Notes From a Business Plan Competition Part 1 – by Cliff Ennico

Cliff EnnicoEach year the Entrepreneurship Foundation (www.entrepreneurshipfoundation.org) hosts a business plan competition in New Haven, Connecticut.

“Teams” from universities throughout New England submit business plans to the competition, and the 25 best are selected for an all-day “pitch” session to a three judge panel consisting of a venture capitalist, an angel investor, and (ahem) myself. I was privileged to judge the 14th annual Connecticut Business Plan Competition (as the event is called) last week.  I judge several business plan competitions throughout the country, and I find a lot of “teams” come up with similar ideas.  So, for those of you readers who are studying entrepreneurship and want to know how judges look at your team’s business plan, here are my handwritten notes on some of the ideas presented at last week’s competition. Plan # 1:  Online Dating Service.   The Concept:  a website that combines the two most common ways couples meet — finding potential partners online who are friends-of-friends. For a small monthly subscription fee, customers upload their Facebook profiles to the site, and people who think someone’s Facebook friend is “hot” can contact that someone for an introduction. What I Liked:  Online dating is too scary for most people, yet people are reluctant to “matchmake” online by recommending their friends to potential dating partners.  This is a “Goldilocks” solution that resolves both problems. What I Didn’t Like:  Too much competition from Match.com, eHarmony.com, and other sites.  Also, if a customer’s Facebook friend doesn’t want to make herself available for online dating, there is no way for the friend to “opt out” of the site’s database (other than “defriending” the customer). Plan # 2:  Skills Certification for Online Hiring: The Concept:  a website where people seeking specific jobs can take an online examination “certifying” them for particular job skills.  The results are published online, so employers seeking specific skills can see how a candidate scored on the examinations for those skills. What I Liked:  From an employer’s perspective, this is a great idea, as it helps them determine if someone claiming to have a particular skill actually has it. What I Didn’t Like:  Several competing sites already test candidates for proficiency in skills that can be quantified (such as knowledge of a particular computer programming language).  It will be difficult if not impossible to come up with an examination that effectively tests skills that cannot be quantified (for example, negotiating and other interpersonal skills). Plan # 3:  “Reviews” Website for Senior Caregivers. The Concept:  A website where senior citizens living at home and their families can rate their in-home caregivers and local caregiver agencies. What I Liked:  There’s a real need for a service like this. What I Didn’t Like:  There’s no way to determine if the reviews are fair or accurate.  Also, I wasn’t sure if anyone would be willing to pay for the service, meaning it would have to rely almost entirely upon advertising revenue. Plan # 4:  Attachment to Video Game Device. The Concept:  A laser attachment for the currently existing motion sensing technology for the Sony PlayStation 3 device called “The Move”. What I Liked:  Third party point of view (POV) videogamers are fanatics who will spend money on anything that will give them a competitive edge. What I Didn’t Like:  Because the attachment must be compatible with the device’s technology, Sony or the device manufacturer would probably have to “authorize” the attachment, and they will want money for that.  Also, nothing prevents Sony or the device’s manufacturer from developing a laser attachment on its own. Plan # 5:  “Parkour” Course.   The Concept:  The development of “parkour” courses, fabricated from abandoned buildings where enthusiasts practice high-risk stunts within safe environments (“parkour” is a gymnastic form of free-running originally designed for the French military, where people rush through urban obstacles as quickly as possible using abnormal movements). What I Liked:  Nobody in the United States is doing this (there are several courses in France and the U.K.). What I Didn’t Like:  “Parkour” is virtually unknown in the U.S., even among extreme sports enthusiasts, so the market size will be extremely small and may not sustain even a small course.  Also, because the nature of “parkour” is to deal with unexpected obstacles as they crop up, the course will need to be changed frequently, at significant expense, so that participants cannot “learn” the course too quickly. Plan # 6:  Device That Eliminates Loose Change. The Concept:  A debit card attachment that automatically deposits loose change into the customer’s account at the point of sale. What I Liked:  The device eliminates coins and encourages saving. What I Didn’t Like:  The customer would still receive bills in change so it’s not a perfect “cashless” solution.  Also, the customer would be required to present two cards at the point of sale instead of one, increasing the time necessary for the cashier to process each transaction.   More next week . . .

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

The Lorax, The Once-ler, The Environmentalist and the Entrepreneur by Cliff Ennico

Cliff Ennico

As you are reading this, the hot new children’s movie is a 3D-CGI film adaptation of Dr. Seuss’ book “The Lorax.”

For the record, I am a lifelong fan of Dr. Seuss (the late Theodore Geisel, who died in 1991 at the age of 87).  I had all his books as a kid, and actually had the chance to meet him — albeit only for a few minutes — when I was an undergraduate at Dartmouth College, also his alma mater. And I loved every one of his books – except this one. Written towards the end of its author’s life, “The Lorax” is a preachy environmental fable without humor or a happy ending.  Of all Dr. Seuss’ books, it is probably the most controversial. For those not familiar with “The Lorax,” here is a short plot summary (for a more detailed one, see http://en.wikipedia.org/wiki/The_Lorax):

A young boy living in a polluted world visits an elderly hermit known as “The Once-ler” and asks how the world got that way.  The Once-ler answers that once the world was beautiful, containing a wide variety of happy animals that lived among beautiful “Truffula trees.”  The Once-ler cut down the trees, because they were excellent material to make products he invented called “Thneeds.”  The “Thneeds” became a huge marketing success, forcing him to expand his factory and cut down more Truffula trees.

The Lorax, a small orange creature who spoke “with a voice that was sharpish and bossy,” warned the Once-ler that the trees are the environment he and his fellow creatures need to survive.  The Once-ler ignored him, and soon the land became polluted, the animals fleeing to more hospitable areas and the Truffula trees dwindling until there were none.  Deprived of its key raw material, the Once-ler’s factory was forced to close, and the Lorax disappeared, leaving the Once-ler to view the ruins of his enterprise with remorse. The book closes with the Once-ler giving the boy the last Truffula tree seed and asking him to plant it so the trees, and perhaps also the Lorax, will return. It is no secret that Hollywood producers love stories that present the profit motive in a negative light – think “Wall Street” or, come to think of it, just about every recent Hollywood movie that has a villain.  It is also no secret that Hollywood producers also love “David and Goliath” stories with environmental themes – think “A Civil Action” or “Erin Brockovich”. But “The Lorax” takes Hollywood’s traditionally anti-capitalist, anti-business posture to a new level. In Dr. Seuss’ book, the Once-ler character is never depicted.  You see only his arms and legs, which are enough to conjure up the image of a green, shriveled up thing similar to the Grinch and other Dr. Seuss bad guys.  In some cartoon versions of “The Lorax”, the Once-ler is depicted as a stereotypically pot-bellied capitalist (picture the “Monopoly” man wielding an ax). But in the new movie, the Once-ler is depicted as a young, attractive Silicon Valley type entrepreneur (see http://seuss.wikia.com/wiki/The_Once-ler) – a basically decent guy who sincerely believes his “Thneeds” will help people live better, more satisfying lives and who isn’t particularly greedy or self-centered.  The Lorax’s enemy now is not capitalism, Wall Street, or corporate greed, but the entrepreneurial spirit. Children’s books (and movies) are extremely dangerous things.  Most authors (and producers) of these choose not just to tell a story, but to send a “message” or otherwise try to indoctrinate young people in a certain point of view.  And children, especially the young ones likely to love Dr. Seuss stories, are impressionable and trusting enough to accept these messages as gospel truth.   We are all shaped, emotionally and mentally, by the books and movies we devoured as children.  If you saw the Disney movie “Bambi” as a child, how do you feel about hunting for sport? Please don’t get me wrong:  nothing, and I mean nothing, is more important than preserving the environment.  What good is a healthy economy if people can’t breathe the air?  Teaching children the importance of preserving the environment is a desirable, even noble, goal. And, let’s face it, if history is any guide, industrial enterprises have not been great stewards of the environment.   But sending small children the message that profit-oriented businesses creating products that people want and need inevitably destroy the environment and hurt small, fuzzy, cute creatures will not help create the innovators and entrepreneurs America will desperately need –in great numbers – to survive the next century.  

That message will instead create only nasty, irritating, opinionated creatures like the Lorax himself, speaking “in voices both sharpish and bossy.”

We need children’s books and movies that present a more balanced message – that a free-market economy and a healthy environment are not mutually exclusive, and that profit-oriented businesses can solve environmental problems as well as create them.  

As the Once-ler says, “unless someone like you cares a whole awful lot, nothing is going to get better, it’s not.”

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

Building A Successful “Authorized Rep” Program by Cliff Ennico

Cliff Ennico

“My wife and I have started a line of all-natural cosmetics.  We launched our website a while back, and have received several inquiries from customers who love our products so much they want to become sales representatives for us.

Both of our mothers were ‘Avon ladies’ when we were children so we know a little bit about how this works.  What are some of the legal issues we will face in setting up a ‘rep’ program similar to Avon’s?”

Back in the day, when the Baby Boomers were young, every neighborhood had at least one “Fuller Brush man” or “Avon lady” selling products door to door in their spare time.  Interestingly, the model appears to be coming back with the increasing popularity of social media websites such as Facebook and LinkedIn.  A lot of companies are looking to pay people for recommending and selling their products to their friends, neighbors, family members and acquaintances, and even established companies have “affiliate programs” where people can receive commissions for selling the company’s products on their own websites.

Here are some of the legal issues you will need to consider when setting up a “rep” program:

Decide Whether Your Reps Are “Agents” or “Distributors”.  There’s a big difference.  An “agent” generates orders for your products.  You fulfill and ship each order, and collect the money directly from the customer.  Then, every couple of weeks or once each month, you pay your rep a percentage of the sales made each month.

A “distributor,” on the other hand, buys your products directly from you, at a discount, then resells them to the customer.

The benefits of an “agent” program are:

  • you know who your customers are, and can build a customer list, enabling you to sell more stuff directly to them;
  • you know your customers are getting good service, because you are providing it.

The benefits of a “distributor” program are:

  • you get paid up front, with fewer orders and returns;
  • your rep handles any collection issues.

Make Sure Your Reps Are “Independent Contractors.”  While you can set guidelines for your rep’s conduct (for example, you can prohibit them from making any statement about your products you haven’t authorized), you cannot – CANNOT – direct and control their activities.  That makes them “employees”, requiring you to withhold taxes from all commissions and other amounts you pay them.

Your reps must be able to set their own hours.  Also, “repping” your products should not be their only job.  If you sense a rep is working full-time selling for you, you might ask them to form a corporation or limited liability company (LLC) for their business as legal entities generally are not considered employees for tax purposes.

Make Sure You Are Not Setting Up a “Franchise.”   If you allow your reps to conduct business under your trademark, or require them to pay an upfront fee to become your rep, operate within an exclusive territory, or comply with detailed rules as to how and when they may sell your products, there’s a risk the Federal Trade Commission may view your rep program as a “franchise,” requiring you to comply with a complex set of disclosure and other legal requirements (http://en.wikipedia.org/wiki/Franchise_Rule).

Make Sure You Are Not Setting Up a “Network Marketing” Program.  If, in addition to paying your rep a commission on products they actually sell, you also allow them to hire other reps and pay them a commission on all sales these “sub-reps” generate, you are starting to look like a “network marketing” program.

The “network marketing” label is generally bad for branding, as it is associated in the public mind with cheap, shoddy goods and aggressive sales tactics.  If not carefully monitored, a network marketing program can degenerate into an illegal pyramid scheme (i.e. your reps will be making more from hiring sub-reps than they do actually selling your products).  There’s also a greater chance that a rep will hire sub-reps without making 100% sure they are “independent contractors”.

Watch Out for the FTC’s “Endorsements and Testimonials” Rule.  There’s a good chance your reps will want to advertise and promote your products on their websites, Facebook and LinkedIn pages, and other social media channels.

In 2009, the Federal Trade Commission adopted a detailed set of rules governing endorsements by consumers, experts, organizations and celebrities (www.ftc.gov/os/2009/10/091005revisedendorsementguides.pdf).  While intended to apply primarily to professional product reviewers, the FTC guidelines prohibit your reps from promoting your products without disclosing that they receive money or other compensation for doing so.

Make Sure You Don’t “Cannibalize” Other, More Profitable Distribution Channels.  Finally, keep an eye on your future growth plans.  If it becomes possible for you to sell your products to department stores and other big customers through long-established retail distributors, they will not want to compete with a small army of individuals selling door-to-door or on eBay.  They will want you to terminate your rep program, and that won’t be either easy or pleasant.

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

Sizing Up Amazon’s ‘Fulfillment By Amazon’ Program by Cliff Ennico

Cliff EnnicoAnyone who’s ever sold anything online – either directly from a website or on one of the major e-commerce platforms such as eBay and Amazon – knows that often the most unpleasant part of the process is packing, shipping and fulfilling orders.  It is labor-intensive, and the time involved can eat into your profits (by limiting the number of orders you can process at any one time).

So it should come as no surprise that one of the hottest things in online retail right now is the “Fulfillment By Amazon” service (“FBA” for short) offered by Amazon.com (http://www.amazon.com/fba).

Amazon has been building warehouses and distribution centers throughout the United States to ensure that customers receive orders quickly and inexpensively (often for free).  With FBA, online sellers can take advantage of those facilities and “outsource” the packing, shipping and fulfillment part of their business, even if they are not selling on Amazon.  For a fee, of course. According to Chris Green, a leading FBA expert and author of “Retail Arbitrage: The Blueprint for Buying Retail Products to Sell Online for Big Profits” ($25.00 paperback, $9.99 Kindle), FBA is the future of online retail, at least for small business sellers.   “Setting up an Amazon business that uses FBA is much like buying a franchise,” says Green.  “With a franchise, you buy a package, get some knowledge and equipment to get started, and then it’s up to you to run the business.”  Unlike a franchise, though, buying and selling online using FBA does not require an initial investment.  “There are no major upfront costs to get started,” says Green, adding that FBA fees can be as little as $2.00 for orders placed through Amazon.com.  “All you really need is a little knowledge, some motivation, and some inexpensive tools and services.” Green’s company, FBAPower (www.fbapower.com), offers a variety of software solutions, mobile phone applications, webinars and information products designed to enable sellers to take maximum advantage of FBA. FBA is a five step process. First, the seller opens an Amazon seller’s account and selects the “FBA” option. Second, the seller sends its new or used products to Amazon. Third, Amazon catalogs and stores the products in one of its network of fulfillment centers. Fourth, Amazon fulfills orders placed directly on Amazon.com or fulfillment requests the seller submits for sales not on Amazon.  When listed on Amazon.com, each seller’s listings are sorted by total price (price plus shipping) so sellers who use FBA are often first even if they have a higher list price.   Fifth, when an order is placed, FBA picks the seller’s products from inventory, packages and ships the products to the customer. “FBA is a win-win for everyone,” says Green.  “The customer gets prompt and professional delivery at little or no cost, and the seller can focus on sourcing inventory, expanding their product lines, increasing margins, and putting merchandise up for sale without the hassle of fulfilling and keeping track of individual orders.” So what’s the catch? “You have to know and understand the rules of selling on Amazon, and especially FBA,” says Green.  “Amazon is much different from eBay where you can mess up and eBay pretty much isn’t going to do anything about it.  If you’re caught breaking Amazon’s rules or provide a poor customer experience, Amazon will ban your account, and there will be no second chances.” Your merchandise must also conform to Amazon’s product listings and categories.  Precisely.  So, for example, if you are selling a power drill with only one of the two batteries required, you will not be able to sell it on FBA even if you make proper disclosure. Probably the biggest catch – one which Amazon is taking steps to correct but may create problems for FBA sellers selling a wide variety of merchandise – is that FBA sellers may not be totally in compliance with state sales tax laws. Online sellers are required to pay sales tax in their home states and in any other state in which they have a physical presence or “nexus”.  By using FBA, online sellers have “nexus” in each state in which their merchandise is being warehoused (i.e. where Amazon’s fulfillment center carrying their merchandise is located).   While Amazon does send you periodic reports showing you where your inventory is located, Amazon can, without warning or notification, ship your inventory to a different fulfillment center.  Also, while Amazon does collect sales tax and remit it to you, it is up to you to register with each state tax authority and pay the taxes to them when due (usually quarterly).

Chris GreenThis situation may create compliance headaches for FBA sellers, especially in light of states’ increasingly aggressive efforts to collect sales taxes on Internet commerce.

Still, Green says, the benefits of FBA, especially for small sellers, far outweigh the risks.  “You are outsourcing your entire shipping department, Amazon is basically absorbing the shipping costs for you, and Amazon buyers prefer FBA sellers because they know they will get their item fast and that customer service will be top-notch.  What’s not to like?”

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

WHEN CAN LANDLORDS “UNREASONABLY WITHHOLD” CONSENT – by Cliff Ennico

Cliff EnnicoWHEN CAN LANDLORDS “UNREASONABLY WITHHOLD” CONSENT

TO LEASE TRANSFERS?

By Cliff Ennico

“I am a small landlord who owns several commercial buildings.

One of my tenants – who runs a small retail store – is looking to sell his business and retire.  There are several years left to go on his lease, and because he’s such a good tenant the rent is somewhat below market for this area.

The buyer is a young man just out of military service.  His credit history is good and he comes from a decent family.  The problem is that he has never worked in retail or run a business of his own before.  He also doesn’t own a home.  I like this young man personally, but I’m afraid he’s going to get ‘in over his head’ and fall behind on his rent.

The lease contains a clause requiring me to consent to any assignment or sublease of the rented space, as long as my consent is not ‘unreasonably withheld.’

I spoke to my attorney who told me I should ask this young man for several months’ rent as an additional security deposit because it will take at least six months to evict him should he be unable to pay his rent.  When I offered this to the young man he became angry and told me he couldn’t afford it.  He said he felt I was discriminating against him because of his youth and his ethnic background, and that it was crazy to put that much money in an escrow account not earning interest for several years.

I want to be helpful in this situation but I can’t afford to have tenants who don’t pay their rent on time.  I also cannot afford to be sued by the current tenant because I was unreasonable in withholding my approval of the lease transfer.

Is there any way to get out of this jam?”

Once upon a time, landlords could evict their tenants the minute a rent payment became overdue. Not anymore.

Most commercial leases contain a clause requiring the landlord to approve any transfer of the lease to a new tenant, as long as the approval is “not unreasonably withheld.”  Most landlords will want to meet the new tenant and review his credit history before they will grant their approval to the transfer and release the old tenant from his liability under the lease.

If a new tenant is not financially able to make his lease payments on time, or has background issues that would cause a reasonable person to question his integrity (for example, jail time or a bankruptcy), most landlords would “reasonably” refuse their consent to the transfer and the law would back them up.

The law isn’t as clear when a landlord wants to withhold consent for personal or nonfinancial reasons.

If the landlord’s decision to reject a transfer is based on prejudice or discrimination, he is being unreasonable.  If a landlord withholds approval because he “just doesn’t like” the person, and the person is a member of a protected class under federal or state antidiscrimination laws, the landlord is almost certain to be sued by his existing tenant for breach of contract.

If you do decide to disapprove the lease transfer, your attorney should prepare a letter to the current tenant detailing precisely what motivated your decision.  This should be based as much as possible on the economic and financial circumstances of the buyer.

If that is not feasible, there are several ways you can approve the transfer while getting additional protection in case the new tenant has trouble paying rent (I would agree with this buyer that asking for more than three months’ rent as a security deposit is probably unreasonable).  For example:

O  you can refuse to release the current tenant from his lease obligations for a period of one year after the transfer – this will make him a personal guarantor of the new tenant’s obligations under the lease and will encourage him to assist the new tenant in making sure rent gets paid on time;

O  you can ask the new tenant if there are any family members (preferably with deeper pockets or greater business experience) who can co-sign the lease along with him; or

O  you can provide for rent increases each time the tenant makes a late payment (called a “time is of the essence” clause).

If all else fails, you may be able to put a clause in the lease enabling you to terminate the lease during the next two years, even if the new tenant is paying rent on time, if for any reason you “deem yourself insecure.”  Banks put this provision in their loan agreements all the time.  Note, however, that because the new tenant is losing his lease without having done anything wrong the law may require you to reimburse the new tenant for the money he paid for the business, his relocation expenses, plus the cost of any tenant improvements he makes after taking occupancy.

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

WHAT TO DO WHEN AN INVENTOR WANTS – by Cliff Ennico

“A couple of friends and I formed a corporation a while back with a noted inventor who lives in our area.
The entire purpose of this company was to bring to market a piece of technology the inventor had created, and for which he holds a U.S. patent.
Because of the difficult economy we’ve had more trouble raising money for this business than we thought, to the point that the inventor has threatened to quit the company because he thinks he can do better elsewhere.
My friends and I have put substantial money into this company. Is there any way we can let the inventor off the hook and still try to bring the product to market? Or is it best to just let him go and write off our losses?”
The first thing you need to do is look at the shareholders’ agreement you and your friends signed with the inventor when you formed the corporation (you did sign one, didn’t you?)
First, look at the section that describes how the company was to be capitalized. This section spells out “who is putting what into the company.” There should be language in this section that specifically requires the inventor to license his patent to the company. If that language is missing, then your corporation technically has no legal rights to the inventor’s patent (these are usually registered in the name of the inventor as an individual) – shame on any attorney who let THAT happen.
If the inventor licensed his patent to the company, you will need to determine the scope of the license. There are four words you should look for:
• “perpetual”
• “unlimited”
• “exclusive”
• “royalty free”
“Perpetual” means that the license continues in perpetuity, regardless of what happens to the inventor. If the inventor dies or withdraws from the company (as he’s threatening to do), the license continues. If the license is not “perpetual,” your corporation’s rights to the technology will terminate when he leaves.
“Unlimited” means that there are no restrictions on what you can do with the inventor’s technology, or where you can operate. If the license is “limited,” you will need to determine what rights the inventor has reserved for himself (for example, your license may be limited to the United States which gives him the right to license the patent overseas).
“Exclusive” means that the inventor cannot license the technology to anyone else as long as the corporation is in existence.
Finally, “royalty free” means that the corporation doesn’t have to pay anything extra for the license (except, of course, for the inventor’s percentage of the corporation’s profits or any other compensation which he receives as an officer or shareholder of the company).
The more of these four words appear in the license language, the better.
If the scope of the license isn’t clear, look to see if the shareholders’ agreement has a “survival” clause. This language, which appears usually in the “miscellaneous” section at the end of the agreement, lists certain provisions that survive the death or departure of a shareholder, among other things. If the license clause is included in the “survival” language, it will be enforceable against the inventor even after he withdraws.
Next, look at the “buy-sell” provisions in the shareholders’ agreement, that determine how and when shareholders can sell their shares either to each other or to third parties. These commonly contain a “right of first refusal” requiring a shareholder to offer his shares to the corporation, or to the remaining shareholders, if he wishes to retire, withdraw or sell his shares to an outside party. If there are such provisions, you may be able to waive them in exchange for a stronger license agreement from the departing inventor.
Finally, see if there is a non-compete clause in the agreement prohibiting shareholders from competing with the corporation after they withdraw. While such language will not take the place of a “perpetual” license, it may give you some leverage to negotiate with the inventor (i.e. you can offer to make the non-compete less restrictive in exchange for being allowed to continue using the technology).
If the shareholders’ agreement isn’t helpful on any of these points, you will need to consider how you will be made whole for the money and time you put into this company.
In practice, most patents are pretty useless to a company without the inventor’s knowledge, expertise, know-how, and active participation in the company’s business. Since your inventor has “gone over to the dark side” and may well work with a competing company, it may be better to try to recoup your losses from him and shut the company down. If the inventor doesn’t have the money to make you whole, and if litigation is not an option, consider releasing the inventor from his obligations to you and your partners in exchange for a percentage of any income he receives if and when he licenses the patent to another company.
Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

THE GREATEST MOTIVATOR, AND HOW TO HARNESS IT – by Cliff Ennico

We’re about 10 days into January by the time you read this, and I’m willing to bet most of you have already given up on one or more of your New Year’s resolutions.

The key to success with any resolution – personal, business or otherwise – is will power.  We all start out with the best of intentions, but when you set yourself a goal and fail to reach it, it’s always because you quit at some point.

Once you have set a goal for something, it all comes down to execution.  Or, to use some other popular words from the “self-help” literature:

  • dedication;
  • commitment;
  • persistence;
  • perseverance;
  • stick-to-it-ive-ness;
  • pigheadedness;
  • ruthlessness.

Whatever name you assign to it (and before you wrinkle your nose in disgust, name one self-made billionaire who was not utterly ruthless getting there), this trait or quality is what separates the winners from the losers in life 99% of the time.

One of my all-time favorite quotes comes from Calvin Coolidge, president of the United States during the Roaring 1920s:   “Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘Press On’ has solved and always will solve the problems of the human race.”

Or, if the thought that a Republican might actually be right about something makes you gag, here’s one from Richard DeVos, the co-founder of Amway:  “If I had to select one quality, one personal characteristic that I regard as being most highly correlated with success, whatever the field, I would pick the trait of persistence. Determination. The will to endure to the end, to get knocked down seventy times and get up off the floor saying, ‘Here comes number seventy-one!’”
Whatever you call it, let’s be clear about something:  it’s not fun.  It is work, and work by definition is not fun.  Anyone who tells you you can reach a goal

without suffering – that you can actually lose weight while eating cupcakes — is lying to you, pure and simple.

I have written more than 15 books in my life, on topics ranging from selling on eBay to making partner at a law firm.  I am proud of each and every one of them.  But let me tell you something:  sitting before a blank computer screen and realizing you have to fill 300 pages before your publisher will pay you anything (or will demand a return of their advance which you have probably already spent) is not fun.

Anything that is worth doing in life requires hard work, pain, suffering and sacrifice.  Get over it, and get going.

In ages past, it was easier for people to accept this.  Up until only a few decades ago, most people accepted the proposition that life was a “vale of tears” that had to be endured stoically so you could finally die and go someplace where maybe you could eat cupcakes without losing weight.  Look at photos of people from the Victorian era.  Notice how nobody smiles?  People back then probably weren’t much fun at parties (most of them would have viewed enjoying oneself too much as a sin), but they were tough, they never complained, and they got an awful lot done.  The idea that hard work, obstacles and suffering as mankind’s daily lot is a tough sell for

us spoiled-rotten Americans of the second Millennium who are (let’s face it) a little too easy on ourselves.  Where are the Puritans now that we really need them?

Nowadays we all want everything, including our work, to be fun and entertaining – look at those Silicon Valley companies that create playrooms for their employees.  If you really want to motivate your employees to work harder, fire a couple of low performers, very publicly, and watch what the rest do.  It’s not pleasant or nice, but boy, does it work (if you have the right people).

If you lack the discipline to persevere in your work, your business, or your life, here’s a little self-motivation trick:  scare yourself silly.  Instead of visualizing success (what all the motivational speakers tell you to do), visualize yourself failing miserably and suffering the “worst case” consequences.  If you want to lose weight, picture your doctor telling you you’ve just developed Type 2 Diabetes and may need to have a limb cut off.  If you need more revenue from your business, picture yourself selling your house, losing your spouse and moving into a tenement if your business fails.

One of the dirtiest secrets of life – an “inconvenient truth” — is that fear is a great, perhaps the greatest, motivator. Once you are haunted by the prospect of failure, and have lost sleep by staring hard into the abyss, you will find inner resources of strength you never suspected you had, and will find creative solutions you

wouldn’t have thought of otherwise.  As a mountain-climbing friend of mine says, “when you’re hanging from a sheer cliff face 200 feet off the ground, you’re not thinking about anything but handholds and toeholds.”

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

 

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