Michael Masterson - The Reluctant Entrepreneur: Turning Dreams into Profits

Copyright 2012 by Michael Masterson. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993, or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

Masterson, Michael, 1950

The reluctant entrepreneur : turning dreams into profits / Michael Masterson.

p. cm. (Agora series ; 73)

Includes index.

ISBN 978-1-118-17844-7 (hardback); ISBN 978-1-118-22727-5 (ebk); ISBN 978-1-118-24021-2 (ebk); ISBN 978-1-118-26492-8 (ebk)

1. Entrepreneurship. 2. New business enterprisesManagement. 3. Small businessManagement. I. Title.

HB615.M3723 2012

658.1'1dc23

2012004737

This book is dedicated to the hundreds of thousands of people who read Early to Rise from 2000 to 2011 when I was writing for it.

FOREWORD: IS THIS AN INSPIRATIONAL BOOK?

Most people go into businesses for the wrong reasons. And most people go about starting and developing businesses in the wrong way.

My friend Michael Masterson, whom I admire immensely, has done a phenomenal job of attacking myths and misinformation about entrepreneurs and how they actually create and grow successful enterprises. You will finish this book with a different, deeper, and more realistic understanding of what is really involved in getting a brand-new business going, getting traction for it in its marketplace, protecting it during its fragile infancy, and growing it to mature success. Getting a new business going is not easy. But its not mysterious either.

In one of my own books, No B.S. Guide to Business Success in the New Economy , I make the point that most people uninitiated to and contemplating entrepreneurship are fearful about it and wonder if they are up to it, because of a belief that successful entrepreneurs are wild-eyed, daring risk takers, akin to riverboat gamblers frequently going all in with questionable hands. This is not true at all. Success is about smart risk management, not about wild risk taking. This is one of many concepts about business success where Michael and I have strong agreementand where he can set you straight.

He also adeptly disabuses the reader of the need for The Big Idea, visionary innovation, and motivation as key success ingredients. Instead, he approaches business as a methodical sequence of good decisions.

My own 35 years of experience starting, buying, building, and selling businesses of my own; working intimately with many clients in developing businesses from the first baby steps to as large as $1.5 billion, but more commonly $10 million to $30 million; and acting as an advisor and coach to thousands more entrepreneurs has convinced me beyond any shadow of doubt that invention and innovation are vastly overrated and methodical implementation is more important. That more entrepreneurial fortunes revolve around the use of known, proven processes for advertising, marketing, sales, management, and finance applied to a good idea than are born by the new, radical, revolutionary, romantic Big Idea. That being a visionary is not required and not necessarily even helpfulinstead, that being able to improve on already proven products, services, and businesses offers the best opportunity. (Disney didnt invent the amusement park. DeVos and VanAndel with Amway neither invented soap nor multi-level marketing. Schultz and Starbucks didnt invent the coffee shop. Zappos neither invented shoes nor e-commerce. I didnt invent newsletters.) That motivation matters, but that motivation without great clarity about a sound, sensible, progressive plan of action leads only to frustration. That successful entrepreneurs are extremely pragmatic.

Michael Masterson impresses me as a committed pragmatist. His advice, this book, is simply and purely about what works. In the real world. With startups.

He and I both come from the disciplined world of direct-response marketing, where measured results rule and nothing else matters, not even our own opinions. In that world, you learn to test as cheaply and harmlessly as you can, toss aside the unproductive and underperforming quickly and unemotionally, and find and leverage what works. This is experience that academic theorists do not have, that traditional brand and image advertising creatives shun, that many small businesspeople never embrace. But when every dollar matters, as it does with startups, this is the approach that trumps all othersand you will come to appreciate it via this book.

None of this suggests trepidation. It suggests prudence.

I actually take exception to the word Reluctant in this books title. Timid might have been a better choice. But even that seems unfair. Perhaps Cautious? Methodical? Had I been asked to name this book, I might have chosen The Pragmatic Entrepreneur. Pragmatism is about finding out what works and doggedly doing it, to the point of resisting distractions and disparate ideas. Its about focus. About well-organized effort.

You can draw a lot of confidence from thisso that you are not reluctant. You can have confidence in process.

The most valuable and sustainable businesses on earth are built on and driven by great processes. McDonalds consistently outperforms all other fast food purveyors not because they have better tasting or healthier or more interesting products. They have the best process. A company I study and own stock in, Tupperware, led by a CEO, Rick Goings, that I admire, is thought of by the public as a purveyor of unique plastic food containers and kitchen gadgets. But Tupperwares success is so much more about process than product. Of its six core competencies, only one has to do with product innovation and manufacture. The other five are processesfor recruiting sales agents who will work on commission and recruit and train others; for interesting people in hosting in-home parties; for conducting successful in-home sales parties; for managing a multi-tiered, global sales organization of independent, part-time agents; and for managing the financial aspects of marketing and growth.