I couldn’t help wandering about the significance of the two p’s in entrepreneurship and it finally dawned on me. They stand for Profit and Passion and they need to work together to drive success.

photo credit: zoomed_in
If you are driven only by profit and are intent on becoming the next Warren Buffett or Bill Gates, you may well achieve that goal but may not enjoy the road you need to travel on and ultimately become very familiar with the inside of your doctor’s office.

If on the other hand you are driven by passion, really believe in what you are doing and neglect the profit side of the business you may thoroughly enjoy what you do but get to become familiar with the inside of your bankruptcy attorney’s office.

Only when these two P’s become like ebony and ivory living together in perfect harmony on your entrepreneurial keyboard can you be assured of success. And by success we mean a profitable business that you thoroughly enjoy and that you wake up everyday and run to so you can run it as if this were your last day.

After starting 4 successful businesses in the last 11 years, I would like to share some advice on 5 major pitfalls common to entrepreneurs who start an internet business, or a home-based business, and how to avoid them.  Perhaps you have already encountered some of them and don’t understand what you could have (should have) done to avoid them. Maybe you have experienced hesitation and inability to make well-founded decisions. Or maybe, you have experienced the failure of assessing risk and lost a lot of precious time and money in the process. In either case, you are not the only one and I believe you will find the following points thought provoking and helpful.

photo credit: Craig Metrowich

1. Lack of a Sound Business Plan

Your business start-up must have 2 things in play before you can even think about becoming a success.  They are a great idea, and its development.

Let’s assume you have a terrific idea for an online or offline business.  How you develop that idea into a viable business model takes a great deal of thought and work.  This means analyzing your idea;

• What are its weaknesses?
• What are its strengths?
• How can you profit from it? (Can you really profit from it?)

The answers to these questions will form the basics of your business.  Develop them into a business plan which explains the execution of your idea, defines the growth potential with a timeline, explains the expertise needed to run your business, a cost analysis and a risk analysis.

2. Inability to Overcome Self-Doubt and Fear

You must understand that obstacles are challenges which can be conquered, not mistakes which have ruined your business.  A bit of fear is understandable (even healthy) but you cannot let it retard your ability to move ahead.

Self -doubt is especially prone to induce fear and even more so for younger entrepreneurs just getting started.  Convince yourself you are the belle of the ball, not a wallflower then swallow your fear and go for it!

3.  You Don’t Have the Right Mentors

Having the right mentors around you (experienced people who enhance and complement your business) can make all the difference.  Without them, you are like the Captain of the ship without any crew.  Or with the wrong mentors, you are an accident waiting to happen.  The proper ones will give the right advice at the right time, be there to support you when you are indecisive, and fill in the gaps where your weaknesses are.

Proper mentors can include experts in negotiation, marketing, strategy, law, tax and finance among others.  Whether by a reciprocal business alliance or direct hire, these people will play a major role in ensuring the success of your business.

4.  Over-commitment of Time and Resources

It is important to recognize from the outset that just because you have decided to start a business, there will never be any more than 24 hours in a day.  You already have a life, perhaps a family, friends, a job, etc.  These have consumed your time thus far, and they are not going away.  So rather than over-commit your time and resources, decide in advance how many hours a day you will be able to spend on the business and still have a life.

Since you have defined your areas of expertise, concentrate your time in those areas and hire help for the others; otherwise you will either burn out and fail, or your business might succeed but you will fail in your responsibilities to those who make up your life.

5.  Being Taken Advantage of

There is always an abundance of scam artists and untrustworthy persons just waiting for some unsuspecting victim to take advantage of.  As a first time entrepreneur, there is a good chance these persons will assume you are a novice at business negotiation and try to ply their trade on you and your business.

You can avoid being lured into any unsavory deal by paying close attention to your business plan, to the persons, businesses and companies you have placed your trust in.  This is a crucial point so take some time each week to review these entities to make sure your trust is well placed.  You might enlist a trusted friend to help you with this; evaluate each facet of your business which is entrusted to another in order to ensure all is as it appears on the surface.  No need to be paranoid, but due diligence must be practiced; you must weigh the risk when dealing with any company (or person).

Now it’s your turn! What do you see as being the number one pitfall when starting a business? Share your thoughts and how you can overcome?

Alex Papa is an experienced web-preneur dedicated to starting new internet-based businesses. Alex enjoys teaching young entrepreneurs how to start a successful business from home. In Business Opportunities Expo he gives you the chance to get the latest Symantec coupon code. Alex also recommends the new Go to Meeting promo code if you want to cut costs on your next online conference.

According to the findings of the most recent survey on SMB Disaster Preparedness, announced by Symantec Corp. on January 11th, 2011most small businesses are at risk of heavy losses due to a disaster. The findings show that most small businesses do not prepare for disasters and only react after the disaster has occurred.

Forty-one percent claim that they never thought to put together a disaster recovery plan while more than 40% did not have disaster recovery as a top priority. Small businesses can be forced to close their doors for upmost of a week in times of disaster.

photo credit: Loozrboy

More than 65% of companies, forced to close their doors for a week because of a disaster go out of business. The things that can place a business at risk include: floods, fire, earthquakes, storm damage, equipment failure, power failure, air conditioning system collapse, both wire-line and wire-less network recovery (voice and data), computer viruses, white collar crime, terrorism (bombings and other terrorist acts) and other threats.

Here are 10 main reasons to put together a disaster recovery plan:

1. The Need for Impact Analysis

Your first key step should be to perform impact analysis across your entire business and to put in place a business recovery plan covering personnel, equipment, facilities, infrastructure and information.

2. Data and Information Not Backed Up

All critical data and information should be identified and documented. A data backup strategy should be in place with data stored off-site, preferably not in the same locale. Provisions should be in place not only to store but also to recover the data quickly.

3. Recovery Team Not Identified

Identify an internal crisis response team with clearly delineated responsibilities. All employees should understand their roles in the event of a disaster.

4. Equipment Replacement

Determine the minimum configurations needed to stay in business and put in place procedures for quickly reconfiguring equipment and production facilities.

5. Customer Service Continuity

Understand the absolute minimum customer service levels needed, and put in place plans for notifying your prime customers (the 80/20 rule) of any changes because many of your customers may be impacted.

6. Voice Data and Computer Recovery

Make arrangements to duplicate voice and data services and to recover your computer devices. You should also assess the impact of changes to telephone numbers and how they may impact customers, suppliers and employees.

7. Lack of An Alternate Site

Select an alternate site to relocate to. This site may be a remote location of your company or a hot site provided by a Business Recovery Services supplier. Plans should be made to replace the minimum business capabilities needed to continue to provide the designated level of service.

8. Lack of a Business Recovery Specialist

Planning assistance from a business recovery specialist is well worth the cost. They can assist with impact analysis and help your company determine where you are vulnerable. Even if you have a recovery plan in place, it is necessary to perform an audit of this plan to ensure that it meets your needs. Such a plan also needs to be maintained and kept up to date since the environment keeps changing daily.

9. Business Recovery Services

It is best to use a major provider of business recovery services who can provide a hot site, far removed (with several to choose from), can assist with replicating voice and data access, can re-establish your communication capability, has the breadth of equipment you will need to re-establish your systems and can even provide personnel if needs be. Your vendor from around the corner is going to be in the same trouble as you when a major disaster hits.

10. One Point of Contact

When managing a crisis, the last thing you need is to be fumbling for the right contacts. Prepare a list with a single contact point for each vendor, customer and service provider you will need to contact.

Jay Goltz, who owns five small to medium sized businesses in Chicago and who writes a column on running small businesses for the New York Times, published an article yesterday, 11th January 2011, on the The Old Man and the Internet.

In it he muses that he started out as a retailer, struggled with the fact that he was also a manufacturer, and eventually expanded into being a distributor, a direct-sales organization and now a Web marketer. The first three evolutions he opines, were slow and painful, but he successfully figured them out. This latest twist, becoming a Web marketer, is different. This time, it is not just about people and problems. It’s about understanding the realities of a whole new world.

photo credit: Daniel Marchese

There are two main points that he makes in this article:

1. Every business owner (especially the Old Farts … my personal perspective) should belong to a business group. As he states, “I’ve said it before and I’ll say it again: the insights gained from comparing notes with other business owners, in different businesses, can be phenomenal.”

2. Small business owners. especially those same Old Farts, are slow to realize that this whole Internet thing is probably the most powerful development since the Industrial Revolution. They need to understand that they now operate in a totally different business environment, and need to adjust. The Internet, social media and whatever else is missing are all changing fast, and need to be mastered.

The problem, is that: The Old Farts do not know what is going on behind the curtain. Sometimes, they think they know, they want to know, they need to know, but how could they know? No one who works in their business most likely has ever been involved with technology.

For the rest of this very stimulating article, please read The Old Man and the Internet.

Mr. Gene Sperling
Head Of the National Economic Council
The White House

Dear Sir:

Congratulations on your new appointment as head of the prestigious National Economic Council. Clearly you come to the job with extensive experience in all facets of the economy but more so with a deep understanding of the needs of the small business community. You did a masterful job of piloting a small business jobs bill through congress last year in spite of the opposition from those who said no to everything. You really do appreciate the contribution of the small business sector to the economic recovery.

Please do not let this congress undo the great work you have done up till now. It is crucial that the small business jobs bill be there to facilitate the growth of the small business community and their access to capital as they start to rebound in this turning economy. You, of all people on the White House staff, are most aware that small businesses need loans from all facets of the financial community and also from state and local government entities. That is why you ensured that there were pools of funds in the bill to take care of that need.

We in the small business community have faith in you sir. Do not let this new congress derail your efforts.

Sincerely,
Jim Smith
CEO
Ychange International

I was looking through some old posts and came across one about business plans from January 7th, 2007 and thought it was appropriate to repost it exactly 4 years later.

At the time, there was an article in the Small Business Page of the Wall Street Journal, “Do Start-ups Really Need Formal Business Plans?

photo credit: gurdonark

The gist of the article was that as an entrepreneur “you’re wasting your time writing a business plan”

Back then, I called this irresponsible journalism for the following reasons:
1. Not every entrepreneur has the good fortune to get a business education at Harvard, Stanford, or the Wharton School of Business.
2. Not every entrepreneur is starting up a business that is looking for Venture Capital Funding.

The article failed to capture the fact that the backbone of Small Business in America is still run by the simple non-business education trained people who have a good business idea and are willing to sacrifice their life savings to bake this idea into a profitable business. These are the people who need a business plan to prevent them from losing their or their friends’ and families’ hard earned investment.

I always tell my clients that the reason for a business plan is not to go looking for financing. “You develop the business plan for you. So that you can peel back the onion and really convince yourself that you understand every aspect of what you are setting out to do”.

Also, the local Community Banks or Credit Unions where these entrepreneurs typically get their financing want to see a business plan to be convinced that they can really execute this business idea and make it happen. These businesses are the ones producing revenue on the order of several $ hundred thousand. This is what Small Business America is all about. Not the “LowerMyBill.com” that sells for $300 million.

At the time, I also chatted with a colleague of mine, who had read the article, but had the following comments: “It is my way of thinking that the first purpose of a business plan is not for raising money from outside sources: banks, investors, family, friends, others. The prime purpose is to take thoughts, which are intangible, and put them into a tangible form i.e. something written that can be reviewed, revised, reviewed, revised many times before making the move to take the final step of opening one’s doors.

It has been my experience that as one begins to put down one’s thoughts on paper it becomes evident that there are some “holes” that need filling . . . holes that if not filled will cause the ship (nee the business) to sink. In addition, as one starts to gather the information needed for a plan, one’s ideas are very likely to change. Few businesses, even those with a business plan, end up doing exactly what they originally set out to do.

Strange as it may seem, the product or service may be right, the target customer however might be different from what was first imagined. Or, it could be that the market is right but the product or service does not fit what the market needs or wants. The reason for this is that people going into new businesses either do not know who the potential customers might be for their product/service or they have the wrong product/service for the market they are thinking of.

Going through the process of developing a business plan is necessary even if outside funds are not needed, as it will ultimately show if there is a mismatch between the idea and reality.

So, now, why is it that so many people go into business without doing a business plan? I believe there are many reasons. One reason is that they are not schooled in business but even worse, there are very few tools to ease those who are “uneducated” in the world of business into the planning process step-by-step. Most of the tools are too academic or the book or template for doing a plan looks so ominous, that the step is put aside.”

So do we still really need business plans in 2011 or were the people in the Wall Street Journal right? Give us your thoughts on the subject.

Jay Goltz, who employs more than 100 people at his five Chicago businesses, and offers insights and perspective on running a small business for the New York Times, just published an article on the Top 10 Reasons Small Businesses Fail. Among these reasons he lists: math not working, owners making mistakes, uncontrolled growth, shoddy accounting practices, lack of a cash cushion, mediocre operations, poor negotiating skills, management dysfunction, no succession planning and declining markets.

photo credit: gareth1953

These are all very sound reasons why businesses fail but he neglected to mention two of the most basic:
1. Lack of understanding of the target customers and their pain points.
2. Lack of consistent business planning.
Interestingly enough, most of those he highlights end up as direct results of the lack of business planning or the lack of knowledge of the target customer.

For a review of his entire article please go to Top 10 Reasons Small Businesses Fail

Every successful entrepreneur pays particular attention to getting a fast start out of the blocks. Here are ten tips to help you get the jump with your customers and employees and to keep you ahead of your competitors in 2011.

photo credit: sky#walker

1. Relax and the good times will roll
It is a business but nothing says that you can’t have fun running it. This helps to set good employee morale and definitely helps with customer relations.

2. Toss aside the arrogance
Arrogance tends to get in the way of simple communication. Both customers and employees relate well to humility. Also understand that you can’t do it all and be ready to ask for help when needed.

3. Be a life-long learner
A successful entrepreneur needs to have a handle on all aspects of the business. You don’t have to know how to perform all tasks, just to understand if they are being done correctly. So try to stay abreast of all functions of your business by continuing to learn. Set up an education schedule for yourself and your most important employees.

4. Think inside their box and outside of yours
The number one success factor is understanding your favorite customer. To do so you need to learn to think like they do and use the words and phrases they use so you communicate completely with them. Act similarly with employees or vendors and learn to, think like they do.

5. Assign responsibility to others
A good manager hires competent people and provides them with the necessary tools and the environment to be successful. Delegate and then look over their shoulder and be ready to give help when and where needed.

6. Learn to soar like an eagle
The details are important, but even more-so, are the strategic decisions which set the direction of your company. You need to operate at ground level where the reality exists but every now and then, you need the ability to fly at 5000 feet to keep the big picture in perspective.

7. Talk less and listen more
To really understand someone’s pain, we need to listen to the conversation. The ability to listen well gets us to the essence of the story. We need to understand what is being said to us before we begin to offer up solutions.

8. Build a good network of advisers
This network is your lifeline and should have links to all of the important areas of your business: finance, legal, insurance, vendor relations, business operations, human relations, manufacturing, sales, marketing communications to name a few. Recruit strong people who can offer you good advice and counsel and start early fine tuning this network.

9. Always be in solution mode
Embrace the opportunity for a solution and not the negative of the problem. Listen well, and then think in their box. When you approach the daily issues this way, both customers and employees want to cooperate and help you resolve the problem.

10. Reach for the heavens
If you don’t aim high enough, your competition will be right behind you and may soon catch and surpass you. Understand that you’re standing on the ground but reach for the stars.

As the new year begins, set these ten tips as your new year resolutions and make every effort to get out of the blocks with a fast start for your business in 2011.

Location, Location, Location –
Your business advisers from the SBDC and SCORE were right — location is critical to the success of your business. Whereas a good location will enable a struggling business to ultimately survive and thrive, a poor location is the straw that will break the back of the camel of any retail business.

photo credit: eflon

You should review the following factors:

* Where are your customers located
Are they within a certain radius of your location? Are they all over the city or state? Are they regional or national? The answer to this will affect your choice of location.

* Traffic, accessibility, parking and lighting
If your business depends on drive by traffic or on the presence of pedestrians, you’ll want to seek out popular retail locations, such as a downtown area or a mall, where there are few restrictions on signage that can help attract passing customers.

* The location of your competitors
If your business is retail and relies heavily on foot traffic, it might make a lot of sense to locate your business close to your competition. Ever notice that some downtown intersections appear to be magnets for coffee shops. Customers tend to congregate where there is a concentration of like businesses.

* Condition and safety of your building
Make sure to check out the building surroundings at all hours of the day to get a feel for the neighborhood. Check out the lighting and the parking lot if there is one.

* Any local incentive programs for business start-ups in your specific targeted area
Does the city or county have any business incentives in the area surrounding your proposed location. Is the area an Urban Renewal Area and is it due for tax credits or some other form of government subsidy.

* The receptiveness to a new business at your prospective site
Is the prospective landlord sold on your business idea and do you think that other businesses in the area will perceive yours as a great addition to the business landscape.

If the answers to most of these questions are positive. only then should you consider making a decision on the location.

You are getting close to the time for your new-year resolutions. We figured we’d try to give you as much help as we can. Most of what we do is always in such a serious vane that we thought we’d depart from that and take a semi-humorous approach to this post.

So we sat down and reviewed some of the mistakes we saw our clients make in 2010 and prepared this list of 60 to avoid. We need to warn you that a lot of these relate to experiences in restaurants, bars and neighborhood watering holes where we spend “creative” time . If you read between the lines you’ll spot the traps!!!

photo credit: Genista

Here we go:

1. Banks have a magic number they use to determine if you qualify for a loan. They multiply your IQ by 7 and if that number is greater than your credit score you instantly qualify. Have your IQ tested before going to see your banker.
2. Lady Gaga has no time for you these days. She’s finally made it! Harry Reid tweeted her after the DADT vote!
3. Kanye West is now totally useless! His 140 characters are all used up. Taylor Swift can now breathe and sing that jingle for your business.
4. Don’t take Mooji literally! “The true essence of anyone is the true essence of everyone,” only if you ride public transportation.
5. How come the only customers consistently missing from this Mexican restaurant are Mexicans?
6. You got fired because you’re incompetent and now you want to what? Start up a business? Get over it!
7. Why would you buy advertising when you don’t have a clue as to your target market.
8. I get sea sick when I sit on your bar stools!
9. Shh! We know you’re gay! You don’t have to say it out loud and embarrass us. We’re the freaking US armed forces out on the town!
10. Of course the State will pay you to go to school to learn to run your own business. After all you just got fired for being unreliable.
11. Listen up! You need to register your business name with the State and get a domain name for your web site. This in no joke!
12. Why did you sign a lease when you don’t yet have the money to start up the business?
13. If you know you’re a good entrepreneur clap with one hand.
14. The sound you hear is John Boehner, the Speaker crying. Did he wet his bed again? Go get some more Depends.
15. I didn’t buy it when it was CRM and now you want me to invest in it as SCRM. What’s the extra letter going to cost me?
16. Yahoo Answers! Get over it and stop sending me notices of the Best Answers I won when you suspended my account three years ago.
17. Foursquare your application can’t ever find me and I’m a Droid not an iThing. How depressing!
18. I know you’re a PR consultant but you’re pushing this Facebook Page thing too hard. Let them build a web site first.
19. You registered how many domain names? 360? Until you figure out which one works best? OooKaaaay! I think I got It!
20. And the mule said to the donkey “Saga Boy don’t you molest me” while we’re at work.
21. Foursquare you just made me Mayor of my bank. Now if I only had some money in the business account!
22. How can a city have 85% of its economy driven by small business but its economic plan going forward is based solely on large businesses.
23. Why do city planners and other government types have no experience in running businesses? Don’t you get it? Cities are not businesses.
24. “Even your identity which you think is a fact, is fiction. I don’t want this to hurt you” Mooji, you need to sit and talk to Rabbi Hillel.
25. Idiot, you ignored me when I arrived at your upscale restaurant and now I’m leaving, your nose is still in the guest book.
26. You made me sit in the bar while I could see that you had several open tables. Obviously you’re trying to get me to buy your overpriced booze.
27. The noise in your bar sucked and the couple of screeching customers with high frequency voices amplified by the poor acoustics did me in.
28. I hate web sites where things are always flashing by. As we get older we need to concentrate to retain information……..just saying!
29. Doctor, your reception area is so quiet, it’s like a morgue. We’re not dead yet.
30. Many of your customers are baby boomers …….their eye sight is the third thing to go. Write your instructions in a bigger font.
31. It helps if your staff would learn to smile occasionally. After all we are your customers and we swpend the money.
32. The menu font is so small and artistic I can’t even read the bloody thing in full sunlight.
33. If I wanted an eye test I would have gone to an eye clinic. You’re making me walk through this maze to find stuff but I can’t read a thing.
34. Does Internet Explorer suck or is this part of getting totally senile?
35. It’s so dark in here, I couldn’t read the menu. So when you bring me the bill bring a torchlight so I can figure out how much to tip you.
36. Your plates are so poorly shaped, every time I put my utensils down, they slide into the food.
37. Hey Rush! Your fifteen minutes of fame are long over. I hear you’re moving to Panama.
38. Your menu is written in French. In the USA we speak English in case you forgot. Bring me the Babel Fish translator with the menu!
39. “Juicy steak served with fresh cauliflower” reminds me of the “Dried out steak served with stale cauliflower” on the menu down the street. Don’t state the obvious!
40. I was in a group of four people and your wait staff insisted on removing the plates before everyone was finished. How thoughtful of them!!!
41. I add sugar and cream to my coffee to fit my taste buds – ask me before you add coffee to my cup!
42. Forget your crappy customer service staff and their lousy attitude. Let’s talk about the rest of my problem with this transaction.
43. Where are the shopping carts. Oh I’m supposed to fetch it in with me from the parking lot. Hey buddy, I walked here!
44. My table rocks back and forth and I feel like I’m at sea. Bring on the Dramamine.
45. Hey Mr. Pharmacist, why didn’t you tell me that my senior discount gives me a better price for my medicine than my insurance pays.
46. Your customer sat at the bar waiting for the table and the back of the bar stool was falling off and your barista with the humongous attitude told him it wasn’t her problem.
47. So he complained to the waiter about the rocking table and he looked at him as if he were an idiot but decided to get him another table.
48. And your people put non-alcoholic beer in the alcohol spot on the beer shelf and the customer must wait a half hour in line to do an exchange.
49. So guess what, moron! This bar stool is broken and I’m scared that at any moment I could be on the floor. Fix the furniture!!!
50. Ever notice that the loudest mouths in an upscale restaurant are the customers on the cell phones.
51. So he brings the water glass and it has spots all over it and some traces of lipstick …ughhh… I decide to skip water and not to ask for another glass because I’m afraid of ticking off this waiter…who knows what he’ll do to my order in the kitchen.
52. He hands me the menu and not only is the print so freaking small that you need magnifiers, the font makes the 5, 6 and 8 all look alike.
53. When you come to a job interview with me, turn off your g-d damn phone!
54. Hey Glenn, we hear you’re moving to Alaska. Hope you and Sarah will be happy there! We’ll get our Alaskan smoked salmon from you guys.
55. I’ll relate to you my experience in your bathroom at a later time. Enough is enough.
56. It was late night TV! They’ll tell you anything you want to hear. Of course she said she’ll help you avoid paying the IRS and you believed her!
57. There are no grants from the government. The government only gives away money to large banks and auto companies.
58. When you sit in one of my classes or seminars at least mute the ringer on your stupid cell phone.
59. I’m well over 40 … my golden years came early for me … so print the instructions for use on the box so I can read the freaking thing.
60. Enough! Stop wasting time with this garbage!!!

Now go make your new year resolutions and good luck in 2011.