3 posts tagged “entrepreneur”

If you are entrepreneur this article is for you.

In an interview with Wharton, two Latin American entrepreneurs and writers reveal what I succinctly believe you need to do to make your business a success. 

UK@W: What steps does an entrepreneur have to take from the time he or she gets the idea until the time when it is put into practice? Is there a trick for speeding up the process?

H.H./D.B.: The first step is to show in practice that the idea is viable. That means that you have to create a prototype of the business – an action plan that you carry out. The business model will be valid only if it produces sales in the volume and at the speed that you forecast. In this respect, you have to be as creative as possible; your tests must involve conditions that are as close to reality as possible. Some people will say, “For my business idea, it isn’t possible to create a prototype.” We think that is just an excuse. There is always a way to create a prototype and sell it.

In the United States , an entrepreneur wanted to build a spa that would provide hydrotherapy. It was hard for him to create a prototype in that area, but he could create a business model. So he invested in virtual models and rented space in a shopping center. His goal was to get 1,000 members to subscribe by asking them for a symbolic registration fee. The club needed at least 200 members to be profitable, and they knew that if they signed up 1,000 people, it was more likely that once the project was launched, only 500 people would pay their fee. If there hadn’t been 1,000 subscribers, the entrepreneur would have returned the fees to the people who had paid them. If it had more than 1,000 subscribers, it would be clear that all of its investments were justified. The principal was clear: An economy of resources, economy of efforts and the minimization of risks.

In that example, would it have been worth the trouble to go through every step and make all the investments, only to realize that the business plan would work? When a model is validated through a prototype, the costs of registration and financing and all the other costs that you need will be much easier to get. So you should never risk what you don’t have without having proved the validity of your business model.

It has been my sentiment ever since high school that you cannot be rich unless you work for yourself.  In other words you have to start your own company.  Granted that many people are not entrepreneurs, and like the security of a job.  But in the end, it goes back to fundamentals of risk and reward.  In order to gain that reward you must take on risk.  The bigger the risk, the bigger the reward.  But as you are well aware that it could also go the other way.  You can risk big and lose big. 

Nevertheless, my sentiment is echoed in a new book, Get Smarter: life and business lessons, by billionaire Symour Schulich, he says " I don't think a person can ever get really rich working for someone else, although there are forms of psychic and altruistic satisfaction in many career lines". 

Last week was not a good week for Canadian investors. The TSX took a 4.5% hit, from mid July where the S&P/TSX composite index was at 14,500 to closing on Friday July 27th at 13, 884. The primary reason for the sell off was the fear of the sub-prime worries in the U.S.A. Ultimately it will a have a negative ripple effect on the Canadian economy.

But if you analyze the market more closely you’ll realize that since 2003 the TSX has grown from 6,100 to Friday’s close of 13,884. More than doubling in the last five years. So many investors who stayed invested should be still way ahead. Selling now is a mistake. Instead, investors should be buying more, obviously very hard to do. But if you are a prudent investor and not a fly by night trader you don’t really have anything to worry about.

Most entrepreneurs understand the fundamentals of business. By starting and operating a business entrepreneurs realize that companies do not disappear over night. If the fundamentals are there along with a solid management team to weather any storm then you don’t have anything to worry about. A great company always knows what to do in good times and in bad times.

If you think you still should sell your stocks, then read this article first.