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Introduction How to Complete 1 Your Mastery Mindset 2 Listen To Your Own Voice 3 Believe In Yourself 4 Your Own Business 5 Knowing Is Your Edge 6 Preparing For Success 7 What Wealth Means 8 Choosing Your Challenges 9 Making the Right Move 10 Entrepreneurial Potential Conclusion |
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Lesson Five - Knowing Is Your EdgeObjectives:
Background:
Let's say that you've decided to sell automobile tires. Remember that the business doesn't matter; your style and attitude matters. How can you love selling tires? Maybe, you can. Maybe, you can't. Tires are the means to your end, to you victory, to retiring as a multi-millionaire in twenty years or less. You can make lots and lots of money from selling tires. Somebody is, why not you? You can live comfortably and invest and retire early from selling tires. You can buy a boat and go fishing and raise a great family from selling tires.
How do I know so much about selling tires?I don't anything. But, I don't have to know anything except that tires are a saleable product in constant demand. I only know about style and attitude of an Action Principles® Champion. I know that you can sell anything if there is consumer demand. I know that if you are a salesperson following the Action Principles® philosophy that you will have the proper style and attitude. I know that you can go way beyond making a living; you can prosper. You can do this with your own tire selling business. Or, you can work for a tire selling company where they appreciate you. Among many things about the tire business, you'll surely want to know which tires are best and why. You have to know the various types of tires and grades of quality. You have to know manufacturers and suppliers. You have to know buy/sell margins. You have to know the wholesale price that you can pay your suppliers so that you can offer the tires to the public at a competitive price. You have to know about inventories, stock and storage. You have to know about the mechanical skills necessary to perform the various jobs at your tire dealership. And, you have to know how to select qualified people with these necessary skills. In the tire business, you have to know the difference between gimmicks and come-ons and genuine sales and values. You have to know who buys tires and when and why and you have to be able to vary your salespersonship accordingly. When selling, you have to know your customers. You must be attuned to your customers' primary objectives. Do they want safety, durability, style or a good price? Do they desire a combination of these? You have to be able to advise them professionally yet persuasively. You have to be able to sell on the phone as well as in the showroom. You have to know about all the items and services related to tires that can mean extra profits. If you sell one tire or four tires to the average consumer, can you sell one hundred or four hundred or four thousand tires to rental car companies, fleet buyers or government entities?
You have to know a lot to succeed in the tire business or any business. Knowledge is power. How do you learn about these things? You devote yourself to continuous, rigorous study. You commit to continual self-improvement. In general, you want to know the relationship of your industry to the economy as a whole. It's a good idea to get into the habit of reading one or more general business publications. They are all online. General business publications include the daily newspaper, The Wall Street Journal and weekly or bi-weekly magazines such as Business Week, Forbes or Fortune. Again, all of the major business publications have on-line editions. What do you want to know about your particular industry? In your specific sphere of business, you want to know everything. In most cases, you can't go to school for the information because the information is too specialized. Can you take a community college course on "How to Sell Tires" with an instructor who is a veteran at selling tires? It's doubtful that there is such a course. Why? Very few people would be interested in taking a course on tire marketing. So, you have to sit in a classroom with other students who want to be graphic designers or sell vintage Pez dispensers on Ebay or want to open nail salons. The instructor must then generalize the material, water down the concepts, to the point that the information becomes generic and of limited use.
Most of your fellow students will naively sit in class taking notes and doing little else. As an Action Principles® Champion, what do you? You have to dig for this specific industry information for yourself. You read the tire business. You talk the tire business. You work the tire business. You read the tire business. If there are books written on tire marketing, you'll want to read them all. If there are books written about people who have been in your business, you'll want to read them all. Is there a Mr. Firestone or a Mr. Goodyear? But, that's just a start.
You want to get your hands on all the trade publications you can. You want to receive all manufacturer and supplier spec sheets that you can. You may not want to think about your competitors as the enemy but you are fighting for the same consumer dollars. You want to read your competitors like a book. You want to read their catalogs, their brochures, their fliers, their circulars, their coupons, their menus and especially their ads and anything else that they are using that they think will bring them new business. You want to be a master of the Internet. You'll want to study all the industry websites and the websites of your competitors. Of course, you'll want to begin your own Internet presence immediately.
You talk the business. You'll want to attend all the trade dinners, meetings and conventions you can. As often as possible, you want to be able to "talk shop" with other people in your business. In other words, you want to be able to talk business with different people who won't find your topic to be completely boring. You want to talk with manufacturers and manufacturer's representatives and suppliers and agents and delivery truck drivers. You want to locate retired veterans of your business and you want to sit and listen to their stories and advice. Just think of how many people have spent thirty or forty years engaged in a business that you're just entering. What a great source of information and contacts! And, the icing on the cake is that in most cases they will be only too glad to answer your questions, based on their long years of experience.
Remember that the secret of talking and learning and establishing rapport is to sit back and listen. Don't be an argumentative bore by trying to impress everybody with your newly found knowledge of the business. Sit. Listen. Learn. This is your objective. You will impress many more people through the simple fact of your success rather than by blowing hot air and trying to dominate every conversation. Even when you disagree with the speaker, remain polite and respectful. This is the attitude of a winner. You work the business. You want to take every opportunity to gain hands-on experience in every aspect of your business. In the tire business, you might want to spend a few days at the factory watching tires being made. You might want to ask a manufacturer's representative if you could spend a day with him or her visiting tire dealerships. You might want to ask a tire delivery driver if you can hop aboard for a day. You certainly want to have experience in all phases of the tire selling business from stocking tires, to changing tires, to balancing tires, to knowing the environmental laws and regulations regarding the disposal of old tires. You'll want to both formally and informally visit as many different tire dealerships as possible to assess locations, lot and store sizes, signage, sales presentation areas, customer waiting areas, work bays, storage areas, etc. You see the place; now look at the people. See the number of employees and how they both look and act. See the number of customers and how they both look and act. What is your overall impression? Is this a place where you would feel comfortable doing business?
Most people at work will not understand why you are doing all the extra work that you do. This is where the geeks, nerds, slackers, the pampered, the lazy and the weak, all fall by the wayside. You are a master following the Action Principles®. You are in that elite one percent. You have freely chosen a more challenging path. Of course, you have to do things differently. If you act like everyone else, if you think like everyone else, you aren't special; you are just like everyone else! Where will the next good idea come from? It may be a book or magazine or website or blog. It may come from a meeting, a seminar or a convention. It may come from an employee, a customer, a mentor or even a competitor. The sources don't matter. You are a master. You are always alert and aware. Story:Romano's Homestyle Pizza, Continued
At this point in his research, Kevin has seen a number of pizza shop operations from the front and from behind the counter. He has a reasonable sense of what type of equipment and supplies he will buy and who will be the vendors. He has seen shops and operations he likes. And, he has a sense for shops and operations that could benefit from some upgrading and better management.If there is a weak spot in Kevin's research, it is probably financials. While it would have been impolite and counterproductive to ask a shop owner during either the on-site or phone interviews, "How much do you gross a week?" Kevin has gathered basic information by asking direct questions and receiving direct answers to questions, such as: "Could you give me a very rough idea of how many pizzas you think I could expect to sell in a week?" Here might be a typical answer to Kevin's question, "Yes, well I don't know. Newton's a good town but you got a lot of good shops there already. And, remember take it slow. It takes awhile to build a business up, you know. And, you gotta have a good location. We sell 450, 500 pies a week here plus we sell plenty of sandwiches but that's after 26 years in business. You can't expect to do a business like this right away." Whatever answer Kevin is given he is appreciative, "Yes, Sir, I certainly do that. Thank you." Even if Kevin thinks he can sell a thousand pizza pies a week, he must remain respectful and thankful to those helping him. He doesn't brag, argue, gloat or try to put anyone else's ideas down. He doesn't try to prove how smart or great he thinks he is. He listens. He learns. He is thankful. Kevin asks, "What can I do?" rather than "What do you do?" when asking financial questions in all of his interviews. He gives the interviewee the opportunity and option to volunteer information or sidestep the questions. From any single response, Kevin may get answers with inflated or deflated figures. But, with all the responses taken together, Kevin gains a general sense of the volume he can expect from an average pizza shop. Source Three - For Sale AdsEvery Sunday in the metropolitan newspapers there is a large Business Opportunities section in the classified section. The Business Opportunities are businesses for sale. The first Sunday he checks, Kevin finds three pizza shops listed for sale. One of the listings is from a business broker who sells all types of businesses. The second listing is from a broker who specializes in selling restaurants. The third listing is from a pizza shop owner selling directly.Kevin makes his first call to Ventures Unlimited, the general business broker. The ad reads,
Kevin calls Ventures Unlimited. However, the person that he speaks with at Ventures Unlimited will not give specific information over the phone. On his next day off, Kevin, arranges an appointment at the Ventures Unlimited offices with Mr. Davis. Mr. Davis doesn't waste any time on details. He moves straight to the close. "Kevin, forget the $225,000 you saw in the ad. If you could do something quickly, if you make an offer of $200,000, you can probably walk away with this place." Understandably, Kevin hesitates, "Is the business worth $200,000, Mr. Davis?" Mr. Davis keeps on closing. In closing the sale, he wants Kevin to commit to buying the business. "Well, you're in the restaurant business, Kevin, not I. I really don't sell that many restaurants. Maybe you're right. Perhaps, $195,000 would be acceptable with $25,000 down. I tell you that the guy who owns this place is ready to give it away. Personal problems, you know lots of personal problems." "Well, enough about him; let's concentrate on getting you into business. Kevin, how much money are you prepared to invest in your future right now? How much available cash are we talking, son?" Kevin presses on, "Thank you, Mr. Davis, for the compliment but I'm really not in the restaurant business, yet. I'm thinking about opening a pizza shop and before I get any further along with my plans, I thought that I'd find out about pizza shops that are already up and operating." Mr. Davis doesn't seem too worried about Kevin's pizza questions because he has other businesses to discuss, "Kevin, you say that you were a Marine. Well, that's what I like to see, a young man with his eye on the future and independent business is certainly the way to go. And, since you're not committed to pizza, I'd also like to talk to you about a Laundromat and a muffler shop we have for sale. Both are a real sure thing. Pizza? Come on, son, forget pizza. You don't want to work 80 hours a week, do you? After all, the sweat, the sauce..." 
Of course, Kevin is committed to opening a pizza shop and he wants Mr. Davis to show him the verifiable income and expenses, "the strong numbers," which he listed in his ad. Really, Kevin wants to know where these numbers stand in relation to the asking price."Well, yes, Kevin," Mr. Davis continues without the blink of an eye. "Pizza is a growing business, growing, growing all the time. People can't get enough pizza, I always say. I love it myself. Now, let's see, we do have some figures here on the listing sheet but you, of course, understand that we get these numbers from the owners and while we deem them to be accurate, we can't always be sure. Pizza's a cash business, you know." Mr. Davis is telling Kevin that the verifiable numbers may not be so verifiable, "Yes, Mr. Davis, I know but if you have copies of the business's tax returns that would be a good starting point." Mr. Davis continues to shuffle and re-shuffle the same three sheets of paper he has filed in a manila folder. "No, we haven't got tax returns. You'd have to ask the owner yourself for those and I doubt if he'd give them to you without a sizable cash offer first, Kevin. How much cash did you say you have to invest? Let me be honest with you, Kevin. I don't know anything about the restaurant business but I know you wouldn't be happy there. Now, have you ever stopped to consider fake fur importing? It's big, Kevin, and a young guy like you could be a pioneer. You'd be in on the ground floor. Let me show you something here..." "I'm really only interested in pizza, Mr. Davis." Mr. Davis finishes frustrated, "Pizza, feetza. I have to remember to take that pizza ad out of the paper. I haven't gotten a decent lead from that pizza ad in six months." Mr. Davis doesn't seem to think that it's unusual for him to share his complaints with this client. Worse, Mr. Davis seems to be starting to lecture Kevin. "Son, didn't the Marine Corp teach you to listen? You're just like my kids. You never listen. Anyway, I can't take any more time with this. Here's a copy of the listing sheet on the restaurant. Talk to the owner yourself. But, remember, if you buy the place remember that Ventures Unlimited must be paid it's full commission of ten percent. But, son, don't let the commission stand in your way either. I'm a reasonable man. I love to wheel and deal. Yes, Sir ... Now, son, I did mention mufflers to you, didn't I? Here, here I want you to take this brochure on aqua farming. Read it. I'll call you in a few days and we'll talk. Son, you've got to start listening to people who know what's best for you, the kind of people who have been in small business for a few years and know the ropes." Kevin beats a polite but hasty retreat. The listing sheet that Mr. Davis gives Kevin does show numbers. It shows the actual gross of the business to be $6,000 a week with listed expenses of $3,500 a week. And, it is obvious to Kevin that many line item expenses for such costs as uniform cleaning, printing, trash removal, pest control, advertising and promotion have been omitted. At $6,000 a week, this shop may only break even with little or no salary to the owner. Kevin follows up with a call directly to the "For Sale" shop owner, Mr. Kozopolus. He receives a half-hearted reply. "Yes, the business might be for sale at the right price." "Is the right price $225,000?," Kevin inquires. Mr. Koz replies, "Are you offering me $225,000?" Kevin still tries to go for the hard number information that he needs, "Well, I'd have to see your books, tax returns and how you arrive at your asking price." Mr. Koz sounds annoyed. Obviously, Kevin isn't the first "looker" that Mr. Davis has sent to bother Mr. Koz. "Listen, let me save you some trouble. Books, shmooks, you don't buy a pizza restaurant that way. You talked to that Mr. Davis, right? He doesn't know anything about restaurants, right? Well, this Mr. Davis comes into my shop and asks me if I'd be willing to sell. I said 'Sure, find me somebody willing to pay me $200,000 and I sell. Otherwise, I'm not interested.' The next thing I know, Davis has the place advertised. He's a real character, a real sharpie." Kevin feels a little better that he is dealing with a genuine businessman in Mr. Koz and not a "sharpie" character like Mr. Davis. "Mr. Kozopolus, let me be frank with you. I've been thinking about opening a pizza shop in Newton. Before I get underway, I thought I'd check out any existing shops that were for sale. I saw the ad for your shop in the Sunday paper. I wonder if I could come to your shop when its convenient and we could talk for half an hour. It's just thirty minutes; I would appreciate your advice." "Sure, sure, when do you want to come?" Mr. Koz's attitude turned very accommodating, "I'll tell you all about the pizza business. Let me tell you something. If you're willing to work hard, you can make a good living. My kids aren't interested. Sure, you come, we can talk. I am doing this because you are a Marine. I was 4F but two of my brothers were Marines. Sure, let's talk." Mr. Kozopolus turns out to be an excellent resource for Kevin. Kevin again goes over his list of the best equipment and the best suppliers. He gets names of people in the business with whom he should talk. And, Kevin finds that Mr. Kozopolus is very willing to discuss the dollars and cents of the business. Kevin has Mr. Kozopolus describe to him how he would proceed if he were starting again from scratch. Be sure to ask your mentor how they would begin again if they were you. If you are someone following the Action Principles®, you will find that most people will respond positively to you and will want to help you. Kevin appreciates hearing Mr. Koz's adventure in coming to America and starting a business. Kevin listens and learns. "Kid, let me tell you that I came to this country with a single suitcase in one hand and my wife and my eldest daughter by my side. My English was very poor. I..." Before leaving, Kevin asks Mr. Kozopolus if he can call him on the phone with questions from time to time as his business proceeds. "Sure, kid. Don't sign no orders or commit yourself to any of these wholesaler people without giving me a call first." Mr. Koz warns, "Now, listen to me, because some of these people are very sharp. By the way, I figure my business worth about $150,000 but I'm not going to sell it for that. I wish my young Stephen would do what you're doing. Here he's got an honest business all ready for him. But, he says, 'No, Papa, I'm sick of pizza.' Can you imagine, sick of pizza? Kids, today, I don't know. You're a smart young man and young man, this isn't a pizza business, this is a money business. You sell the pizza to make money. You take the money and buy a little real estate. You can have yourself a good life from a good, honest business." Mr. Kozopolus obviously wants to share his experiences in the pizza business. If his son Stephen doesn't want to listen, that's fine with Kevin. Kevin may have found his first mentor in Mr. Kozopolus. Kevin has a fruit basket with a Thank You letter sent to Mr. Kozopolus. In the end, the call on the ad which seemed to be leading nowhere after the meeting with Mr. Davis at Ventures Unlimited, has turned out to be very productive and the cost was $32.00 for the basket and delivery. It is possible that when Mr. Koz is "really" ready to sell that Kevin could have the inside track to buy the restaurant and add this restaurant to his pizza chain?
Kevin is already thinking ahead. Kevin, now turns to the second ad by the pizza shop owners selling direct. The ad reads,
Kevin calls Sam and arranges an after work meeting. Kevin explains that he will have to see operating statements and tax returns to verify the income and expenses.Sam says, "Sure, no problem." At the meeting, Sam does produce income and expense figures that appear fairly complete. However, in cross checking the numbers on the tax return with the operating statement, there is a problem. Kevin tries diplomatically to ask Sam about the numerical discrepancy. "Sam, just looking at your figures quickly, it would seem that your reported gross income from the business last year was about $35,000. That's about $700 a week and not $2,500." Sam sounds irritated, "Is that right? $700, no way. You come here any day at lunch time and see the business that I do. I'll sell thirty, forty subs in an hour. You'll see." Kevin asks another question trying to understand and verify the numbers and not seem to accuse Sam of anything, "So, you're saying that the $35,000 figure is very low?" "Listen," Sam stares at Kevin and replies in a low voice, "All I'm saying is: do you know the restaurant business or not? You got to know how the business world works before you can buy a place like this. Come on now, don't play stupid with me. You know." Sam, frustrated by Kevin's questions tries to close the sale, "OK, maybe the place doesn't do $2,500 but it does $2,000 a week, easy. At the price I'm asking, this place is a steal." Kevin thanks Sam for his time and tells him that he'll get back to him if he's interested. No fruit basket this time but still another lesson learned. Of course, one of the principle ways that the IRS does catch tax cheats is to sit outside and count customers.
Sam is telling Kevin that the way to make money in the restaurant business is to not report income and not pay taxes. If Sam isn't reporting all his federal income tax, what about his state taxes, sales taxes, meal taxes and employee withholding taxes? If a buyer is foolish enough to "steal" Sam's restaurant, he or she may find himself or herself in the soup rather than serving the soup. Operational Limitations:
Seeds for thought:
Jargon:Margins The difference between the price a product costs a company and the price at which a product can be sold. Questions and Answers:Since I was a youngster, I've worked for my uncle who has a long term lease on a newsstand in a large hotel. Now, he's offered to sell me the lease and the business. I've always wanted to own my own business and I like this particular business but, frankly, I aspire to a higher standard of living than my uncle. Should I buy or look for a business with more financial potential?The newsstand seems to have a lot of appeal. You like the business. You have years of experience in the business. You have established contacts and suppliers. You have your uncle as a mentor. And, let's presume that your uncle is offering you the business at a favorable price and terms. The problem is that you can't achieve your financial objectives with this business alone. So, why not expand? The first thing you must do is to carefully review the lease your uncle has with the hotel. It will specifically list what you can do, what you can sell and what you can't. This is all very important and if you have any questions, you must review them with a real estate attorney. Can you adjust the product mix in the stand to bring a higher return? Is there a possibility of physically expanding the stand to accommodate more merchandise? Are there other complimentary businesses in the hotel that you could purchase and manage? Could you offer products such as foreign newspapers which might bring business to your stand from outside the hotel? Would the hotel allow you to offer additional services such as the overnight rental of DVDs? As you continue your research and become an expert at newsstand economics, you may find opportunities to purchase and leaseback other newsstands in other hotels. Is it possible to become a hotel newsstand tycoon? Tell us on the Success.org forums. I have been working for a caterer for five years and I think that I can do a better job at catering than the owners of this business. They are just coasting. Should I make my move? Absolutely, if you know the catering business, why not you? If you have the desire and the talent, why not you? If you are willing to do the research and put in the money and the hours, why not you? Why wait another five years? It is not unusual to find businesses that start strong, but when the owners reach a certain comfort level, everything seems to stop and business begins to coast. They begin to take their employees and suppliers for granted. And, most importantly, they begin to take their customers for granted - big mistake. Successful owners must continue to research and test, and keep their businesses vibrant and alive. If your boss isn't appreciating his or her customers, you might be walking into a big opportunity. Does it take an extraordinary person to succeed in small business, or can everyone do it? Unfortunately, when people get an idea for a business, they are filled with enthusiasm, but when they approach family and friends, the reaction is often overly cautious at best, and downright negative at worst. The result is often procrastination fueled by doubt. It takes extraordinary confidence to accept the risks and take the steps. The hows of small business are actually simple, but executing those simple things can be difficult. Succeeding at small business takes hard work and persistence and determination. It takes having a positive mental attitude when the going gets tough. It takes appreciating your customer when that isn't always easy to do. It takes a continuing commitment to research and improvement. It takes a tough thoughtful spiritual person of action, an Action Principles® Champion and this would be you. Action Plan:
Support:
Inspirational Insights:All know the way; few actually walk it.Bodhidharma God will not have his work made manifest by cowards. Ralph Waldo Emerson Punishing honest mistakes stifles creativity. I want people moving and shaking the earth and they're going to make mistakes. Ross Perot When you discover your mission, you will feel its demand. It will fill you with enthusiasm and a burning desire to get to work on it. W. Clement Stone Remember, a real decision is measured by the fact that you've taken new action. If there's no action, you haven't truly decided. Anthony Robbins I'm a great believer in luck and I find the harder I work, the more I have of it. Thomas Jefferson I find that when you have a real interest in life and a curious life, that sleep is not the most important thing. Martha Stewart The Way of the Warrior is based on humanity, love, and sincerity; the heart of martial valor is true bravery, wisdom, love, and friendship. Emphasis on the physical aspects of warriorship is futile, for the power of the body is always limited. Morihei Ueshiba One man with courage makes a majority. Andrew Jackson The world is filled with willing people; some willing to work, the rest willing to let them. Robert Frost When deeds speak, words are nothing. African Proverb What a man believes may be ascertained not from his creed, but from assumptions on which he habitually acts. George Bernard Shaw We can discover this meaning in life in three different ways: (1) by doing a deed; (2) by experiencing a value; and (3) by suffering. Victor Frankl Confidence can get you where you want to go, and getting there is a daily process. It's so much easier when you feel good about yourself, your abilities and talents. Donald Trump To lead people, walk beside them... As for the best leaders, the people do not notice their existence. The next best, the people honor and praise. The next, the people fear; and the next, the people hate... When the best leader's work is done the people say, 'We did it ourselves!' Lao Tzu All problems become smaller if you don't dodge them but confront them. Admiral Bull Halsey Talk doesn't cook rice. Chinese Proverb Being busy does not always mean real work. The object of all work is production or accomplishment and to either of these ends there must be forethought, system, planning, intelligence, and honest purpose, as well as perspiration. Seeming to do is not doing. Thomas Edison Don't find fault. Find a remedy. Henry Ford Because the samurai accepted death, he lived in one day the life of an ordinary man's thirty days. Legend of the Samurai |
