1
00:00:00,000 --> 00:00:02,320
tips for early entrepreneurs then?

2
00:00:03,960 --> 00:00:05,600
Early on what?

3
00:00:05,600 --> 00:00:06,960
Entrepreneurs.

4
00:00:06,960 --> 00:00:10,280
Entrepreneurs, yeah, I think the first thing is,

5
00:00:10,280 --> 00:00:13,460
the first question they should ask is,

6
00:00:13,460 --> 00:00:18,460
where do I go to understand the business

7
00:00:19,020 --> 00:00:22,000
that I'm getting into or that I seek to get into?

8
00:00:23,400 --> 00:00:26,880
Where are the sources of information that allow me to

9
00:00:26,880 --> 00:00:32,060
do an estimate of the situation?

10
00:00:32,060 --> 00:00:37,060
In other words, going into financial planning, for example,

11
00:00:37,340 --> 00:00:40,540
are there resources that would provide me with details

12
00:00:40,540 --> 00:00:45,540
or analysis or information that tells me the survival rate,

13
00:00:46,900 --> 00:00:49,680
that tells me what the likely income is going to be

14
00:00:49,680 --> 00:00:52,020
in the first one, two, three years?

15
00:00:52,020 --> 00:00:53,660
Are there associations?

16
00:00:53,660 --> 00:00:56,320
Are there, for example, in real estate,

17
00:00:56,320 --> 00:00:58,780
there's a National Association of Realtors,

18
00:00:58,780 --> 00:01:01,380
which has significant amount of information,

19
00:01:01,380 --> 00:01:06,020
surveys of agents and how much profit they make or don't make.

20
00:01:06,020 --> 00:01:09,780
And that was a tremendous resource in writing my book

21
00:01:09,780 --> 00:01:12,460
because it gave me the statistics of how many people

22
00:01:12,460 --> 00:01:14,660
were failing in the first two years,

23
00:01:14,660 --> 00:01:18,340
how many people were limping along making minimal income.

24
00:01:18,340 --> 00:01:20,340
It gave me the average hours worked.

25
00:01:20,340 --> 00:01:23,420
It gave me statistical data that I could assess

26
00:01:23,420 --> 00:01:24,900
this estimate of the situation.

27
00:01:24,900 --> 00:01:26,460
And that's a very important term.

28
00:01:26,460 --> 00:01:31,180
The estimate of the situation is what is the industry today

29
00:01:31,180 --> 00:01:34,180
and how will I survive in that industry

30
00:01:34,180 --> 00:01:37,820
and what's my likelihood of success being open-minded

31
00:01:37,820 --> 00:01:40,180
about the positives and the negatives of that

32
00:01:41,580 --> 00:01:46,580
and not having a tunnel vision that I'm so excited by this

33
00:01:47,100 --> 00:01:49,820
and I'm so enthusiastic to do it

34
00:01:49,820 --> 00:01:51,780
that I ignore the warning signs.

35
00:01:51,780 --> 00:01:55,200
And when a person goes into real estate and finds out that,

36
00:01:55,200 --> 00:01:56,640
well, I'll just, Harry, I'll just give you

37
00:01:56,640 --> 00:01:58,240
a real good story.

38
00:01:58,240 --> 00:02:01,880
A gentleman called me up and knowing that I was one of the

39
00:02:01,880 --> 00:02:05,040
very top producing real estate agents in our area.

40
00:02:05,040 --> 00:02:08,640
He called me up and I had helped him purchase a home.

41
00:02:08,640 --> 00:02:10,880
And he said, Sonny, I'm thinking about going into

42
00:02:10,880 --> 00:02:12,640
the real estate business.

43
00:02:12,640 --> 00:02:16,400
And I asked him, how much do you make per year

44
00:02:16,400 --> 00:02:19,040
in your current job, your current assignment?

45
00:02:19,040 --> 00:02:22,280
And he said, about 200,000 a year.

46
00:02:23,640 --> 00:02:26,040
And I said, it will take you, in my opinion,

47
00:02:26,040 --> 00:02:31,040
three to four years to equal that in net profit.

48
00:02:32,260 --> 00:02:34,400
If you go into residential real estate

49
00:02:35,480 --> 00:02:38,560
from the very beginning, three or four years

50
00:02:38,560 --> 00:02:41,160
to equal what you're currently making.

51
00:02:41,160 --> 00:02:43,720
Now, and there's no guarantee of success,

52
00:02:44,880 --> 00:02:47,920
but if you're very good and you study

53
00:02:47,920 --> 00:02:51,240
and you really try and you devote the time to it,

54
00:02:51,240 --> 00:02:53,720
you could probably work your way up to making

55
00:02:53,720 --> 00:02:57,360
about $200,000 a year in three or four years.

56
00:02:57,360 --> 00:03:00,080
This man was a talented, successful businessman.

57
00:03:01,080 --> 00:03:02,640
But a lot of people go into real estate

58
00:03:02,640 --> 00:03:04,800
and they think it's gonna be so easy.

59
00:03:04,800 --> 00:03:08,800
I'm gonna turn on the engine for my new business.

60
00:03:08,800 --> 00:03:12,000
And I'm so enthusiastic, I'm so excited

61
00:03:12,000 --> 00:03:13,840
that I ignore the red flags.

62
00:03:13,840 --> 00:03:16,360
And that's a problem.

63
00:03:18,160 --> 00:03:22,640
Yeah, I have so many names of people

64
00:03:22,640 --> 00:03:25,200
that come to my mind who are going down this path.

65
00:03:26,040 --> 00:03:28,400
And I see it, I see it.

66
00:03:29,280 --> 00:03:33,360
Hopefully they make it with their grit and enthusiasm

67
00:03:33,360 --> 00:03:35,440
and they do it and they prove me wrong.

68
00:03:35,440 --> 00:03:37,800
But I also see the pain coming from the other side.

69
00:03:37,800 --> 00:03:40,040
I'm like, oh my gosh, I should have switched

70
00:03:40,040 --> 00:03:42,360
five years of my life, but I didn't realize why.

71
00:03:42,360 --> 00:03:47,360
Well, in my book, I tell a story of a brilliant man.

72
00:03:48,280 --> 00:03:51,960
He was president of a medium-sized corporation.

73
00:03:51,960 --> 00:03:54,120
And I mean a pretty good sized corporation.

74
00:03:54,120 --> 00:03:56,480
If I said the name of it, most people would know it.

75
00:03:57,800 --> 00:04:02,080
And he, a medium-sized meaning about probably 25,

76
00:04:02,080 --> 00:04:04,880
30 million per year in revenues.

77
00:04:04,880 --> 00:04:07,320
That's not a bad business.

78
00:04:07,320 --> 00:04:09,920
And he retired from that business

79
00:04:09,920 --> 00:04:14,080
and had been successful in everything he had ever done.

80
00:04:14,080 --> 00:04:18,160
And he started a business and he hired me to come out

81
00:04:18,160 --> 00:04:21,920
and evaluate the business and tell him what was going wrong

82
00:04:21,920 --> 00:04:25,160
because he was losing about $20,000 a month

83
00:04:25,160 --> 00:04:26,960
in this small business that he started

84
00:04:26,960 --> 00:04:30,160
after being president of a medium-sized corporation,

85
00:04:30,160 --> 00:04:32,760
having lots of employees, et cetera.

86
00:04:32,760 --> 00:04:36,200
And I did the analysis and determined that he would lose,

87
00:04:36,200 --> 00:04:41,200
was losing 200 to $250,000 per year.

88
00:04:41,280 --> 00:04:44,720
And that his likelihood of continuing to lose that money

89
00:04:44,720 --> 00:04:46,040
was pretty high.

90
00:04:47,480 --> 00:04:50,640
He did not have a business marketing plan,

91
00:04:50,640 --> 00:04:53,200
a business plan or a marketing plan.

92
00:04:53,200 --> 00:04:57,880
He did not have the marketing strategies and tactics

93
00:04:57,880 --> 00:05:00,560
that would allow him to be successful.

94
00:05:00,560 --> 00:05:02,920
He had a boat with no captain.

95
00:05:02,920 --> 00:05:05,840
Even as highly knowledgeable as he was

96
00:05:05,840 --> 00:05:08,640
of running a big corporation, keep in mind,

97
00:05:08,640 --> 00:05:11,280
he had captains of all the different areas.

98
00:05:11,280 --> 00:05:13,560
That's going back to what you said a minute ago

99
00:05:13,560 --> 00:05:16,160
about your most recent activity.

100
00:05:16,160 --> 00:05:18,200
When you look at, you've got to be,

101
00:05:18,200 --> 00:05:20,160
you've got to understand financial.

102
00:05:21,040 --> 00:05:25,040
You've got to understand marketing, technology,

103
00:05:25,040 --> 00:05:28,520
personnel, you have to understand

104
00:05:29,520 --> 00:05:31,520
your marketing strategy.

105
00:05:31,520 --> 00:05:34,600
Your marketing strategy and the marketplace,

106
00:05:34,600 --> 00:05:36,920
you have to know who your target audience is

107
00:05:36,920 --> 00:05:39,680
and what's going to be the hot button for them.

108
00:05:39,680 --> 00:05:41,920
There's so much you have to know

109
00:05:41,920 --> 00:05:44,040
that when you start a very small business

110
00:05:44,040 --> 00:05:47,600
as an entrepreneur and you don't have expert,

111
00:05:47,600 --> 00:05:51,200
subject, expert, expertise, subject area experts

112
00:05:51,200 --> 00:05:56,200
in those other areas, it's going to be risky.

113
00:05:57,360 --> 00:05:59,000
And the fewer of those resources

114
00:05:59,000 --> 00:06:03,480
that you have available to you, the more likely

115
00:06:03,480 --> 00:06:04,480
it is for failure.

116
00:06:04,480 --> 00:06:07,680
And one of the biggest problems is that someone

117
00:06:07,680 --> 00:06:11,480
who's been highly successful in something else

118
00:06:11,480 --> 00:06:14,880
has a false sense of knowledge and security

119
00:06:14,880 --> 00:06:17,160
because they feel like I've been successful,

120
00:06:17,160 --> 00:06:19,840
I've done it before, I can do it again.

121
00:06:19,840 --> 00:06:22,200
It doesn't mean that when they started the endeavor

122
00:06:22,200 --> 00:06:25,040
that they're in currently or previously,

123
00:06:25,040 --> 00:06:27,520
that they were maybe an employee or a team member

124
00:06:27,520 --> 00:06:30,840
or a partner, but when they have to start over

125
00:06:30,840 --> 00:06:32,520
and do everything from the beginning

126
00:06:32,520 --> 00:06:35,760
in a different environment, in a different world

127
00:06:35,760 --> 00:06:37,920
than maybe they were in when they started,

128
00:06:39,080 --> 00:06:40,840
it could be catastrophic.

129
00:06:40,840 --> 00:06:45,320
And this particular man said to me, almost in tears,

130
00:06:45,320 --> 00:06:50,320
if you can imagine a 68 year old man

131
00:06:50,480 --> 00:06:52,120
who has been highly successful

132
00:06:52,120 --> 00:06:56,400
in almost everything he's ever done, losing $400,000

133
00:06:56,400 --> 00:06:58,400
in the first two years of his business,

134
00:06:59,240 --> 00:07:02,320
seeing his retirement funds dwindle

135
00:07:02,320 --> 00:07:05,400
as he funds a non-profitable business,

136
00:07:05,400 --> 00:07:07,280
he looked at me almost in tears and said,

137
00:07:07,280 --> 00:07:09,040
what do I need to do, help me.

138
00:07:10,640 --> 00:07:14,440
And the first thing we went dead was we went back to basics.

139
00:07:14,440 --> 00:07:15,560
What is the audience?

140
00:07:15,560 --> 00:07:18,520
What are they looking for and how do we appeal to them?

141
00:07:19,760 --> 00:07:22,400
And we corrected the shift,

142
00:07:22,400 --> 00:07:24,480
but it took another year to year and a half

143
00:07:24,480 --> 00:07:29,480
and he lost over $500,000 before he started making money.

144
00:07:30,600 --> 00:07:33,760
Well, it took him a long time to recover the 500,000.

145
00:07:34,720 --> 00:07:36,560
I don't want that to happen to people.

146
00:07:37,720 --> 00:07:41,120
I don't want them to go into real estate and work two years

147
00:07:41,120 --> 00:07:42,640
and make a little bit of money.

148
00:07:42,640 --> 00:07:44,880
Maybe they make as much as they would have made

149
00:07:44,880 --> 00:07:46,080
working for someone.

150
00:07:46,980 --> 00:07:49,920
And to that extent, maybe they believe they're successful,

151
00:07:49,920 --> 00:07:52,160
but that's not business ownership.

152
00:07:52,160 --> 00:07:54,920
Business ownership is owning a business

153
00:07:54,920 --> 00:07:58,280
that not only pays the key people who run the business

154
00:07:58,280 --> 00:08:01,000
a meaningful or reasonable wage,

155
00:08:01,000 --> 00:08:22,520
but also makes a profit.