I’ve just released my latest report, entitled ‘7 Keys To Entrepreneurial Success For Online Marketers‘, so today I want to share one of those keys with you… Here’s an excerpt from that report:
Key #5: Are You Financially Prepared To Be An Entrepreneur?
This is one of the more important aspects to be sure of – more businesses fail due to cashflow shortages than any other reason. Keep the following key points in mind:
1) Every business success requires the investment of time and money;
2) The greater your investment of either, the less that’s required of the other;
3) Every business endeavor takes longer to produce income than you expect;
4) Challenges pop up on the financial path of every entrepreneur – proper planning, prudent savings and fast reaction times are required;
5) Winners are knocked down as often as losers – they just get back up more often than losers do. Understand from the outset that there will be setbacks and steel yourself to weather any storm that approaches.
Time and money – the two areas every entrepreneur must track most closely. Most offline businesses take a major investment to begin, although a few can be started just through heavy time investment. Online businesses also require more capital investment in most cases.
You CAN start an online business with no outlay – I detailed one such method in my ZERO DOWN e-book – but success using those methods take a greater time investment and take as much as 6 months to a year LONGER to really become profitable, as those first months are used to build up the investment you should have had to get started.
Most would-be entrepreneurs want to start a business to replace their full-time job with higher-paying activities they enjoy more, or to make up for a current ongoing financial deficit. This leads to a common catch-22 situation: it takes money to make money.
If you can’t afford your current bills or don’t have a job or savings, you shouldn’t be looking at starting your own business just yet. Instead, find a job or two that will a) help you lower your current monthly expenditures, b) pay down some of your existing debt load, and c) provide the capital to start your new business properly. Don’t handcuff your new business venture right from the outset by not having enough money to launch it successfully.
Read that last sentence again – it’s that important. You’ve probably seen that happen in both the online and offline business startups already… Offline, it’s not uncommon to see a new restaurant, for example, take over a location and spend months renovating it – only to never open. Usually this is because they under-estimated the ongoing costs before they opened, and ran out of cash when some parts of the renovations took longer or cost more than they budgeted for.
There have been extreme cases of this online as well – remember the dot-com bust in 2000? Some startups had attracted up to two million dollars in start-up funding then used it all for staff, offices, equipment and the like. Then the money ran out before they even got a website online.
The good news, though, is that for every one of those companies there are 1,000’s who started with one small website or blog and went on to success from there – in fact, I’d wager more virtual companies that started as home-based businesses have succeeded than those started with heavy funding in corporate offices…
Why? Because when starting your own business you’re following the entrepreneurial model – starting small and building from there. You don’t rush out and hire employees, rent expensive offices and start buying or leasing company cars. Instead you keep your expenses to a minimum, outsource work only when it makes sense to do so, and continue to invest as the business requires it from your full-time job, savings or other income.
As mentioned back in Key #3, businesses started in tough economic times have historically performed better than those started in boom times. When times are tough and money is tight, entrepreneurs are forced to be more resourceful, more creative and to exercise much more prudent financial planning. After all, if your funds are limited you’re going to be much more careful in how you use that cash, aren’t you? That’s the same formula you need to apply when starting your home-based business as well.
Time after time I’ve had new clients come to me and say they’ve been trying Internet marketing for a year or two and made nothing, instead having wiped out their savings or maxed out their credit cards and still have nothing to show for their time and money.
What’s happened is they’ve been unfocussed, jumped from idea to idea and bought each new ‘shiny object’ that came along, without ever using any one of them long enough to profit from it. Others have made money as they went along, immediately removing those funds and spending them, counting on the income to keep rolling in indefinitely. Of course then the inevitable hiccup came along and they didn’t have the cash on hand to weather the storm.
Now this doesn’t mean that you shouldn’t invest heavily in your business if you can afford it – of course you should invest as much as you reasonably can afford to without incurring any debt. But it DOES mean you should be sure you’re using the money wisely and getting maximum return for that money.
Some of the choices are simple and straight-forward… The best example is getting the basics of online business tools from a reliable supplier at a reasonable cost. I’m forever seeing people paying $25 a month for hosting, $47 a month or more for professional autoresponders, $10 a month for tracking services, $50 a month or more for affiliate management programs, etc. Yet they could be using the eBusiness Automation Center to get all of that, and more, for $30 a month.
The same goes once your business is established online – you should continue investing in it until you’re making enough to make sufficient re-investment from your online profits. But don’t use the funds to buy every new product or service you see. Instead, know the path you’re following and ignore everything that won’t help you RIGHT NOW to move forward along that planned path.
Staying that focused not only ensures you get the most return for your money, but it also prevents ‘information overload’. Instead of being deluged with new information on every topic under the sun, you’re just buying immediately-actionable information and tools.
When you focus just on those resources that will help you right now you’ll find there isn’t that much to get at any one time, and that leaves you some of your capital to continue growing your business. New targeted prospects are the lifeblood of any business – online or offline, new or established – and that’s where the bulk of your time, effort and investment should be focused.
For an online business, these leads take the form of prospects who opt-in to your e-zine or e-mail lists. As a general rule of thumb, plan to get half of your new leads from your efforts (your blog, giveaways and other joint ventures, social media posts, etc.) and half from your investments (solo ads, social media ads, etc.).
Rather than ignoring this investment at first and then trying to play catch-up down the road, take two important steps right now to help ensure the growth & eventual success of your new online business venture:
1) Plan to invest a MINIMUM of $100 a month for lead generation right from the get-go. Either put aside $1,200 right now for the first year, or detail how you’ll get that $100 each month (not including ANY online earnings).
2) Again starting right from the beginning, re-invest 50% of ALL net online income into paid sources of new leads.
So now you know you’ll be budgeting $360 a year for your hosting & autoresponders, etc, and a minimum of $1,200 a year for your opt-ins – now decide how much above that $1,560 a year you’re willing to spend for tools and resources. Break that amount down into 12 monthly amounts and you’ll know what you’re committing yourself to. Be sure you’re comfortable with the number you arrive at and then STICK TO YOUR BUDGET.
Don’t be persuaded to go above that amount until your business profits have truly grown to a point where it’s both necessary for additional growth and easily affordable. If you do come into some additional funds you can invest, be sure to pump it directly into getting more leads into your opt-in funnel, not buying new gimmicks that may or may not prove useful – save that for when you’re rich! 😉
Obviously no one, myself included, can tell you if you’ll be successful in any entrepreneurial venture – it’s entirely up to you and the time, effort, knowledge, experience and financial resources you bring to the task along with the viability of your business concept. But as a general concept for most new businesses, plan to support your new venture for at least two years, both time-wise and financially, before it starts to produce a profit above and beyond what needs to be re-invested on an ongoing basis.
You may well see profits sooner than that, even large profits – but don’t count on it. Similarly it may take longer, so have a contingency plan in place to fund it further if it should prove necessary. In many cases, if not most, an online business can be self-sufficient in less time than that, especially if you can afford a good coach or mentor to guide you along until you’re fully versed in running an online business. Having previous experience as an entrepreneur, executive or marketer can help a lot, but if that’s not your background then think seriously about either finding a top mentor or making the acquaintance of a few very successful marketers you can model yourself and your business after.
To sum this Key up, your business is going to take time and money to start successfully. Once you think you know the costs, time-wise and financially, double them. Similarly, double the length of time you think it will take to start seeing any regular, on-going profits from your business. If you’re still both ready and able to start your new venture after doubling both of those, you have a much greater chance of success. Remember, better prudent than poor!
Download The Entire Report For Free…
The above excerpt is just one of the 7 Keys To Entrepreneurial Success detailed in this new report, and the report also includes a bonus section entitled ‘A Brief Outline Of Online Marketing For Entrepreneurs…’ The report isn’t for sale anywhere at this time, but instead is available as a free download for those signing up to receive our e-zine – secure your copy of this powerful report here: 7 Keys To Entrepreneurial Success For Online Marketers.
Leave me a comment below to let me know what you thought of the information in this excerpt, then head over and grab your copy of the report… And don’t forget to let me know what you think of the report once you’ve read it, too!