To Keep Your Startup Alive, Keep Creating Value

Have you ever wondered why seemingly successful companies perish? It seems like they're doing fine on the surface. But many of them fail -- at first slowly. And later, they abruptly collapse.

I have been thinking about this problem for decades ever since the first startup that I worked with, Applied Expert Systems, shut down. Founded by a former MIT computer science professor, the company aimed to replace personal financial planners with a so-called expert system. The product automated the decisions of a planner in helping a client develop a financial plan. But after raising millions in venture capital and hiring dozens of employees, the company introduced a product but too few financial planners were interested in buying it.

Several years later for one of my first consulting projects, I worked with a huge telecommunications giant that attempted to find out why some tech companies survive as waves of new technology are introduced and others perish. My resulting investigation turned into my first book, The Technology Leaders.

I later boiled down the findings of that book to its essence, dubbing it the value cycle: To sustain superior performance, a company must keep its strategy focused on addressing three distinct processes:

1. Create value.

The first stage in the value cycle is to design and market a product that consumers are eager to use because it meets their most important needs better than competing products.

In 1995, Netscape's Mosaic web browser became popular after the company's initial public offering. That widespread popularity suggests to me that Netscape had achieved success in value creation, doing a better job than almost any other browser at that time in helping people visit websites for the first time.

2. Capture value.

The second stage of the value cycle is choosing business activities so that customers are willing to pay for a product at a price high enough above the company's costs to generate sufficient profit and create a return for shareholders after compensating employees and suppliers.

Netscape is a great example of a company that created value but couldn't capture it. How so? Lots of people used its browser but did not pay money for it. Moreover, the other ways that Netscape made money were not sufficient for it to survive an onslaught from Microsoft. So the company ended up being acquired by AOL in 1998 for $4.2 billion.

For a startup to survive, it must at least create and then capture value. 

3. Renew value.

The final stage in the value cycle is filtering out the noise from the market signals (from changing customer needs, upstart competitors and changing technology) to identify how a company must adapt to stay ahead of competitors.

This value renewal is the most difficult part of the value cycle for startups trying to survive over the long term.

Remember Blockbuster? It rented DVDs and VCRs at retail stores. Then Netflix came along, sending DVDs by mail, making it cheaper and more convenient for consumers to rent movies. Blockbuster was unable to adapt and perished.

Netflix engineered its operations beautifully to win the battle for DVD-by-mail market supremacy. It bought huge quantities of DVDs cheaply, set up a system for people to order them and engineered a process for delivering and collecting them. People have been willing to trade the convenience of picking up videos at the corner store in exchange for a wide selection of titles and the elimination of late fees. 

Then along came video streaming. As more people use smartphones and tablets, they are finding it more convenient to watch movies on these devices rather than sitting in front of their TV sets and plugging a DVD into an attached player.

Netflix renewed value, developed new capabilities (such as the ability to stream movies) and also created its own popular content.

With HBO and CBS eying online streaming customers, Netflix must keep its eye on the value cycle. 

And so should any startup with the hope of surviving over the long term.

From Entrepreneur

Mistakes Women Entrepreneurs Make Pitching to Venture Capitalists

Women own 28.2 percent of U.S. companies and yet only a tiny number of these companies are securing backing from venture capital investors, according to a report by the Ewing Marion Kauffman Foundation. Based on this research, female-founded companies receive just 4 percent to 9 percent of the funds doled out by venture capital firms.

This means that very, very few women score venture funding for their startups. I'm proud to say that I’m one of them. My startup, Admittedly, received $1.2 million in venture capital funding this year. While I might not have all the answers, I’ve certainly learned a few lessons about pitching VC investors as a woman.

Based on my experience, here are four unique things that female entrepreneurs have to deal with and suggestions for addressing them. 

1. Address the other women at the table.  

It’s more and more common for venture capital firms to have women at their tables. That’s a good thing and a smart business decision.

But for women who pitch, this can be a double-edged sword. On the one hand, a woman may provide valuable insight for a project or help her colleagues see the pitch differently.

At the same time, I know some women are hesitant to give criticism to other women -- especially in front of male colleagues. Women have told me they are nervous about being seen as hostile or worse. As a consequence, some women at the venture capitalist table save their criticism for after the pitch -- when the woman giving the pitch is not there to answer. That can be a real problem.

When I'm doing a pitch, I try to draw out the other women and bring them into the conversation. I ask them for their feedback directly -- at the time of the pitch. If they (or any potential investors) have questions or concerns, it’s better to put them on the table in a situation where they can be addressed.

2. Try to not stand out too much.

Although I’ve found many VC investors want to invest in women-started businesses, having too unique a business model is problem.

Instead of trying to reformat the thinking of male investors and convince them why their traditional rules don’t apply to the idea being pitched, learn the rules they use and speak in those terms. There are certain assumptions about a company’s ability to scale up, get to market and go public. Embrace the venture capitalists' rules and think big -- not different.

3. Avoid being complacent or vague.

The boardroom of a venture capital firm is not the place to play go along to get along.

Statistically men have proved better at asking for what they need in business and therefore getting what they want. Here's one time that I say, follow their lead.

Time and time again I see women go to business meetings and ask for things such as “backing,” “support” or “investment.” But “support” isn’t a number. The bank won’t take a check made out to “your help” so don’t ask for it. If you need a million dollars, ask for it. Be specific.

Trust me, the (usually) men on the other side of the table know the meeting is about money. They will be surprised only if it isn't requested. 

4. Dress well for the meeting. 

For men, the choice of attire for a meeting with venture capitalists is usually easy: They either wear a suit or the tech uniform of a T-shirt and jeans.

For women, it’s far more complicated. Their hair and makeup styling and shoes matter as well as the clothes selected. Appearing put together, confident and stylish is essential but there’s real danger in sending the wrong message. Attention is desired but not the wrong kind.

Unfortunately there’s no one-size-fits-all answer. But my rule of thumb is to be comfortable and appear professional. Don’t dress different and unusual -- for your style. Women who wear a skirt and heels four days a week should do that. If someone is a pants and button-down shirt type of gal, she should wear that. Don’t let fashion choices lead to uncomfortableness, physically or otherwise.

I’m the last person to say that the gap between women businesses and venture capital funding results from women entrepreneurs blowing their pitches. Venture capital firms are still dominated by men and they need to become better at recognizing the extraordinary business opportunities that women bring to the table.

But if the United States is going to close the gender gap in venture capital funding, there’s work to be done on both sides.

From Entrepreneur

No Money to Start a Business? No Problem. Try These 5 Options

You might be limited to a strict budget when you want to start a business, but that doesn’t mean you don’t have any options. It is possible to start a business with very little money, if you have the right combination of skills, work ethic and marketing know-how.

According to Chris Guillebeau, author of The $100 Startup, “To succeed in a business project, especially one you’re excited about, it helps to think carefully about all the skills you have that could be helpful to others and particularly about the combination of those skills.”

Follow these simple guidelines to start a business when you have little to no money.

1. Make something.

Yes, making something does take an initial cost in supplies, but oftentimes, these products can be sold for many times over their actual cost. What you decide to make is up to you, but there are several places you can sell your handmade options online:

• Abe’s Market deals in natural and organic goods, such as lotions, candles, granola, and more.
• Etsy is one of the largest online markets for almost anything homemade, from jewelry to wooden toys for kids.
• Bonanza is another growing handmade marketplace, similar to Etsy. According to PC World, it boasts over 10 million visits per month.
• eBay is one of the biggest online ecommerce marketplaces in the world, and its streamlined store options, easy checkout through Paypal, and customizable listing options make it a great choice for selling items.

Many business owners sell their products on multiple platforms to get the most exposure possible. It is important, however, to make sure your inventory stays updated on all sites you have a storefront on. If you want to learn about more resources for selling homemade items.

2. Resell something.

If you don’t want to make anything (or you don’t consider yourself a creative person), many business owners have grown large businesses just be reselling products that have already been made. This can be done through a variety of ways or channels:

• Drop shipping: Set up an online store and partner with drop-shipping companies that will do all the order fulfillment for you. Online ecommerce platform Shopify has a great drop shipping guide, and Tim Ferriss does a good job of explaining drop shipping in his well-known book, The Four Hour Work Week.
• Thrift stores and garage sales: If you know where to look, you can find items at thrift stores, antique shops, flea markets and garage sales and resell them online or in your local community for more than you purchased them for. One extremely successful example of this is Sophia Amoruso, the founder of Nasty Gal. Amoruso started buying and reselling vintage and unique fashion pieces on eBay, and her company has grown to a net income of $24 million in 2011 with over 200 employees. Her book, #GIRLBOSS, is in inspiring look into how she got started.

3. Sell your services.

One way to start a business with little to no startup capital is to sell your services, instead of a physical product. There’s a huge variety of services you can offer, depending on your background and interests.

Some will require advanced degrees, such as accounting, while others require little more than a working knowledge of how it’s done (such as babysitting, lawn mowing or personal assistance).

Because you are selling your services, you will need a branding plan to make sure your name and company gets in front of the people who may need the service. Some places that are free for promoting your services include Fiverr, Craigslist, Elance, Taskrabbit and Skillshare.

It’s also useful to have a website to show examples of your work, list your experience, and blog about your industry to draw visitors. If you want to learn more about branding and online marketing, check out Buffer’s social-media blog, Hubspot’s blog, Content Marketing Institute and CopyPress.

4. Barter to get what you need.

Unfortunately, it’s extremely hard to start a business without any type of funds at all. Even creating a freelance-writing business utilizing Elance and a free Wordpress or Wix website will still require a computer to work on as well as Internet. However, there are ways to get supplies you need for starting your business without money.

For instance, if you find yourself in need of a used laptop, try to barter for it. Build a new website for a used electronics supplier, or offer babysitting services to your neighbor for their old Macbook.

5. Utilize low-cost services.

As mentioned previously, you can use sites such as Fiverr or Elance to advertise your products and services on, but you can also use these platforms to build up your own company. For instance, many designers offer $5 to $25 logo designs (that come with free revisions). Sort by reviews and look at past examples to find a designer or service provider that matches your style.

This is a great way to get branding materials, printed items (Vistaprint and Zazzle are great places to buy personalized items), or other needed items without much cost. And for additional savings, be sure to look for coupon codes on sites such as RetailMeNot before checking out at any online retailer!

Starting a business requires ingenuity and a passion for what you are doing. Once you find yourself doing something you enjoy, you will be more likely to find ways to make it all come together.

From Entrepreneur

17 Ways to Know You Were Born to Be an Entrepreneur

It can be hard to explain to non-entrepreneurs why you choose such a challenging journey. Here's what to tell them.

Being an entrepreneur is hard. Really hard.

You put everything on the line: your talent, your creativity, your ideas, your money, and yet you still do it, sometimes again and again.

That's why your friends often don't understand. (Sometimes even your family doesn't understand.)

"Why don't you just play it safe and get a job?" they ask. The next time people ask, show them this.

Here's why you're an entrepreneur:

1. You hate the idea of finding yourself in the wrong life.

Unexamined decisions, unforeseen consequences, drifting along with the current.... It's easy for people to end up in places they never would have chosen. And then they feel trapped.

And, late at night, they often wonder what it would be like if their lives were different.

Entrepreneurs don't wonder--at least not for long. They wonder, and then they go find out. And that's because ...

2. You want a calling--not just a career.

Anyone can build a career; all you need to do is a land a job to find your life's work. Very few can build a business from nothing--and make it their life's mission.

3. You embrace your own definition of success.

Maybe it's money. Maybe it's status. Maybe it's power.

Or, more likely, it's living life the way you want to live--and in the way that makes you as happy and fulfilled as possible.

4. You're not afraid to dream.

And you're not afraid to fail.

And you're not afraid to succeed.

5. Your happiness comes from seeing others succeed.

And the best way to do that is to be in the position that best allows you to help them succeed.

6. You were once told you weren't good enough.

So you decided to prove those people wrong. But along the way your motivation shifted. Now you don't care what other people think.

Now you're not trying to prove other people wrong.

You're just trying to prove to yourself that you are right, because you are the only person whose opinion truly matters.

7. You don't care about doing the expected thing; you care about doing the right thing.

And to do that, you have to be in charge.

8. You don't care about choosing from the best available option.

Instead, you want to decide what is the best possible option, and then go and make that happen.

9. You want a better life for your children.

And you feel the best way to do that is to set an example by believing in yourself.

10. You want your earnings capped only by your talent.

Work for others and they decide what you can make.

Work for yourself and you decide, through your effort and perseverance and ingenuity, what you can make.

11. You ask, "Why not me?"

Entrepreneurs don't assume wildly successful people possess special talents or gifts from the gods. Entrepreneurs look at successful people and think, "That's awesome. They succeeded, and I will too.

"People do great things every day--so why not me?"

12. You want to look back on a life well lived, instead of at a retirement watch.

That watch? It means you served a company. A life well lived means you served others and, by so doing, also served yourself.

13. You want to be remembered.

But not just for what you did; more important, you want to be remembered for the kind of person you were--and the way you made other people feel.

14. You believe effort should always beat politics.

And the only way to ensure politics doesn't play a part is to run your own business--and build a company with a culture you and your employees love.

15. You've decided merit is the only currency worth earning.

Seniority, corner offices, fancy titles: They're great. But they are also often given (and not always to the most deserving).

Accomplishments are always earned.

16. You feel business is the last unexplored territory.

And you're convinced new discoveries are out there waiting for you.

And, most important...

17. You simply don't know any other way to live your life.

So you don't even try.

Why would you?

You're an entrepreneur.

From Inc. Magazine

Prioritizing Health Can Help You and Your Business

Being fit and healthy does more that just boost someone’s looks. Recent studies have shown that even moderate physical activity offers big benefits, including better immunity, healthier body weight, improved sleep and even a sharper mind. 

Balanced nutrition and sufficient sleep also bestow rewards, ranging from a healthier body weight and reduced risk of illness and disease to sharpened mental acuity. Combined, these benefits add up to individual and business success. 

Exercise and the mind.

Exercise provides innumerable perks for the brain, supporting healthy functioning in several ways. 

Researchers from the University of Texas at Dallas found that regular cardiovascular exercise improved memory and cognition in older adults. A Stanford University study discovered cognitive and mood-boosting benefits after moderate exercise in young and older adults.

Research in mice has suggested that endurance exercise triggers a series of reactions and hormones in the brain that support the development of new neurons while improving mood and cognition. A key brain hormone produced during exercise, irisin, is also suspected to have metabolic and antiaging effects.  

Other research on exercise and the brain has shown enhanced learning and brain plasticity, neuroprotective benefits and depression alleviation and prevention. The Anxiety and Depression Association of Americahas suggested exercise is an effective way to relieve stress and anxiety. 

Fitness and immunity.

Regularly exercising can also help boost the immune system, better equipping the body to fight infections, inflammation and certain illnesses. 

According to the National Institutes of Health Medline Plus website, research has shown regular exercise helps the body fight bacterial and viral infections and decreases the risks of heart disease, osteoporosis and cancer. A recent Italian study found that regular exercise is associated with reduced low-grade inflammation in the body. 

The NIH guide explains that exercise is believed to aid immunity by flushing out bacteria and carcinogenic cells, speeding circulation of antibodies and white blood cells, temporarily increasing body temperature and slowing the release of stress hormones. 

It recommends a moderate exercise program such as daily walks, bicycling a few times a week, light sports or regular gym sessions for immunity-boosting benefits. 

The key to sticking with fitness is to find an enjoyable activity rather than one that feels like a chore. Any form of exercise, from weightlifting and yoga to following the prompts of an at-home fitness DVD, is better than staying sedentary. 

Even when mountains of work pile up a quick jog or boxing session can boost motivation and help refocus energy. Taking time for personal fitness is essential to avoiding burnout and stress.

Nutrition, energy and performance.

Diet and nutrition are critical to individual performance. Research by the United Nations’ International Labour Office found that inadequate nutrition affects worker productivity, physical work capacity and performance. Even national productivity and economic growth are affected. 

The International Labour Office has linked poor nutrition with increased absenteeism and sickness, low morale  and increased accidents. Obese workers were twice as likely to miss work compared with normal weight individuals, with obesity costing U.S. businesses an estimated $12.7 billion. 

By educating their workforces on proper nutrition and ensuring access to healthy foods, employers can receive significant benefits, from improved productivity to reduced spending on health care and sick days. 

Entrepreneurs and other busy people often rely on fast, convenient foods that aren't necessarily nutritionally sound. Make an effort to pack lunches or seek out healthier options. 

Workplaces could also incorporate fresh fruit and vegetables into break rooms, invite a nutrition coach to give a seminar or partner with local vendors and food trucks that offer healthy meals if catering or a full-service cafeteria are not practical. 

The perks of sleep.

An important, yet often overlooked, component of health and fitness is sleep. Sleep is needed to support physical fitness and exercise, is tied to eating habits and plays a major role in mental performance and motivation. 

Sleep deprivation is associated with a higher body mass index and a greater incidence of obesity, according to a Harvard School of Public Health article. Sleep deprivation is associated with eating more calories and making less healthy food choices, likely due to increases in hunger hormones and added time to eat, the article explained. Feeling tired during the day also makes physical activity less likely, meaning fewer calories are burned. 

But weight and fitness are just a small part of the sleep picture. Getting sufficient rest is critical mentally (for attention, focus, learning, memory, problem solving and mood) and physically for reducing the risk of inflammation and chronic disease. 

The bottom line. 

Emphasizing healthier habits is key to employee productivity and the bottom line. Good managers and entrepreneurs have a true interest in their employees’ well-being, in my experience. 

As far as business benefits, healthy people take fewer sick days. People who exercise, sleep and eat well also have better mental acuity, drive, focus and performance, boosting efficiency on the job. 

This means a more productive workplace with fewer wasted costs, which research has borne out. 

A large study published in the Journal of Occupational and Environmental Medicine found on average a 27 percent lower absenteeism rate for workers who ate healthy and exercised regularly. Workers who consumed healthy foods or exercised at least three days a week were more likely to have a higher job performance than those who did not.

When individuals make the effort to prioritize fitness, nutrition and sleep, brain power is boosted, stress reduced andwork performance is improved, along with overall health and moods. 

Prioritizing health doesn't necessarily mean a major overhaul or fanaticism. Small and gradual workplace initiatives can make a big impact. Real results can accrue from nap-friendly policies for breaks, seminars from local health experts, lunch walk groups or partial gym membership subsidies. 

From Entrepreneur

Start a Service Business

Who can sell a service? The answer is simple--anyone and everyone. Everyone is qualified because each of us has skills, knowledge or experience that other people are willing to pay for in the form of a service; or they're willing to pay you to teach them your specific skill or knowledge. Selling services knows no boundaries--anyone with a need or desire to earn extra money, work from home, or start and operate a full-time business can sell a service, regardless of age, business experience, education or current financial resources.

What Are the Advantages of Selling Services? 

There are many advantages associated with starting your own business selling services. Perhaps the biggest advantage is you become your own boss, take control of your future, and in effect become the master of your destiny. I've been self-employed for a number of years, and for me the lure of self-employment is the freedom and independence that calling the shots affords, which can be difficult to achieve when you work for others.

Operating your own business also gives you the potential to earn more money, in some instances two, five or even ten times more than you're currently earning. Why? Simple duplication. When you work for someone else, there is only you and only so many hours in the day to work for an hourly wage or a salary. When you operate a business, you can duplicate yourself by hiring employees and salespeople to increase revenues; you can duplicate your customers and find more just like them to purchase your services; and you can duplicate your business model and open in new geographical areas to service more customers and earn more profit. These are all things you can't do when you work for others, and if you do, chances are it will financially benefit the boss a lot more than you.

Capitalize on Your Skills 

Don' t worry if you lack business skills and experience in areas such as time management, personal-contact selling, negotiating, bookkeeping and the ability to create effective advertisements. There's no question these are all important skills to have, but at the same time they're also skills that with practice can be learned and mastered. More important is the question, "What skill(s) do you have that can be sold as a service?" Any skill(s) you possess can be your best, and by far your most marketable, asset. If you know how to safely walk a dog, that's a skill people are willing to pay you for. If you know how to plan and throw one heck of a party, that's also a skill people are willing to pay you for as their event and party planner. If you know how to play the piano, this is a skill other people will pay you to teach them. If you know how to sell products and services online, once again that's a skill that people are willing to pay you for as an online marketing consultant. All are examples of skills that people pay other people to perform, or teach them how to learn.

Every person has one or more skills other people are prepared to pay for in the form of a service provided to them, or to learn. However, with that said, most people have a tendency to underestimate the true value of their skill sets and experiences. You have to remember, what may come naturally to you may not come so naturally to others. Likewise, you might think your particular knowledge or expertise may be of little value, but if someone else needs or wants to learn about that knowledge, it's very valuable to them.

Selling Services Part Time 

The first option is to start off selling your services on a part-time basis, which is a good idea because it enables you to eliminate risk by limiting your financial investment. It allows you to test the waters to make sure that being self-employed is something you enjoy and want to pursue. If all goes well, you may decide to transition from your current job, devoting more time to your new enterprise each week, all the while decreasing the time at your current job until you're working at your new business on a full-time basis. There are many advantages to starting off part-time, including keeping income rolling in, taking advantage of any current health and employee benefits, and building your business over a longer period of time, which generally gives it a more stable foundation. If it turns out you're not the type of person who's comfortable being the boss, you've risked little and still have the security of your job.

Of course, if your ambitions are only to generate extra money to pay down the mortgage, save for retirement, put yourself through school, or pay off credit cards, selling services part-time is the perfect choice. It's important to do what you want to do and what best suits your individual needs. If selling services part-time works for you, then go for it.

Selling Services Full Time 

You can also jump in with both feet and start your new business selling services full-time. This option would appeal to people without a current job or people who are confident about being the boss and operating a business. There's nothing wrong with starting off full-time, especially if you take the time required to research the business, industry and marketplace. You must also develop a business and marketing plan, and have the necessary financial resources to start the business and pay yourself until it becomes profitable.

The main downside to starting full time is risk. If you jump ship and leave your job, you risk loss of current employee benefits and have no guarantee of steady income, contributing spouses or partners excluded. The upside to starting off full-time is potential rewards, including the opportunity to make more money than you can at your current job, and to gain control of your future. Your decision to operate your new business on a full-time basis will largely be determined by your current financial situation, your own risk-reward assessment, and your goals and objectives for the future. Jumping in full-time will appeal to the true entrepreneurial mindset--people who prefer to blaze the trail rather than follow behind in the wagon train.

Selling Services Seasonally 

Another option is to start a seasonal business selling services, which can be operated with a full- or part-time effort. But most are run full time to maximize revenues and profits over a normally short time span. Examples of seasonal businesses selling services would include snow removal in winter, yard maintenance in summer in northern climates, income tax preparation service in spring, and serving as a vacation property rental agent. Just about any business can be run seasonally or occasionally, but some are obviously better suited than others.

A seasonal venture will appeal to people who want the ability to earn enough money during part of the year in order to do as they please with the remainder of the year--travel, pursue education, or work a job in another season. The potential to earn a very good living operating a business only part of the year is a genuine opportunity, as proven by the thousands of people who are currently doing it. The main downside to a seasonal business, especially one that can be operated year-round, is that you don't want to spend thousands of dollars and hundreds of hours promoting your business only to shut it down for half the year, sending current and potential customers running to your competitors while your business is closed. It may prove very difficult to lure them back when you reopen for business.

Selling Services to Supplement Your Retirement 

The fourth option is to sell services to supplement your retirement income or just to have fun and stay active in your golden years. Retirement businesses have become extremely popular in the past decade, mainly because the cost of living has dramatically increased, often outpacing wages and retirement savings. The result is that many people head into retirement needing a little extra income to cover expenses and provide an adequate lifestyle or to maintain their pre-retirement lifestyle.

People are living longer and much healthier now than in decades past, and because of this many are seeking new challenges; starting and operating a business is a way to stay active physically and mentally. Older people also have a proverbial ace up their sleeves when it comes to starting a business and selling services: a lifetime of knowledge and experience that can only be acquired by spending lots of time on this planet. Because of the value of these skills, many people are willing to pay big bucks for them. This is why many people who are reaching or have reached retirement age have chosen to start a consulting business selling their experiences, knowledge and skills for the benefit of their clients.

Financial Compatibility

Before you decide to get into business for yourself selling services, there are two issues to consider regarding financial compatibility--income and investment money. First, when deciding what type of service to sell, you have to consider how much money you want to earn and how much money you need to earn. If you need to earn $75,000 per year to pay your personal expenses, there is little sense in starting a dog-walking service. Perhaps there are a few dog walkers earning this much, but it's not a realistic expectation. How much money do you want to earn--that is, how ambitious are you? Again, you must be realistic and relatively sure the service you choose to sell has the potential to generate enough income to live on in the short-term, and the potential to match your income goals in the longer term. Income doesn't have to factor into the business startup equation for everyone. If you want and need to earn only a little money from a part-time or retirement business, the income equation will not factor as heavily as other issues.

The second big financial compatibility issue affecting your decision about which business to start or purchase is the amount of money needed to start or purchase the business. Not only will you need to have or have access to the investment needed to get rolling, but you'll also need extra money for working capital to cover day-to-day operating expenses until the business achieves positive cash flow. This can take a week, a month or even a year.

Ultimately, financial compatibility is important when starting a business and deciding what services to sell. If you cannot afford to start the business and don't have the financial resources to pay operating expenses and your wages until the business can break even, you'll probably have to look at alternative options, such as starting part time, choosing a different business to start, or waiting until you have acquired the money needed to get started.

Finding a Good Match 

You also must be well suited to start and operate the business and services you're considering providing. You and your business must be a good match. You may have an interest and even experience in a specific business or in providing a specific service, but that doesn't necessarily make it a good match. Here are a few points to consider when determining a good business match.

• Do you have the financial resources to start or purchase the business, and enough money to pay the day-to-day operating expenses until the business breaks even and is profitable? If not, it's probably not a good match, and you should consider alternatives.
• Does the business have the potential to generate the income you need to pay your personal expenses, and does it also have the potential to generate the income you want to earn? This is very important because if you can't pay your own personal bills, you'll soon be in trouble. And if, over time, you can't earn the income you want to earn, you'll lose interest in the business--a recipe for disaster.
• Are you physically healthy enough to handle the physical strains of starting and running the business? If not, you may end up having to hire people for the job, which can be problematic if the business revenues aren't there to support both management and employee wages.
• Do you have experience in this type of business or service, and do you have any special skills that can be utilized in the business? You can gain experience and knowledge on the job but skills that can be utilized and capitalized upon right away are extremely valuable.
• Are there any special certificates or educational requirements to start and operate the business, and are these readily available? Find out the upfront costs associated with these, how they can be obtained, and the time frame needed to obtain specific certificates. Training and certification shouldn't be viewed negatively because often the return on time and investment is substantially rewarded financially. Anything worth doing is worth doing well.
• Will you enjoy operating the business, and does it match your personality type and level of maturity? This is very important. If you don't think that you would enjoy it, then don't start. Again, the loss of interest in a business is almost certainly the kiss of death. You can't stay motivated and rise to new challenges if you don't like what you're doing.

From Entrepreneur