It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs.
Saturday, April 23, 2011
HOW TO BECOME A CHICKEN ENTREPRENEUR
I firmly believe that one of the best (or possibly the best) ways of growing wealthy is to start your own business. And while I’m all for taking on a limited amount of risk, I’m not about to recommend that you jump ship in the hopes that you can build a raft while struggling to stay afloat. That’s where my principle of "chicken entrepreneurship" comes in.
Chicken entrepreneurship figures heavily in my latest book, Seven Years to Seven Figures. It has certainly helped many of my friends and colleagues build seven-figure incomes. But that doesn’t explain the concept.
A reporter for CNNMoney who recently reviewed my book Automatic Wealth for Grads … and Anyone Else Just Starting Outwas particularly interested in chicken entrepreneurship. He had lots of questions for me. And I hope my answers can help you figure out how to navigate the tricky transition from "job" to "career."
1. What does being a "chicken entrepreneur" mean?
A chicken entrepreneur is somebody who keeps his day job while he gets his ideal job going at home in the evenings and on weekends. He is an entrepreneur, because he is taking the initiative to start his own business. He is chicken, because he’s not willing to quit his current job and lose the income. The compromise he accepts is that he will have to work 60 to 90 hours a week for several years before he can either abandon his great idea or fire his boss.
The term "chicken entrepreneur," by the way, was not my coinage. I heard it many years ago. I didn’t like it, but I recognized that it applied to me.
In Seven Years to Seven Figures, I expanded the term to include employees of a company who, by virtue of extraordinary performance, earn their way into of the position of managing a product or division that is their own. They are still employees, but they operate autonomously and share in the wealth they create for the company.
I have been both kinds of chicken entrepreneur in my career … and I liked them both.
2. What does it take to manage your business while still keeping your day job?
It takes discipline, faith, integrity, hard work ??? and a very understanding family. It’s not easy to work a full day at the office (9 or 10 hours) and then go home at night to put in time on your own project. The competition for your time can become intense. But if you create a plan and follow it in an orderly fashion, you will eventually succeed.
3. What tips can you offer for people interested in trying chicken entrepreneurship?
As I say in Seven Years to Seven Figures, start a business you know something about – a business that is based on some interest you have. And if you want to do something different, take the time to learn about that business from the inside out. That means getting yourself some part-time work in the industry in which you intend to compete.
To succeed in any business, you must know certain things very well. You must understand, for example, what kinds of products the marketplace desires and what price points are "sweet." You must know how those first sales are made – what specific marketing techniques are employed to generate a sale without spending too much money acquiring the customer. You must understand the "back end" of the business (how to upgrade a new customer into buying vertical, higher-margin products). And you must become competent at the basic business skills: marketing, salesmanship, and negotiation.
4. What common pitfalls should be avoided?
There are several.
The most common is dictating to, rather than listening to, the market. New entrepreneurs often waste precious time and effort hoping to bring something brand-new and exciting to the marketplace. If the product doesn’t exist, there is usually a good reason for it. It’s better to be a chicken at product development, too. Start off with a better or cheaper version of a product that is already proven to be in demand.
The next-biggest mistake new entrepreneurs make is spending too much time and money on non-essential pursuits. The fundamental activity of a business is the commercial transaction. Natural-born entrepreneurs know that their best chance of success comes when they devote 80 percent of their initial resources to making the first sale. Forget about business cards and fax machines. Get that sale made.
5. Who is best suited for this approach?
Entrepreneurs have one quality that other people lack: brass loins when it comes to risk. Otherwise, they are pretty much the same as everyone else. Anybody who has modest intelligence and the qualities mentioned above (drive, tenacity, integrity, etc.) can be a chicken entrepreneur. That’s what’s so nice about it. You don’t have to have the moxie.
6. When, if ever, do you have to choose between jobs?
That’s the easiest question to answer. When your own business is up and running and bringing you a larger personal compensation than your paycheck, you have to ask yourself only one question: Do I like running this business? If the answer is yes, walk into your boss’s office and tell him, "See you later!