 |
From Mark Ford, founder, Palm Beach Research Group: Two engineers, Fahri Diner and Xiang-Dong Cao, were the “brains behind [a] Billion Dollar Deal.”
They were sitting around after work having a few beers (I’m making up the details) and complaining about their employer, Siemens Information and Communication Networks in Boca Raton, Florida.
Cao was saying that their bosses did not properly appreciate them. Diner replied, “Hell, we should start our own business.”
“You’re damn right,” Cao replied.
Several months later, they said goodbye to their employer and moved into a dusty warehouse. They telephoned former colleagues until they found two willing to work for them for stock.
With this meager core of four, they started their own fiber optics transmission company, doing essentially the same thing they were doing before but with a few of their own improvements.
In a few short months, they had gone from wage-earning employees to brave new entrepreneurs.
How I Became an Entrepreneur
My first real job was “backseat wiper man” at the Rockville Centre Car Wash on Long Island. I was 14 and happy with the $1.25 they paid me.
A couple years later, when I was working as a house painter’s assistant in swank Hewlett Harbor, a 20-minute drive from my home (a ramshackle house literally on the other side of the tracks), I became an entrepreneur.
Well… a chicken entrepreneur.
What happened was this. My friend Peter and I were scraping the shingles of a big yellow mansion—I can still remember the details—when the lady of the house, a Mrs. Bernstein, came out asking for Armando, our boss.
Armando’s routine was to drop us off at the work site at 7 a.m. and disappear until 5 or 6 in the evening.
We were left to do the work with virtually no experience and only Armando’s advice on watering down paint and “dry rolling” the second coat to guide us.
(In case you are about to get your house painted… dry rolling is when your painters pretend to be giving you a second coat when in fact the rollers are dry. This allows them to get the job done twice as fast and save a bundle on the cost of paint.)
“I’m on to your boss,” Mrs. Bernstein said. “How much does that cheap bastard pay you?” We told her. She harrumphed and disappeared inside. When she came out a half hour later, she announced, “I just fired that good-for-nothing. And if you know what’s good for you, you’ll be here Monday morning. I’ll pay you an extra $5 an hour to finish this job properly.”
And that’s how we got into the house painting business. As owners (not employees) of P&M painting, we were able to make more money on weekends alone than we could make working full time during the summers. We felt, at least compared to the kids in our working-class neighborhood, relatively rich.
After high school, we started a new company, Reliable Pools, with another friend. We built and maintained above-ground pools nine months out of the year. We had a crew of 12 to 15 people and were each making as much as $300 a day. That business not only paid for my college tuition, but also for the renovation of my parents’ house.
But starting your own business is a scary process. You give up a steady income and go without any assurances for an unknown period of time. You risk embarrassment and failure. Most people—and I mean 99 out of 100—don’t have the brass for it.
I don’t believe I had that strength back then. But I was lucky. Mrs. Bernstein gave Peter and me the impetus we needed. Had it not been for her, I might be a college teacher today, earning a modest living and complaining about the administration.
New Shoots From an Old Vine
I wonder how many new businesses start this way—as new shoots from an existing vine. Many, I’d guess. Even most.
The advantage of doing this is clear. Spinning off from an existing enterprise gets you past three of the biggest hurdles facing new ventures: lack of useful industry contacts, knowledge, and skills.
Having the right contacts—vendors, marketers, and consultants—makes everything easier as a startup entrepreneur. When you have a question or problem, you know who to call.
Knowledge is important, too. Not general knowledge of the industry, but specific knowledge of how it really works from the inside out. You can get this experience only by actually working in the business—working intensely and consciously—for some period of time.
And the third obstacle is the lack of certain skills, skills that are essential to make your business succeed. Typically, these skills involve locating the market then figuring out what they want and how to sell it to them.
Again, the best way to learn these skills is by working in the industry.
The strategy you want to follow is to gain the knowledge, develop the skills, and make the contacts while you are still an employee.
Start by “promoting” yourself. Do the job you want, not the job you have. Learn everything about it. Find out what makes your business grow, how your sales are made, and what, if anything, makes your product or service special.
Also very important:
- Figure out what is less than perfect about the business you are in.
- Get friendly with the key suppliers, bankers, and consultants your business uses.
After doing these things, you are only one decision away from going off on your own.
This is basically what Diner and Cao did. Within days after jumping ship, they had an ongoing business competing with their former employer.
Two years later, their company, a developer of high-speed fiber optics transmission equipment, was acquired by Nortel for $3.25 billion.
4 Steps to Knocking Off a Business
No, you don’t have to be a self-starter to have your own business. You can start as a wage coolie, just as Diner and Cao did, and take advantage of what you have to create an opportunity for yourself later.
Interested? Here’s what you need to do (and what better time than now?):
- Learn everything you can about your business, especially how sales are made and what, if anything, is unique about the product or service you provide. Read about your business. Take seminars. Educate yourself.
- Become known as a “can-do” employee. You will attract good people, individuals you may want to team up with later.
- Figure out how to make your company’s products or services better. This will become the key to your eventual success. When you go out on your own, you want what MBAs call a “competitive advantage,” something you do better than your former employer can.
- Start saving. You are going to need a bank account to get you by, even if you find a venture-capital partner. Try to stash at least 10% of your take-home pay. Twenty percent would be better. If this is not possible, consider—seriously—a weekend or evening job.
And when you get your first billion-dollar offer after following this blueprint, I want a cut.
Reeves’ Note: Every year at tax time, a good number of Americans collect big checks from the government. Essentially, they overpay throughout the year and get reimbursed in the spring.
That’s precisely what has been happening at PBRG. We’ve noticed a high number of readers have been “overpaying.”
PBRG founder Tom Dyson has come up with an interesting way to remedy this situation. Depending on how much you’ve spent, you could be entitled to receive anywhere from $1,755 to $3,500 back from us.
Ask Mark: The No. 1 thing you need to grow wealth…
Today, we continue our special holiday feature “Ask Mark.” In these videos, PBRG founder Mark Ford answers questions sent in by our subscribers. It’s unvarnished and straight from the source.
If you’re living paycheck to paycheck, you won’t want to miss today’s short video. In it, Mark shares a tip you can use to get a raise and boost your income…
In case you missed it…
Our friends over at Casey Research just notified us that select spots have opened up in their small (and profitable) Platinum alliance. As a Platinum member, not only do you get access to all of legendary crisis investor Doug Casey’s research… you also get special discounts to La Estanica De Cafayete… a beautiful 550-hectare resort in the Argentinian countryside. (It’s where Doug spends a lot of his time golfing.) You can learn how to become a member right here…
