www.princexml.comPrince - Personal EditionThis document was created with Prince, a great way of getting web content onto paper.

Dedicated to all of the trailblazers,creators, doers and

innovatorsto anyone whos ever been braveenough

to try, fail, and try again. This ones for you.

CONTENTS

Cover

Title Page

Dedication

Foreword by Mark Burnett

Introduction

PART ONE: TO BE OR NOT TOBE AN ENTREPRENEUR

Catching the EntrepreneurialFeverLori GrenierChapter 1: Small Business 101

Chapter 2: Whats Your EQ(Entrepreneurial Quotient)?

Chapter 3: Your Big Idea

Shark Tale: Travis Perry,ChordBuddy (Season 3)

PART TWO: SETTING UP SHOPThe Unlikely Entrepren-eurRobert HerjavecChapter 4: Finding YourCustomers

Chapter 5: Getting Down toBusiness

Chapter 6: Making It Official

Shark Tale: Moshe Weiss,SoundBender (Season 4)

PART THREE: MONEYMATTERS

The Art of SuccessKevin OLearyChapter 7: Knowing YourNumbers

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Chapter 8: UnderstandingFinancing

Shark Tale: Jim Tselikis andSabin Lomac, Cousins Maine Lob-ster (Season 4)

PART FOUR: OPEN FORBUSINESS

The 100th RoadDaymond JohnChapter 9: Up and Running

Chapter 10: MasteringMarketing

Chapter 11: Learning to Sell

Shark Tale: Rick Hopper,ReadeREST (Season 3)

PART FIVE: TAKING IT TO THENEXT LEVEL

The Power of FailureBarbaraCorcoran

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Chapter 12: You Cant Do ItAlone: Building the RightTeam

Chapter 13: Leading theCharge

Chapter 14: The Smart Wayto Grow

Shark Tale: Lani Lazzari, SimpleSugars (Season 4)

PART SIX: A DIP IN THE TANK:BEHIND-THE-SCENES ATSHARK TANK

It Only Takes OneMark CubanChapter 15: Swimming withthe Sharks: A RoundtableQ&A

Shark Tale: Tracey Noonan andDanielle Desroches, Wicked GoodCupcakes (Season 4)

Final Words

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Tools and ResourcesMy Small Business JumpStart PlanFrom Idea to Incorpora-tion: A FlowchartTalk the Talk: Small Busi-ness Terms to KnowOnline ResourcesBooks to Read

Notes

About the Author

Copyright

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NavigationBegin ReadingTable of Contents

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FOREWORD BY MARKBURNETT

Shark Tank is an important show because itproves the entrepreneurial spirit is alive andwell. But even more than that, it gives peoplehope and inspires future entrepreneurs topursue their dream of building a business ata time when America needs them the most.

Today, Americans face unprecedentedhardships. As the job security they once re-lied on quickly disappears, people of all agesand backgrounds are reclaiming their futureby creating their own opportunities. Whilethis rebirth of small business is exhilarating,it also presents many challenges.

As banks remain wary of giving outloans, Shark Tank is stepping up and serving

this new crop of entrepreneurs by offeringaccess to six self-made, ultra-successful, mil-lionaire and billionaire business moguls whoare looking to invest their own money in theright people with the right ideas.

Each season the Sharks set a new recordamount for investmentsmost recently in-vesting over $10 million. At the same time,each season the entrepreneurs who appearon Shark Tank continue to report amazingsuccess stories: incredible growth, unbeliev-able sales, and an abundance of job creationwithin their communities.

Its hard to believe that we went fromfewer than two thousand applicants our firstseason to more than thirty thousand forSeason 4. I believe this alone demonstratesthat Shark Tank inspires not only fledglingand seasoned business owners, but also stay-at-home moms and dads with nothing morethan an idea. Ultimately, thats why I thinkthe show has been so successful: it strikes a

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chord with just about anyone who watches it,from successful entrepreneurs to children.

A recent report released by Babson Col-lege and Baruch College showed that U.S.entrepreneurship climbed in 2012 to thehighest level in a decade. This just years aftera crippling recession. I guess in some waywed like to think that Shark Tank hasplayed a small role in the resurgence of en-trepreneurism in America. At least we hopeit has.

What we do know is that this show givesreal people a platform to catapult theirdreams and ideas into successful businesses.It proves that with a little ingenuity and a lotof hard work, they can all transform theirlives and their communities. Thats a power-ful message, and one Im proud to standbehind.

Mark Burnett is an award-winning executive producerwhos famous for such hit shows as Shark Tank, The Voice,

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Survivor, and Celebrity Apprentice.Burnett has won four Emmy Awards and four Peoples

Choice Awards.

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INTRODUCTION

Sure, the walk may only be a few feet, but itfeels more like a mile. As you make your waydown the dimly lit hallway, two rows of glow-ing aquariums illuminate the path and guideyou toward a pair of large, wooden doors. Al-though you may not be able to hear the swellof the driving music that underscores yourjourney, somehow you can still feel it in yourbody. Theres no turning back now. Withouteven a moment to comprehend whats aboutto happen, the doors swing open and thereyou are, standing face-to-face with a panel ofworld-class investors on national television.You walk front and center, take a deepbreath, and begin your pitch. This is the mo-ment. This is the opportunity. This iseverything youve been working toward.

As you speak, the Sharks begin furiouslyscribbling down notes. You cant help butwonder what theyre writing, what theyrethinking. To them and the rest of the worldyoure just another eager entrepreneur pitch-ing a new idea, but to you this experiencecouldnt be more personal. Every day, everymonth, every year that youve spent tirelesslybuilding your business flashes before youreyes. The moment you first decided to start acompany, the day you officially incorporated,your first saleall of it comes rushing backin a single flash. You try to stay focused, buthow can you when each of those thrillingfirsts has paved the way to this: the oppor-tunity to land a deal with one of the Sharks.

For the lucky few who enter into theShark Tank, this is their fate. Whether pitch-ing a food truck, clothing line, or tech com-pany, each fearless entrepreneur takes thesame excruciating walk. And yet even thoughthis expedition is a solitary one, somehow

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you feel as though youre there too, watchingfrom a distance as a small but importantpiece of history is made. Will the pitch gowell? Will a deal be struck? Your guess is asgood as anyones. The only thing you cancount on is that what youre witnessing is buta tiny snippet in the life of a businessasubchapter of a much larger story that star-ted a long time ago.

The age of entrepreneurship is upon us.In the last three years, the United States hasseen the highest rate of new business cre-ation in over a decade, and many of thesefledgling companies are being started byfirst-time entrepreneurs. As technology ad-vances and creates an abundance of new andexciting opportunities, more and morepeople are mustering up the courage toabandon a career that feels painfully conven-tional and embrace one that is deeplymeaningful.

But it takes more than hunger and desire

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to achieve success, and with great effort alsocomes great challenge. The U.S. Small Busi-ness Administration reports that more thanhalf of small businesses fail within the firstfive yearsa number that will only continueto rise. And of those businesses that do sur-vive, many struggle to ever achieve signific-ant growth.

So why do entrepreneurs have such a dif-ficult time getting their ventures off theground? A shortage of capital? A lack of con-nections? Perhaps. But the modern entre-preneurs greatest barrier is rarely money orcommunity; those are symptoms of a muchlarger problem. No, the greatest hurdlestanding in the way of the first-time smallbusiness owner is a general lack of know-ledge and know-howtangible informationand experience about how to create, main-tain, and grow a company.

Theres no question that starting yourown business can be a remarkably liberating

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and fulfilling experience. Each week onShark Tank you witness firsthand how hardwork and dedication can turn an eager hope-ful into a successful entrepreneur. But justbecause you can start a business doesntmean that you should start a businessorthat youll even enjoy it. Is entrepreneurshipthe right choice for you? Does your idea havethe potential to become a business? This iswhere Shark Tank Jump Start Your Busi-ness begins.

In the first part of the book youll beasked to assess your business idea and evalu-ate your entrepreneurial skills. The goal is tohelp you identify, from the start, if you havewhat it takes to run a profitable company.From there, youll learn how to turn yourconcept into a business, including everythingfrom incorporation to basic accounting.Next, youll be guided through the launchprocess and gain access to crucial knowledgeon how to effectively market, sell, and

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promote your product or service. Finally,youll discover how to grow your businessand achieve long-term success. As an extrabonus, the final part of the book features anexclusive, up-close- and personal round tablediscussion with all six of the Sharks. But theSharks knowledge doesnt end there.

Infused in each chapter are a series ofShark Bitessmall bits of wisdom from theSharks pertaining to each topic. Youll learnwhat Barbara Corcoran thinks about hiring,why Daymond John believes brand is sovaluable, and how Mark Cuban defines theperfect pitch. Youll discover what KevinOLeary looks for in leaders, why Lori Grein-er thinks entrepreneurs should protect theirideas, and what Robert Herjavec believes isthe secret to closing a sale. Whats more,each part of the book will open with an essayby a Shark and close with a behind-the-scenes look at a successful entrepreneurfrom the show.

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Launching a business is an adventure,and begins with that first step. Perhaps thisbook is that step, or maybe youve alreadystarted your business and are looking fornew ideas and fresh insights. Whatever yourgoals may be, Shark Tank Jump Start YourBusiness is the resource you need to takeyour idea from concept to cash.

The walk down that hallway may only bea few feet, but it feels more like a mile. And itstarts right here, right now, with you andyour idea. Who knows, perhaps one day youtoo could be standing in the Shark Tank,making a deal that will forever change thecourse of your life.

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CATCHING THEENTREPRENEURIAL

FEVER

For me, being an entrepreneur is all aboutpassion and drive. Starting out, I didnt havepeople who were there to help me and takeme by the hand. I had to figure things out onmy own, which made me the person I amtoday. Nobody I knew had ever done any-thing like what I was attempting, so it reallywas up to me to figure it out. It made mesmarter, I think, and thats really importantbecause the more experienced you are, thestronger, faster, and more responsive youcan beall of which are important qualities

for anyone starting out.

Initially, my love of business grew out ofa passion for inventing. After my firstproduct did well, the creative juices just star-ted flowing. I couldnt stop. One success ledto another, and before I knew it I had the en-trepreneurial fever.

As my business began to take off, I greweven more excited about the work. I felt like Iwas really doing something meaning-fulsomething that made peoples lives bet-ter. That was very enthralling for me. So Ijust kept going, inventing more products.Thats all I ever thought about.

The entrepreneur will face many chal-lenges along the way, so youve got to havethe discipline and self-motivation to dowhatever it takes to get the job done. Youhave to be willing to do the hard work andput in the long hours. There are times whenIve literally worked thirty-six hours straight.[Authors note: Case in point, Lori and I are

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meeting for this interview at 10 p.m. on aSaturday night after shes already put in afull day of filming and travel.]

After launching hundreds of products,my business has become very successful andmy entrepreneurial fever has evolved andgrown to include other passions as well, likeShark Tank.

I absolutely love working on the show be-cause it feels so good to help others achievethe kind of success Ive had. The idea of pay-ing it forward is very important to me, and Ifeel like being on the show has helped me dothat. Ive always believed that if youre luckyenough to do well, you have a responsibilityto give back. Thats the higher, truer, biggermeaning of life.

I really do feel as though its my destinyto be on the show and to serve as a positiverole model for other entrepreneurs who aretrying to succeed.

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1SMALL BUSINESS 101

In 1931, the world had just entered a greatdepression. As the economy tanked and un-employment soared, Americans from Cali-fornia to New York felt the piercing sting ofhopelessness and desperation. Followingdecades of tremendous growth and oppor-tunity, the ebullient spirit that had oncedefined a nation was now depleted. Butsomewhere between the unveiling of the Em-pire State Building and Babe Ruth hitting hissix hundredth homerun, a man youve prob-ably never heard of defined an idea thatwould shape the next century and beyond:the American Dream.

When James Truslow Adams first putthose two words together, Americans had yetto adopt prosperity as a core value, let alonea birthright. No matter how inspired Adamsmay have felt when he first conjured up theidea of the American Dream, he couldntpossibly have known just how transformativethose words would become.

As our culture has progressed, the Amer-ican Dream has matured and evolved. Butthe heart of the idea has remained as pure asthe day it was first declared: the dream of aland in which life should be better and richerand fuller for everyone, with opportunity foreach according to ability or achievement.

Today the entrepreneur has become thevery embodiment of that dream. Throughhard work and perseverance, its he or shewho dares not only to dream, but to riskeverything for the chance to succeed.

When you think of the typical small busi-ness, you may imagine your favorite local

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diner or independent bookstore. Perhaps youpicture the kind of quaint mom-and-pop es-tablishment that lines the main streets of cit-ies across America. But small business is ac-tually much bigger than most people realize.Defined by the Small Business Administra-tion as companies with fewer than five hun-dred employees, small businesses employaround 60 million people each year, contrib-uting to roughly half of private sector em-ployment. From grocery stores and doctorsoffices to consulting firms and advertisingagencies, small businesses play a major rolein the job market and the economy.

According to a 2009 USA Today/GallupPoll, roughly a quarter of working Americanshave considered becoming an entrepreneur.And with more access to resources than everbefore, many people are walking away fromthe safety of their day jobs to do just that.But access should never be mistaken forease. While a number of rewards come with

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starting a business, there are an equal num-ber of challengeschallenges that must beconsidered before launching any newventure.

If youve picked up this book, you have,at the very least, a desire to start your ownbusiness. Congratulations, thats the firststep. But before you can begin building thenext great company, you must first considera few key questions:

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What kind of business do you want to start?Are you looking to open a small boutiquefirm or is the goal to create fast and furiousgrowth? Do you want to start a service-basedbusiness or is your idea centered on aproduct? While one type of business isnt ne-cessarily better than another, its crucial tothoroughly research your industry and mar-ket before launching a company.

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Why are you starting this company?Perhaps even more significant than thewhat is the why. Do you want to start abusiness to avoid working for someone else?Do you have a great idea that you feel wouldperform well in the market? Are you out ofwork and looking to gain financial independ-ence? The why behind your business willplay a major role in many of the decisionsyou make as an entrepreneur.

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Are you willing to invest the time and energy ittakes to succeed?Owning a small business, especially at thebeginning, is a 24/7 job. From strategy anddevelopment to balancing the books andsweeping the floors, its likely youll be a one-man band, at least at the beginning. Dontfool yourself into thinking that youll start abusiness next week and sell the company formillions of dollars next year. For most entre-preneurs the road is long and challenging. Infact, a good rule of thumb is to estimate howmuch time and energy you think youll needto invest in your new venture and thendouble that number. Still interested?

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What skills or training must you acquire beforeopening your business?In Chapter Two youll be asked to dig deepand identify your strengths and weaknesses,but for now try to anticipate what kind oftraining or skills you may need to make yourcompany work. If youre great with yourhands and would like to open a massagebusiness, there are certain types of certifica-tions you must acquire before you can legallyrun that type of operation. If you have agreat eye for design but not much experi-ence, you may need to develop a few morehard skills before starting a design company.Flesh out your idea and try to anticipatewhat skills or training youll need to acquire.

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You should never worry about economictiming when starting a new business.When the economy is slow, it means biggercompanies are reducing their investmentsand cutting back, which opens the door toinnovation. When the economy is good,companies often rest on their laurels. Itsalways a good time to start a business inAmerica.

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What happens if your business fails?Optimism is important, especially for thefirst-time entrepreneur, but so is pragmat-ism. Since half of all new companies failwithin the first five years, you owe it to your-self to consider what might happen if yourbusiness faces a similar fate. Will you be fin-ancially wiped out or do you have anothersource of income? Will you be able to getyour old day job back or will you face long-term unemployment? While you shouldntlet fear of the unknown deter you from start-ing a business, you must also not let ignor-ance lead you down a dangerous path. Itsjust as important to anticipate failure as it isto prepare for success.

While these types of questions are noteasy to ask, their answers will provide tre-mendous value as you begin to shape yourbusiness idea. Launching a business, espe-cially for the first time, is a major

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undertaking, and preparation is absolutelycritical.

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MYTHS VS. FACTSBeing an entrepreneur hasnt always been soglamorous. Until the last twenty years or so,the entrepreneur was seen less as an innov-ator and more as a risk-taker or thrill-seeker.In many circles it was considered foolish andeven sometimes careless to launch a newcompany. Why would you go through thetrouble of starting your own organizationwhen there were so many stable corporationsto work for? But as technology invigoratesthe small business landscape and big busi-ness stumbles over its own red tape, theplaying field is slowly beginning to level.

Still, much misinformation exists aboutwhat it takes to be an entrepreneur. Somebelieve that you must have access to a largeamount of capital, while others insist thatbootstrapping is the only way to ever suc-ceed. From education and background toeconomic timing and geographic location,

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there are a number of confusing and contra-dictory ideas out there about what it actuallytakes to start and run a thriving business.

So why exactly do these myths exist?Much of the confusion is fueled by a paralyz-ing fear of failure. Theres comfort in believ-ing theres only one formula for success be-cause it lets you off the hook. It gives youpermission to stay at that job you dont likeor abandon that silly idea youve beendreaming about for years. Never trying is theonly way to guarantee you will never fail. Butthe reality is that the path to success is en-tirely up to you. Daymonds journey was dif-ferent from Barbaras, which was differentfrom Loris, which was different fromRoberts. For every rule there is an excep-tion; for every definite theres a maybe.

To help separate fact from fiction, heresthe truth behind a few of the most commonsmall business myths:

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Entrepreneurship runs in the family.While having an entrepreneur in the familycan certainly instill some important know-ledge and values, the truth is that growing uparound entrepreneurs doesnt affect yourability to become one. A study done by theKauffman Foundationa renowned organiz-ation dedicated to promoting education andentrepreneurshipsurveyed 549 companyfounders across various industries and foundthat more than half of the participants werefirst-generation entrepreneurs. In otherwords, starting a great business isnt aboutwhere you came from. Its about where youwant to go.

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Entrepreneurs are born, not made.If you cant sing, youll probably never be aprofessional singer. Sure, you can take les-sons and get better, but if you cant sing, youcant sing. Starting a business is just the op-posite: its a learned skill, not a natural borntalent. While its hard to deny the commontraits found in successful entrepreneurs, nu-merous studies suggest that the majority ofsmall business owners didnt even considerstarting a company until much later in life.

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You can assess an entrepreneurs potential by howwell she performs in college.While one camp believes that the best entre-preneurs bypass college, the other would ar-gue that college is a breeding ground for ex-cellence. Those assumptions are both trueand false. Yes, some entrepreneurs never at-tend college and others do exceptionally well.But the majority perform somewhere in themiddle. The same Kauffman study from ourfirst example found that 67 percent of thesurveyed entrepreneurs ranked their aca-demic performance among the top 30 per-cent of their undergraduate class. They wer-ent setting the curve, but they werent flunk-ing out either. Strangely enough, the studyfound that high school competency serves asa better indicator than college of future en-trepreneurial success.

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Not wanting to work for someone else is a goodenough reason to start your own company.Most entrepreneurs dont love the idea ofworking for somebody else; this is true. Butits rarely the single driving force behindtheir decision to start a company, and itshouldnt be yours. If it is, you may wish toreconsider your choice. As youll soon learn,running a business is all-encompassing, anda general dislike for authority may not beenough to keep you going.

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Entrepreneurship is a young persons game.False, false, and false! Another study done bythe Kauffman Foundation found that everyyear from 1996 to 2007, Americans betweenthe ages of fifty-five and sixty-five had ahigher rate of entrepreneurial activity thanthose aged twenty to thirty-four, averaging arate of entrepreneurial activity roughly one-third larger than their younger counter-parts. Moreover, the study found that theaverage age of a tech founder is thirty-ninewith twice as many over 50 as underage 25. By 2011, the number had increasedeven more, with Americans between the agesof fifty-five and sixty-four making up 20.9percent of all new entrepreneurs. Thinkyoure too old to start a business? Thinkagain!

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Most entrepreneurs are just in it for the money.If youre starting a business as a way to getrich quick, you may find yourself sorely dis-appointed. On average, small business own-ers actually make substantially less moneythan they would working for someone else.Whats more, they typically put in morehours, deal with more stress, and have moreresponsibilities. As Lori Greiner often says,Entrepreneurs are the only people who willwork eighty hours a week to avoid workingforty. If making a quick buck is your onlymotivation, you may be in for a long, frus-trating journey.

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You must be wealthy or have access to a lot ofcapital to start a business.You may need a lot of energy and stamina tolaunch a company, but you dont always needa lot of money. Its estimated that the aver-age startup cost for a business is somewherebetween $25,000 and $50,000, dependingon whether or not the company plans to hireemployees. And where do most entrepren-eurs get that money? Not from a bank, notfrom their family. Most business owners usemoney from their personal savings to starttheir company. In fact, studies suggest thataround 65 percent of entrepreneurs financetheir venture using some form of personaldebt.

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You shouldnt start a business during a recession.What do Burger King, GE, Microsoft, andHyatt Hotels all have in common? They wereall started during a recession. While you maythink that starting a business during a reces-sion is a bad idea, many companies havethrived during difficult economic times. Itactually makes a lot sense if you think aboutit. During a recession you may have betteraccess to cheaper space and more talentedemployees. And because everyone is trying tosave money, you may have a greater shot atcompeting than you would in a time ofprosperity. Hopefully, by the time the marketrecovers, youll have already gone throughthe difficult startup phase and be on yourway to growing the business.

Now that you know some of the myths,heres the truth: starting a business is simul-taneously one of the most rewarding and dif-ficult things you could ever do. There will be

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moments, plenty of them in fact, of uncer-tainty and fear. After your second month ofworking seven days a week or your secondyear without a regular paycheck, youll beginto seriously question why you were evercrazy enough to start a company in the firstplace. But when that moment occurs, andeventually it will, you cant let it get in yourway. Instead, you must use that anxiety as acatapult to push you to the next level.

When you decide to become an entre-preneur, you enter into an exclusive clubwith members like Steve Jobs, Thomas Edis-on, and Warren Buffett. You may never re-ceive a tote bag or newsletter, but make nomistake: you will earn that membership eachand every day. And if that club had an oath,it would be that no matter where you camefrom, no matter what youve chosen to buildor how youve chosen to build it, you can ex-pect to encounter nothing less than perpetu-al challenge. But if you persist, if you put in

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the time and energy, eventually you will tri-umph. And isnt that why you decided to be-come an entrepreneur in the first place?

One of the biggest myths is that it costs alot of money to start a business. Venturecapital may get all the sexy media atten-tion, but most small businesses are startedon a bootstrap bud get. Most people willhave an opportunity to start a million-dol-lar businessnot a billion-dollar one. Andyou dont need a lot of money in todayseconomy to start that.

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SHARING THESPOTLIGHT:A WORD ON

PARTNERSHIPSStarting a company on your owncan feel overwhelming, especiallyfor the first-time small businessowner. With a seemingly endlessto-do list, it can feel as though yourjob is never done. So for many, theidea of working with a partner canbe very appealing. More people onboard equals less responsibility andultimately less headache, right? Notalways. Bringing on a cofounder isa huge decision that will have a ma-jor impact on your business.Whether that impact is positive or

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negative is up to you.As in any relationship, the

secret to a great partnership iscommunication and trust. Remem-ber, youre not just hiring an em-ployee; this person will have accessto every facet of the business.Therefore, its crucial that youreable to have open and honest con-versations with your partner aboutanything and everything related tothe business.

Its also important to look forsomeone with a different set ofskills and talents than your own. Ifyoure exceptional at sales and mar-keting, for instance, you shouldseek out a partner who is great ataccounting or strategy. If youre aleft-brained, analytical thinker, you

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may wish to find a more right-brained, big-picture type of person.You want to create a well-roundedteam.

Although its natural to considerfriends and family members as pro-spective partners, that may not al-ways be the wisest choice. No mat-ter how much you like someone orhow well you get along, conflict isbound to occurguaranteed! If youdecide to start a company with afriend or family member, makesure youve discussed how youllseperate your personal and profes-sional lives.

Regardless of with whom youpartner, youll want to put togethera comprehensive partnershipagreement. From financial

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expectations to roles and respons-ibilities, this document protectsboth founders and should lay outall the nitty-gritty details of yourworking relationship. You neverknow what conflicts lie ahead.

Companies like Microsoft andGoogle, have proven that there canbe power in numbers, but bringingon a partner isnt the right move forevery business owner. Make sureits the best choice for you and yourcompany before asking someone tocome on board.

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2WHATS YOUR EQ(ENTREPRENEURIAL

QUOTIENT)?

Its estimated that each day some 2,356Americans become entrepreneurs. From col-lege students and stay-at-home moms toseniors and excorporate executives, togeth-er these scrappy, homegrown pioneers willopen more than 500,000 businesses annu-ally in hopes of building the next greatcompany.

So, which companies will thrive andwhich will fail? Only time will tell. But

perhaps theres a more productive question.Maybe the real indicator lies not in the busi-ness but in the business owner. Are somemore fit to be entrepreneurs than others? Isthere a type of person who has a better shotat building a successful company thansomeone else? While there are no scientificanswers to these questions, many expertswould agree that there is a very well-definedentrepreneurial mind-set.

Below youll find a short test thats de-signed to help determine if you have theright combination of skills, talents, and in-stincts to become an entrepreneur. Readeach statement below and respond witheither yes, sometimes, or no. Fromthere, assign each answer a correspondingpoint and tally up your numbers to revealyour score.

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WHATS YOUR EQ?

KEYYES: TWO POINTSSOMETIMES: ONE POINTNO: ZERO POINTS

1 Im driven by achieve-ment and success.

__________

2 When I experience fail-ure, Im quick tobounce back.

__________

3 I consider myself to beself-motivated andself-sufficient.

__________

4 I have been told Im anatural salesperson.

__________

5 I dont like the idea of __________

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working for somebodyelse.

6 Im great at thinkingon my feet.

__________

7 I have superior com-munication abilities.

__________

8 I run towards chal-lenges instead of back-ing away from them.

__________

9 I have a strong opin-ionsometimes toostrong.

__________

10 I consider myself aleader.

__________

11 I like doing things myown way and questionconventional wisdom.

__________

12 I hold myself to a __________

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higher standard.

13 I work as hard orharder than anyoneelse I know.

__________

14 I have friends or familymembers who runtheir own business.

__________

15 Im great at making de-cisions, even if I dontalways make the rightone.

__________

16 People think of me asintense or passionate.

__________

17 Im more risk-seekingthan risk-averse.

__________

18 I enjoy coming up withnew ideas.

__________

19 I dont know how, but __________

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things usually seem towork out for me.

20 When I set my mind tosomething, I see itthrough.

__________

TOTAL: __________

RESULTS

4031 points: Good news! It looks like youwere born to be an entrepreneur. With theperfect combination of passion, drive, andfortitude, you have exactly what it takes torun a business. In fact, its surprising youvelasted this long working for somebody else.

3021 points: You certainly have the potentialto be a great entrepreneur, but you may facesome challenges along the way. Perhaps you

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take pleasure in working for someone else oravoid challenges. Maybe you have a difficulttime finishing what youve started or tend tobe overly risk-averse. Whatever your person-al barriers may be, take note of them as youbegin your journey.

20 and under: Even though you may have thedesire to start a company, its likely your ex-perience will be fraught with challenges.Rememeber, you dont have to be an entre-preneur to be entrepreneurial. There areplenty of opportunities to exercise your inde-pendent nature within already establishedcompanies. You may wish to think twiceabout whether starting a business is reallythe right move for you.

So how did you do? Are you destined tobecome an entrepreneur, or should you

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consider exploring other opportunities?

Keep in mind that this test is designed toeducate, not discourage. While a clearlydefined mind-set does exist, there are plentyof talented entrepreneurs who have brokenthe mold. With enough drive and determina-tion, most anyone can start a companyandthat means you too.

Great entrepreneurs definitely have a cer-tain nature about them. Thats beenproven. Typically they are type A, theyrevery driven, theyre risk-takers. Im notsaying you have to be that way to make it,but I certainly feel as though most entre-preneurs have a very specific type ofpersonality.

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IDENTIFYING STRENGTHS ANDWEAKNESSESNo matter how you scored on the EQ test,you should be aware of your personalstrengths and weaknesses from the start.Identifying this information will help youmake essential decisions about whom towork with, how to structure your position,and even what kind of business to build.While some people excel at this type of exer-cise, others may find it exceedingly difficult.

This process is valuable because it de-termines where you should direct your ef-forts. Professional achievement relies less onyour aptitude for developing new skills thanon your ability to fine-tune the ones youalready have.

Making this type of assessment can feeloverwhelming. So, to help focus the process,try to think of it in the context of starting a

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new business. Which parts excite you?Which parts are you dreading?

Below youll find a breakdown of the fiveessential phases every entrepreneur goesthrough when starting a new business. Usethese categories to help identify yourprimary strengths and weaknesses. Thesooner you can name them, the more pro-ductive youll be.

Brainstorming: A great business startswith a great concept. Are you bursting at theseams with new ideas or do you struggle withgenerating them? Do you prefer brainstorm-ing with a team or do you work better alone?Where in the ideation process do you exceland where do you stall? For some people,coming up with the idea is the easiest part.Others approach this process with anxietyand fear. What strengths and weaknessesdoes the process bring out in you?

Strategy: Having an idea is great, but hav-ing a plan is crucial. How strategic are you?

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Would you say youre more of a dreamer or aplanner? Are you consistently five stepsahead or do you prefer staying grounded andin the moment? Being an entrepreneur re-quires a certain amount of strategic thinking,and some people are naturally better at thatthan others. Where do you fall on thespectrum?

Organization: Organization is important toall businesses, but not to all entrepreneurs.Would you call yourself detail-oriented? Doyou do well with deadlines? Are you motiv-ated by order, process, and procedure? Itsall right if organization isnt your strong suit,but come to grips with it now, so you canprepare accordingly and bring on the rightsupport team.

Communication: You can have the greatestbusiness in the world, but if you cant com-municate your product or service, youll nev-er succeed. Are you a natural born salesper-son? Do you love to connect with customers

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and employees? Do you do your best workwhen speaking, writing, or expressing your-self? Getting your message across is vital tothe overall wellbeing of your business. Howstrong a communicator are you?

Execution: A plan is essential, but only ifits properly executed. Do you get excitedabout the creative process but lose focuswhen its time to execute? Would you ratherdream up a project than actually launch it?Do you value process over performance?Eventually your business will reach a pointwhere its very livelihood will rely on the pre-cision of your execution. Do you have theright combination of skills to make it work?

Of course you will have more strengthsand weaknesses than just what may fall un-der these five categories. But hopefullythrough this process youve begun to uncoversome common themes. Take a few momentsto make your own comprehensive list. Itsimportant to be honest here. If youre not

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great at execution but wish you were, youshould still count it as a weakness. You canwork on improving your skill sets later. Fornow, the goal is to simply assess your currentstate.

People believe you need to be a well-roun-ded person and work on your weaknesses.Thats just not true. To compete on aworld-class level, you need to accentuateyour strengths. Focus on the things youregood at and hire someone to do the rest.

Once you have developed a list of yourstrengths and weaknesses, begin taking noteof where you should spend your time andwhat responsibilities you should outsource.If strategy or organization is not your strongsuit, you may want to think about bringingon an associate or administrator. If yourenot great at execution or ideation, perhapsyou should find a business partner who is.Identifying your strengths and weaknesses is

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a simple exercise that can have a dramaticimpact on your business.

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GETTING EDUCATED: TRADITIONALVS. DIYIf you interview a group of prosperous entre-preneurs, its likely youll uncover some in-teresting similarities, many of which wererepresented in the EQ test you took earlier inthe chapter. But no matter how many com-mon traits you might find, theres one areathats almost always diverse: educationalbackground.

For many years, most people who wantedto work in the business sector pursued amore traditional path. Success, many be-lieved, could be achieved by following atime-tested formula. Those days are longgone.

Survey a group of successful businessowners today, and youll quickly see just howvaried educational backgrounds can be.While some choose to take a more traditional

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route, perhaps even earning an MBA, othersdrop out of high school to start their firstcompany or transition from another field al-together. In the modern, globalized world,business success has become more aboutpluck and ingenuity than grades and formal-ities, especially for the entrepreneur.

For many, the issue of higher educationcomes down to money. Depending on whichschool you choose to attend, the price tag foran MBA can range from thousands to hun-dreds of thousands of dollars. With a tepidjob market and a fickle economy, its verypossible to spend $150,000 on a graduate-level education only to find yourself out ofwork and in serious debt. As the cost of astarting a company decreases, the price oftraditional education becomes harder tojustify.

I am a huge believer that you go to col-lege to learn how to learn, writes MarkCuban on his blog. However, if that goal is

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subverted because traditional universities,public and private, charge so much to makethat happen, I believe that system will col-lapse and there will be better alternativescreated.

Many business hopefuls share Markspoint of view and are hungrily searching foralternative options. Some are even creatingtheir own educational opportunities. Withmore access to information, media, and com-munity online, creating a DIY path can savethe entrepreneur precious time and money.But choosing that route requires a tremend-ous amount of dedication and discipline.

Below youll find five ways to help kick-start the learning process. Even if you chooseto seek a more traditional education, thesetips will come in handy.

Read everything: No experience in ac-counting? Unsure of how to build a market-ing campaign? While this book is a fantasticstart, it should be just thata start. Commit

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to reading a minimum of two business booksby trusted experts each month. You shouldalso begin subscribing to business-relatedmagazines, like Fast Company, INC., andEntrepreneur. Publications like theseprovide a real-time snapshot of whats hap-pening in the small business communityavaluable resource for anyone interested inbecoming an entrepreneur. For more of thistype of material, including a list of recom-mended books by established businessvoices, check out the Tools and Resourcessection at the end of this book.

Explore digital tools: Getting in the habit ofreading new material every day is important,but your research shouldnt stop there. Fromvideos to online courses, the Internet is fullof incredible tools for the blossoming entre-preneur. In fact, the greatest challenge is theabundance of material, not the lack thereof.To help focus your search, start followingsome of your favorite business authors and

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publications on Twitter and Facebook. Takenote of what theyre recommending on adaily basis. Try to commit an hour or twoeach day to finding valuable digital content.Download apps that can help boost your pro-ductivity. Sign up for newsletters. Listen tobusiness podcasts. While the explorationprocess can feel daunting at first, over timeyoull begin to see just how much this in-formation can help you grow.

Invest in community: The value of com-munity cannot be overstated, especiallywhen trying to launch a new business. Ifyoure comfortable with social media, diveright in and join the conversation. Most en-trepreneurs are nothing if not boisterous andoutspoken; youll have no trouble findingthese rabble-rousers online. But dont spendall your time in front of a screen. You shouldalso seek out offline community as well. Ex-plore local meetups and small business asso-ciations, attend trade shows and

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conferences, and reach out to other entre-preneurs in your field. If you live in a majormetropolitan area, you may find it helpful tojoin a co-working spacea shared workingenvironment that houses a variety of com-panies. If youre going to create your owneducational experience, you must be evenmore proactive when it comes to buildingcommunity.

Get some experience: Most entrepreneursneed all the help they can get. Try to find asmall startup that interests you and see ifyou can spend a few hours each week helpingout. Its possible they wont be able to payyou, but dont let that be a deterrent. Thinkof it as an internship. If you cant find an op-portunity, launch something small on yourowna starter business. If youre crafty, sellsomething on Etsy. If you have stuff in yourhouse to get rid of, create your own eBaystore. Start something small that requires aminimal investment. This will help prepare

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you for what its like to run a larger opera-tion. Experience is the greatest teacher ofthem all.

Find a mentor: We live in a culture thatplaces tremendous value on independenceand self-reliance. But knowing how andwhen to ask for help, especially when itshard, is one of the most valuable lessons youcan learn. A great mentor can play an influ-ential role in your personal life and the life ofyour business. Seek out a relationship withsomeone in your community whom you re-spect and trust.

Technology has really changed educationby allowing more people to get informationquicker than ever before. Its no longer ne-cessary to always take that two-, four-, oreight-year course. You can learn so muchon your own.

Whether you get an MBA or decide tobuild your own curriculum, be sure your

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path includes the right combination of know-ledge, experience, and connection. A well-rounded education requires all three of thesepriceless elements.

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GETTING YOUR LIFE(STYLE) INORDERThe final piece of the puzzle in decidingwhether entrepreneurship is the right fit foryou is assessing the current state of your per-sonal and professional life. In other words,before you can get your business in order,you must get your life in order. But what ex-actly does that mean? How do you possiblyprepare for the unknown? It starts by ex-amining three key areas:

Time: Did you just undertake a massivenew project at your day job? Do you have aplethora of outside commitments that limityour downtime? If you want your companyto succeed, it must be your primary focus forthe first few months, if not years. Every freeminute should be spent building and grow-ing the business. This isnt to imply that youshould ditch all your other responsibilities; itjust means that your company must remain

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front and center.

If you generally have a hectic schedule,you may find it helpful to schedulebusiness-building time in your calendar, asyou would a meeting. And dont just pencil itin; literally schedule nonnegotiable businessdevelopment hours. If you find yourselfwith less than ten hours a week to dedicateto your business, you should probably holdoff until your schedule is a bit more flexible.Time is your most valuable resource, andyour new business will demand the majorityof it.

Finances: As youll soon learn, starting abusiness may require a sizeable personal in-vestment. If youve decided to quit your jobor arent currently working, you must beeven more careful with your money. Try toget your overheadsuch as rentas low aspossible and reduce your discretionaryspending as much as you can. Theres noreason to sugarcoat it: the first couple years

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will likely be very financially challenging. Berealistic with yourself about whether or notyoure really in financial shape to start abusiness.

Relationships: Starting a new business islike riding a roller coaster, with ups anddowns coming toward you at the speed oflight. Having a strong support system cansignificantly reduce the anxiety and stressyoure bound to encounter. But its evenmore important to pay close attention toyour weak and tumultuous relationships.The last thing you need is for unsupportivepeople to halt your progress. The journeyyoure about to undertake is a challengingone. You need people by your side who willbe encouraging and reliable, even inespe-cially indifficult times.

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The reality is that when youre starting abusiness, you have one master toserveand thats your business. There is nobalance. And you have to be honest withyourself. If youre not prepared to makethat sacrifice and commitment, dont do it.

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VICTORIES, BIG ANDSMALL:

SETTING SMART GOALSRegular, strategic goal setting isone of the best habits you can adoptas an entrepreneur. When you startsetting goals, the mystery behindsuccess begins to disappear.

As Daymond John says, Goalsetting is like a motto, a hook, or aphrase thats always on your mind,just like a jingle youd rememberfrom a commercial. The things youdo, say, or hear in your everydaylife will subconsciously trigger youto act out your goals and movecloser to the desired target. A lot ofwork and thought processes go into

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goal setting, but once you get thehang of it, it will come to younaturally.

When setting goals, you mayfind it helpful to use the SMARTmethod, which was first developedby author George T. Doran in 1981.Using this method, goals shouldmeet the following criteria:

Specific: Who? What? Where?When? Why? In order to createtruly achievable goals, you mustlearn to get as specific as possible.If you desire wealth, for instance,your goal shouldnt be to get richbut to make a specific amount ofmoney in a certain period of time.

Measurable: If you cant meas-ure it, youll never be able toachieve it. When setting goals, its

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best to identify short- and long-term measurements of successalong the way. This way, you cantrack your progress in real time.

Attainable: Theres nothingwrong with dreaming big, but makesure your goals are somewhat at-tainable. If you want a million dol-lars and you only have $100 in yourbank account, its highly unlikelythat youll be a millionaire by nextmonth.

Relevant: Achieving any majorgoal takes a lot of work, so youmust make sure your goals are rel-evant and important. Dont forgetto zoom out a bit and take a look atthe bigger picture. Do your short-term goals set you up for long-termsuccess?

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Timely: Goals can only becomeaccomplishments when given a tar-get date. Be sure to assign each ofyour goals a specific due date, anddont allow yourself the opportun-ity to waver. A time frame will helpcreate a sense of urgency aroundthe goal and push you that muchfurther ahead.

Write down some of your short-and long-term goals and begin as-sessing them using the SMARTmethod. Are you right on track, ordo some of your goals need a littlefine-tuning?

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3YOUR BIG IDEA

Business owners can be called a lot of things:job creators, entrepreneurs, founders. But nomatter the title, they all share one single, un-derlying goal: the desire to solve a problem.Whether youre inventing something new orsimply developing a new approach, a greatbusiness starts with a great solution. Youneed only look at a handful of companiesfeatured on Shark Tank to see this principlein practice.

SURFSET Fitness, Season 4, Deal made with MarkCuban

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SURFSET Fitness, Season 4, deal made with MarkCubanProblem: Surfing is a fantastic total-bodyworkout, but not everyone has time for it oraccess to the beach.

Solution: SURFSET Fitness workouts allowanyone to get the benefits of surfing by usinga free standing SURFSET Fitness board de-signed to mimic the movement of its aquaticcounterpart.

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Cozy Bug, Season 4, Deal made with Daymond John88/628

Cozy Bug, Season 4, deal made with Daymond JohnProblem: Kids outgrow clothes quickly,which can end up costing parents an armand a leg.

Solution: Cozy Bug products are designed togrow with the child, allowing clothes to beworn for many years and saving parents timeand money.

Scrub Daddy, Season 4, Deal with Lori Greiner

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Scrub Daddy, Season 4, Deal with Lori GreinerProblem: Cleaning a variety of products of-ten requires the use of more than one tool.

Solution: The Scrub Daddy sponge uses aspecial foam that changes texture in differenttemperatures of water, allowing it to serve asthe perfect cleaning instrument for any task.

So as you can see, a great business startswith a great solution. Below youll find tenquestions designed to help effectively evalu-ate your idea. If answered thoroughly, thesequestions should provide the clarity youllneed to advance to the next stage of buildingyour business.

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What problem are you trying to solve, and how willyou solve it?Dont think too hard here. Simply identifythe problem and briefly explain the solutionyour business will offer.

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Is someone else already solving this problem?Most likely there are other people trying tosolve the same problem that you are. Thatsnot necessarily a bad thing. Watch closelyand study each part of their business. Youmight discover that by making only a smalltweak you can capture a large piece of themarket.

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How is your solution better and/or different thanyour competitors?Assuming you will in fact have some compet-ition, you must next identify how youll dif-ferentiate your product or service from oth-ers. What are you bringing to the table thatsdifferent and/or better than whats alreadyout there?

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Is there a want or need for the product or service?Maybe youve come up with a brilliant newway to teach corporate executives how towhistle. Great! But do enough people want orneed that? Probably not. Before you gothrough the trouble of starting a company,you must first uncover whether theres agenuine desire for it in the marketplace.

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How big is the potential market?Although there must be a market for yourbusiness, it doesnt have to be huge toachieve results. Plenty of companies do wellby targeting very small, niche consumer seg-ments. To discover the size of your market,first gather data on how many people alreadyuse your product or serviceyou can easilyfind this type of information online. If youreselling dog food, for instance, do research onhow many dog owners exist in the U.S. Next,youll want to eliminate consumers whodont apply to your business. If your dog foodis especially designed for small dogs, all petowners with large canines are out. Finally,try to estimate how much of the market youcan capture based on your size and market-ing abilities. This last step is the toughest be-cause its the most subjective. You may findit helpful to look at annual sales of your com-petitors. How much of the market do they

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How much will it cost to start the business?This may be a tough question to answer atthis point in the process, but its still good toconsider. If youre planning to open a retailstore, for example, youll need significantlymore capital than you would to start a con-sulting business. Think hard about the costsassociated with launching your business andstart tallying up the numbers.

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How soon can you start the business?Does your business require permits and li-censes that take months to secure? Do youneed to raise substantial capital before youeven begin? Developing a solid time framewill provide the perspective you need tomake bigger decisions later.

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What personal and professional adjustments mustyou make to start this business?Most likely, youll start building your busi-ness on nights and weekends while you worktoward proof of concept. But even that re-quires certain personal and professional ad-justments. Think about any changes you mayneed to make to be more successful.

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What is (are) your ultimate goal(s) in starting thisbusiness?Do you want to make millions of dollars orbuild a small, modestly sized family busi-ness? Are you looking to sell your companyquickly or do you want to create a businessthat can last a lifetime? The best way to fast-track success is to declare it from the start.

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What will happen if you dont start this business?What if you walk away right now and dontpursue this idea? What will happen, or nothappen, in your life and the lives of others ifyou close this book and go back to what youwere doing before? This powerful questioncan sometimes be the defining factor for anentrepreneur.

But is starting a business really all aboutsolving a problem? What about passion?Shouldnt it play a role in what kind of com-pany you choose to start? Thats a complic-ated question. Being passionate about yourwork is important, and you certainly mustlove your product or service. But theres amajor difference between being passionateabout your business and starting a businessbased on a passion.

Passions shift over time, and building acompany around something so fleeting canbe unwise. Whats more, passions dont

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always translate into businessesboth oper-ationally or financially. Loving art and own-ing an art gallery, for instance, are two verydifferent things. Likewise, taking pleasure inregularly cooking for friends and familydoesnt mean youll experience that same joyif you own a restaurant. Passion is only asingle ingredient; its not the recipe.

There are really only two questions to askwhen evaluating your business idea: Isthere a real need for the product and areenough people willing to pay for it? And ifits been done a million times before, youalso have to ask whether you really have apoint of difference that makes it so muchbetter. You should never be afraid to fullyexamine your idea, even if it means youmight have to give it up.

When it comes to following a passion,you may find it helpful to heed Mark Cubansadvice. Cuban believes the key is to followyour effort, not your passion. Time is the

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most valuable asset you dont own, saysCuban. And how you use or dont use yourtime is going to be the best indication ofwhere your future is going to take you.

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DEVELOPING A PRODUCTNow that youve evaluated your businessidea, youve probably found yourself in oneof two positions: (1) youre even more confid-ent in your idea than before and ready tomove forward or (2) youve decided your ini-tial concept is not the strongest choice, andyouve begun to rethink the plan.

If its the former, and your business iscentered on a product, the next step is tothink about development. In other words,how will you turn your concept into an actualproduct?

The first step is to hire a professional de-signer or engineer. Even if you have a sketchof what youd like the product to look like,youll still need someone to create a CAD(computer-aided design) file, which is re-quired to make a prototype.

For Travis Perry, founder of

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ChordBuddy, his search started on Google.

I had a concept drawing, but I needed toget it designed by a professional, recountsPerry. So I began Googling engineers whoplay the guitar and ended up finding an en-gineer who had a son that played the guitar.He loved the idea and really understood thevision.

Once the engineer designs your productand creates the CAD file, youll need to find acompany that can create an actual prototype.

When it comes to getting a prototypeproduced, there are a variety of different op-tions to consider. Perry chose to build anSLA (stereolithography) prototype, which isessentially a type of 3-D printing. Even asone of the more affordable options, it endedup costing somewhere between $750 and$1,000. That may not sound like a lot, butconsider that Travis went through seventeendifferent prototypes before he was ready toget a mold produced.

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A mold is not what I thought it was,says Perry. Mine was the size of a refrigerat-or and cost about $150,000 to build.

Finally, when the mold has been tweakedto perfection, the final step is to design andproduce the packaging.

Although this entire process can be tax-ing and expensive, the result is a consumer-ready product.

TANK TIPTake advantage of all the resources you can. Ididnt know a lot about running a business when Ifirst started, but thanks to SCORE (the Service Coreof Retired Executives) I was able to get some reallyamazing free help. Resources like that can make ahuge difference.

TRACEY NOONAN, COFOUNDER OF WICKEDGOOD CUPCAKES

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BUYING A BUSINESSIf starting your own company doesnt appealto you, there are still other ways to be a smallbusiness owner. Many choose to purchase acompany thats already up and running.

Depending on your particular circum-stance, purchasing a business, as opposed tostarting one from scratch, can actually be thebetter option. For one, theres generally lessrisk involved in buying a business. Thinkabout it: if you purchase a business for$100,000 that has an annual cash flow of$20,000, theres a high probability thatyoull recoup your initial investment and be-gin making a profit in a reasonable timeframe. And thats without making anyimprovements.

Even if you only spend a third of thatcapital to launch a startup, the likelihood ofit being lucrative from the start is slim. Many

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entrepreneurs are unable to take a salary forthe first few years. And for those who do, thesize of that salary is less impressive than youmight think. Its estimated that a small busi-ness owner with less than one year of experi-ence will earn as little as $34,000 a year. Bypurchasing a business thats already makingmoney, you greatly decrease your overall riskof failure.

Another benefit of buying a business isthat you acquire basic infrastructure. A busi-ness thats already operational comes withcustomers, employees, best practices, tech-nology, and other necessities that could takeyears to develop from the ground up. Addthat to the brand loyalty and legacy youll in-herit, and you have the makings of whatcould be a fantastic business. If you purchasethe right company, your main focus will beon improvement, not development. Thatalone can save you an abundance of time,money, and headache.

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Purchasing a business, however, isnt aseasy as it may sound. Although you may notbe starting something from scratch, youshould invest the same level of care and con-sideration in the evaluation process. Whenlooking to buy a potential business, here aresix questions to consider:

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Is there potential for growth?If youre going through the complicated andrisky process of purchasing a company, youwant to make sure it has real growth poten-tial. Explore not only the business, but theindustry as well. Try to identify any markettrends that indicate where your businessmay be headed. ACTION ITEM: Do a com-prehensive online search for any informationrelated to the industry. Read articles, find ex-perts, follow fellow entrepreneurs onTwitter.

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What are the businesss greatest strengths andweaknesses?You probably have a good idea of the com-panys strengths. Why else would you con-sider buying it? But having a clear under-standing of its weaknesses is sometimes evenmore valuable. As the new owner, you will bethe one responsible not only for recognizingthe challenges that lie ahead, but for comingup with solutions as well. ACTION ITEM:Anonymously chat with the competitionabout the business or ask to speak directlywith current customers. Dont hold backwhen having these conversations. You wantthe most accurate feedback possible.

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What kind of reputation does the business have?Theres more to a business than just its cur-rent (and potential) financial state. Whatkind of reputation does it have? What roledoes it play in the community? Make surethere arent any unpleasant surprises thatcould affect your ability to succeed. ACTIONITEM: Review sites like Yelp that give accessto real customer feedback. If possible, chatwith current and past employees to get theirtake on the business youre thinking ofpurchasing.

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Why is the business being sold?Maybe the company is growing too fast forthe current owner to handle. Perhaps thefounder is ready to retire. Whatever the reas-on, youll want to know exactly why the com-pany is being sold. Be sure to ask this ques-tion a few times throughout the process andmake sure the story holds up. The more in-formation you can gather, the better offyoull be. ACTION ITEM: Dont just talk tomanagement; try to engage the staff as well.If youre thinking about purchasing a retailbusiness, it may also be a good idea to chatwith the businesss neighbors. Word travelsfast, and they may know more than youthink.

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What does the competition look like?Even if this information is laid out in thebusiness plan, be sure to have a detailed con-versation (or two) with the current ownerabout the competitive landscape. Who arethe companys main competitors? Where arethey located? How long have they beenaround? Look beyond the current competi-tion and explore any potential future chal-lenges as well. If a big competitor is slated tocome to town in the near future, for instance,you may be less inclined to purchase thebusiness. ACTION ITEM: Acting as a cus-tomer, anonymously reach out to any majorcompetitors and inquire if theyre planningto open a new location near you anytimesoon.

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Will you be able to add value?This is perhaps the most crucial question ofthem all. Are you the best person to own thisbusiness? Do you have the right combinationof skills and talents to maintain and grow theoperation? Even if the company seemspoised for greatness, you should only pur-chase a business if you feel certain you canadd considerable value to the operation. An-swering this question honestly from the startwill save you tremendous pain and anguishlater. ACTION ITEM: Thoroughly review thelist of strengths and weaknesses you createdin the previous chapter and make sure theyalign with your role in the business.

When you start a business from scratchyou have to go through the genesis of trialsand tribulations that come with launchinga new company. Ultimately, thats whatmakes good entrepreneurs into great ones.When you buy a business thats already up

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and running, you miss out on thatopportunity.

Purchasing a business is a complicatedprocess, and youll eventually need to hire ateam to perform the proper due diligence.This process begins when the buyer andseller sign a letter of intent. From there, thepotential buyer has sixty to ninety days touncover any unsavory information that maybe lurking in the background. The due dili-gence process usually contains threepartsoperational, financial, and legalandshould be performed by a lawyer and ac-countant who specialize in the process. Youllwant to hire the very best team you can af-ford. This is not the place to cut corners.

Although buying a business can have lessfinancial risk in the long term, it generallyrequires substantial capital at the start.While banks are usually more inclined togive loans to businesses with cash flow, more

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than likely youll be taking on a significantdebt. Make sure you have all the necessaryinformation before making such a heftycommitment.

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PURCHASING A FRANCHISEIf youd rather not take on the risk of startinga new business and youre uninterested orunable to purchase one, opening a franchisemay be the right decision for you. A franchiseis a business system in which private entre-preneurs purchase the rights to open and runa location of a larger company. Think abouta local fast-food restaurant, gym, or hotelchain. Its likely all of those are franchises.

When purchasing a franchise, the busi-ness owner (also know as the franchisee)signs a contract with the parent company, inwhich he agrees to an elaborate set of rulesand procedures that must be followed. Whilesome may take pleasure in such a rigid struc-ture, many entrepreneurs hate the idea ofbeing kept on a tight leash.

Before deciding whether purchasing afranchise is the right move, you should know

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the pros and cons that come with owningthis type of business.

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Business modelPro: Youre not only buying the business,

youre buying the business model as well. Formany startups, finding a viable businessmodel can be challenging. By tapping into aproven model, you could have a betterchance of success.

Con: Having to follow a specific modellimits your ability to control your business. Ifyou come up with a fantastic new idea thatsoutside the boundaries of the particularmodel, you may not be allowed to see itthrough.

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InventoryPro: In theory, the collective bargaining

power of the parent company allows thefranchisee to save money on inventory.

Con: The less control you have over in-ventory, the less control you have over yourfinances. Theres often speculation that fran-chisors receive kickbacks from suppliers,which means you may become subject to in-flated prices.

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Startup costsPro: When a franchise is being pur-

chased, the parent company will generallyprovide the franchisee with a good estima-tion of the startup costs. This allows you tobudget properly from the start.

Con: Along with the regular expenses in-curred when starting a new business, mostfranchisors require a nonrefundable initialstartup fee that can range from thousands tohundreds of thousands of dollars. These ex-penses can put the business deep in debt be-fore it even opens.

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Cash flowPro: When business owners tap into a

turnkey operation, one that requires little tono additional work from the buyer, its as-sumed that they will begin bringing in cashrelatively quickly.

Con: Many franchisors take royalty feeseach month, along with requiring businessowners to contribute to an advertisingfundeven if the advertising doesnt directlyaffect their particular franchise. Moreover,some franchisors require credit card pro-cessing to be done through their system,meaning the franchisee must wait longerthan usual to receive her money. Regular ex-penses like this can dramatically hurt a fran-chisees cash flow.

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BrandPro: An established brand can increase a

companys ability to stand out from the com-petition and acquire new customers, makingthe business more profitable.

Con: When the parent company doessomething unfavorable, it has the potentialto affect the franchise too. Take BP, for in-stance, whose Gulf oil spill significantly af-fected their franchisees business.

Starting from zero is the hardest thing todo. Its very difficult to start from nothingand create something. Anytime somethingis more established, youre going to be bet-ter off. So a franchise is a great way tostart a business because youre workingwithin the confines of somebody elses vis-ion, which of course has its negatives too.

Owning a franchise requires a lot ofwork, but its definitely the most plug and

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play option for starting a business. Keep inmind, however, that it may not be the best fitfor a person who craves freedom. If the fran-chisee steps just a little out of bounds, it cancause the parent company to terminate theagreement on a moments notice. And sincemost franchisees are forced to sign away theability to seek legal recourse, the businessowner could lose his entire investment.

While this book is designed to help allentrepreneurs jump start their respectivebusinesses, its important to note that someof the information found in these pages maynot be applicable to franchise owners. Mostfranchises come with stringent operatingagreements that affect everything from ac-counting and marketing to suppliers andcustomer acquisition. You may find that yourfranchise contract goes against some of theadvice provided in this book. If so, void thisinformation and follow the rules laid out inyour agreement. Otherwise, you may not

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CHANGING COURSE:UNDERSTANDING THE

PIVOTIn 2008, tech entrepreneur EricRies introduced an idea called theLean Startup which greatly im-pacted the startup world. RiessLean Startup relies on a constantstate of building, measuring, andlearning to create the very bestproduct possible. Not only did thisapproach change the way productsare made, but it introduced a slewof new concepts into the businessvernacular, including one of todayshottest buzzwords: pivot.

According to Ries, pivoting is astructured course correction

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designed to test a new fundamentalhypothesis about the product,strategy, and engine of growth.Put more simply, its a way of de-scribing startups that change direc-tion but still remain rooted in theiroriginal idea. When a businesspivots, the vision might change, butthe defining principles stay relat-ively the same.

You most often see pivoting intech startups, as they have the mostdata at their disposal. One such ex-ample was 3degreesan app thatused Facebook to help people makenew offline connections. The ideawas simple. Users logged in withFacebook and could search theirfriends friends for shared interestslike rock climbing, salsa dan-cing, or entrepreneurship. From

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there, they could reach out directlyto the new contact or get an intro-duction from the mutual friend.

Shortly after launching the app,founder Brian Scordato noticedsomething interesting: No onewanted to go rock climbing. No onewanted to go salsa dancing. All any-one was doing was searching fortheir friends single friends. Eventhough 3degrees had already gottensome good press, Scordato knewthat if he wanted the business to besuccessful, he had to pivot. A fewmonths later, 3degrees turned intoFind Your Lobstera socially integ-rated mobile dating app that helpspeople find their friends singlefriends.

It took months of research

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before I felt comfortable pivoting,says Scordato. Just because themetrics were telling me to build adating site didnt mean I couldbuild a successful one. I didnt wantto waste my time or energy, andonly proceeded once Id done seri-ous diligence.

In this chapter you were askedto evaluate your idea, but the learn-ing shouldnt stop there. The mod-ern entrepreneur must learn tocontinually improve her product.As you prepare to launch, createcheckpoints along the way to reas-sess and reevaluate key areas ofyour business. You never know,one day you may need to pivotyourself.

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TRAVIS PERRY,CHORDBUDDY

(SEASON 3)BIG IDEA: A device that helps

novice guitar players learn to playchords

INVESTOR: Robert Herjavec

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Since Travis Perry can remember,hes been crazy about the guitar.Learning to play at only eight yearsold, he knew from an early age thatmusic would forever be a staple inhis life. In 1980, at just eighteenyears old, Travis got his first job,teaching guitar at a small musicshop in Dothan, Alabama. But after

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only a few months, he offered hisresignation.

I went to the owner and toldhim I had to quit, says Travis. Ithought I must have really stunk asa guitar teacher, because half of mystudents were quitting.

To Traviss surprise, the ownerrevealed that on average 70 percentof students give up during the firstsix to eight weeks. In fact, it evenhas a name: the two-month hump.Traviss dropout rate wasnt bad atall; it was outstanding. I knewthen that our system of teachingguitar was broken.

Determined to create a solution,Travis came up with the idea forChordBuddy, a small device thatfits on the neck of a guitar and

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helps the novice musician makechords.

This way, you can get therhythms down, says Travis.Thats where the music is.

But Traviss idea remained onlyan idea, and he eventually moved toNashville to pursue his dream ofbecoming a professional musician.

Thirty years later, after a re-warding career in the music in-dustry, Travis Perry returned to hishome state of Alabama to start areal estate business. But when theindustry tanked, so too did his com-pany. The first-time business ownerfound himself out of work and fin-ancially devastated

I thought I was going to lose myhouse, reveals Travis. I had

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literally started looking for sites Icould park my camper. It had got-ten that bad.

Desperate to stay afloat, Travisreturned to his first love: teachingguitar. Although it had been almostthree decades since he set foot inthe classroom, he discovered thatnot much had changed. The two-month hump was still very muchalive and well.

One afternoon while strugglingto teach his daughter Bradi how toplay, Travis shared his longtimedream of creating ChordBuddy. Notonly did she love the idea, sheoffered him a challenge. If you cre-ate it, Bradi said, I promise Illlearn how to play.

Seventeen prototypes and $1

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million later, the music loverturned his dream into a reality. TheChordBuddy was officially born.

Interested in growing the brandand building the business, Traviswent on Shark Tank and landed adeal with Robert Herjavec. Almostovernight, the ChordBuddy tookoff. But Travis knew the hard workwasnt over; it had just begun.

Youre never really over thehill, says Travis. A lot of peopleview Shark Tank as the be all andend all, but I viewed it as astepping-stone. I knew the spikewould eventually go away, and Idhave to keep selling.

More than a year after Travissepisode aired, his business is stillbooming. With a new ChordBuddy

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Junior set to hit shelves by the endof 2013 and other exciting productson the way, Travis continues toshare his love of the guitar with theworld.

Its amazing what ten minutesand forty two seconds in front often million people can do. Itchanged my life forever.

To find out more aboutChordBuddy, visitChordBuddy.com or follow themon Twitter @ChordBuddy.

REAL-WORLD WISDOM: Alwaysmake sure you have a solid game plan and greatadvisors. Each part of the business-buildingprocess is expensive, so you dont want to runand gun it. Its important to always be as pre-pared as possible.

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THE UNLIKELYENTREPRENEUR

I never wanted to start my own business; Inever wanted to be an entrepreneur. I justwanted to be happy and work for someoneelse. In fact, I only started my first companybecause I was fired from my job and couldntfind another one in time to pay themortgage.

At the time, I was running a high-techcompany and had just gotten married. WhenI returned from my honeymoon, the venturecapitalist whod funded the company hadpacked up all my things. I was fired, he toldme, and his son was now going to be the

president. Plus, he said that if I didnt stayon and run the sales department, he was go-ing to claim I defrauded the company andsue me for $5 million. I left anyway.

When I got home and told my wife, sheimmediately started crying. Just then, weheard a knock on the doorit was the bailiffserving us with a writ for $5 million. I hadnever been fired; I had never been sued; andI had only been married for one day. It wasawful. But Ill tell you what, thats the beautyof life. You have to look for the opportunitiesthat let you do great things. And thats whatit was: an opportunity. I could have eitherfelt really miserable for myself or I couldhave shaken myself off and kept going. Ichose to keep going.

I decided to start my first business, butnot only that, I taught myself law too. Ididnt have the money to hire a lawyer, and Ididnt want to give the guy who fired me thesatisfaction of knowing I was burning money

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on legal fees. So I worked on the business allday and taught myself law in the evening. Idefended myself and took it all the way to thehighest level court. Its amazing what youcan learn when you have to learn it.

What I love about being on Shark Tankis that I get to meet a lot of people who sharemy beliefpeople who have a dream andwho are waking up each day and trying to dobetter for themselves. You know, the worldrewards substance. Shark Tank has really re-affirmed that idea for me.

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4FINDING YOURCUSTOMERS

After assessing your entrepreneurial poten-tial and evaluating your business idea, youprobably have a good sense of what youretrying to create. But one fundamental ques-tion still remains: Who exactly are youselling to? Who makes up your targetmarket?

A target market is the specific group ofcustomers that your business aims to attract.Understanding yours will serve youthroughout the business-building process.

Naturally, many new business owners

are hungry for customers and will seek outjust about anyone willing to buy theirproducts or services. Although this strategymay sound intuitive, trying to appeal to anunfocused group of people can be ineffective.Instead, targeting your product or service toa niche audience will help build a more rel-evant, compelling, and sustainable business.

Lets say, for instance, that youve cre-ated a new natural and organic cosmeticsline. Your initial instinct may be to targetanyone who purchases makeup. But in real-ity that may not be the smartest move. Thecosmetics space is oversaturated and domin-ated by large corporations with an abund-ance of resources. Selling your product towomen who wear makeup would be likeopening a restaurant for people who eatfood. Its difficult to compete if youre com-peting with everyone.

Rather than aiming for any woman whobuys makeup, it would be far more effective

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to focus on health-conscious women agedtwenty-five to thirty-five who make morethan $50,000 a year and live in major met-ropolitan areas. Yes, youve eliminated alarge portion of the market, but now you canposition your product in a way that deeplyresonates with your ideal customerinsteadof only being slightly relevant to everyone.

When defining your target market, thereare five things to examine: demographic in-formation, geographic location, wants andneeds, hobbies and activities, and overallmarket size.

Demographic information: Identifying theage, gender, ethnicity, income level, andfamily status of your consumer is the firststep to defining your target market. Aproduct that appeals to an twenty-one-year-old white male making $22,000 a year andliving at home will likely be quite differentthan one that appeals to a forty-five-year-oldHispanic female with two children making

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$150,000 a year. What demographic is thebest fit for your business? This question isthe starting point to better understandingyour target market.

Geographic location: If your consumer livesin a rural area in the Deep South, she willprobably have different needs than herurban-dwelling Northern counterpart. Like-wise, a person who resides in the suburbs,rather than say a bustling city environment,may buy products through different chan-nels. The only way to sell to your consumersis to know where to look for them.

Wants and needs: What does your con-sumer want and need? Those, by the way,are two very different things. Is he looking toupgrade his lifestyle? Is she trying to save forher childs college? Understanding what ex-actly your consumers are looking for willhelp you better identify their buying habitsand position your business accordingly.

Hobbies and activities: Where do your

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customers hang out? What do they do forfun? Would they rather go to yoga onSaturday afternoon or spend the day at thelocal sports bar watching the game? Are theyinvolved in their community, or do theyprefer to keep to themselves? Try to get asspecific as possible.

Market size: Roughly how large is the tar-get market youre going after? If youre try-ing to sell to plumbers who live in Milwaukeewith a net worth of more than $250,000,your model and strategy will look very differ-ent than if youre trying to target plumberswho live in Wisconsin with a net worth ofmore than $25,000. Do a little digging andtry to acquire some basic information on thesize of your market.

Finding your audience can be challen-ging, and sometimes theres no better waythan to hit the streets and begin talking toeveryone, at least that was ReadeRESTfounder Rick Hoppers strategy.

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I spent the first few months trying tofigure out who my customers were, saysRick. I got a trade show booth and set it upat every kind of show you could imagine: gunshows, craft shows, car shows. I tried to do atleast three or four shows a month and get infront of as many people as I could. I knew itwas the only way Id discover my targetmarket.

Defining a market can make many first-time entrepreneurs uncomfortable. But re-member: just because youre targeting onetype of consumer, doesnt mean you cant orwont appeal to others. Youre simply focus-ing your efforts to have the maximum impactin the marketplace. Whats more, your targetmarket will likely change and grow with yourbusiness. Think of it as a formula. Until youget it just right, youll want to regularlytinker with the variables.

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When you sell a product or service, youremaking a promise to your audience. If youdont understand your audience, youll nev-er be able to keep that promise and youllultimately let them down.

Once you start acquiring this type ofdata, you may find it necessary to go backand refine your offerings. Thats a goodthing. Dont be afraid to use the facts you un-cover to build a more targeted and effectivebusiness. Thats what this kind of research isfor.

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IDENTIFYING THE COMPETITIONThere are hundreds of different kinds ofbreakfast cereal sold in the United States,from sugary and unhealthy to wholesomeand hearty. While many of these brands areowned by a handful of companies, thats stilla lot of competition. It would be natural thenfor the first-time business owner to presumeits a wise idea to stay out of the cereal busi-ness. But that assumption may not necessar-ily be correct.

Its safe to bet that a family purchasesmore than one brand of cereal per house-hold. Assuming each member of the familytries a few new brands every year, your cer-eal may actually stand a fightingchancethat is, if you find a way to make itonto grocery store shelves.

Competition should be welcomed, notfeared. In fact, being first to market is rarely

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a good thing. When youre first, you oftenmust take on the responsibility of educatingthe consumer, which can be a costly andtime-consuming task. If youve invented thefirst time machine, for instance, you mustprove the value not only of your product, butof the entire product category as well. In oth-er words, before you can sell a single timemachine, you must teach your customerswhy they need the device in the first place.Thats a lot of work just to sell one lousy timemachine. Competition not only saves youfrom this resource-draining task, it provestheres already a demand for your product orservice.

Because the average American familybuys cereal, you can assume that prettymuch everyone understands the value of theproduct. Therefore, if you create the nextgreat cereal, you need only convince con-sumers that your cereal is the best. And thatprocess starts by researching the key players

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in your industry.

In the past, finding your competitorswasnt always an easy task. Thanks to tech-nology, however, the world is far more trans-parent than ever before. When trying to as-sess your competitive landscape, youll wantto come up with a strategy that combinesboth online and offline efforts. Below are afew quick ways to get started:

Harness the power of Google: Of course theobvious first step is to search for your com-petition on the Internet. Thats a given. Butoutside of just your basic search, Google hasa variety of tools that can help add additionalvalue to your quest. By setting Google Alertsto receive news about your competitors andtopics related to your business, you can stayup-to-date on the latest happenings in yourindustry. With Google Analytics, you cantrack your websites traffic, including wherevisitors came from and where they wentwhen they left. Not only are these tools

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extremely helpful, theyre also free and easyto access.

To set up Google Alerts, visitGoogle.com/Ale