There is always a market for selling truly new and remarkable products. Here are 3 criteria for making this strategy work:

1. The product must be reasonably new (the marketplace isn’t saturated yet)
2. The product must actually be remarkable (this provides repeat sales; consumptable products are best for this)
3. You have a simple, low-risk profit model (no complicated pyramid schemes, no huge upfront-costs, and no other wacky ‘business necessities’)

When these elements all line up, there’s a potentially great win-win-win opportunity.

For giving an example of a great new product (and for sharing a decent small business idea…) consider this: selling silver sol from your home.

Although this specific example may become less juicy over time, selling silver sol from home is currently a great opportunity for small-scale entrepreneurs. It will also serve as a great example for recognizing the trends of spotting other good small business opportunities.

Step 1: Find a great product

• Try to find something you feel good about selling; something that will improve the life of your customer. This will make client relations way smoother than selling junk.
• Try to find something you can reasonably expect to sell to people you already know (neighbors, acquaintances, etc.)
• Try to find something people are already concerned about. (Trying to create a need for a product is way harder than just selling something that people are already concerned about.)
• Try to find something that doesn’t already have a saturated market.

Example: Silver sol makes people healthy.  Almost everyone is concerned about their health.  Plus, many people haven’t even heard of silver sol yet (let alone know where to buy it; yet folks are still dying of MRSA, malaria, and all sorts of other things this stuff kills…)

Step 2: Gather product information / sales collateral

Often, emerging products already have marketing materials available. They do this to make it easy for others to sell their product. Ideally, you should have to do almost no work in creating sales material.

Example: Silver sol already has several fact-filled resources and videos available. With videos like these, making sales is as easy as showing your customers a website and offering a price that beats the website (which is easy to do, considering the cost advantages of buying in bulk.)

Step 3: Figure out the financial model

If you can’t make money, what’s the point of doing business? Look for low-risk opportunities where you won’t end up with a garage filled with product and no way to sell it. Also, beware of complicated commission schemes and multi-level profit-sharing systems. These systems can work, but they often leave small business owners scratching their heads wondering what happened. Preferably, there should be a simple gap between what you can charge and what you pay for supplies. If there’s a bonus for selling increased volume (you can reduce your costs, thus increasing your margins), that’s good news for you. It also makes accounting easier, which leaves more time for concentrating on real business growth.

Example: Silver sol can be ordered in increments as low as 10 bottles per sale, but can be purchased in larger quantities with decreased cost (as far as I can tell, Guardian is the top source for this…) If a bottle retails for $25 but you can get it for under $18, that leaves $7 in your pocket each time a customer comes back for another bottle, which in the case of silver sol may be every week or two. Do the math for what happens when you raise the price or get 100+ customers

Step 4: Start selling!

If you’ve made good decisions in steps 1-3, this part of the process shouldn’t be very difficult. A great new product should almost sell itself. However, if you’ve taken a shortcut and are trying to sell something that doesn’t work, something that people don’t need, or something where the market is already saturated, you’re going to need a ton of perseverance or luck to make sales grow.

Once these 4 steps have run their course and the product is no longer enough of a niche to effectively market to new customers, it may be time to find a new remarkable product and then let it dominate your business for the next few years. The chances are good that you can simply keep your existing clients from the first business (if the product is consumptable, it works, and it makes people happy), which means that you can soon graduate to running 2 small businesses instead of 1!

Good luck selling your new and remarkable product!

A recession hits a small business just as much as its been hitting the big banks, multinationals, and other huge companies. The only difference is, instead of posting billions of $’s in losses and announcing 100’s or 1000’s of layoffs, a small business owner simply has to accept the fact that they’re either going to go belly-up or that they won’t be able to afford that extra holiday after all…

How Can a Small Business Increase Profit During a Recession?

A business exists to make money (not to be a hobby.)  As such, it is imperative that more money flow in than flows out.  This is called being profitable.  This is what having a business is all about.

Some people forget that.  Or, having grown accustomed to routines and assumptions and just taking historical margins for granted, some folks hardly notice their business creeping towards being unprofitable.

Especially in the midst of a recession, when purchasing luxuries has dried up for many consumers.

So what can you do about it?

Recession-Proof Your Business

There are two ways to improve your business’s profitability: to make more money or to spend less.

That’s it.

There are no other ways.

Make More Money with Your Small Business

Good luck with that :)  They don’t call a recession ‘tough’ just for fun.

For many businesses, particularly those who supply products or services typically purchased using discretionary funds (money people can choose to stop spending when their budgets get reduced), a recession is simply a time to try to keep revenue neutral or only a few % points down.

Provided you can do so cheaply, this might be a good time to try shifting your small business’s focus to offering products or services that are non-discretionary.  Examples of this include food (people always eat), car tires (who’s going to drive on old bald tires?), accounting services (those books aren’t going to keep themselves), IT support, etc.

But in general, don’t get too bummed out if you don’t increase your revenue over the next few quarters.  Chances are it just ain’t gonna happen.

But that doesn’t mean you can’t increase your small business’s profit.  Far from it.

Spend Less Money with your Small Business

Most businesses spend more money than they really need to when times are good. They try to find ways to increase revenue (make more money) as a part of becoming more profitable.

Common ‘investments’ include swollen marketing budgets, research & development on experimental offerings, expansion-related capital costs, or other boom-time optimistic expenses. And that’s okay - that’s how businesses typically grow.

But what happens when revenues are forecast to stay flat? What happens when there is no new revenue to be found?  How does a business become more profitable then?

Its obvious - they spend less money.

Yet, most businesses keep spending money like before the recession happened.  Go figure.

But you’re much smarter than the average business owner, right?

Concrete Steps You Can Take Today to Save $$$ for Your Small Business

If you are serious about increasing profit by saving money over the coming weeks and months (so you can afford that holiday), here are several specific services to check out.  Each of these offers cost-cutting efficiencies unheard of only a few years ago:

In addition to trying new tools, be sure to review all of your budget items with a critical eye. Ask yourself, “if I stopped spending $ on this, what would happen? Is this expense really needed to satisfy my clients’ (and my) needs?” If the answers are no, pull out the axe!

Time to Get Started!

If you believe the saying, “there’s no time like the present,” I guess the time to start saving money is now.

In one of my own business, I have recently cut approximately 70% of expenses, which goes a long way to making that 20% drop in revenue seem less severe!

Regardless of your opinion on the subject, everyone has basic instincts that trump the myriad of trivial business requirements that typically fill our days.

For example: while in the midst of a leisurely swim on a tropical vacation, you may find yourself wondering about how nice your new bathing suit feels, if you paid too much for your hotel room, if you remembered to unplug the toaster before leaving home, and so forth.  However, when you’ve been underwater just a few seconds too long, you suddenly get 100% interrupted by an unstoppable urge that says, “get me up to the surface for more air, NOW!!!”  Its your survival instinct which, without, none of us might be here.

Similarly, while in the midst of a productive brainstorming session, business plan meeting, or some other small business operation, it is totally possible to suddenly have your business focus 100% sideswiped by an evolutionary urge like “Why is my child screaming in the other room?!  Must save progeny!!” or “Man, its almost the weekend again, and I still haven’t heard back from [name of person you took to dinner 3 weeks ago]…  this is driving me CrAzY!!!” or “I am soooooooooooooooo thirsty…  who cares about this business detail I’m working on?  What I really need to do is find me a bevy…” and so on.

While this kind of instinctual reaction to keep ourselves alive may be good for our survival, it can also kill your business productivity in no time.

That’s because our bodies and minds have been programmed to prioritize some things, like eating and other survival skills, above more abstract 17th century principles like value creation, completing a year-end, or doing adequate business planning.

In a split second, its virtually impossible to choose a low-priority business task over an apparently high-priority, survival-dependent task. This is true even when your survival is really not actually threatened, such as ‘needing’ a snack an hour after breakfast or ‘needing’ to check on a child when you know they’re being well cared-for.

To deal with this, we have to try to deal with the instinctual/survival/evolutionary issues beforehand.  That way, hopefully, we can physically survive and get that business plan written.

To accomplish this, here are a few things you can do to instantly improve your small business’s productivity, assuming you have not already done so:

• Have basic snacks available near or at your desk
• Keep a large glass or container of drinking water on hand at all times
• Unless absolutely necessary, keep your workspace and your parenting space separate
• If you haven’t already got this under control, learn how to get a date so you can concentrate on your work
• Clear all bee hives, roaming bears, and angry squirrels from the vicinity

With these basic aspects of life and “survival” under control (and unlikely to distract you 9 minutes for every 10) your business productivity should improve markedly.

For at least 90% of your day, you now only have to worry about everything else in life!

At least this gives you a fighting chance of concentrating on the tasks your business needs to have completed in order to thrive, instead of just getting overrun by the tasks you need to survive.

Winter’s coming, heating bills are a pain to deal with, homeowners are too busy to do minor home maintenance tasks, and I smell a 100% green small business opportunity.

Home renovations are a big deal, so long as you’re dealing with things like moving walls, installing cabinets, finishing a basement, etc.  For the average entrepreneur, the barrier to entry on performing home renovations is too steep to actually give it a shot.  Aside from needing expertise, you need tools, a truck or van to haul gear and supplies, references from past jobs, actual skill, and so forth.  Its a great business for people who can do it well, but its is no business to the average Joe to pursue unless they’re 100% serious about it.

A Green Home Renovation Idea for Total Amateurs

However, many smaller aspects of home renovation, particularly with regard to ecologically-friendly upgrades, are simple and accessible to the average entrepreneur.  That means you, provide that you’re willing to invest a limited amount of time and energy.

As heating bills begin to pounding tight budgets over the coming months, you can bet that homeowners across the nation will be looking for ways to reduce monthly bills AND to make their home more environmentally sound. Given concerns over mortgage payments and other financial uncertainty, its hard to find someone who wouldn’t like to slice a few bucks of their monthly utility bills…

So, here’s a green small business idea to fill this niche - put together a package of green home improvement services that:
a) you can actually do;
b) will be helpful to your customers (it will help them save on utility bills);
c) are things your customers don’t want to do or can’t do themselves.

Its kind of like shoveling snow off people’s driveways or mowing people’s lawns, except the actual services provided in this small business idea are slightly different.

So, what type of deliverables could you actually provide?  Well, how’s this for starters…

Green Small Business Idea

$0                   1 hour free Home Winter-Readiness Assessment (looking around the house for the biggest or easiest things that you could fix for someone; offering this for free entices prospective customers to let you in their house without any risk, allowing you to subsequently pitch specific services;  or, possibly, this could be a $50 assessment which becomes free for all people ordering at least $50 dollars’ worth of services.)

$25/window    Putting internal plastic barrier on windows
$25/window    Putting on external storm windows (where storm windows already exist)
$50                  Sealing leaks or gaps in older windows using silicon or a caulking gun
$50/door         Replace side and top weather stripping on external doors
$50/door         Replace bottom seal on external doors
$15/door         Secure hinges, doorknobs, etc. on all external doors for better sealing
$50                  Secure and maintain pet doors for better sealing
$10/foot          Provide wind/temperature barrier around the outside of the house along the ground level (if possible, using flax-straw bales or equivalent)
$25/rug           Delivery and installation of area rugs for cold floors on specific landings, hallways, or rooms (letting the customer choose and purchase from an online catalogue of your choice)
$____               (additional services of your choosing)

$50/hour         (Or an hourly rate of your choosing) For the completion of any additional tasks not mentioned above.

For the more serious handyfolks:

$____               Reinsulation of attic, walls, or basement
$____               Installation of double doors (storm doors)
$____               Furnace or hot water system maintenance
$____               Heating duct cleaning service
$____               (additional services of your choosing)

Simple Marketing Plan

Put together a one-page printable sheet that includes all of your small business’s services (chosen from above), clearly highlighting the fact that you will do a free assessment.  Print copies and either go up and down the streets of your neighborhood, post signs on community billboards with your phone number, or publicize according to your local situation.  Mention the benefits that your clients would receive if they bought your stuff: lower heating bills and a more environmentally friendly home.

The goal of this business, in sum, is to provide an easy and relatively cheap home upgrade to people who either don’t want to do this for themselves or who can’t.  It is not a complex home renovation business, but more along the lines of a neighborhood kid who mows lawns for all the old people on the block.  But, instead of simply mowing people’s lawns, you’ll be providing services that most 10 year old kids aren’t nearly sophisticated to pull off.

Hey - if I could pay someone a few hundred buck to take care of these things for my place, I’d do it in a heartbeat!

We’ve all been there: you start on a Monday morning, filled with passion, clarity, and a prioritized list of things to do that will make this week superbly profitable.

Then you check your inbox. Then Tuesday afternoon gets interrupted by the plumber. Then you have a completely unrelated bright idea on Wednesday. Then you’re tired/unintelligent on Thursday. By Friday you’re spent, have logged 50 working hours, have gotten a lot done, but have totally missed the priorities identified on Monday. And sadly, the chances are, you did not end up having a very profitable week.

Alas, the trap of relapsing out of our profit-focused priorities back into that profitless addiction called “misc.”…

A Weekly Goals & Accomplishments List

Having faced this issue numerous times in the past, I have started to write weekly priorities down. This simple activity serves as a personal guide for those times in the week where I lack good decision-making ability and lack clear perspective about what my priorities should be. In the absence of an external manager (drill sergeant), an entrepreneur must become their own manager. A heartless, time-watching, production-driven manager.

And we need tools to pull that off consistently.

A Simple Tool You Can Use

Spending 5 minutes a week writing down your top priorities and budgeting time for each task can really upgrade personal effectiveness. It is super easy to do, allows you to maintain a sustained effort on specific goals over many days, and allows you to evaluate how effectively you have worked when a week has passed. And all it takes is a pencil, a printer, and somewhere to post this list where you’ll see it throughout the week.

Luckily, its also as strict or laissez faire as you want it to be.

Why Do You Need a Printer?

To print this free, easy pdf: Weekly Goals & Accomplishments Worksheet

Feel free to use this form (high-resolution printable version here) and share it with others.

Tips for Use

Getting Started: Print off several copies, fill in the “Week” dates in advance, and commit to trying this for at least a month. It may take 2-3 weeks before this system starts to click for you.

Goals: Under “Details”, write the goal in a few words. Be as specific or general as seems to work best. Aim to have anywhere from 5 to 20 goals. Sample entries might be, “brainstorm one new business idea”, “read chapters 5-14 of ____ book”, “investigate tax options”, “adequately do my 15-hour part-time job”, “design these 2 elements of my new website: ______, _____”, “write 3 new pages of marketing material”, etc.

Priority: Some jobs are more critical than others. After filling in your jobs, rate the most important tasks “1″ and the least important “3″.

# of Hours Budgeted: Estimate how long it will take to complete each task. Round off to the nearest hour.

# of Hours Actually Taken: When finishing a task, estimate how long it took to complete. Compare this number to your estimate and see what you can learn from this. Don’t worry if the two “hours” numbers don’t always line up; just be sure that you consistently get better at optimizing your work time.

Total Hours Budgeted and Taken: At the end of the week, add up your hours and evaluate how things went. Don’t be too hard on yourself - just become aware of how you actually spend your time and figure out how to make the next week better.

Want to phase into a shorter work week? Use this tool to start shaving wasted hours, leaving more time for fun and relaxation!

Reward for Completion of Tasks: This is BY FAR the most important part of this sheet. Positive motivation works a million times better than penalties, guilt, or negative consequences. Choose something fun to do, buy, taste, or enjoy if you meet your weekly targets EACH WEEK, and then enjoy the rewards you’ve earned! Samples might be, “guilt free night out”, “large chocolate milkshake”, “new sunglasses”, “fanciest coffee at the coffee shop”, “trip to the beach”, etc.

Caffeine can be an A+ tool in the entrepreneur’s toolbox. Used at the right times for the right reasons, it can make you smarter, faster, and richer. However, used at the wrong times and for the wrong reasons, caffeine is likely to make you bankrupt, confused, and probably a little dehydrated

Caffeine vs. Uncertainty

One of the entrepreneur’s central questions is, “What am I going to do to make a lot of money?” Or, on a daily basis, “What am I going to do today to tweak my existing small business to make a lot more money?” In both cases, the entrepreneur is faced with uncertainty, unsure of how to best proceed through the mysteries, pitfalls, and opportunities in a future they cannot clearly see.

Uncertainty, for those who do not know, is a reddish-brownish blob that looks like this:

Uncertainty’s prime characteristics are:

• Its mystery (you don’t know what it is)
• Its elusive scope (you don’t know how little you know about it)
• Its inevitability (like it or not, every decision you make confronts uncertainty; it is 100% unavoidable for all entrepreneurs)
• Its dangers (there are always plenty of ways to muck up)
• Its promise and allure (somewhere within it, great fortune may await you)

Now, if only you could filter through that uncertainty a little more quickly…

Caffeine: The Uncertainty Annihilator?

Caffeine has the great characteristic of allowing your mind to operate differently than normal. Not better and not worse. But definitely different.

Although medical professionals may offer more complicated explanations, caffeine basically allows you to think faster, with greater agility, and with greater confidence than normal. Unfortunately, losing perspective, jumbling priorities, forgetting your purpose, making rash decisions, and displaying inept judgment are all common side effects.

In sum, while caffeine may make you a quicker thinker, it also makes you more susceptible to distraction and working on the wrong problems. By analogy, while you might be able to run twice as far, you’re more likely to run in the wrong direction.

When trying to make good business decisions in the face of uncertainty, caffeine can be your best friend or worst enemy.

Caffeine: Recipe for Impaired Thinking

A normal person dealing with the unknown is like this yellow dot within a blob. Their knowledge and command of the business opportunities still hidden within the blob of uncertainty are very low:

A thinker exploring the unknown without caffeine enjoys good judgement, good ability to maintain original priorities, and good ability to avoid distraction. After 5 hours of brainstorming ideas, a non-caffeinated thinker’s knowledge may look like this:

This thinker has made steady progress, but has been unable to do any truly remarkable thinking.

In contrast, a thinker exploring the unknown with caffeine benefits from the ability to make tremendous conceptual leaps, connect disparate details, and conceive a “master plan” in just a minute or two. After 5 hours (or possibly just 5 minutes) of brainstorming ideas, a caffeinated thinker’s knowledge can look like this:

However, several hours later, this caffeinated thinker will return to normal, look at their notes from the last 5 hours, and realize that their knowledge actually only looks like this:

That’s because they remembered to take out the garbage, found a lost item in the back yard, listened to a good radio program, wrote a hefty email about US foreign policy, checked their web stats 4 times, thought about 2 other aspects of the project, wondered about 5 other things, and spent 15 minutes actually working on the original problem.

This can be disheartening, but need not be. Managed properly, a caffeinated super turbo boost can be applied without going nowhere.

Tactics for the Profitable Use of Caffeine

1 - Before drinking caffeine, decide what you need to think about. Write it down, write it on your hand, write it on your screensaver, and write it on the wall. However you do it, write down the 2 or 3 specific questions that need genius-level caffeinated input so that you’ll stay on focused on the right tasks while jacked up.

With a well prepared and documented agenda, a 5 hour caffeine-fueled brainstorming session might look like this:

2 – Never brainstorm and spend money in the same session. If you end up brainstorming in caffeinated circles, think you’ve got the greatest idea in the universe, and immediately start spending money to make your dream a reality, you’re probably just wasting money on what will later emerge as a half-baked business plan. Always put a buffer between thinking up a “million dollar idea” and actually beginning to build it. Unless you think spending money on one of these sounds like a good idea…

3 – Go easy on the caffeine amounts. Use moderation at all times. For me, two cups of coffee is as much as I’ll drink on one of my caffeinated stints. Any more than that I lose all ability to act with intelligence. Plus, I’ll feel sick, probably won’t sleep well, and will be exhausted the following day.

My personal favourite sources of caffeine are plain dripped coffee (dark roasts have less caffeine per sip, but often taste better), green tea, a fine Darjeeling black tea, and bitter chocolate. I find that soft drinks, “energy drinks”, and other mild stimulants all cause more mental fuzziness or nausea than they’re worth. Go ahead and make your own decisions about what you choose to ingest, but personally, the four items listed above are my only endorsed “performance enhancing” drugs

4 – Power up your non-caffeinated mind with jumping jacks. This is no joke. If you’re uncaffeinated, feeling dull, and have a big pile of caffeine-free intellectual work to do, spend 2 minutes in a different room and do 100 jumping jacks. Count them all out loud. Or, if that doesn’t work, do 250. You’ll instantly increase your intelligence and ability to focus by at least 20%.

5 – Alternate bouts of caffeinated and non-caffeinated work. Over a week or two, spend time in alternating caffeinated mental states while working on the same project. Use the bouts of superior judgment (caffeine-free) to strategically temper and focus your periods of superior mental speed. Alternately, use a dose of superior mental agility (bring on the coffee!) to generate ideas, applying more sober and methodical reflection and synthesis later on. Over several days, this approach can lead to an exploration of your area of uncertainty that looks more like this:

With the blob of uncertainty (the one which stands between you and making more $$$’s) mapped out as thoroughly as the blob above, you are now in a pretty good position to make informed decisions about what to do next.

Good Thinking = Good Choices = More Money

Deciding whether or not one of your “bright ideas” is the right one to develop may be the most important decision you make in the next 6, 12, or 24 months. Similarly, deciding what to do each day to grow an existing business is essential to success. Getting these decisions right, aided by the elimination of as much uncertainty as possible (with maximum speed, balance, and thoroughness), is a key component to successful entrepreneurship.

And it lets you justify the odd cup of mmmmmmm delicious coffee along the way

Note: For those over-caffeinators amongst you (probably most of you), try working in non-caffeinated mode more often to improve your overall mix. It might take a week or two at first to fully emerge from the cycle of being over-drugged, but you’ll be amazed at what a difference a little clarity can make to your overall productivity and profit!

These ideas will each allow a very small business owner to save big-time $$$’s over the next 6 months. Depending on how many you choose to implement, you can easily save $12,000!

1 - Get a Free Library Card

Entrepreneurs have an insatiable thirst for novelty and information. Quench this thirst with a library card instead of your wallet. You can still buy items for your personal library later on (items you’ve checked out of the library 3 times), but 90% of the stuff you buy or think you want you’ll never end up reading/watching /using again. Educating yourself doesn’t have to make you poor.

Most libraries will charge you a few bucks for a card, but if you cite “financial constraints”, they’ll give it to you for free. Also, most libraries have “inter-library loans”, so that even the smallest suburban branches have access to a huge collection. Fulfill your need for information, advice, and how-to on the public’s tab. Reserve best-sellers or TV series online. Libraries have almost everything you can imagine.

Monthly Savings: $200 or more

2 - Cut Your TV Package and 2 Cell Phone Features

Cutting your cable or satellite TV package will have a dramatic effect on your life – you’ll have more free time, more energy, plus you’ll be smarter and happier. Trust me, its true. To rebalance your life, explore internet videos and a local library.

Cutting the most useless features on your phone package is also something you won’t miss. Endless voicemail, bundled text messages, the data package you never use… these can all turn into $’s you can use on marketing or something else way more fun.

Monthly Savings: $50 - $150

3 - Drop Your Land Line & Long Distance Packages

Get Skype for all long distance calls, get a Skype phone number or mailbox, encourage regular contacts to install Skype as well (so your conversations become free), buy a $30 headset, and chuck your landline for good. Keep your cell phone “in case of emergency”, having people call you to take advantage of free incoming minutes. You will never look back.

Monthly Savings: $50 - $100

4 - Lower Your Rent

If you can’t afford where you’re living or working, move somewhere $200/month cheaper. Pretty straight-forward, eh?

Monthly Savings: $200 or more

5 - Drive an Older Car and Live Close to Where You Work

Daily commuting costs an incredible amount of time and money – something often only visible once you’ve stopped doing it. 25 minutes to get to work… $75 gas… Arrangements to get the oil changed… $400 car payment…

Instead, buy an older import with no depreciation that does at least 40 MPG (mine does 55), move to within walking distance of your daily destinations, and park your car. Rent a car for that once a year trip where reliability matters.

If you’re trying to impress people with your automobile, impress them with stories of the foreign excursions you took with the money you saved instead.

Monthly Savings: $500 or much more

6 - Drink Water for Lunch

($0 drink per day) x (20 working days per month) = $0

($2-10 drink per day) x (20 working days per month) = $40 to $200

Monthly Savings: $40 - $200

7 - Brew Your Own Coffee

Brewing your own coffee = Almost nothing

($2-10 drink per day) x (20 working days per month) = $40 to $200

Monthly Savings: $40 - $200

8 - Sell High

When your stocks go up in value (perhaps well above their previous highs), and you’re thinking, “Yes! I’m finally about to become a millionaire,” stop being such a moron and take your cash while you can. Letting your portfolio of stocks plummet in value is a really easy to lose the money your business made in the first place. If you don’t want to follow your investments daily, set sell-stops so that you don’t have to. But regardless, don’t just sit around and lose your shirt.

Monthly Savings: Only you know this number

9 - Learn to Cook Gourmet

Cut out one fancy dinner per week and you’ll easily save $200 a month, especially if you like to entertain guests. If you’re relying on restaurants to be impressive, note that people like it better when you prepare it all yourself

Monthly Savings: $200 or more

10 - Make Your Own Wine/Beer

The first kit won’t save you much money, but it will still be cheaper than any sale in town. Subsequently, wine will cost you approximately $2/bottle and beer even less.

Making wine or beer is best done in good company (as your drinking should be!) Aside from ensuring fun throughout the whole process, if everyone does their own kit and you all split the results, you get a variety of products and minimize the risk of one or two ruined batches.

If you’re having a company party, this is an easy way to cut costs and do great team-building (the brewing process) as well.

Depending on how much you drink and how much you pay, this can save:

Monthly Savings = (X*Y) – (X*$2) Where (bottles/month = X) and ($/bottle = Y)

Adding Things Up

Take the amount of money you’ve saved with each of the 10 items above, put it in the “Monthly Savings” column, and see how much you can save!

If you can’t make things add up to $12000 per year (just $1000 per month, or less than half of the list above), there’s something wrong with you!

The most important thing any small business can do is learn - from your own mistakes & success, but also from the mistakes and success of others. Aside from building friendships with mentors and experts in a wide range of disciplines, it is essential to learn from the experts - including experts you would otherwise not encounter.

Of course, the alternative is to simply not learn. Instead of reading something, you can simply maintain your current level of knowledge and its current level of income.

The following list is broken into sections on purpose. If sections within this list strike you as particularly non-attractive, “useless”, or disconnected from small business ownership, I’d recommend beginning your reading there. That may be your area of greatest need.

Last updated - July 2008

Design

Like it or not, following several basic principles of design will largely dictate the success of your small business. If you are not well versed in the contents of these books, the chances are high that you will critically mis-communicate with everyone.

• The Design of Everyday Things (Donald A. Norman) – Brief summary of basic design principles and why good design is important. A great text for a smart person with no background in formal design. This book was originally titled, “The Psychology of Everyday Things.”

• Principles of Design (William Lidwell) – Includes 100 2-page concept summaries involving almost no text. Rich in pictures and visual examples, this book explains and illustrates the most important design principles essential to making everything work, look, and communicate better. A perfect reference for amateurs and people who don’t like to read.

Entrepreneurship

Entrepreneurs who follow their dreams form a tiny percentage of the general population. As a result, you likely haven’t had the chance to really chat with many real entrepreneurs. Learning from others’ successes, failures, and hearing their advice can quickly improve your business intelligence.

• The Book of Entrepreneurs’ Wisdom (ed. Peter Krass) – Comprised of short essays and stories by over 50 entrepreneurs, this book covers the basics: The Start Up, The Maverick Element, Going Public, Risk, Inventions, Branding, Management, and Personal Stories. Contributors include giants like Steve Jobs, Michael Dell, Henry Ford, Ross Perot, J.C.Penny, Michael Bloomberg, Andrew Carnegie & many more. Required reading for small business owners.

Synthesis / Personal Finance

Regardless of how well your small business does, business revenue and personal finances are completely independent. Learning how to grow and protect your nest-egg over the long haul is one of the most important skills to acquire; a skill many business owners neglect in the midst of daily hassles.

• Automatic Wealth (Michael Masterson) – Well written and to the point, these six steps offer a blue print for finding financial independence in as little as 7 years. Offering non-sensationalized, non-flakey plans, this book can help you take advantage of seemingly obvious strategies that most entrepreneurs don’t catch or leverage until years later. If you want to “retire” as quickly as possible, this book has realistic lessons and advice.

Geography and Culture

If you haven’t realized it yet, successful business ideas work by addressing the real needs of real people in the real world. The more you know about the world we live in, the better-equipped you become to build a lasting and valuable business. These books will change the way you view business strategy and risk by challenging your assumptions about humanity, our future, and why things are the way they are.

• Guns, Germs, and Steel (Jared Diamond) – A summary of human history that explains more about our culture and the world than you’d think possible. Essential reading for those concerned with or impacted by international supply/demand.

• Collapse (Jared Diamond) – A sequel to Guns, Germs, and Steel, Collapse examines cultural lessons from past and current civilizations on the brink of dramatic decline. This is recommended reading for understanding how to position a business with solid long-term fundamentals.

Statistics and Risk

Almost every aspect of life and business depend on decisions which relate to risk. In short, how to understand uncertainty, leverage statistics, and outsmart the “curve”. in other words, how to make good decisions. These books may save your skin more often than you can imagine.

• The Black Swan (Nassim Nicholas Taleb) – Required reading for anyone dealing with uncertainty and/or “certainty” in their everyday lives. In other words, everyone. By challenging common assumptions about stability, mathmatics, and how humans think, this book will change the way you play with risk and, most importantly, how to avoid becoming a sucker.
• Principles of Statistics (M.G. Bulmer) - Overview of the theory and methods of statistics. Great bed-time reading in case you’re having trouble counting sheep

Time/Life Management

Without a guide, system, philosophy, or externally-enforced routine (a boss or middle-manager telling you what to do each day), most people end up working with poor efficiency and living with unbalanced priorities. The following two books will accelerate your progress dramatically.

• The 80/20 Principle (Richard Koch) – Even if you’ve heard of this principle before (80% of the input creates 20% of the value), reading the book will take you in mental directions you wouldn’t have predicted. Worth re-reading at least twice a decade.
• The 4-Hour Workweek (Timothy Ferriss) – Easy to read, this guide provides inspiration, a conceptual framework, and specific tools to dramatically reduce time spent working while increasing overall productivity.

Brainstorming & Idea Generation

If you’re coming up with ideas, you may as well come up with good ones. Reading these two books will help enormously.

• Purple Cow (Seth Godin) – Easy to read, this pages will help you transform your small business idea into a remarkable idea with a realistic chance of success.
• The Dip (Seth Godin) – Learn when to abandon a small business idea by asking yourself a few simple questions. At least 70% of being a successful business owner is knowing what and when to quit; a skill this book will help you develop.

Books and Ideas to Drop at Cocktail Parties

A lot of good business relationships can be formed by sharing an interesting conversation about bees, Sri Lanka, quantum mechanics, or some other specialized topic. That’s because a lot of the best business contacts you can make happen to be smart people with niche interests. By becoming able to converse on a broad range of topics, you increase your networking potential (and your potential for the benefit of having powerful friends) by a large margin.

• The Lonely Planet’s Guide to [pick any place in the world...] – Everyone likes to talk about travel. Gain specific knowledge of locations around the world. Or, even better, visit them yourself. This topic of conversation works on 99% of important potential business contacts.
• The Field (Lynne McTaggart) – Introduction to quantum science and overview of numerous scientific disciplines. 90% of people you talk to about this will think you’re weird, but the other 10% will be your new best friend.
• Siddhartha (Hermann Hesse) - How to not get caught up in the wrong goals, lose yourself for 15 years, and wonder how the f*** you got to wherever you are.
• Breakfast of Champions (Kurt Vonnegut, Jr.) - Taking things too seriously is a terrible disease and a terrible way to run a business. Breakfast of Champions may not exactly be up your alley, but it will likely help you out along your way.
• Bach, Beethoven and the Boys (David W. Barber) - Humorous, easy to read vignettes and quick facts about classical music. Can be read in an evening and provide you with cocktail trivia for years.
• Sophie’s World (Jostein Gaarder) - If philosophy intimidates you and that bothers you, this novel will help. Written by a high-school teacher to help his students understand basic philosophy, this book will equip you for any unexpected philosophical conversation you’ll encounter.
• Any three books by any “literary master” – Even if you don’t like reading, its handy having two or three author’s names to drop before quickly changing the subject to something you actually care about. Like it or not, you look dumb if you don’t read. To quickly solve this problem, choose any book (preferably short) by a “canonized” author (an author that appears in University English classes), form one opinion about each book (or find one on the internet), and you’re set.
  • For ease of reference, each of the following books is short, easy to read, and genuinely counts as “literature”:
    • Earnest Hemingway – The Old Man and the Sea
    • John Steinbeck – The Pearl
    • John Steinbeck – Of Mice and Men
    • William Golding – Lord of the Flies
    • Henry James – Daisy Miller
    • Salmon Rushdie – Haroun and the Sea of Stories
    • George Orwell – Animal Farm
    • Samuel Beckett - Waiting for Godot

What is “Barrier to Entry”?

Simply put, “barrier to entry” refers to the difficulty of getting started in a given niche or specialty. If the barrier to entry is high, that means its hard to get started or to “pass the barrier”. If the barrier is low, almost anyone can get started with little effort or skill required.

Examples of High and Low Barriers to Entry:

The following business ideas all have a high barrier to entry:

• Private health clinic (barrier = years of medical training and business set-up)
• International widget distributor (barrier = years of building a company from the ground up)
• Industrial manufacturer (barrier = heavy initial investment in machinery, supplies, labour, etc.)
• Nuclear power supplier (barrier = unbelievably high investment requirements, political regulatory requirements, decades of clean safety records, etc.)

The following business ideas all have a low barrier to entry:

• Blogger (barrier = free account, a few minutes, and a few good ideas)
• Neighborhood snow shoveler (barrier = $10 snow shovel and 15 short conversation with 15 neighbors)
• Advertising based website (barrier = $20 hosting and domain registration plus some way of getting internet traffic)
• Dog walking service (barrier = contact with dog owners willing to pay you to walk their dog)

Leveraging Low Barriers to Entry

Leveraging a low barrier to entry in your small business plan is great for one simple reason: it is really easy for you to get started. Starting a blog, opening a small-scale neighborhood service, or some other really simple business has little to no startup costs, little to no employment requirements, and little to no personal risk. In other words, its really easy to move from the planning stage to implementation.

However, the problem with these businesses is that you’re likely to encounter high levels of competition. If you could get started with $10 and an afternoon’s worth of effort, so can 500 other people. As a result, businesses with a low barrier to entry are likely to have minimal potential as stable, reliably profitable businesses. Unless you’re willing to work like an SOB for years and years at your idea (perseverance, by the way, is a high barrier to entry kind of thing), it is unlikely that your business idea will work on the merit of the idea alone.

Leveraging High Barriers to Entry

Leveraging a high barrier to entry in your small business plan is also great for one simple reason: its tough for competition to crowd you out of getting customers or charging premium rates. Exclusive systems that weed out competition are at the heart of most professional programs (years of medical school, strenuous CGA tests, tricky logic tests to become a lawyer…), high-skill professions (eg. pro basketball player or opera singer), and big business (capital-intensive facilities, a committed and talented workforce, real estate at the right street corner…), meaning that it is potentially very difficult to compete with established players who are already decades or leagues ahead of you.

On the flip side, if you’re the one already past several barriers to entry, you have the ability to stay several steps ahead of your potential competition. In fact, the chances are that you have several advantages over potential competition that you’re only marginally aware of. Think up a list of barriers you’ve already passed and think about ways you can use them to your advantage.

To help you recognize existing strengths, the following list shows potential barriers you may have passed that can be twisted into your own small business, well beyond the reach of 50,000 would-be competitors:

• undergraduate degree, graduate degree, professional certification
• finely tuned skill only .001% of the population possesses
• lump of cash to accelerate the startup process
• years of experience starting & managing businesses
• a fruitful network of people and acquaintances
• technical skills, physical skills, ______ skills
• real estate in choice locations
• credibility and reputation from another walk of life
• and the list goes on and on…

The Bottom Line:

If you’ve got some exceptional skills, knowledge, certification, or other advantages that leapfrog you past would-be competitors, use them whenever possible. By standing inside difficult barriers to entry, you automatically make your business more stable, more valuable, and potentially more profitable.

Or, if you’re just new to the game and are planning a business with a low barrier to entry, work quickly, work diligently, and try to leverage cost-free qualities with a high barrier to entry (integrity, perseverance, brilliance, cunning, and excellence; all qualities more rare than you’d think) as quickly as possible!

The Essential Test for Every Small Business Idea:

Every new small business idea must face this simple yet essential question: Is your small business idea a business, a hobby, or both?

Go ahead, take 30 seconds to ask yourself this question.

The Answers:

If you answered “both”, you have failed this test. Chuck your idea and go back to the brainstorming phase. You will only lose time and money if you don’t stop now.

If you answered “hobby”, congrats! You now have a new hobby. Consult your day-planner and your family to see if have time for a new hobby.

If you answered “business”, congrats! You now have a new business idea.

The Definitions:

A business may be defined as, “something you do to make money.” Businesses are not about making friends, pursuing personal dreams, doing something interesting, developing personal skills, or having a good time. A business exists to make money, as quicky and efficiently as possible. That’s it. End of story.

A hobby may be defined as, “something you do for personal reasons: enjoyment, socialization, or something else.” Hobbies are not about making money, building economic leverage, developing business relationships, or being efficient. A hobby exists for purely personal reasons, as pleasurably, enricheningly, interestingly as possible. That’s it. End of story.

A business/hobby may be defined as, “something you tell yourself you do to make money while also enjoying yourself.” These mixtures are typically bad at making money (because you get lost in the fun parts of it), bad at personal enjoyment (because you get lost in the economic parts of it), and great at wasting as much time & money as you’re willing to throw at them. That’s it. End of story.

How to Mix Business & Hobby (Because Its What You Really Want To Do…):

Regardless of the dangers mentioned above, most people pursue a mixture of business and hobby anyway, regardless of the dangers, occasionally with great success. In order to do so, the following thoughts may help you on your way:

• Doing a business you enjoy, even love, can provide essential motivation to make it through the tough times. Often, its what makes the difference between a business that dies and a business that survives the dips. Using this to your advantage & choosing a business idea that you actually do enjoy can be the most important decision you make. Just be sure you’re clear on the fact that its a business, not a hobby, or else you’re playing with danger.
• If you think this article is stupid and that mixing business and hobby is a good idea, consider running this small test: choose a small business idea you have no personal interest in (selling a widget you’ve never heard of, setting up an online t-shirt store with designs themed around bikers, babies, parrots, or something else you have zero interest in, or launching an ad-based website on a topic like automotive insurance, drill bits, or dutch elm disease) and run the test over a 4-month period.Chances are you’ll be way more rational about learning how to run a business with this test than you will be if working on a topic you love. Measure things like input cost, revenue, # hours/week, and so forth. Then, once you’ve learned how to turn this business into a money-making machine, try running a new business on a topic you love, but restrict yourself to the same limits you used in your other business (# of hours/week, input cost, etc.). See how well you cope making intelligent business decisions in the midst of a hobby-esque environment.
• Hobbies, friendships, and relaxation are great. If you develop a business that leverages your favourite activities and/or the people you hang out with, will you be able to introduce the pursuit of personal profit without poisoning the things you love? Will business efficiencies and difficult decisions obfuscate your treasured relationships and leisure activities? Be sure to ask yourself these questions before going too far down this business/hobby rabbit hole, lest you end with a failed business and failed hobbies.

The Unexpected Bottom Line:

Despite these warnings, I’m not 100% discouraging a mix of business & pleasure. I actually have a part-time hobby/business which I would still choose to do for free, yet I certainly don’t complain about the cheques which arrive every month. Alternately, I also have several small businesses which are 100% profit driven and hobbies are 100% motivated by fun. The key is to label each activity clearly so that there’s never any confusion over why you’re doing what you’re doing.

For most small business owners (and possibly you), this means getting serious about making a business a pure business; learning to make hard business decisions that have nothing to do with personal feelings. It can really suck to kill a business/hobby isn’t working out, but that’s a lesson many entrepreneurs need to learn in order to move beyond current limitations.

To what extent is your “business idea” a business and/or a hobby? Figure this out and your ability to make clear decision (and your chances of success) will go way up.