A Small Business

1. A Small Business A Business - in All Respects By Jack Geary

2. Outline of This Presentation Snapshot of the Business & Cautions! • About Small Business Models • Any Business • It helps to read Rich Dad Poor Dad by Robert Kiyosaki before you review this outline.

3. SNAPSHOT # 1Independent Business Owner’s Model PURPOSE of ANY BUSINESS • To earn Immediate Income + Residual & Passive Income • Develop Wealth through Capital Gains rather than wages/salary. CAPITAL INVESTMENT REQUIRED • Most business require 30K to 200K ++ Operating Cash • What businesses require less than business sign; cash register; or 1/8 Yellow Page Ad

4. Snapshot # 2 WHAT YOU DO! – Day in Day Out? • Most IBO spend hours working • IN the business rather than working ON the business.M. Geber, E-Myth

5. SNAPSHOT # 3Independent Business Owner’s Model HOW – ANY BUSINESS! • Invest your time in activities that result in highest probability of generating most gross revenue and • moving products and/or services through the channel that you build. • Find and keep customers or clients • Read this a number of times and focus on every word!

6. Schizophrenia Yes, it’s true. A IBO in an ‘independent operator’ type business must perceive themselves as two people: 1. As a ‘business owner’ who invests and owns the business; • 2. As an employee or worker who spends ‘time’ in the business; It is vital that you keep the two personalities separate. Each plays an important but difference function, e.g., beautician who rents space; child care person who establishes a daycare business; a plumber, carpenter who operates a contracting business; a truck driver who owns his/her own rig.

7. What Is This Concept Called “Channel” How does a person providing a personnel service business establish or become part of the distribution channel? • Answer: You provide access to vendors who sell yellow pages, licensing, schools where you received training, business taxes, supplies purchased. These vendors depend on you.

8. Caution - Danger The Sales Dog BITES • With low $ investment + low operating cost you may Underestimate Commitment Required. • You must be treat business as if you invested 200K, financed by a 2nd mortgage.

9. ANY – BUSINESSWhere Are You?Where Do You Want to Be? R. Kirosaki, Cashflow Quadrant

10. The Truth About Every “Any” Small Independent Business Owner Every IBO must sell & promote. Every IBO part of a supply chain Every IBO must constantlyfind customers Every IBO must constantly retain customers Every IBO must turn customers into distributors If you can! Not all quadrant ‘S’ & ‘B’ business models allow for ‘distributor’ formation or growth! What IBO does not want distributors?

11. Recap - Any - Small Business PURPOSE: Immediate Draw + Residual income or (Passive) + Most “S” Few “B” Quadrant INVESTMENT: $15K-500K+; 401K; Seller Note-with monthly payments Monthly Royalty Fees + Operating Cash; 2nd Mortgage; Golden Parachute

12. Recap - Any Small Business EXAMPLES of BUSINESS MODELS Bakery, Mail Box, Copy, Sign, Coffee, Candy, InkJet Refill, Barber • Sole Proprietor • Franchise (Turn Key) • Network Marketor (like a franchise: Avon, MaryKay, Shacklee, Quixtar)

13. Recap: Any Small Business OPERATING EXPENSE (Every Every Month) Employees (massive drain on $$$, admin. Time.) ER’ becomes a Social Service Dept) Contractual commitments (debt service, leases, copier, cash register) Immediate sales receipts (less Visa-Check Guarantee Service) or invoices, factor – every day, week, month, year!

14. Recap: Any Small Business GROSS REVENUE Based entirely on sales volume of products & services moved through your distribution channel (Markup, Performance Bonus Not Guaranteed). Probability of success IS poor Asset loss IS great;

15. Recap: Any Small Business HOW: 70-80 hrs/wk operating + managing + supervising + administrating + solving employee problems + interruptions Not much time invested in high revenue generation activity, e.g., finding new customers, selling, promotion, training, building the channel. (Remember the two personalities.)

16. OPERATING COST TO FIND NEW CUSTOMERS Any - Business + Cost of acquiring a customer Location Location Location just a means of finding new customers plus High Traffic Interiors Radio/Print/TV Direct Mail Outside Sales Sales Clerks Yellow Pages Trade Orgs Chambers + Net Revenue Personal Effort* Finding New Accounts Customers or SELLING “System” not a tool to avoid selling; rather, it is a tool to free-up time to sell, promote, & train, to be efficient & to be creative; *show the plan, build the distribution channel

17. Cost of Finding Customers The graphic illustrates that a typical brick & mortar store where the owners uses advertising, location, and employers to find customers and therefore has a very high cost of acquiring and retaining customers. Direct selling-eye ball to eye ball-where the IBO finds and keeps customers eliminates these high costs.

18. Finding Customer Base KeepingWhere Do You Find Then??? Employees Word by Mouth Direct Mail Foot Traffic Yellow Pages IBO Radio/TV Interior Decloration Prestige Location Your Business Print Ads Telephone Marketing Parking 6000 to 9000 customers per month- every month

19. SUPPLY CHAINMultiple Distributors & Levels in the Traditional Market Economy for Any Business To what supply chain are you connected? • Everyone is connected to someone’s chain at some level! May be a business but an end consumer none the less End Consumer Always Looking for Distributors of Wholesalers IBO Services Products D M S Typical Retail Operation or sole proprietor/professional ‘S’ Quadrant IBO W FO Factory Direct A distributor at any level in the chain seeks stability & profitability– no account more than x % of the business. This is how business is done in a market economy!

20. Entrepreneurial MythsFatal Assumptions for Any IBO “You are suddenly stricken with an Entrepreneurial Seizure to start a business.”M. Gerber, E-Myth “If you understand the technical work of a business. You think that you understand the business that does that technical work.” NOT!

21. Entrepreneurial Myths Fatal Assumptions for Any IBO You want to start your own business because you want to:R. Kiyosaki, Cashflow Quadrant “Be your own boss,” “do your own thing,” “do it yourselfer,” “fiercely independent” “the product or service is so good that it will sell itself.” “NOT” You do not “want security, benefits” BUT! Small business is a team sport!

22. How to Avoid Consequences of Fatal Assumptions • “Work on the business rather than in it.” • establish and work a system. Michael Gerber, E-Myth • Duplicate - do not invent the wheel again “why do it yourself when you can hire someone to do it for you, “they can do it better.” Cashflow Quadrant, Robert Kiyosaki • Build relationships- a team; no ‘lone ranger’ mentality!

23. RECAP REALTY CHECKANY - BUSINESS • Sales & Marketing + technical knowledge • A typical retail coffee shop: • 500 to 9000 customers per month, every month; • $ 3 to $ 10 average sale/customer ($ 1000 to $20,000 average sales per day) • Must operate + manage + PROMOTE + SELL (the sell word) • Always finding new accounts and customers - always • Where do you spend time? Operation or Building customer base?

24. RECAP - REALTY CHECKANY BUSINESS • YOU WANT TO BE A CAPTAIN OF INDUSTRY - EGO • News - PR about your businesses- about sq.ft.leased -, • # employees- investment (bank, SBA Loan) (advertising) • ‘News’ is never about traffic, customer counts, gross revenue, profit or investment yield • It is all about ‘ego.’

25. Why Did We Get In This For- in the First Place! We Want Business Model – a System • leverage time, i.e., cash flow is not dependent on your personal time. • maximize your “earning yield,” “critical mass” (Bob Brinker, Money Talk) • “tri-net” income,” or income available for “investment” in income producing assets that do not depend on your personal time. • Free up time for family, leisure or Quality of Life Tri-net: Net income after all taxes, operating costs, living costs, leisure, living expenses, mortgages, usual insurance & retirement responsibilities. (Jack Geary, Career Economics).

26. Change of Perception About ‘Selling.’ Value Added Solution Purchaser Selling!

27. Change of Perception About – ‘Selling’ Consult with Customer Close Yes! Absolutely NO! R.Blake, J.Mouton, The Grid for Sales Excellence

28. CRM MODELCustomer Relationship Marketing • Businesses succeed by getting, keeping, and growing customers. • Customers are the scarcest resource- not capital! • Customers create current cash flow and retention means future cash flow

29. CRM MODELCustomer Relationship Marketing • Treat different customers differently • Differentiate high value customer • Customize to meet individual needs Don Peters and Martha Rogers, Ph.D., Bob Dorf, One to One Future

30. SUPPLY CHAIN STRATEGY Revisited RE-POSITION Yourself in the Supply Chain • Authorized to Build Your Own Network of IBO’s. Move Product & Services C M IBO IBO Bonus IBO MS You IBO IBO Q IBO IBO IBO Duplicate the system and your effort C IBO IBO Low cost investment opportunity authorizing you to share the business plan and establish IBO with full rights to compensation schedule.

31. Finding CustomersKeeping Word By Mouth IBO CRM One - to - One Peters & Rogers, PH.D. Build Relationships

32. Model - System • Word by mouth relationships • Contractual Right to compensation system not a guarantee of earnings • Legal Right- build distributing channel • Everyone has equal opportunity • No ground floor opportunity • No Location – No Brick/Mortar

33. System 2ANY Business • Global Market • Product/Service Diversity • Low Labor Requirement – no employees • Meet Continuing Human Need • Low Overhead • Free From Government Regulations • High Probability of Good Management

34. Family Enterprise Friendly Try Out Quick, Positive Rewards Leverages Time ****** (Busy People Manage Time Well) Minimum Technical Knowledge Rewards Related to Effort Support System System 3

35. ACTION • All business opportunities require cold selling after the hype and enthusiasm. Andrew Caffey, Franchise Attorney • Everyone sells, including your physician, rabbi, priest, minister, the Pope, GOD. • Everything said means nothing and will be perceived as hype if you do not take the business seriously and if you do nothing.

36. The ‘musts’ for successful self-employment “Self-employment makes ever more sense in an era in which you usually must be outstanding to land a good non-off-shore-able job. Self-employment enables you to instantly go from schlepper to CEO.”

37. The ‘musts’ for successful IBO However, to avoid failing you must: • Be a self-starter, not a procrastinator.  ”interpreneur”   • Be smart enough to quickly solve real-world problems.     • Make a good first impression.

38. The ‘musts’ for successful IBO Don’t innovate; replicate. Most innovations fail—at great expense. So, only wealthy individuals and corporations can afford to risk innovation. Most people are wise to copy a successful business… “Marty Nemko, San Francisco

39. Entrepreneur If you are not afraid of the sales dog. ‘Any’ business requires maximum effort on the most difficult aspect of any business which is – to generate positive revenue & finding and keeping customers or selling!