create current cash flow and retention means future cash flow

CRM MODELCustomer Relationship Marketing

• Treat different customers differently

• Differentiate high value customer

• Customize to meet individual needsDon Peters and Martha Rogers, Ph.D., Bob Dorf, One to One

Future

SUPPLY CHAIN STRATEGY Revisited

RE-POSITION Yourself in the Supply Chain• Authorized to Build Your Own Network of

IBO’s.

You IBO

IBO

IBO

IBO

IBO

IBO

IBO

IBO

IBOC

Bonus

Low cost investment opportunity authorizing you to share the business plan and establish IBO with full rights to compensation schedule.

Duplicate the system and your effort

CM

Move Product & Services

QMS

IBO

Peters & Rogers, PH.D.

Finding Customers Keeping

Model - System

• Word by mouth relationships • Contractual Right to compensation

system not a guarantee of earnings• Legal Right - build distributing channel

• Everyone has equal opportunity• No ground floor opportunity• No Location – No Brick/Mortar

System 2ANY Business

• Global Market• Product/Service Diversity• Low Labor Requirement – no employees

• Meet Continuing Human Need• Low Overhead• Free From Government Regulations• High Probability of Good

Management

System 3

• Family Enterprise• Friendly Try Out• Quick, Positive Rewards• Leverages Time ******• (Busy People Manage Time Well)

• Minimum Technical Knowledge• Rewards Related to Effort• Support System

ACTION• All business opportunities require

cold selling after the hype and enthusiasm. Andrew Caffey, Franchise Attorney

• Everyone sells, including your physician, rabbi, priest, minister, the Pope, GOD.

• Everything said means nothing and will be perceived as hype if you do not take the business seriously and if you do nothing.

The ‘musts’ for successful self-employment

“Self-employment makes ever more sense in an era in which you usually must be outstanding to land a good non-off-shore-able job.

Self-employment enables you to instantly go from schlepper to CEO.”

The ‘musts’ for successful IBO

However, to avoid failing you must:– Be a self-starter, not a

procrastinator.  ”interpreneur”  

– Be smart enough to quickly solve real-world problems.    

– Make a good first impression.

The ‘musts’ for successful IBO

Don’t innovate; replicate.

Most innovations fail—at great expense.

So, only wealthy individuals and corporations can afford to risk innovation.

Most people are wise to copy a successful business… “ Marty Nemko, San Francisco

Entrepreneur

If you are not afraid of the sales dog.

‘Any’ business requires maximum effort on the most difficult aspect of any business which is –

to generate positive revenue &

finding and keeping customers or selling!