3 POSSIBLE WAYS TO DO BUSINESS.

One of the earliest decisions you’ll have to make as a new entrepreneur is the legal one of deciding whether you want your business to be a sole proprietorship, partnership, or corporation.

If you are going to take the family lawn and go into the grass-cutting business, you don’t have to do anything. The mere act of getting paid for looking after your neighbor’s grass makes you a Sole proprietor. The advantage is that you are your own boss, and if the business turns into another General Motors, you own it all. The disadvantage is that you are all on your own (O.Y.O). You don’t have any partners to help capitalize the venture, scheme and plot with you about it, help you turn it into a success, and be right there beside you in good and bad times. As a sole proprietor you are also personally liable for all debts, and if you cut off a customer’s big toe while trimming his greenery, you can get sued for everything you’ve got.

As a sole proprietor you can do business under your own name (For Instance, Jonathan Services), but if you want to use an assumed name, such as Unbeatable Service, you’ll have to file a ‘’doing business’’ certificate with the appropriate authorities in your country.

 If you feel you’d like someone to share the load with you in starting up a business, you think about a Partnership. Under this arrangement, you and your partners are personally liable for the firm’s debts or for judgments if it is sued, but the responsibility for actually running the business can be divided anyway the partners wish. It’s asking for trouble if you don’t have a signed contract with your partners, one that spells out everything you’ve agreed on, from who puts how much in the venture, to who does what, to how the profits and losses will be divided .

If you are still not at ease with the unlimited-liability (Unlimited liability means that your liability is not limited to what you put into the business, it could affect your personal effects in case of a big loss) associated with sole proprietorship or general partnership, then you have an opportunity of incorporating. You could try protecting yourself by purchasing a liability insurance policy to reimburse you if you are held financially responsible for your business’s transgressions-but not its unpaid bills. You might even be able to get a general partnership to invite you in as a silent limited partner, which protects you against everything but losing your investment.

But the safest way to avoid being impoverished by your business going belly-up is to incorporate. This way if things turn sour, all you lose is what you’ve sunk into the business. You home, car, and other personal assets cannot be touched by your company’s creditors, or by those who hold judgment against you. One way your private property can be seized is if you’ve agreed to be personally liable for your company’s debts, something most banks will insist upon if you are just starting in business and ask for a loan.

  As you get closer to starting a business of your own, the fear of being isolated and lonely may begin worrying you, as it has so many others. A good way to quickly allay this fear is to join a support group of other business people in your community where you can find people of like minds. Such association will help in no small measure in getting you through this cradle stage of your business.

7 CRITICAL SKILLS FOR SUCCESS IN THE 21ST CENTURY.

 

Every age is marked with its distinctive features. Some decades ago it was the industrial age where manpower was required to accomplish most business tasks. The situation is however, different today-the Information age where Mind power is required more than Manpower to deliver results.  The huge opportunities available to mankind in this 21^st century were never in place decades ago. The uniqueness of these opportunities is defined by the myriads of problems enclosing them. Exploring these challenges for our benefits require some critical skill sets.

Contrary to believe in some quarters, great rewards still abound in this age! It’s only that they are received by individuals who can marshal relevant critical skills to deliver effective business solutions in real time. The success model I developed for this century is R=f (S_p).

Where:

 R=Reward, S_p=Problems’ solution. The reward you get is a function of the problem you solve. The 21^st century like no other is about result. This clearly explains why organizations tie compensation to performance.  Let’s take a look at a number of these skills:

EFFECTIVE COMMUNICATION SKILLS: There has never been need for effective communication in business and leadership more than today. Communication becomes effective if you are able to get your message across, sending the right signals that you’re saying what you mean and that you mean what you say. Understanding the point you are making should not take special effort on the part of the person you’re talking to. The heart of effective communication in this century is LISTENING. Listening skill is such a critical skill that can facilitate smooth and effective communication. Excellent listening skill entails listening with empathy—seeking to clearly understand what’s being said per time before speaking. This is clearly a shift in paradigm from what it used to be when people ‘listen’ just for the sake of giving a response and not to understand. What makes communication effective is not just speaking but deep listening. This skill is learnable.

INTRA AND INTERPERSONAL SKILLS: Deals with what meaning you attach to situations and circumstances around you. One rule for good intra and interpersonal skills is ‘Never you underestimate anyone’. The way you relate with others will determine how they respond to you. Treating everyone with utmost kindness is a critical skill require for success in this century. Anyone with good set of values can be outstanding in intra and interpersonal relationship.

EMOTIONAL INTELLIGENCE: Do you know that 80% of why you succeed is attached to your emotion. In the face of constant rush and hustle that characterizes today’s business environment, you should be able to hush yourself and analyse situation before taking decision. The major keys to unlocking emotional intelligence include: Self-Awareness, Self-regulation, Motivation, Empathy and Social skills. Success in this 21^st century demands a high score in emotional intelligence (EQ).

NEGOTIATION SKILLS: Life does not give you what you want; it only surrenders to you what you negotiate. Life in its entirety is about negotiation. You can negotiate your way to success. The key ingredients required for developing this vital skill include:

Power- Assess the power to close the deal.

Information-Arm yourself with the right set of information.

Time- Have the time to negotiate. Negotiation is not best done in a hurry.

FINANCIAL INTELLIGENCE: This is premised on three major factors---

·         Your ability to know that money can work for you and not you working for money.

·         Your ability to reduce cost and take calculated risks in investment.

·         Your understanding of the Value of money.

EXECUTIVE INTELLIGENCE: This simply connotes common sense and not any special type of skill. The truth is everyone can deploy common sense at will but not all of us do so. Executive intelligence zooms in on your ability to analyse situation properly in a bid to finding appropriate solution. Here are four key ingredients of executive intelligence:

·         How you accomplish a task;

·         Working with and through people;

·         Judging Oneself;

·         Your ability to adapt to situations accordingly.

NETWORKING SKILL: Networking has suddenly become an essential skill required for success in this age and time. Some often say ‘’your net worth is a function of your network’’. This saying validates the importance of networking skill in this century. I once learnt from a network marketing expert that the distance between any one and the president of U.S or the President of your country is 6 persons away. In other words, network with 6 persons and you might have access to the President of your country.

 

EARN MORE WHILE YOU WORK LESS

There is a saying in the corporate world: ‘’don’t make yourself irreplaceable. If you can’t be replaced, you can’t be promoted’’. As an entrepreneur, this is still true. Let’s think of ‘’ being promoted’’ as earning more and working less. You can raise your prices, but until you can remove yourself from being directly involved in doing the work that generates the income, there’s always going to be a limit to how much you can earn, and it can only increase very slowly.

Passive income on the other hand, is the income that does not require your direct involvement. Some kind of passive income you may be familiar with include: Owning rental property, royalties on an invention or creative work, and network marketing. If you want to earn more, work less, and have a decent retirement, you have to start creating income streams that do not require direct involvement. Whether you’re just starting your business or you’ve been running it for a while, the sooner you start thinking about how you’re going to shift your business model to create more passive income, the sooner you can achieve personal financial freedom. Let’s look at two basic types of passive income, and a third type of income that, while technically not passive, is a key strategy for earning more and working less.

RESIDUAL INCOME

Residual Income is revenue that occurs over time from work done one time. Some examples include: An insurance agent who gets commission every year when a customer renews his policy; a network marketer’s income or direct sales rep’s income from her direct customers when they reorder product every month, An aerobics instructor who  produces a video and sells it at the gyms where she teaches; A marketing consultant who creates a workbook and sells it in e-book format on the internet, A photographer who makes his photos available through stock photography clearing house and gets paid a royalty  whenever someone buys one of his images; A restaurant or retail owner who has grown to the point of hiring a trust worthy manager. As you can see, there are many different ways to generate residual income across a wide variety of businesses. It may be recurring income from the same customer or the sales of a product to new customers. It may require no personal involvement whatsoever, such as an e-book sold on a website, or it may require some personal interaction such as the insurance agent calling the customers to remind them about their renewal and ask them if they want to change any of their coverage. Often, it’s something that you can delegate to an assistant. Note that this is different from merely recurring income. Recurring income may still require your involvement to earn the income, e.g., a coach or consultant on a monthly retainer, or a caterer who delivers lunch every Monday to the local school board. While this ‘’Active recurring income’’ offers welcome stability, it also tends to tie you down, and you still have limit on your earning capacity based on your own personal production capacity.

LEVERAGED INCOME

Leverage income leverages the works of other people to create income for you. Some examples of leveraged income include: An e-book author selling his book through affiliates who promote the product; A network marketer who builds a downline and receives commissions on the sales made by people in his downline; A general contractor who makes a profit-margin on the work done by sub-contractors, Franchising your business model to other entrepreneurs (the ultimate leveraged income). Again, there are many different models in many different businesses. The key is that you are making money off other people’s labour rather than primarily your own. Note that leveraged income may or may not also be residual income. When you combine both, that’s better.

ACTIVE LEVERAGED INCOME

This is a term I use to describe income that requires your direct participation, but that you can make more money by having more people involved. This generally involves a one-time event, such as: A seminar or class; a conference or convention; concerts and dance recitals; raves and other parties. Although these require your direct participation, your earning potential is much higher than if someone were just paying you a direct hourly rate. Fill a room with 1,000 people paying you $5,000 each and you can cover your facility cost, promotional cost, and staffing fees and still have a nice chunk of change left over.

APPLYING IT

Now is the time to think about how to apply this in your business. Can you create a product that people will buy over and over again? Can you engage others to sell your product? How could you make money off the works of others?

                            This article is culled from The Guardian’s Executive Brief.