Don Quixote de la Mancha was a novel published in 1605. That was before the Jamestown Colony in Virginia and before Wall Street. Don Quixote was a bored, destitute landowner who in his spare time read stories of knights of old and heroes and damsels in distress.
Yearning for a bit more zip in his humdrum lifestyle and needing some fortune, Don Quixote dressed himself up in armor and mounted his super thin horse Rocinante and set out upon the world. Contrasted with his chubby squire or aide Pancho Sanza and Pancho 's donkey, the two cut a literary and visual image known worldwide; tall thin, Don Quixote and short, round Pancho Sanza are forever with us.
Don Quixote represented the dreamer and Pancho Sanza the cold realist. Together they stumbled and fumbled their way to adventure; our man Quixote fighting windmill giants and armies of sheep. Sancho managing to just keep our man Quixote from falling in. The figure he cuts thrusting his lance upward toward a windmill epitomizes the quest for quest 's sake and the universal struggle for meaning. Or something like that. But just how does Don Quixote correlate to the modern day start up?
First off many start ups are fanciful dreams, much as Don Quixote imagined windmills to be threatening giants. Working some start-ups is the equivalent of dressing up in armor and fighting windmills. Fed by little more than a dream and sometimes little else, those that work in these fanciful ventures will make less, work more and almost assuredly end up going to another one when this one crashes. The danger is that once you actually do one you are hooked. It is a well known fact there is no thrill like a start-up thrill.
But why even try something that has a high probability of failure?
For the experience, stupid, might be Don Quixote 's reply in one of his more lucid moments. Start ups sometimes are often made of up a handful of employees comprising the 'team'. This team is it; management, production and marketing all in one package. No where else other than a start up can one find that kind of experience. Peter Drucker, perhaps the 20th century 's most eloquent management theorist, made the statement that if a job isn't challenging enough and helps you develop, you should find another.
As I look back over my career I can see that I've been involved with several dozen projects. On some, I was the leader. In others, a cog in the start up machine. Each one of these projects either honed a current skill or gave me a new set of skills. Often these skills were not apparent until after the project or even until years later.
Of course I naively threw myself headfirst into anything I was working on. This is what the pundits call being engaged. Because I was engaged, I cared. And because I cared, I was engaged. Each project became a personal project; one that I owned and developed a strong series of emotional 'bonds' to.
It is because of this engagement and corresponding emotional attachment that the experiences were so strong and the new skill sets so thoroughly learned. Often my colleagues would make fun of me but I didn't care. I was having fun at least and when I saw the dud projects they were working on I made fun right back. It seems I was always working on something interesting, though I can't remember ever doing an exciting company manual...
My colleagues made fun of me because I wasn't making their fees. In hindsight I wonder if there also wasn't a tinge of jealousy. I was always so excited and upbeat and they were always so, well let 's just say not very happy. My happiest times in business were working on some absurd Don Quixote windmill project.
And I had some real winners: online auto parts, online blue collar recruiting, farmworker cooperative, depressed area economic development, language acquisition, security and anti-theft development and so on. Most ended up requiring original research and extensive whiteboarding. In fact on one of these projects I whiteboarded for six straight months. Where else could that type of experience happen?
But start ups end. They fold, merge, get bought out, and fade into the business sunset. Sometimes even succeed.
But a funny thing happened on the way to the dance. As time went by, I put more and more of these windmills under my belt. I didn't pay them much attention, but my skills and capabilities had taken a major step upward. And I could tell my colleagues were right there in their comfort zone where they assured their own perpetual stagnation or Drucker 's non-development.
To my surprise I had gotten better, much better, and they had not. Where once a colleague and I had roughly the same abilities, five years of doing Quixotic projects had vaulted me way ahead. The funny thing was I could tell and they could tell and it irritated the heck out of them. They even stopped kidding me. But what could I say?
And thanks to my Quixote projects my 'traditional' projects seem to be easier too. After one spends months attempting the impossible, a creative marketing plan or internal reorganization seems so much easier. That 's because it is.
I don't mind that on occasion I'm still teased for being Quixote. There are worse things. But I will say this. I wouldn't trade a single one of my windmills for a stack of ho-hum snoozer contracts. Life is just too short to sleep through it...
But seriously, somebody has to keep a close eye on those windmills or they can very quickly get out of hand...
Sunday, April 20, 2008
Education Creates Attractive Choices: From Climbing the Career Ladder to Planning for a New Career
Many people join large successful organizations because they are searching out opportunities for learning, promotions, and stability in a career ... especially at organizations that cherish employees and help them develop. Even people who think they might later want to own and operate businesses often value the opportunity to first learn from working at a well-run company. Many such companies encourage their employees to take courses, earn degrees, and prepare for enhanced careers in a variety of other ways.
Such career development can provide an unexpected bonus: The education you gain can help you prepare for a new career if you no longer want to climb the old career ladder ... or find something you like a lot better. Carlos O. Laya had both experiences while studying at Rushmore University.
Mr. Laya started his career by enjoying a wonderful job as a laboratory technician at one of the world 's finest and most admired companies. But Mr. Laya longed to work instead with customers as a salesman for laboratory analytical instruments.
To prepare for that potential sales career, Mr. Laya took distance learning courses to master electronics. After that Mr. Laya received and accepted an offer to become a service engineer for a world-leading manufacturer of laboratory analytical instruments. During the next two years, he earned a degree in electro techniques that enabled him to be more effective in optimizing instrument performance for customers.
Mr. Laya was thrilled when his employer bought the international rights to sell, distribute, and maintain biotechnology instruments. He enthusiastically asked for and received the job of being the Swiss sales manager for these products. Now he was where he had aimed to be. Taking courses in selling and instrument applications, his confidence and effectiveness grew. Mr. Laya was thrilled to meet the many professors, Ph.D.s, and physicians who were his customers. Eight happy years of work followed.
A new opportunity arose when Mr. Laya was offered a position selling biotech products in Argentina for his company. Mr. Laya eagerly stepped up to the challenge.
This time meaningful progress eluded him. The value of the Argentine currency plummeted and the office was unprofitable for his employer. Rather than take these losses as a failure, Mr. Laya proposed starting a company to represent his employer 's products in Argentina. But that approach faltered when the economy grew worse in Argentina, and his employer pulled out of the country.
After that experience, Mr. Laya returned to Switzerland and worked as an international pharmaceutical products sales manager.
In 2003, he decided that the time had come to earn an MBA to complement his diplomas in international trade and marketing. He saw the MBA as the key to being promoted into senior management at his current employer.
Having enjoyed his distance learning experiences, Mr. Laya sought a university that could provide a flexible schedule for an MBA so he could study part time while continuing his sales management job. When he discovered Rushmore University, he knew he had found the ideal school for him: Rushmore would allow him to focus courses solely on his planned career development. He also liked the idea of working individually with professors using the Oxford tutorial method to study what he wanted to learn rather than a preset curriculum.
Here 's what Mr. Laya has to say about his experiences with Rushmore:
"With my previous distance learning experience, accustomed to learning at my own pace, anywhere and anytime, I was searching for a university that could suit my continuing education needs. When I visited the Rushmore University Web site for the first time, I was convinced that Rushmore was the right choice ... The most important argument that caught my attention was the flexibility it offers you to create your own program and to focus your learning on subjects that will add value to your own personal situation. The faculty consists of selected and well-recognized business people with substantial experience in writing business books, but what is most relevant for business professionals is that the professors have a broad knowledge of the real business world. The learning method -- reading books and papers and writing a report or paper to apply your findings -- is a highly effective way to learn and understand a course."
While studying for his MBA in 2005, Mr. Laya lost his international sales management job. After a six-month search, he gained another international sales management job representing products used by environmental companies. This was a new experience for him and made him aware of the many important environmental problems for which solutions are needed.
This new job led Mr. Laya to take two courses related to environmental issues, and he developed a desire to become an environmental consultant. From there, he changed his curriculum to focus on how to establish such a consultancy.
Through those Rushmore courses, Mr. Laya was able to identify what knowledge, skills, and experience he lacked to make such a consultancy successful. As part of his MBA capstone paper summarizing what he learned at Rushmore, Mr. Laya developed a plan to fill in those gaps and to move into such a consultancy within a few years.
As a recent graduate, it 's too soon to report on how that development is going. Perhaps Mr. Laya will follow his plan. Or perhaps in following that plan he will find even more appealing work, as he has done before in his successful career. In either case, his grounding in business management will serve him well ... as will his understanding of what it takes for an enterprise to succeed, one of his knowledge bases as a new MBA from Rushmore.
Mr. Laya has shown a great talent for spotting opportunities he would enjoy better than his current work. With his MBA and ability to find distance learning opportunities that fit him and his goals well, Mr. Laya should make rapid progress from here in building on his sound foundation in career planning.
Such career development can provide an unexpected bonus: The education you gain can help you prepare for a new career if you no longer want to climb the old career ladder ... or find something you like a lot better. Carlos O. Laya had both experiences while studying at Rushmore University.
Mr. Laya started his career by enjoying a wonderful job as a laboratory technician at one of the world 's finest and most admired companies. But Mr. Laya longed to work instead with customers as a salesman for laboratory analytical instruments.
To prepare for that potential sales career, Mr. Laya took distance learning courses to master electronics. After that Mr. Laya received and accepted an offer to become a service engineer for a world-leading manufacturer of laboratory analytical instruments. During the next two years, he earned a degree in electro techniques that enabled him to be more effective in optimizing instrument performance for customers.
Mr. Laya was thrilled when his employer bought the international rights to sell, distribute, and maintain biotechnology instruments. He enthusiastically asked for and received the job of being the Swiss sales manager for these products. Now he was where he had aimed to be. Taking courses in selling and instrument applications, his confidence and effectiveness grew. Mr. Laya was thrilled to meet the many professors, Ph.D.s, and physicians who were his customers. Eight happy years of work followed.
A new opportunity arose when Mr. Laya was offered a position selling biotech products in Argentina for his company. Mr. Laya eagerly stepped up to the challenge.
This time meaningful progress eluded him. The value of the Argentine currency plummeted and the office was unprofitable for his employer. Rather than take these losses as a failure, Mr. Laya proposed starting a company to represent his employer 's products in Argentina. But that approach faltered when the economy grew worse in Argentina, and his employer pulled out of the country.
After that experience, Mr. Laya returned to Switzerland and worked as an international pharmaceutical products sales manager.
In 2003, he decided that the time had come to earn an MBA to complement his diplomas in international trade and marketing. He saw the MBA as the key to being promoted into senior management at his current employer.
Having enjoyed his distance learning experiences, Mr. Laya sought a university that could provide a flexible schedule for an MBA so he could study part time while continuing his sales management job. When he discovered Rushmore University, he knew he had found the ideal school for him: Rushmore would allow him to focus courses solely on his planned career development. He also liked the idea of working individually with professors using the Oxford tutorial method to study what he wanted to learn rather than a preset curriculum.
Here 's what Mr. Laya has to say about his experiences with Rushmore:
"With my previous distance learning experience, accustomed to learning at my own pace, anywhere and anytime, I was searching for a university that could suit my continuing education needs. When I visited the Rushmore University Web site for the first time, I was convinced that Rushmore was the right choice ... The most important argument that caught my attention was the flexibility it offers you to create your own program and to focus your learning on subjects that will add value to your own personal situation. The faculty consists of selected and well-recognized business people with substantial experience in writing business books, but what is most relevant for business professionals is that the professors have a broad knowledge of the real business world. The learning method -- reading books and papers and writing a report or paper to apply your findings -- is a highly effective way to learn and understand a course."
While studying for his MBA in 2005, Mr. Laya lost his international sales management job. After a six-month search, he gained another international sales management job representing products used by environmental companies. This was a new experience for him and made him aware of the many important environmental problems for which solutions are needed.
This new job led Mr. Laya to take two courses related to environmental issues, and he developed a desire to become an environmental consultant. From there, he changed his curriculum to focus on how to establish such a consultancy.
Through those Rushmore courses, Mr. Laya was able to identify what knowledge, skills, and experience he lacked to make such a consultancy successful. As part of his MBA capstone paper summarizing what he learned at Rushmore, Mr. Laya developed a plan to fill in those gaps and to move into such a consultancy within a few years.
As a recent graduate, it 's too soon to report on how that development is going. Perhaps Mr. Laya will follow his plan. Or perhaps in following that plan he will find even more appealing work, as he has done before in his successful career. In either case, his grounding in business management will serve him well ... as will his understanding of what it takes for an enterprise to succeed, one of his knowledge bases as a new MBA from Rushmore.
Mr. Laya has shown a great talent for spotting opportunities he would enjoy better than his current work. With his MBA and ability to find distance learning opportunities that fit him and his goals well, Mr. Laya should make rapid progress from here in building on his sound foundation in career planning.
A Reality Check Prior To Starting An Internet Business
The thrill of starting a business on the Internet is hard to ignore. Working from wherever you want, choosing which hours you work (even whilst sleeping) and making pots of money. So.... how could you possibly not be drawn into diving straight into building your website or writing a blog?
Not so fast - slow down a minute! You would not believe how many internet millionaire "wanna-bes" there are around, several of whom have spent years of their time and thousands of dollars trying to set up profitable internet businesses.
It appears that everyone is making money on line but that is simply not true. Failure is rarely admitted because no one likes to be a flop and also because on the internet perception means everything. Therefore, if you are seen to be a failure no-one will be interested in your business, resulting in a downward spiral of trade.
So what are the disadvantages and obstacles encountered by potential Internet entrepreneurs?
The first is the steep learning curve - and there is no single "how-to" guide to follow.
Making a success of an on line business needs mastery of many key abilities which are not directly required for off line businesses. For example, you have to build a user-friendly and relevant website or blog, then be able to drive traffic to it without making errors so your potential customer/client does not move away from your site due to loss of interest or confidence in you.
It 's Not Easy!
There are numerous ways to learn about starting a business on line such as, books, on line business models, "how-to" courses and the words of experts but it is hard for a newcomer to be sure which method to have faith in.
The second issue mentioned above which needs much attention, is the way to drive traffic to your website. The amount of competition in connection with search engines, keywords and phrases is often vastly underestimated by the novice internet marketer.
Top-ten rankings for the most popular keywords is extremely difficult to achieve, so the novice will need to master the art of advertising on line, which can be quite a costly exercise.
The third and final obstacle is the fact that it is very easy to become distracted when building an Internet business.
When you subscribe to Internet e-zines or log onto discussion forums, both of which are well known methods of building knowledge and connecting with potential customers or partners, you will be bombarded on a daily basis with new ways to make your fortune. You will be offered more top secret, never before revealed to the public methods to target visitors to your website than you could ever think possible.
Although some of these strategies may be excellent for particular on line businesses, many will not suit and much time and money is wasted by internet marketers trying to distinguish which one is right for them, when they really should putting more effort into mastering the method they already have in use.
If you are considering starting an internet business this article will serve as a "reality check" for you. It really is possible to make a substantial secondary or even primary income online - but you have much more chance of success if you are aware of the obstacles you are likely to encounter along the way.
Good luck!
Not so fast - slow down a minute! You would not believe how many internet millionaire "wanna-bes" there are around, several of whom have spent years of their time and thousands of dollars trying to set up profitable internet businesses.
It appears that everyone is making money on line but that is simply not true. Failure is rarely admitted because no one likes to be a flop and also because on the internet perception means everything. Therefore, if you are seen to be a failure no-one will be interested in your business, resulting in a downward spiral of trade.
So what are the disadvantages and obstacles encountered by potential Internet entrepreneurs?
The first is the steep learning curve - and there is no single "how-to" guide to follow.
Making a success of an on line business needs mastery of many key abilities which are not directly required for off line businesses. For example, you have to build a user-friendly and relevant website or blog, then be able to drive traffic to it without making errors so your potential customer/client does not move away from your site due to loss of interest or confidence in you.
It 's Not Easy!
There are numerous ways to learn about starting a business on line such as, books, on line business models, "how-to" courses and the words of experts but it is hard for a newcomer to be sure which method to have faith in.
The second issue mentioned above which needs much attention, is the way to drive traffic to your website. The amount of competition in connection with search engines, keywords and phrases is often vastly underestimated by the novice internet marketer.
Top-ten rankings for the most popular keywords is extremely difficult to achieve, so the novice will need to master the art of advertising on line, which can be quite a costly exercise.
The third and final obstacle is the fact that it is very easy to become distracted when building an Internet business.
When you subscribe to Internet e-zines or log onto discussion forums, both of which are well known methods of building knowledge and connecting with potential customers or partners, you will be bombarded on a daily basis with new ways to make your fortune. You will be offered more top secret, never before revealed to the public methods to target visitors to your website than you could ever think possible.
Although some of these strategies may be excellent for particular on line businesses, many will not suit and much time and money is wasted by internet marketers trying to distinguish which one is right for them, when they really should putting more effort into mastering the method they already have in use.
If you are considering starting an internet business this article will serve as a "reality check" for you. It really is possible to make a substantial secondary or even primary income online - but you have much more chance of success if you are aware of the obstacles you are likely to encounter along the way.
Good luck!
The Subjectivity and Relativity of Risk Assessments in Investment Decisions
It is a widely accepted belief that risk is an important factor in investment decisions. The income method of investment valuation stipulates that the price an investor is willing to pay for an investment is a function of the future expected cash flow, discounted by a rate that reflects the risk associated with receiving this expected cash flow. The Ibbotson build-up, Black/Green, and Schilt are three widely used methods valuators use to determine a specific discount rate to be applied to projected cash flows in valuing closely held companies.
The Ibbotson method utilizes historic rates of return on publicly traded investments, combined with risks associated with the specific industry and company being valued. The Schilt method derives a discount rate by adding various risk premia to the risk-free bond rate. Ranges of premia are specified according to risk factors, such as earnings stability, depth of management, competitiveness of the industry, and the size of the company being valued. Black/Green takes a similar, but more detailed approach.
Despite differences, all three methods falsely assume that only the inherent risks in operating the business need to be considered in the valuation process. I contend that the unique characteristics of potential investors have profound effects on how risk assessments are made in real world investment decisions. Not all potential investors have the same subjective attitudes towards risk. Not all potential investors have the same depth of financial resources, business experience and management acumen. These subjective and relative aspects of risk have a great bearing on how risk assessments are made. Their variability makes the risk of owning and operating a business a relative, rather than an absolute, quantity.
All three of the standard methods of developing a risk related discount rate assume that that the expert valuator analyzes the inherent risk associated with various operating characteristics of a closely held business. Based upon this analysis, the valuator develops a discount rate that will be used in capitalizing the projected future income stream and developing a fair market value.
However, in trying to model the behavior of potential investors in small closely held businesses, it is the attitudes of those potential investors toward risk and not the attitudes of CPA/CVA valuators that matter. As a group, CPA/CVA valuators do not necessarily have the same attitude toward risk as potential small business investors, who therefore may not make the same quantitative assessment of risk as a CPA/CVA valuator. Based on my experience with small business owners, I would predict that CPA/CVA valuators are more risk averse than most small business investors are.
Of course, not all small business investors have the same attitude toward risk either. Certain investors will largely ignore the risk of an investment if they perceive the potential return to be very high. Furthermore many small business investors have non-monetary motivations for investing in small businesses. For such investors, the inherent risk associated with receiving a future cash flow may not be assessed as it is for a passive investor seeking only a future cash flow.
Some advocates of the income method concede that certain investors do not view the risks of a particular investment as they do. Some proponents of the income method claim that investors who do not pay sufficient attention to the inherent risk of an investment, or who fail to give the same weight to various risk factors as expert valuators, are irrational. This view implies that CPA/CVA valuators are the arbiters of what constitutes rational investment conduct. While as a class we may be more risk averse than other groups of people, who is in a god like position to claim that being more risk averse is equivalent to being more rational?
Let 's turn to now to the relative aspects of risk. Everyone would agree that walking across a high wire without a net is a risky proposition compared to walking across a living room floor. Nonetheless, the degree of risk associated with walking across a high wire without a net is not absolute: it depends on who is doing the walking. Clearly, if a trained high wire performer does the walking, the activity is less risky than if an untrained person attempts the feat. In this sense, the risk of walking on a high wire is a relative phenomenon. A similar situation exists in any particular line of business.
Most of us would agree that there is more inherent risk in an industry sensitive to business cycles, like construction, than one where demand for the service is relatively constant, such as tax preparation. However, a buyer who has previous experience operating a construction business faces less risk than a buyer who has never run such a business. Likewise, if a potential buyer has a great deal of capital and access to lenders, that buyer will be able to weather the inevitable cyclic downturns better than a perspective buyer who lacks these assets. The simple point is that different potential investors in closely held businesses are in a position to change the inherent risk of operating a business. Some investors can decrease the inherent risk of operating the business, while others can increase the risk.
This point may be overlooked, because advocates of the income method fail to recognize that the investment contexts of publicly traded and closely held companies are dramatically different. An investor buying a few hundred shares of Microsoft is not going to have an impact on the operational performance of that company. An investor buying a controlling interest and becoming intimately involved in the day-to-day management of a closely held company is going to have a significant impact on the operations of that company.
Another relative aspect of risk involves diversification. As modern portfolio theory points out, the degree of diversification associated with a portfolio of assets has an impact on the risk associated with holding any particular asset. If a potential investment in a closely held company represents nearly 100% of an investor 's holdings, that investment is judged as much riskier than if it represents only 5% of the investor 's holdings.
Clearly, risk assessments play a role in real world investment decisions, but the nature and extent of that role is vastly more complicated than implied by the risk measurement approaches used in the income method of valuation. In the real world, differences in subjective risk tolerances will effect investor decisions. In the real world, investors have the ability to change the inherent risk of operating specific closely held businesses. In the real world, the risk of investing in a particular closely held business will depend on an investor 's ability to diversify his or her total portfolio of holdings. By failing to take into account these relative and subjective aspects of risk all variants of the income method give us a greatly oversimplified and inaccurate account of how investment decisions are actually made.
The Ibbotson method utilizes historic rates of return on publicly traded investments, combined with risks associated with the specific industry and company being valued. The Schilt method derives a discount rate by adding various risk premia to the risk-free bond rate. Ranges of premia are specified according to risk factors, such as earnings stability, depth of management, competitiveness of the industry, and the size of the company being valued. Black/Green takes a similar, but more detailed approach.
Despite differences, all three methods falsely assume that only the inherent risks in operating the business need to be considered in the valuation process. I contend that the unique characteristics of potential investors have profound effects on how risk assessments are made in real world investment decisions. Not all potential investors have the same subjective attitudes towards risk. Not all potential investors have the same depth of financial resources, business experience and management acumen. These subjective and relative aspects of risk have a great bearing on how risk assessments are made. Their variability makes the risk of owning and operating a business a relative, rather than an absolute, quantity.
All three of the standard methods of developing a risk related discount rate assume that that the expert valuator analyzes the inherent risk associated with various operating characteristics of a closely held business. Based upon this analysis, the valuator develops a discount rate that will be used in capitalizing the projected future income stream and developing a fair market value.
However, in trying to model the behavior of potential investors in small closely held businesses, it is the attitudes of those potential investors toward risk and not the attitudes of CPA/CVA valuators that matter. As a group, CPA/CVA valuators do not necessarily have the same attitude toward risk as potential small business investors, who therefore may not make the same quantitative assessment of risk as a CPA/CVA valuator. Based on my experience with small business owners, I would predict that CPA/CVA valuators are more risk averse than most small business investors are.
Of course, not all small business investors have the same attitude toward risk either. Certain investors will largely ignore the risk of an investment if they perceive the potential return to be very high. Furthermore many small business investors have non-monetary motivations for investing in small businesses. For such investors, the inherent risk associated with receiving a future cash flow may not be assessed as it is for a passive investor seeking only a future cash flow.
Some advocates of the income method concede that certain investors do not view the risks of a particular investment as they do. Some proponents of the income method claim that investors who do not pay sufficient attention to the inherent risk of an investment, or who fail to give the same weight to various risk factors as expert valuators, are irrational. This view implies that CPA/CVA valuators are the arbiters of what constitutes rational investment conduct. While as a class we may be more risk averse than other groups of people, who is in a god like position to claim that being more risk averse is equivalent to being more rational?
Let 's turn to now to the relative aspects of risk. Everyone would agree that walking across a high wire without a net is a risky proposition compared to walking across a living room floor. Nonetheless, the degree of risk associated with walking across a high wire without a net is not absolute: it depends on who is doing the walking. Clearly, if a trained high wire performer does the walking, the activity is less risky than if an untrained person attempts the feat. In this sense, the risk of walking on a high wire is a relative phenomenon. A similar situation exists in any particular line of business.
Most of us would agree that there is more inherent risk in an industry sensitive to business cycles, like construction, than one where demand for the service is relatively constant, such as tax preparation. However, a buyer who has previous experience operating a construction business faces less risk than a buyer who has never run such a business. Likewise, if a potential buyer has a great deal of capital and access to lenders, that buyer will be able to weather the inevitable cyclic downturns better than a perspective buyer who lacks these assets. The simple point is that different potential investors in closely held businesses are in a position to change the inherent risk of operating a business. Some investors can decrease the inherent risk of operating the business, while others can increase the risk.
This point may be overlooked, because advocates of the income method fail to recognize that the investment contexts of publicly traded and closely held companies are dramatically different. An investor buying a few hundred shares of Microsoft is not going to have an impact on the operational performance of that company. An investor buying a controlling interest and becoming intimately involved in the day-to-day management of a closely held company is going to have a significant impact on the operations of that company.
Another relative aspect of risk involves diversification. As modern portfolio theory points out, the degree of diversification associated with a portfolio of assets has an impact on the risk associated with holding any particular asset. If a potential investment in a closely held company represents nearly 100% of an investor 's holdings, that investment is judged as much riskier than if it represents only 5% of the investor 's holdings.
Clearly, risk assessments play a role in real world investment decisions, but the nature and extent of that role is vastly more complicated than implied by the risk measurement approaches used in the income method of valuation. In the real world, differences in subjective risk tolerances will effect investor decisions. In the real world, investors have the ability to change the inherent risk of operating specific closely held businesses. In the real world, the risk of investing in a particular closely held business will depend on an investor 's ability to diversify his or her total portfolio of holdings. By failing to take into account these relative and subjective aspects of risk all variants of the income method give us a greatly oversimplified and inaccurate account of how investment decisions are actually made.
How to Find Your Passion Before You Start Your Business
If you're like me, you have a lot of different interests and you're probably very good at a lot of different things, which means you could make money doing just about anything. You could probably even make money doing nothing much at all. The question is:
What do you ENJOY doing? What do you enjoy so much that you could turn it into a business?
Those are the most important questions for any aspiring new business owner when trying to decide what business to start. When confronting these questions I've found, in my experience, there 's a few other things to consider before trying to answer them:
a)When you start a business, you suddenly become an "expert" of sorts. People will look to you for advice and information about your field of expertise. The questions now become:
What would you be proud to be an expert about? What are you willing to continue learning about for as long as you're in business? What questions are you happy to answer over and over again?
I knew a man who opened a postal mailbox store and began offering office supplies and services to make more money. However, he was completely disinterested in learning about copy machines, different ways to bind reports or the various bulk-mailing options for marketing mailings. When I met him, this new part of his business was failing and he couldn't understand why. It was my job to tell him it was because HE didn't want that part of his business to succeed!
b)No matter what business you start, you put yourself in the role of Customer Service and Support. The questions now become:
What type of customers, if any, do you enjoy working with? To what degree to you want to work with them? What kind of people would you love to help over and over again?
I was once asked by a financial consultant to help him work on launching a public speaking career. I suggested he conduct a mock presentation in which I, and others, would sit and be his mock audience. At the end of the night, after being bombarded with questions about his slides, he realized that the presentation was targeted to the wrong group of people. His presentation was a "beginner 's guide" for those new to personal finance. His true passion was advanced financial planning. He realized that he wanted to work with people who had a highly developed, working knowledge of personal finance as he had found all of our questions boring, mundane and, ultimately, frustrating!
c)Quite often, the work will become so hard and so draining that you'll have to find within yourself a reason to do it even when you don't want to. The questions then become:
What means so much to you that you have to share it with others? What do you believe in enough to want it for others more than for yourself?
When I started my own dance troupe in early 2007, the start-up work was unimaginably grueling, both physically and psychologically. My partner was helping me choose songs for the show while I was choreographing. I was designing costumes while he was making them. Add to that web design, business card design, advertising, writing marketing copy, fielding sales calls and teaching a class twice a week while remaining a dancer myself!
Even though I would have a miniature nervous breakdown every Sunday, the one thing that kept me going was the employment of my dancers. The one thing I was most proud of, that I believed in the most, was their ability to make a living doing what they loved. I was giving that opportunity to my dancers, showing them it was possible. It didn't matter too much to me if I failed or the business failed. What mattered was they needed to know they COULD make money as dancers, that they COULD combine work and passion. They depended on me for that opportunity, and I believed in it so much I just couldn't give up. It 's that drive that got me through the first few months of the season, and what kept my dancers loyal and hardworking through all the early kinks.
If you're having trouble, like I have in the past, deciding what your passion is, what business you're truly interested in, ask yourself these questions over and over again. When you can answer all of them clearly, simply and quickly, you'll have your answer to:
What type business do I really want to start?
What do you ENJOY doing? What do you enjoy so much that you could turn it into a business?
Those are the most important questions for any aspiring new business owner when trying to decide what business to start. When confronting these questions I've found, in my experience, there 's a few other things to consider before trying to answer them:
a)When you start a business, you suddenly become an "expert" of sorts. People will look to you for advice and information about your field of expertise. The questions now become:
What would you be proud to be an expert about? What are you willing to continue learning about for as long as you're in business? What questions are you happy to answer over and over again?
I knew a man who opened a postal mailbox store and began offering office supplies and services to make more money. However, he was completely disinterested in learning about copy machines, different ways to bind reports or the various bulk-mailing options for marketing mailings. When I met him, this new part of his business was failing and he couldn't understand why. It was my job to tell him it was because HE didn't want that part of his business to succeed!
b)No matter what business you start, you put yourself in the role of Customer Service and Support. The questions now become:
What type of customers, if any, do you enjoy working with? To what degree to you want to work with them? What kind of people would you love to help over and over again?
I was once asked by a financial consultant to help him work on launching a public speaking career. I suggested he conduct a mock presentation in which I, and others, would sit and be his mock audience. At the end of the night, after being bombarded with questions about his slides, he realized that the presentation was targeted to the wrong group of people. His presentation was a "beginner 's guide" for those new to personal finance. His true passion was advanced financial planning. He realized that he wanted to work with people who had a highly developed, working knowledge of personal finance as he had found all of our questions boring, mundane and, ultimately, frustrating!
c)Quite often, the work will become so hard and so draining that you'll have to find within yourself a reason to do it even when you don't want to. The questions then become:
What means so much to you that you have to share it with others? What do you believe in enough to want it for others more than for yourself?
When I started my own dance troupe in early 2007, the start-up work was unimaginably grueling, both physically and psychologically. My partner was helping me choose songs for the show while I was choreographing. I was designing costumes while he was making them. Add to that web design, business card design, advertising, writing marketing copy, fielding sales calls and teaching a class twice a week while remaining a dancer myself!
Even though I would have a miniature nervous breakdown every Sunday, the one thing that kept me going was the employment of my dancers. The one thing I was most proud of, that I believed in the most, was their ability to make a living doing what they loved. I was giving that opportunity to my dancers, showing them it was possible. It didn't matter too much to me if I failed or the business failed. What mattered was they needed to know they COULD make money as dancers, that they COULD combine work and passion. They depended on me for that opportunity, and I believed in it so much I just couldn't give up. It 's that drive that got me through the first few months of the season, and what kept my dancers loyal and hardworking through all the early kinks.
If you're having trouble, like I have in the past, deciding what your passion is, what business you're truly interested in, ask yourself these questions over and over again. When you can answer all of them clearly, simply and quickly, you'll have your answer to:
What type business do I really want to start?
Some Preliminary Thoughts before Starting a Restaurant
So romantic ideas aside, starting any business takes a good deal of planning, and a restaurant or any food service takes even more thoughtful fact gathering. This article will give you an idea springboard to look further into the prospects of bringing your culinary dreams come true.
Before you buy any restaurant supplies or building materials, try finding a consultant to talk to before you start anything that you can't back out of. Basically, any consultant in the restaurant field can be found in your local yellow pages. Word of mouth is better. If you have a network of people you can talk to in the industry, look for someone who can recommend a good consultant they've previously worked with. This is already assuming that you have the logistics of where your place is going to be and a mental picture of your restaurant concept.
From here, I will concentrate on the stocking of the kitchen portion of your restaurant.
Kitchen Ideas: Buying the Kitchen Gear
The single most important aspect, more than location, atmosphere and staff, is the food that you are planning to serve. That is going to be the driving force, the advertisement, and the magic that keeps people coming back. We'll take a brief look at purchasing restaurant equipment, and if you are serving drinks, some detail about bar supplies.
The equipment has to have the facility to deliver, but not necessarily over elaborate -- extra parts are a pain to watch, maintain and prevent getting lost or broken. Another aspect is to buy products that have some lasting power. Of course, being a beginning entrepreneur, it may not fit the bill getting that $20,000 range and hood, but getting some of the basic tools with some integrity, will benefit you in quality in the production process.
Also, you will want to know what your city codes are in regards to some of the stuff you need to stock your kitchen, especially with storage and cooking products. For instance, the city where you live may have some requirements on what size hood you have over your oven, or what type of gas hook ups you need. Each city may have slightly different standards, and restaurant equipment vendors are not going to give you the heads up before buying.
Some basic points to consider before buying restaurant supplies are:
- Be wary of buying any used equipment from a seller unless you know them
- Try giving a call to your local fire precinct, health department or building inspector before buying; they may have a list or reference guide they can refer you to
- Check the refrigeration materials on any cooler (compressor-type coolers usually) and see if the electric wiring can handle heavy loads when it gets really hot outside
- Watch out for overbuying; make sure that you keep it lean and efficient until you get the hang of your process after running the business for a while
Bar Supplies: The Shopper 's List
This is basically a whole new subject, but for the restaurant owner they may go into the game tandem. Here are a few products you may want to put on your buying list whether this is in the works now or if you plan to expand in the future.
Glasses are essential. Depending on the drinks you serve and the atmosphere you want, the style and quality vary. However, there will be a good deal put into selecting these. It will be a fine balance between style and affordability -- think dropped glasses.
Bottle openers. Nothing further needs to be said.
Cocktail mixing supplies are another. If you have a liquor license that includes cocktails, invest in buying measuring spoons or thimbles, cocktail shakers with built-in ice filters are good. Also, look to pour measurers that insert into the bottle neck. It will keep the cocktails consistent as well as the routine restock of the liquor.
Before you buy any restaurant supplies or building materials, try finding a consultant to talk to before you start anything that you can't back out of. Basically, any consultant in the restaurant field can be found in your local yellow pages. Word of mouth is better. If you have a network of people you can talk to in the industry, look for someone who can recommend a good consultant they've previously worked with. This is already assuming that you have the logistics of where your place is going to be and a mental picture of your restaurant concept.
From here, I will concentrate on the stocking of the kitchen portion of your restaurant.
Kitchen Ideas: Buying the Kitchen Gear
The single most important aspect, more than location, atmosphere and staff, is the food that you are planning to serve. That is going to be the driving force, the advertisement, and the magic that keeps people coming back. We'll take a brief look at purchasing restaurant equipment, and if you are serving drinks, some detail about bar supplies.
The equipment has to have the facility to deliver, but not necessarily over elaborate -- extra parts are a pain to watch, maintain and prevent getting lost or broken. Another aspect is to buy products that have some lasting power. Of course, being a beginning entrepreneur, it may not fit the bill getting that $20,000 range and hood, but getting some of the basic tools with some integrity, will benefit you in quality in the production process.
Also, you will want to know what your city codes are in regards to some of the stuff you need to stock your kitchen, especially with storage and cooking products. For instance, the city where you live may have some requirements on what size hood you have over your oven, or what type of gas hook ups you need. Each city may have slightly different standards, and restaurant equipment vendors are not going to give you the heads up before buying.
Some basic points to consider before buying restaurant supplies are:
- Be wary of buying any used equipment from a seller unless you know them
- Try giving a call to your local fire precinct, health department or building inspector before buying; they may have a list or reference guide they can refer you to
- Check the refrigeration materials on any cooler (compressor-type coolers usually) and see if the electric wiring can handle heavy loads when it gets really hot outside
- Watch out for overbuying; make sure that you keep it lean and efficient until you get the hang of your process after running the business for a while
Bar Supplies: The Shopper 's List
This is basically a whole new subject, but for the restaurant owner they may go into the game tandem. Here are a few products you may want to put on your buying list whether this is in the works now or if you plan to expand in the future.
Glasses are essential. Depending on the drinks you serve and the atmosphere you want, the style and quality vary. However, there will be a good deal put into selecting these. It will be a fine balance between style and affordability -- think dropped glasses.
Bottle openers. Nothing further needs to be said.
Cocktail mixing supplies are another. If you have a liquor license that includes cocktails, invest in buying measuring spoons or thimbles, cocktail shakers with built-in ice filters are good. Also, look to pour measurers that insert into the bottle neck. It will keep the cocktails consistent as well as the routine restock of the liquor.
Vending Candy Wholesale and The Bulk Vending Business!
Purchasing bulk candy from an Internet wholesale supplier gets you a variety of specialty candy at low prices. Ordering bulk candy online means that your yummy goodies are delivered right to your home. Purchasing candy in bulk translates into substantial cost savings. You can re-sell the candies at Little League snack bars, offer sweet party favors at a wedding ceremony or other prominent celebrations, use candy as component of a marketing campaign, set out big tubs of candies at your place of business, and much more. One of the most beneficial reasons to order big quantities of candy is to stock up for your special occasion, trade show, marketing event, fundraisings, or vacation without having to leave your home or office.
A proven source of income, the bulk candy vending machines industry is a vast multi-million dollar annual industry. Bulk vend is a supplier of bulk candy and bulk candy vending machines at wholesale rates, to help you begin or improve your bulk candy vending machine business. Nuts, chocolate, chewing gums, stickers, toys and more are all available from Bulk vend at wholesale rates to make your bulk candy machine business productive. The bulk vend representatives will reach your locations for setup by either telemarketing or in person, depending upon location, to help you bring your bulk candy machine business off the base.
For someone who trade candy in their businesses or by candy vending machines, it is very significant to find a reliable supplier. This is because given the popularity of candy among consumers; supermarkets, groceries and vending machines that provide those, sellers want to have a regular supply of these products. In addition to being able to discover a reliable supplier, second important thing is locating a supplier that offers the better prices for his products, since this can insure that retailers can also sell the candy at a beneficial price. However, locating a supplier that suits this profile can be challenging as there are a large number of them to select from, which can make the procedure of canvassing for a supplier not only time-consuming but exhausting as well.
One of the best ways to discover is to explore the Internet for wholesale companies that deal candy. This is because exploring the Internet not only assists you to a wide array of selections with regard to different types of candy but it can also allow you to compare a number of companies well at the comfort of your home. In addition to this, the ease by which dealings are made online also provides a convenient way to buy candy.
One of the basic things to study when you search for wholesalers is the price of their products; however, given the big competition online, you can expect that the costs of different candy products would be very competitive. Another significant consideration is on how these companies would send the products to you, as much as possible; you should find a company that has its own delivery system. Other considerations include the way of payment for the products, making sure that you get the most fresh products and the reliability of the company in being able to ship their products and provide services. Alternately finding a supplier in your area can be beneficial so your can directly see the product and pick it up right away.
A proven source of income, the bulk candy vending machines industry is a vast multi-million dollar annual industry. Bulk vend is a supplier of bulk candy and bulk candy vending machines at wholesale rates, to help you begin or improve your bulk candy vending machine business. Nuts, chocolate, chewing gums, stickers, toys and more are all available from Bulk vend at wholesale rates to make your bulk candy machine business productive. The bulk vend representatives will reach your locations for setup by either telemarketing or in person, depending upon location, to help you bring your bulk candy machine business off the base.
For someone who trade candy in their businesses or by candy vending machines, it is very significant to find a reliable supplier. This is because given the popularity of candy among consumers; supermarkets, groceries and vending machines that provide those, sellers want to have a regular supply of these products. In addition to being able to discover a reliable supplier, second important thing is locating a supplier that offers the better prices for his products, since this can insure that retailers can also sell the candy at a beneficial price. However, locating a supplier that suits this profile can be challenging as there are a large number of them to select from, which can make the procedure of canvassing for a supplier not only time-consuming but exhausting as well.
One of the best ways to discover is to explore the Internet for wholesale companies that deal candy. This is because exploring the Internet not only assists you to a wide array of selections with regard to different types of candy but it can also allow you to compare a number of companies well at the comfort of your home. In addition to this, the ease by which dealings are made online also provides a convenient way to buy candy.
One of the basic things to study when you search for wholesalers is the price of their products; however, given the big competition online, you can expect that the costs of different candy products would be very competitive. Another significant consideration is on how these companies would send the products to you, as much as possible; you should find a company that has its own delivery system. Other considerations include the way of payment for the products, making sure that you get the most fresh products and the reliability of the company in being able to ship their products and provide services. Alternately finding a supplier in your area can be beneficial so your can directly see the product and pick it up right away.
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