Not-for-profit Organizations

Social entrepreneurs start non-for-profit organizations. Social entrepreneurship involves changing the world in a good cause. If you have in mind to help people who can't pay you, then you might consider starting a non-for-profit company. At S.C.O.R.E. and the Baiada Center we get lots of people coming through with ideas for businesses which are really better suited for a not-for-profit organization than a for-profit business.

A not-for-profit company is designed not to make a profit. This is a good idea if you're going to provide something to people who need it but can't pay for it. I use "not-for-profit" rather than the "nonprofit" to distinguish an organization designed not to make a profit [Not-for-profit] from an organization that is designed to make a profit [For-profit] but isn't making any. This is a whole 'nother thing.

Because they don't make a profit doesn't mean they aren't good organizations. They do great things have budgets in the billions of dollars and pay good salaries. The International Red Cross is a non-for-profit organization. Not-for-profit organizations can have some for-profit ventures, too, but are strictly limited.

About.com says:

Nonprofits are corporations formed for a charitable, civic, or artistic purpose. Nonprofits are generally exempt from federal and state taxation on their income, and so they are often called "exempt organizations." Nonprofits have substantial responsibilities for reporting their activities, income, and assets to ensure that they are in compliance with federal and state laws governing charities. For additional information on starting, managing, and developing a not-for-profit organization, see the About.com Guide to Nonprofits.

You should google "Types of Business Organizations." There's a ton of stuff on entrepreneurship in general. Follow the links and you'll never want for reading matter.

The thing is, if you have a not-for-profit organization, you are eligible for pools of money that aren't available to for-profits. So you can get money from one source and operate when the users of your service can't pay for it. That's the advantage of a Not-for-Profit. And you get the feeling of doing good in the world.

All business is tough right now. Not-for-profit businesses are dropping like flies. Investors' funds are severely stressed and giving is down. Obama's policies cut back on tax incentives of charitable giving. Individual contributions are down because normal individuals have seen their savings either entirely or largely disappear. But don't let that stop you. Link your passion to human need, whether it's getting soccer shoes to innercity kids or improving third-world countries' access to clean water, or whatever.

Always consider carefully what you do in business. And involve both an attorney and an accountant in your decision. They can evaluate your specific situation.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

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A Trust

A Trust is not a business organization in the vein of C corporations, S corporations, sole proprietorships, and partnerships are.

About.com says:

Trusts are usually formed upon the death of an individual and are designed to provide continuity of the investments and business activities of the deceased individual.

You might consider setting up a trust for your assets as you go forward. It will simplify things immeasurably for your children. But in terms of helping you do business, there's not much to say about them.

Before setting up a Trust, or making any move with your business, you should always consult an attorney and an accountant.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Subchapter S Corporation

An S Corporation is a variant of a standard, or "C" corporation, in which the income of the business passes through to the shareholders. The corporation itself does not pay any taxes, rather the shareholders report their income and expenses on their personal tax returns.

It avoids the double tax is presented when one or just a few individuals own a C corporation: the company pays taxes on corporate profits, and the owners pay taxes on their incomes. In an S corporation the owners are only taxed once.

Here's what Wikipedia, free, on-line encyclopedia, says:

An S corporation, for United States federal income tax purposes, is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. In general, S Corporations do not pay any income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns.

As Bakar says, consider carefully when you set up a corporation. You should always consider things carefully, either in business or in life.

Also, be sure to consult an attorney and an accountant when you decide on the form of organization to create. They can advise you on your specific situation.

And keep in mind that laws differ by country. If you're reading this in England, you different things might obtain. If you are marketing to different countries, you should consider what laws obtain in different countries.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

The Standard Corporation

A standard corporation is what you think of when you think of big companies. Ford, General Motors, Microsoft, MacDonalds. You can tell them if they say Corporation, or Corp., or Inc. Ltd, which is British. We can call our companies LTD as well, though whenever I see it I think ask, "limited to what?" I don't want anyone to think my business is limited to anything.

Here's what Investorwords.com says:

The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern. The process of becoming a corporation, call incorporation, gives the company separate legal standing from its owners and protects those owners from being personally liable in the event that the company is sued (a condition known as limited liability). Incorporation also provides companies with a more flexible way to manage their ownership structure. In addition, there are different tax implications for corporations, although these can be both advantageous and disadvantageous. In these respects, corporations differ from sole proprietorships and limited partnerships.This content can be found on the following page:http://www.investorwords.com/1140/corporation.html.

Corporations are easier to set up than they used to be. And they have the alleged advantages of limiting your liability and protecting you against suits. This is true or is not.

Fraud-nothing protects you against that, and there's no time limit. If you committed it 40 years ago you can still be prosecuted.

The corporate "veil" doesn't necessarily protect you against creditors either. Anyone who sues your corporation is going after the deepest pockets. If your corporation is small with few assest, they're coming after the owners because the owners were acting in the interest of the corporation.

The corporate "veil" doesn't necessarily protect you against financial default. If your corporation needs money, and doesn't have much for collateral, anyone lending you money is going to require you to personally guarantee the loan with your personal assets. As my lending officer told me once, "If National Research Services, Inc., [my start-up at the time] defaults on this loan, how can I get my money back? But if Tim Bosworth defaults, I know he can probably get a job and pay me back."

So in the case of small corporations, there isn't an easy way to protect yourself other than sound business practices such as maintaining good credit, developing abundant positive cash flow, having appropriate insurance, exhibiting transparency in all business dealings, and so on.

One definite marketing advantage of a standard corporation: that "Inc" after your company name gives you in some eyes a platform of credibility unmatched by any of these other forms. In short--you look like a real business. And that inspires trust.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Partnership

A partnership is like a sole proprietorship for a few people. Wikipedia, the free, on-line encyclopedia describes a partnership as

a type of business entity in which partners (owners) share with each other the profits or losses of the business undertaking in which all have invested. Partnerships are often favored over corporations for taxation purposes, as the partnership structure does not generally incur a tax on profits before it is distributed to the partners (i.e. there is no dividend tax levied). However, depending on the partnership structure and the jurisdiction in which it operates, owners of a partnership may be exposed to greater personal liability than they would as shareholders of a corporation.

For myself, I would never enter into a standard partnership. Each partner is fully liable for all the debts of the partnership. If you partner empties out your bank account and scams off to Aruba or somewhere there's no extradition treaty with the US, you're on the hump.

Anyone thinking of forming a partnership should contact an attorney. Also, don't consider forming a partnership with people you don't know well. It's like getting married. They're easy to get into but messy to get out of.

And make sure you have a good partnership agreement. That agreement will specify how you will handle certain situations. What if one of your partners becomes incapacitated or, worse, dies? What if he or she decides to leave the business? What if you want to take on new partners? What happens if you decide to dissolve the partnership? Who is contributing what assets to the partnership and what proportion of the partnership's revenues does each partner get?

And talk to an accountant. He may have a different take on things than an attorney because he's looking at a different side of your business.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Sole Proprietorship

This is the easiest and cheapest form of business to start. Just get some cards, put up a website, register your business if you have to, develop whatever promotional material seems right to you, and go.

Here's what Wikipedia, the free, on-line encyclopedia, says about a sole proprietorship:

A sole proprietorship, or simply proprietorship (British English: sole trade) is a type of business entity which legally has no separate existence from its owner. Hence, the limitations of liability enjoyed by a corporation and limited liability partnerships do not apply to sole proprietors.

All debts of the business are debts of the owner...It is a "sole" proprietorship in the sense that the owner has no partners. A sole proprietorship essentially refers to a natural person (individual) doing business in his or her own name and in which there is only one owner.

A sole proprietor may do business with a trade name other than his or her legal name. In some jurisdictions, for example the United States, the sole proprietor is required to register the trade name or "Doing Business As" with a government agency. This also allows the proprietor to open a business account with banking institutions.

If you're just going to go for that sandwich, then this may be the one for you. You're going to do business as yourself. When you cease doing the business for whatever reason, the business ceases.

This may or may not work for you. It's simple and direct and virtually free to set up. You just do it. But it's also limiting. If you want to rent an office it's harder. If you want to have employees it's harder. If you want to build something lasting, it's harder. If you're serving a market that values buying from more permanent businesses, it's harder.

If you're a website developer working out of your home, a solo practitioner attorney, an organizational consultant working with fortune 500 company, it can work for you. You can start, then always change later. Always be as simple as possible, but no simpler.

My first business was a sole proprietorship. I was a market research consultant in Madison, Wisconsin, working from my home. I didn't want employees. I didn't want an office with all that overhead. Then I found myself not getting hired because I wasn't a "real" business. I screwed up a report because I was trying to do it all myself. I went out and incorporated as a Subchapter S corporation.

What do you think of this? The goal is to produce more skilled entrepreneurs.
Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Forms of Organization

Once you've either hired your ships or gotten your sandwich, you'll have to decide on what form your organization will take. You will have to decide because there's no way NOT to decide. So evaluate your options and decide what form is best for what you want to do.

According to About.com,

While there are a variety of designations at the state level, for federal tax purposes there are only 6 forms of business organizations:

1. Sole Proprietor (1040 Schedule C).
2. Corporation (1120).
3. Partnership (1065).
4. S-Corporation (1120S).
5. Trust (1041).
6. Non-profit organization (990.)

I'm neither a lawyer nor accountant, nor do I play either on TV, but I know and have used each type of incumbent. We'll discuss each of them in turn and I'll give you my take on their pros and cons.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Forming an Organizational Entity

When you start a business, you'll have to form some form of organizational entity. which you choose depends upon your purpose of going into business. Is your intention wanting to form an entity that will live after you, have employees, change the world, and all that? Or are you wanting to start a business that will provide livelihood for you and your family.

In short, in the words of Marsha Cannon, "Hey Columbus, are you wanting to discover the new world, or do you just want to go across the street for a sandwich?"

Cookie monster, the character from the popular PBS series Sesame Street, in a book I used to read to my kids when they were small, had the choice of going for eternal peace and salvation or for a really great cookie. He decided on the cookie. "But you'll never attain eternal peace and salvation," said somebody. "But I did get one fantastic cookie," said our hero.

It's a little like that.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

On Taking Action

Back on February 18, 2009, I revised our initial definition of an entrepreneur such that "An entrepreneur is a leader who undertakes an enterprise in an atmosphere of uncertainty and risk."

We've talked about our core mission, what a leader is, and now we're onto "undertake."

Thefreedictionary.com, quoting from the American Heritage® Dictionary of the English Language, 4th Edition, defines "undertake" thus:

un·der·take (ndr-tk)
v. un·der·took (-tk), un·der·tak·en, un·der·tak·ing, un·der·takes
v.tr.
1. To take upon oneself; decide or agree to do: undertake a task.
2. To pledge or commit oneself: undertake to care for an elderly relative.
3. To set about; begin.
4. Obsolete To accept combat with.
v.intr. Archaic
To make oneself responsible. Used with for.

Note these definitions are all active words. They mean entrepreneurship is taking action. Entrepreneurship is not sitting and thinking about something. It's not reading about something. You can't be an entrepreneur if you're only thinking about your options.

An entrepreneur doesn't just talk to their friends about it. All these things are important. Yet it's not being an entrepreneur.

Often entrepreneurship's couched in terms of embarking on a trip. You can't take a trip without starting out. And what a trip it is. It's not for everybody. In fact I believe everyone should earn the right to be an entrepreneur.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Gerber on bridging the gap

I've brought you with my comments what I take to be the best of Gerber's system. It's my bible and the way I build my business.

A couple more take aways before I go to other things.

On page 261, Michel Gerber says about bridging the gap:

That's what this book is really about. Bridging the gap. Between "outside" and the "inside."
Between the world "out there" and the world "in here."
And your small business can become that bridge. The bridge between you and the world. The bridge that can draw together the world "out there" and the world "in here" in such a way as to make both more human.

He goes on to add, on p. 263:

And that after all is the "Dream of American Small Business," the dream that has served as the catalyst for so many entrepreneurial--and not so entrepreneurial--efforts.
To create a world of our own.
What is the Entrepreneurial Revolution people are talking about today, where millions of us are going into business for ourselves.?
It's nothing more than a flight from the world of chaos "out there" to a world of our own.

And that's it in a nutshell. We don't like the world we're in, so we try to recreate the world in the image we want it to be.

We want our customers and our employees to share that world. To come along on the ride with us.

The Emyth Revisited lays out a bluebrint on how to do this. Follow what Gerber says, and you have the best chance of success.

What do you think of this? The goal is to produce more skilled entrepreneurs.
Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Model: Step 7: Your System Strategy

The last step in Michael Gerber's business development program is a systems strategy. See pp. 214-252. Gerber defines a system as:

A set of things, actions, ideas, and information that interact with each other, and in so doing, alter other systems.

Gerber says there are three kinds of systems, each of which interact with each other: hard systems, soft systems, and Information systems.

1) Hard systems are "inanimate, unliving things," such as computers and buildings.

2) Soft systems are "things to be sold." He also calls it a selling system, "a fully orchestrated interaction between you and your customer."

3) Information systems to support the sales effort.

Go to Gerber and read this, there's a lot more in it than I've outlined here. I can say that for the whole book. Think about how all the elements in your business, the physical structure, your products, your customers, information, and the context within which you're selling, connect with one another to make what your business is.

What do you think of this? The goal is to produce more skilled entrepreneurs.

Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Another key question: What are they buying?

Michael Gerber, on pp. 222:

If you know who your customer is...you can then determine why he buys.

Gerber calls this psychographics.

A colleague of mine has a bit of doggerel which he pulls out at least one time every 3 mentoring sessions. Here it is.

If you're going to sell
What Mrs. Smith buys,
You're going to have to see
What Mrs. Smith sees,
Through Mrs. Smith's eyes.

I get tired of hearing it but it's exactly true.

So do you get the point? What your customers are buying is not just your product. It's your product filtered through their own experience, assumptions, needs, hopes, dreams, and expectations. You have to identify that reason they're buying if you're going to be as successful as possible.

You have to figure out what benefit you're product is going to be and what is the benefit of that benefit.

Wal-Mart used to advertise "Every day low prices." Now they advertise low prices so we can live better.

What do you think of this? The goal is to produce more skilled entrepreneurs.
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Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

The key question: who is your customer?

Michael Gerber, on pp. 222, says one of the two pillars of a successful marketing strategy is knowing who your customer is.

Gerber focuses on demographic information, which is important. But beyond this, you have to have an idea of who your customer is as a person. You have to know more about your customer than your customer knows him or herself. How old is he? What does she like to eat? What kind of car does he drive? What does she want out of life? And so forth. Make up a questionnaire and answer it for each kind of customer you envision you will try to serve.

If I were to continue as a realtor, my customer would be married, between 55 and 70 years old, married or has been, kids grown, has a financial portfolio of $1.5 million or more, wants to move to Center City and experience good things in life, walking, eating in good restaurants, experiencing good drama and concerts, etc.

Write a descriptive paragraph of the most important customer for you. Then devise a questionnaire incorporating who, why, where, why, when, how, and how much. Once you know that you'll be able to go to Gerber's second marketing pillar.

What do you think of this? The goal is to produce more skilled entrepreneurs.

Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program, Step 6: Your Marketing Strategy

Michael Gerber, on pp. 222, says there are two pillars of a successful marketing strategy. Pardon me if I don't use his capitalization procedures. I'll quote it tto you:

Demographics and psychographics are the two essential pillars supporting a successful marketing program. If you know who your customer is--demographics--and you can then determine why he buys--psychographics. And having done so, you can then begin to construct a Prototype to satisfy. his unconscious needs, but scientifically rather than arbitrarily

I wouldn't use those terms these days to describe what he describes. But knowing who you're customer is and why that customer is buying from you are, as the ad says, "priceless."

There you are, your people strategy. The game is outlined in your operations manual. Implement this game in your business, really implement it, along with all the other things, and you're business will thrive. Believe me.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program: Your People Strategy, Step 5, part 4.

Michael Gerber, pp. 203-206, sets out 8 rules of his game:

1. "Never figure out what you want your people to dl and then try to create a game out of it." The game has to come first.

2. "Never create a game for your people you're not unwilling to play yourself."

3. "Make sure there are specific ways of winning the game without ending it."

4. "Change the game from time to time--the tactics, not the strategy."

5. "Never expect the game to be self-sustaining. People need to be reminded of it constantly."

6. "The game has to make sense."

7. "The game needs to be fun from time to time."

8. "If you can't think of a good game, steal one."

There you are, your people strategy. The game is outlined in your operations manual. Implement this game in your business, really implement it, along with all the other things, and you're business will thrive. Believe me.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program, Step 5: Your People Strategy, Part 3.

Gerber sets up this discussion by using the metaphor of a game. Here's what he says on p. 202:

People--your people--do not simply want to work for exciting people. They want to work for people who have created a clearly defined structure for acting in the world. A structure through which they can test themselves and be tested. Structure is called .

.This one kind of slid by me the last few times I went over this material, but the idea of a game got me this time. I've been thinking a lot about people who play virtual games, and it's right. They play because they want a defined structure. The world's a mess, so millions of them are turning to virtual reality for a world.

Here's what he says on p. 203.

The game your business will play can't simply be captures on the written page. It must be seen if it is to work. It must be experienced.

It is--first, last, and always--about how you act.

[Your] words will become hollow if the game is a contrived one.

The game can't be created as a deice to enroll your people. It can't become cynical if it's to provide your people with what they need in order to come alive while playing it.

The game has to be real. You have to mean it.

The game is a measure of you.

How you act in the game establishes how you will be regarded by other players.

This is what virtual games do. They provide a structure with clearly defined rules within a benevolent dictatorship.

So what you're going to do is create that benevolent dictatorship in the real world. You have to think out the code of conduct, what they're to do, etc. All of this communicated through an operations manual that define what people do. [pp. 202-203]

What do you think of this? The goal is to produce more skilled Entrepreneurs.Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program: Step 5, Your People Strategy, part 2

Here's the idea behind the work, according to Gerber, and he's right. It's stated on p. 201 and has three parts:

1. "The Customer is not always right, but whether he is or not, it is our job to make him feel that way."

2. "Everyone...is expected to work toward being the best he can possibly be at the tasks he's accountable for. When he can't do that, he should act like he is until he gets around to it. And if he's unwilling to act like it, he should leave."

3. "The business is a place where everything we know how to do is tested by what we don't know how to do, and the conflict between the two is what creates growth, what creates meaning."

Absolutely true. If you follow Gerber's rules, you will have a great business, assuming that everything else goes okay.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program, Step 5: Your People Strategy

Step 5 in Gerber's program is your people strategy, starting on p. 197.

Here, on p. 201, is an important thing to remember: You manage people by making sure that they understand "the idea behind the work they're being asked to do," and you make it clear that "the idea behind the work [is] more important than the work itself."

I've never worked in a place where I was just told what to do, but I can imagine the scenario Gerber lays out, where employees are just told what to do. There's no respect for the employee, just what the bosses want.

More on this tomorrow.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program, Step 4: Your Management Strategy

Beginning on p. 187, Gerber elaborates what he means by his management strategy. It's not what you think, and it's really important, so here goes:

You may think that the successful implement ion of a management strategy is dependent on finding amazingly competent managers--people with finely honed "people skills," with degrees from management schools, with highly sophisticated techniques for dealing with and developing their people.

It isn't

You don't need such people

Nor can you afford them.

What you need, instead, is a Management System.

The System will become your management strategy, that means through which your Franchise Prototype produces the results you want.

The System will become your solution to the problems that beset you because of the unpredictability of your people.

The System will transform your people problems into an opportunity by orchestrating the process by which management decisions are made while eliminating the need for such decisions wherever and whenever.

Have you ever worked for any company like this? Probably not. Listen to what he says, reread it, and then apply it to what you want to do.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber: Don't Organize Around Personalities

On page 167, Gerber says:

Most companies organize around personalities rather than around functions...The result is almost always chaos.

True, but how can you not? Whenever you think of a function for your business, you immediately think of someone you know. Or your mother suggests somebody: "You know your cousin Eddy would be great for that."

Now your mother is your human resources director.

If you are considering hiring people you know, you need to sit down with them and discuss your reservations and expectations. And have a job description for each one. Have them sign it. Put the relationship on a business footing. And you might have to have a rule about no business transacted at family gatherings, etc.

If you don't have clear expectations for everyone in your business, whether you're related to them or not, you're asking for trouble. And if you hire somebody, whether you're related to them or not, you're asking for trouble.

The key is, don't hire anyone just because they're in your circle of family and friends. You can hire them in spite of that if you think they're right for the job. But be businesslike to reduce the risk and uncertainty.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program, Step 3: Your Organizational Strategy

How is your company going to be organized? Michael Gerber asks. It makes no sense to say you need an organization because you are small. You have an organization no matter what size you are. And what does your company look like when it grows up. Visualize this. And how do you get from where you are now to where your company will be when it's done is your organizational strategy.

Everyone has an organizational strategy too. Either it's not written down carefully thought out, and well executed, or it's in your head poorly thought out, and poorly executed.

On page 175, there's a neat organizational chart, drawn during the old economy when companies were organized hierarchically. They never worked that way, but they were visualized that way.

In the new economy, driven by globalization and its correlates, we need to be horizontal in our thinking rather than vertical. We need to think cooperation and collaboration rather than command and control.

So write out the organization that you visualize. If you can't come up with the final one right now that's okay. Do the best you can. It will come to you. After all everything is a work in progress.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Who's Your Customer?

There's a lot of attention these days paid to the social media. Twitter especially has gotten a lot of play. The social media, i.e. websites, Linked In, Facebook, Twitter, blogs, etc. What is not pointed out is that people have different attitudes toward technology, and there are distinct differences based on age.

People over 65 you're not going to find on Facebook. They're not on LinkedIn. They don't know what tweeting is and could care less. They don't surf the net. They might check a website once in a while, but that's it.

The middle group emails frequently, has a website and goes on social media websites. But they didn't grow up with the technology and therefore aren't fluent in it.

The younger group grew up with technology. They live in the virtual world. They're texting, tweeting, sending emails, etc. They're on Second Life, World of War Craft, etc. They have hand-held devices and have all their emails forwarded to it, etc.

The point being in all this is to know who your customer, how they learn about stuff, how they like to process information. If their older, you're not going to do well relying only on the social media. If they're younger, go for it.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

The Big Kahuna, or, Michael Gerber's Second Standard: Who is my customer?

This is the big kahuna. The whole enchilada. The 800# gorilla in the room. Here's what he says on p. 155:

Every business has a Central Demographic Model. That is, a most probable customer. And that customer has a whole set of characteristics through which you can define him--age, sex [we call it gender], income, family status, education, profession, and so forth.

Demographics is the science of marketplace reality. I tells you who your customer is.

I cannot stress more how right Gerber is on this issue. If the customer is king, knowing who the customer is, is paramount.

Of course, we don't think quite this way anymore. What he means by "demographic" is really "customer characteristic." Somebody a long time ago heard the term "demographic" and started it and everybody jumped on the bandwagon. Gerber jumped on the bandwagon.

Demography is the study of the composition of and changes in populations over time. Historical demography, one of the sources of my intellectual property, is the study of those things in the past. Demography is that discipline from which "demographics" became bastardized.

There are only a three real demographic variables: births, deaths, and net migration. Demographers also study age at marriage, age at first birth, fertility, fecundity, as well as all those other things we now call "demographics." But no worries: common parlance now is "demographics" so that's what we use.

But no matter what you call them, the most important thing to understand is who your customer is. If he's 64, married C-level, major corporation executive living in Manhattan, that's one thing. But if she's 25, unmarried with a 10 year old son, living with her ex-boyfriend's parents in a trailer on the outskirts of Aho, Arizona, and working at the local Wal-Mart, it's something different.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Under Michael Gerber's Second Standard: An Opportunity Worth Pursuing

Under Michael Gerber's second standard of your strategic objective, you should ask what kind of business you're in. See pp. 153-154:

The product is what your customer feels as he walks out of your business. What he feels about your business, not what he feels about the commodity. Understanding the difference between the two is what creating a great business is all about.

This is another way of saying, "It's the customer, stupid."

Now since Gerber wrote this, the Internet has become big. So, people are buying on line more often, not just going into physical stores. But so what? How do people come away from your website? Mine right now is pretty crappy, because I'm not sure what I want it to be when it grows up. I have some ideas though, and I'm going to fix it pretty soon. I'm not even certain I'm going to keep it.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber and Earning the Right to Entrepreneur

In life we have all kinds of opportunities. Most of them we don't take advantage of because, as Edison is supposed to have said, they walk around dressed in overalls and look like work.

Entrepreneuring is something special. We have the chance to shape society and make people's lives better in any number of ways. Yet to do such a thing requires passion, thought, perseverance, and, yes--skill.

Before you undertake it, you have to determine that that opportunity is the best one for you. If it's not, it's not an opportunity worth pursuing. That is, if the payoff isn't there, if the potential for making our world better isn't there, don't do it. But to decide if a given opportunity isn't right takes skill, and then to go forward.

So don't just tell your boss to shove your job somewhere where the sun never shines, take that anger and do something meaningful for yourself and the world around you. Look around for another job first, and when nothing materializes, and you see what looks like a great entrepreneurial opportunity, go for it. But before you leap, make sure you have a pretty good idea of what you're leaping into.

Also, before you decide to entrepreneur, see what jobs are available. If there is a job that offers you a chance to do good things, meets most of the needs your entrepreneurial opportunity would, pays well enough, and gives you most of what you need, take it. Save your passion and perseverance for times when that entrepreneurial opportunity is the best one for you. Remember, it's tough out there. It's like trying to play chess on a board that's always changing shape, with pieces whose powers are constantly shifting, and with opponents that kind of come in and out unpredictably.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Second Standard of Your Strategic Objective--An Opportunity Worth Pursuing

In my own mind, when I think about starting a new business, the first question I ask myself is "Is this an opportunity worth pursuing?"

One thing you should not emulate in Gerber is his capitalization strategy. :-)

It was the first question my dissertation advisor made me answer when I started my Ph. D. dissertation: Is this a topic that matters enough to me? Do I have the passion to see it through? Can I get it up for the years it will have to commit to it to make it work? Can I endure the periods of low sales and no income to do it.

Here we have the same question. Is this an opportunity worth pursuing. In his words [p. 153]:

An Opportunity Worth Pursuing is a business that can fulfill the financial standards you've created for your Primary Aim and your Strategic Objective.

Is this sufficient for you to devote the time and energy and money you're going to have to devote to it to make it work?

Do you expect sufficient payoff at the end of it for it to matter?

Are you going to change the world, or just go across the street for a sandwich?

If you're out to change the world, and you're sure the world can be changed, and you're convinced you have the staying power, go for it.

Otherwise, you want mustard on that?

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program: Your Strategic Objective, First Standard--Money

Michael Gerber's first standard, discussed beginning on p. 151, is about money:

The first standard of your Strategic Objective is money. Gross revenues. How big is your vision? How big will your company be when it's finally done? Will it be a $300,000 company? A million-dollar company? A $500-million company?

It's about money. Once you have a passion and an idea, it's about money:

If you don't know the answer, how can you possibly know whether your business can help you realize your Primary Aim?

You won't know everything at the beginning. You have to start somewhere, and knowing how much money you will realistically make will tell you whether to go further with this. And you have to be realistic.

And don't be like the guy who was going to gross $5 Million in his first year selling submarine sandwiches at $5.00 per pop. That's selling 114 subs every hour, 24/7. How you do your financials tells you and others how successful your thinking is. Follow the money and you'll understand the business.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program: Step 2, Your Strategic Objective

Gerber, p. 151-165, Lay out seven standards comprising your strategic objective. They are:

1. First Standard: Money [p. 151]
2. Second Standard: An opportunity worth pursuing. [p. 153]
3. Third Standard: When is your Prototype going to be completed?
4. Fourth Standard: Where are you going to be in business?
5. Fifth Standard: How are you going to be in business?
6. Sixth Standard: What...are you going to insist upon regarding reporting, cleanliness, clothing, management, hiring, firing, training, and so forth?
7. Seventh Standard: Other questions.

Standards 3 through 7 are laid out on p. 156. Gerber doesn't we need to stick just to what Gerber says. You need to use it as a basis for going forward. He does say that "the standards you create for your business will shape both your business and the experience you have of your business." [p. 156]

And we don't need to have all of this established before our business gets off the ground. Businesses are all a work in progress, and we figure things out as we go along. But we need to develop as full an idea of why we're in business and what the business will do as possible before we start. Gerber helps us do that.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Gerber's Business Development Program: Step 1, your primary aim

Gerber, pp. 139 to 140, lays out the questions he thinks you should be asking before you start your business. Here they are:

1. How do I wish my life to look like?

2. How do I wish my life to be on a day-to-day basis?

3. What would I like to be be able to say I truly know in my life, about my life?

4. How would I like to be with other people in my life--my family, my friends, my business associates, my customers, my employees, my community?

5. What would I like to be doing two years from now? Ten years from now? Twenty years from now? When my life comes to a close?

6. What specifically would I like to learn during my life--spiritually, physically, financially, technically, intellectually? About relationships?

7. How much money will I need to do the things I wish to do? When will I need it? .

These are just a few of the questions. You remember our values clarification from Todd Duncan's Killing the Sale? This goes along with that.

If we don't have clarity at the beginning, where will we be? All the orchestration, innovation, and quantification in the world won't help us.

But if we pay attention to our core mission and these other things, we'll start out farther down the road.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.

Michael Gerber's Business Development Program

Gerber lays out his Business Development Program on p. 135. Here's the outline.

The Program is composed of seven distinct steps:

1. Your Primary Aim
2. Your Strategic Objective
3. Your Organizational Strategy
4. Your Management Strategy
5. Your People Strategy
6. Your Marketing Strategy
7. Your Systems Strategy

This certainly covers the ground.

If you do this in addition to everything else in Gerber's arsenal of tricks, you'll be pretty far ahead. Success isn't assured, but it will be a lot closer to in your grasp.

What do you think of this? The goal is to produce more skilled entrepreneurs. Does this help? Tell me. Post a comment. I'd like to know. And follow me on Twitter.com

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com.