For people who are interested in being an entrepreneur one day you should definitely watch the show Shark Tank. I absolutely love that show so much. It shows the different ideas, business, and concepts people come up with on a daily basis. Watching Shark Tank you can see the good and flaws in people as entrepreneurs throughout the show. The main reason I love the show is because I want to see who are truly the good entrepreneurs on the rise and how the successful guys perceive them. That's really my favorite aspect of the Show how Mark Cuban, Daymond John, Kevin O'Leary, Lori Greiner, Robert Herjavec, and Barbra Corcoran look at the entrepreneurs and their pitches.
First let me talk about how I either like, dislike, and perceive each shark when it comes to reacting to pitches and their methods of negotiating. The first guy I have to talk about is Kevin O'Leary aka "Mr. Wonderful". I won't lie he's the one shark I'm not a big fan of. To me he comes off as a complete asshole, which sometimes you have to be in business but he seems to be an asshole 90% of the time. His negotiation methods are selfish, horrible and downright bad a lot of the times. Why do I think his methods are so bad? He always wants a royalty when negotiating with an entrepreneur that is pitching a manufacturing product or business. The sad part about it is so many of these entrepreneurs that come on this show actually entertain his offers that include royalties. That shows me how some of those people aren't ready enough when coming to the table. Always remember Rule #1 "All money isn't good money" No deal is better than a bad deal. The reason why royalties are just terrible for small businesses is that it's counter productive. They cypher out necessary cash flow that is needed to grow a small business. When growing a small business cash flow is CRUCIAL. The last thing any growing business needs is a royalty on their books that's cyphering out 2%-10% of the cash flow that could and should be re-invested into the business. Kevin O'Leary makes horrible offers because he's a blood sucking leach that only cares about getting his money back and yielding a return with as little risk as possible at the cost of potentially bleeding the business dry. For Kevin royalties mitigate his risk by guaranteeing him money while increasing the risk of the entrepreneur. I hate Kevin's methods of negotiating its like he completely forgot how small businesses operate.
Robert Herjavec and Mark Cuban are my two favorite sharks on the show. Robert you can tell is a very compassionate guy who actually cares about helping these entrepreneurs grow their company and being successful while also making smart decisions when he does try to close a deal on a pitch. Even when Robert is not trying to close a deal he still gives a lot of the entrepreneurs advice from his experiences. He's also very straight forward and honest but in a very respectable way. He understands and considers the obstacles these small businesses go through and always consider that.
Mark Cuban is the guy who stays in his lane. He's has a technology background starting from his days of starting MicroSolutions and Broadcast.com. So the technology sector is what he mainly stays in when trying to close deals on the show. He will branch off occasionally but he stays in his lane. The one thing he always says which I take to heart is "The money isn't the most important issue when I'm investing, its my time because no matter what I do I can never get back the time lost." Mark Cuban understands his strength and weakness as a business man and he smartly sticks to his strengths and what he's good at. This is why I like Cuban on the show.
Now when it comes to the next guy Daymond John I don't want this taken out of context and I'll explain why. But of all the sharks I think he's the least when it comes to book smarts and business savvy. Now not by any stretch of the imagination is he dumb because you just don't develop a $200 million dollar brand in FUBU and be dumb absolutely not. Damon is a hustler, the type of entrepreneur that just knows how to work the system and hands he's dealt to make the most of it. I personally knew an entrepreneur like this the late "Comer Cottrell" Now Lets be honest the main reason his clothing line grew so much originally was because he knew and had connections to LL Cool J and hustled his way to convincing him to wear his shirts in his music videos. When LL Cool J and other rappers were wearing his clothing line he was still making shirts and hats in his basement. He's quoted on record that at one point everyone thought he was this major clothing line when in reality he only had 10 shirts hanging in his basement and was still selling hats out of his car while working at Red Lobster. Daymond John hustled his way to the top. So when it comes to negotiating it seems a lot of the times the other sharks don't quite give him the same level of respect as in they know were smarter than you. Damon Johns background is mainly in manufacturing but he does branch out and diversify which is a risk because you could be getting into a business sector your not too familiar with. which is also why I think he does a lot of joint deals with other sharks. His mentality is so much different than the other sharks which can be a gift and a curse.
Now what separates the good entrepreneurs from the bad ones on the show? Well the good ones understand the most important rule when it comes to getting investors. What is it? It's very simple one word NUMBERS. What do I mean by NUMBERS? (I'm going to capitalize NUMBERS every time to show its importance.) What I mean is "Women lie, Men lie, NUMBERS don't" NUMBERS is the only thing that matters. Does your product or service provide good margins, are the overhead or manufacturing costs low, is their a legit market for your business, are your sales NUMBERS good. Those are the most important things that separate good entrepreneurs on shark tank from bad ones. So many times people have came on this show with a product and the sharks are like no way. As soon as he spills the NUMBERS and their really good all of a sudden the sharks eyes pop open. Your NUMBERS speak for themselves. At the end of the day your in business for one reason only to make money. a VC or investor can't make money with bad NUMBERS.
Shark Tank is a good show for people who want a solid understanding of investing, business, and what makes good entrepreneurs. I absolutely love the show I'm savvy enough to know which entrepreneurs are legit and have a legit business and the ones that don't know what the hell they are doing. (An arcade game with a built in beer keg SMH c'mon that was maybe the worst thing I've ever seen and their NUMBERS were awful.) But if your interested in business in any shape or form watch this show.
Tuesday, October 13, 2015
Tuesday, September 1, 2015
What running a new small business is TRUTHFULLY like.
What's it really like running a new small business? Most people see the successful businesses, the millionaire or billionaire owner, see their humble beginnings and look at it as that's how you get rich. They look at it as only if I had the money or resources to start a business I will be rich down the line. To put it into laymen terms people say they have a great idea or plan for a business and immediately see dollar signs as if it will make them rich. Which TRUTHFULLY is not the case at all.
Running a new small business is HARD, DIFFICULT, STRESSFUL. It's not what it seems like. people don't see what happens behind the scenes in the daily operations of the business. You could be walking into a store, restaurant, or bank that from the outside looks great but behind the scenes is a struggling new business that's trying to survive. 75% of new small business fail within 3-5 years. Running a new small business is a 24/7 365 job. You have no days off, you have to be fully committed, and be willing to make ultimate sacrifices.
When running a new small business the first thing is going to be the start up capital. The average income for an adult in the US is roughly $30K-$35K a year. Which should tell you the majority of the population doesn't have a ton of money for start up capital. So lets start this in the eyes of the average person who's starting a new business. First of all kind of off topic, for me personally I'm highly against business loans when it comes to getting capital for a business. You have so many uncertainties in the business that the one thing that has to be certain is paying back that loan. Regardless if your business is successful or not you have to pay that loan back. Also you want little to no debt on your books when you start a business. Now the person puts thousands of dollars of their own money into getting the business off the ground. Pretty much everything they had and used all of their resources that now that person is broke or has very little personal money left. But now its congratulations you have a business up and running now your doors are officially open so what's next?
Now comes the possible struggles that majority of new small business owners run into. First issue that a TON of owners run into is that they have to build up a clientele for the business. Without customers and clientele you have no business. The first step into building clientele is an obvious one MARKETING. But marketing costs money, UH OH that's going to be a problem now. You've spent 100% of your money and resources in the start up capital just to get the business off the ground that you have zero money left over for a marketing budget. Damn what do you do? I have little to no money. My business is in the early stages not to mention the monthly overhead costs, payroll, and I still have bills at home that have to be paid. This is what we call BLEEDING MONEY. Your business is in the early stages so you have to grow the business for it to be in the black. The issue is your business doesn't generate the necessary cash flow yet so every month your pouring hundreds if not thousands of dollars of your own money into the business just to keep it afloat. Your business is constantly bleeding money. This is the #1 issue that kills and destroys new small business.
The first 6-months to a year of opening and running a new small business is going to be a struggle. Unless your very fortunate to have a business that immediately becomes successful and you start to net a profit within months (which is very rare) its going to be very difficult. Generally within the first year even if your in the black your just making back all the money you put into the business. There are so many issues and difficulties that come about behind the scenes.
The difference between successful business owners and non successful are the ones who understand their market and who know how to work around their issues. The #1 issue is marketing with a small to no marketing budget. My advice is to develop a marketing strategy or platform that is paid for on the back end. Groupon is a marketing platform that does this but be careful with Groupon because if your profit margins aren't wide enough it will eat up into your profits too much. So you will be put in a position where you'll have customers walking into your doors but you will only be making 50%-60% of the money generated from Groupon on an already reduced price. If your business has very wide profit margins that can handle that I highly recommend Groupon as a marketing platform in this situation. Now you can also develop a marketing strategy which will require some hustle on your end. let your customers market for you that is called C2C (Customer to Customer) marketing. Develop a very lucrative incentive for customers if they refer people to you. In doing this your spending no money up front while your customers market the business for you. Also everything is paid on the back in by just eating into your profit margins a little that's it.
Running a business is time consuming. Your going to run into serious issues, its going to put you in a financial bind early on. The stats say that you have a 75% chance of not even running a successful business. Its scary, stressful, hard but its what all business owners from humble beginnings deal with starting a new small business. But if you succeed you will look back on it and say I grinded everyday and it paid off.
Running a new small business is HARD, DIFFICULT, STRESSFUL. It's not what it seems like. people don't see what happens behind the scenes in the daily operations of the business. You could be walking into a store, restaurant, or bank that from the outside looks great but behind the scenes is a struggling new business that's trying to survive. 75% of new small business fail within 3-5 years. Running a new small business is a 24/7 365 job. You have no days off, you have to be fully committed, and be willing to make ultimate sacrifices.
When running a new small business the first thing is going to be the start up capital. The average income for an adult in the US is roughly $30K-$35K a year. Which should tell you the majority of the population doesn't have a ton of money for start up capital. So lets start this in the eyes of the average person who's starting a new business. First of all kind of off topic, for me personally I'm highly against business loans when it comes to getting capital for a business. You have so many uncertainties in the business that the one thing that has to be certain is paying back that loan. Regardless if your business is successful or not you have to pay that loan back. Also you want little to no debt on your books when you start a business. Now the person puts thousands of dollars of their own money into getting the business off the ground. Pretty much everything they had and used all of their resources that now that person is broke or has very little personal money left. But now its congratulations you have a business up and running now your doors are officially open so what's next?
Now comes the possible struggles that majority of new small business owners run into. First issue that a TON of owners run into is that they have to build up a clientele for the business. Without customers and clientele you have no business. The first step into building clientele is an obvious one MARKETING. But marketing costs money, UH OH that's going to be a problem now. You've spent 100% of your money and resources in the start up capital just to get the business off the ground that you have zero money left over for a marketing budget. Damn what do you do? I have little to no money. My business is in the early stages not to mention the monthly overhead costs, payroll, and I still have bills at home that have to be paid. This is what we call BLEEDING MONEY. Your business is in the early stages so you have to grow the business for it to be in the black. The issue is your business doesn't generate the necessary cash flow yet so every month your pouring hundreds if not thousands of dollars of your own money into the business just to keep it afloat. Your business is constantly bleeding money. This is the #1 issue that kills and destroys new small business.
The first 6-months to a year of opening and running a new small business is going to be a struggle. Unless your very fortunate to have a business that immediately becomes successful and you start to net a profit within months (which is very rare) its going to be very difficult. Generally within the first year even if your in the black your just making back all the money you put into the business. There are so many issues and difficulties that come about behind the scenes.
The difference between successful business owners and non successful are the ones who understand their market and who know how to work around their issues. The #1 issue is marketing with a small to no marketing budget. My advice is to develop a marketing strategy or platform that is paid for on the back end. Groupon is a marketing platform that does this but be careful with Groupon because if your profit margins aren't wide enough it will eat up into your profits too much. So you will be put in a position where you'll have customers walking into your doors but you will only be making 50%-60% of the money generated from Groupon on an already reduced price. If your business has very wide profit margins that can handle that I highly recommend Groupon as a marketing platform in this situation. Now you can also develop a marketing strategy which will require some hustle on your end. let your customers market for you that is called C2C (Customer to Customer) marketing. Develop a very lucrative incentive for customers if they refer people to you. In doing this your spending no money up front while your customers market the business for you. Also everything is paid on the back in by just eating into your profit margins a little that's it.
Running a business is time consuming. Your going to run into serious issues, its going to put you in a financial bind early on. The stats say that you have a 75% chance of not even running a successful business. Its scary, stressful, hard but its what all business owners from humble beginnings deal with starting a new small business. But if you succeed you will look back on it and say I grinded everyday and it paid off.
Who Am I?
My name is Jonathan I'm a 27 year old African American man who loves sports and business. I played college basketball at a small school in Minnesota as well as studied business marketing and finance at the University of Texas at Arlington. I recently made an investment and partnered in a massage clinic business venture. In June 2015 my business partner and I officially opened Heavensent Massage Clinic www.heavensentmassagonline.com. I invested in this business because my partner owned a massage clinic in Hawaii for 7 years. I loved the infrastructure that was already put in place and is proven that it works. The main objective was marketing it the right way to build up our clientele. Ever since I was 14 years old when my father opened up his first business I knew I wanted to be an entrepreneur and business owner. My father is a former CFO (Chief Financial Officer) and senior vp for 2 corporations.
Tuesday, August 11, 2015
What is the Business of REAL?
What is The Business of REAL? It is (Real Entrepreneurial Advice & Lessons) my personal blog about my journey as an entrepreneur. I will be letting everyone join me in my journey starting from scratch and hopefully growing my business from the ground up into something special. I will be posting a lot of things from behind the scenes with my partner and I running our business. I will also be posting tips, things I learn along the way, as well as the mistakes I make. This will be everything every entrepreneur has to deal with. My journey will be shown so others who want to know what it takes to be an entrepreneur can learn from my experiences.
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