Entrepreneurs Need to Think Big

Any entrepreneur is a person, by definition, that takes a risk in the business world. So why should you be any different? Think BIG!

What exactly does “think big” mean? Thinking big means that you take into consideration any and all ideas that you feel are too hard, too expensive, too time consuming, or are out of your reach. Why limit yourself by things that you think are easy to obtain? If a project or investment is easy to obtain, this usually translates into a small amount of risk. If a project or investment has only a small amount of risk attached to it, this usually means that the reward will also be small. As an entrepreneur, you should challenge yourself to take a risk and to consider all possibilities regardless of intensity or degree of impossibility.

Keep in mind that thinking big and acting on those thoughts are two very different things. When I tell you to think big, the point is to prevent you from limiting your options before you have even considered the possibilities, advantages, or chance of success. This does not mean that you should blindly follow an idea merely because it is a “big” idea.

Thinking big means accepting all ideas and working through the details until you reach a decision as to your course of action or inaction, if that is the case. Think big, reach for the stars, dream about the impossible, but follow your intuitions, education, and instincts as to a course of action to pursue.

Is it Possible to Define Entrepreneurial Spirit?

Entrepreneurial spirit is the motivation used to better yourself and/or others on your quest to achieve “success.” As far as the definition game goes, I believe that “success” is much harder to define and even harder to obtain that is entrepreneurial spirit.

Put simply, entrepreneurial spirit is motivation. Motivation to do what? That is a question that you have to answer. Nobody can tell you that you are an entrepreneur. Nobody can say, follow these steps and you’re an entrepreneur. Unlike traditional college programs, one cannot major in “entrepreneurialism.” You can take classes on the subject, but for the most part, a Business degree is as close as universities get to offering a major in entrepreneurialism. The point is, you have to find your own reason for choosing the path you chose, and then be responsible for maintaining the passion necessary to complete your quest.

A professor once told me, “an entrepreneur has only three characteristics, Passion, Passion, and Ego.” It was the first two characteristics (passion and passion) that really made me think. Two-thirds of being and maintaining yourself as an entrepreneur is having the passion to be an entrepreneur; having the passion to pursue the entrepreneurial dream; having the passion to think of an idea and see it through to fruition; just simply having the passion to do.

Only you can light the fire to pursue your dreams. School, experience, specialty courses, degrees, and the what not are all just tools to help prepare you for the journey. But, what good are these tools if you do not have the passion to use them? Talking is not action, and many would be entrepreneurs make this fatal mistake. If you want to do something, take action!

I have a friend who became very successful in the real estate business. He came from a similar educational and financial background as me, yet he has already achieved what I currently working toward. We were sitting down one day having coffee and I asked him, “How did you get the financing for your first real estate purchase?” He said, “If you want to get financing, go out and get it. That is what I did.”

My friend did not know anybody special. He did not have rich family members or any other type of monetary connection that I did not. His ace in the hole, his sole source of revenue was his passion. He had the passion to go out and get what he wanted. I am sorry to say that he had more passion than me or else I would have been in the same boat. However, all is not lost. I learned from our little conversation and am better off because of it.

Find your passion; find your “entrepreneurial spirit” and success will follow.

Tips on Developing a Reputation as a Ubiquitous Businessperson

Ubiquitous is defined as "being or seeming to be everywhere at the same time." How does this help a businessperson's reputation? To be described as ubiquitous means that you can be in more than one place at once. It means that you can handle more than one situation at a time. Put simply, it means that you are a multitasker.

Is being able to multitask a good trait to possess? I believe it is. Being able to effectively complete more than one task at a time helps with efficiency. Efficiency equates to cost savings. Cost savings equate to higher profits. Higher profits equates to more money! Do you see a winning formula here?

Now back to the question at hand; how do you develop a reputation of being a multitasker? First, you have to know your limits. There are many characteristics that will help you in the business world, and you do not have to possess all of them to be successful. Develop the characteristics that play to your strengths. Do not try to bite off more than you can chew just because you want to show your ability to handle multiple tasks. Business partners, investors, and customers will be more concerned will quality than quantity. It makes more sense to do a great job on one project than a mediocre job on three projects. The reason this is true is because even though three jobs were "completed," they will probably have to be redone because of lack of quality. Having to redo things costs money and effectively negates the cost saving purpose of multitasking.

Second, if you evaluate your situation and think you can effectively handle more than one task at a time, try your hand at more responsibility. Start small and take on one additional, small task. For example, if your current project is in real estate investment and your task is to find financing, but you feel that financing will not be a hard project to effectively complete, you may want to take on another small project, such as finding renters (if you are going to hold the real estate).

Last, do not try to do everything yourself. This point is similar to my first point except for one difference. My first point was, do not multitask for the sake of multitasking. This third point is, once you have started multitasking and found that you can successfully do it, do not use this success as a motive to do everything. Nobody can do everything, and if you attempt to, two possibilities will result: (1) you will get "burned out" and not be able to effectively perform any task; or (2) you will not be able to complete all the tasks and some aspect of your project will "fall through."

Having the ability to multitask will be beneficial to your future success, however, only do so within your limits. Remember, effectively completing one task is better than partially completing multiple tasks. The whole point of multitasking is cost saving, and this only works if projects do not have to be redone. Be ubiquitous, but not irrational, and your reputation will develop accordingly.

Ways to Effectively Distribute Business Cards

Let us assume that you already have received your brand new business cards. Chances are you spent money to get them. Why then would you waste that money by ineffectively distributing business cards?

Before we begin, you will want to make sure that your business card contains your full name, your company name, you position/occupation in the company, and any and all contact information (including your company address, office phone number, cellular phone number, fax machine number, and e-mail address). You might want to refrain from giving your home phone number unless you run a home based business. If you have a beeper, give this number also. The point is that you want to make it very easy for your client to contact you whenever he/she needs to, during working hours.

Additionally, you want to keep your business card clean-looking and to the point. The point of a business card is to give some very brief information about your position and contact numbers. Now is not the time to present your entire life story. I have seen some people put their company mission statement, product lines, company motto, etc, on their business cards. I think this is overkill. At most, I would include (if relevant) a company logo and any education or experience you have that would make you more credible. This does not mean that you place your resume on your card; this means that you put the appropriate educational distinctions after your name (for example, M.B.A., M.E., B.A, B.S., J.D., M.D. Broker, Broker-Salesperson, Salesperson, etc) and/or a quick one-liner about your experience (for example, “helping people acquire wealth for over ten years”).

First and most importantly, ALWAYS have some of your business cards on you. Having anywhere between 10 to 15 business cards with you at any given time would be ideal. Many times people will ask for a business card and you may not have one to give. This is a lost opportunity! If you just give the potential contact a phone number, chances are, he/she is going to forget what and who the phone number is for. However, if a business card was given, there can be no mistake as to who the number belongs.

Second, put a stack of business cards on your desk. When you meet potential clients, it is nice and beneficial to give them a card. This way, if that person wants to recommend you to another, they will have a business card to give to that person. Additionally, your client will have a means of information should they need to contact you for any reason.

What if you do not have an office where clients come to meet you? What if you run a home based business? This problem is easily solved. When you go and meet the client, give them a card attached to any presentation, contract, agreement, and/or document that pertains to the meeting. (The preceding sentence also applies to people that have a traditional office where clients come to meet. Just make sure that you do not drown your clients with business cards. One or two is fine. Do not attach a business card to every document you produce for them).

What if you never meet the clients with who you do business? In this case, some sort of communication has to take place. How else would you two have gotten into contact? In this case, it is most likely that e-mail is used and, therefore, you can put business card-like information beneath your signature line. It has the same effect as a traditional business card and better yet, it is free!

Third, networking events are a great place to exchange business cards with others. Just make sure you do not blindly throw your cards at people without making a true contact. Handing cards to people you never talk to are not going to help your cause.

Last, place your business cards in local shops that allow you to do so. Many local coffee shops, juices bars, restaurants, pubs, bars, and “mom and pop” stores allow people to place their business cards on a bulletin board and/or on the restaurant tables under a piece of glass which serves as the table “cloth.” This is a good way to create ties with the local small businesses and with the local community. A word a caution; this is probably going to be the least effective method for generating business. Many people do not go into a coffee shop looking for a anything other than a cup of coffee, therefore, do not expect much business to come directly from this method. That being said, if a person does become your client from one of your cards placed in local businesses, and that client ends up loving you, that little card that stays pinned up at those shops, probably indefinitely, will generate much positive word of mouth advertising. This in turn creates lots of business for you.

Self-esteem and the Business World

Self-esteem is important no matter the avenue of life involved. If you do not have self-esteem about general aspects of your life, possessing self-esteem in the business world is not important. You first have to possess self-esteem generally if you want the same to apply in a business setting.

Let us assume that you possess much self-esteem and that you are an outgoing person. Both of these characteristic traits will be greatly beneficial to you. However, it is easy to get discouraged if you are not careful. You have to have “thick skin” in the business world if you want to achieve greatness.

Many people advocate the “dog eat dog” ideal of business. Competition is going to be rampant during your entrepreneurial journey, however, how you deal with the competition or how it affects your self-esteem is going to determine whether you will survive as an entrepreneur.

Rolling with the punches is part of this business. I am not advocating that you not be competitive. Competitiveness is an essential element, however, when the competitive streak leads to unethical tactics or the untruthful damaging of a personal reputation, you need to step back and evaluate your actions. The truth is, these actions may happen to you. How you deal with such an event (by means of your self-esteem) will be pivotal to your success.

First and foremost, you have to stay calm. This can be easier said than done when faced with a situation as described above, however, maintaining your calm will help you think rationally. Rational thinking will help prevent your doing some action that you will later regret.

Second, fix the problem. If you have received negative feedback or are experiencing confrontational problems from co-workers or other similarly situated people, fixing the problem can be your best bet. This will require talking to the culprit. Do not confront because this could cause an unnecessary tension. Instead, explain the problem to the other and see if you two can come to an amicable solution.

Last, assess how you handled the situation. Your self-esteem about your abilities runs simultaneous with your abilities themselves. Learn to control your environment, and your self-esteem and you will do fine on your entrepreneurial journey.

The Importance of Networking

If you have found your way to this blog, then you are interested in pursing some type of career path as an entrepreneur. I am going to let you in on a little secret, networking is going to be one of the most important keys to your success.

I have written articles in the past regarding the importance of networking, and nothing has changed since that time. Why then am I writing another article on the subject? I am writing another article because networking is that important.

The whole idea behind entrepreneurialism is to create wealth were ordinary people cannot. Later in your career, when you have your own company and your own financing, you may be able to complete a project with most of your own resources. However, even then you will need the help of others. Until that time, you have to build your reputation and business contacts. This is achieved through, survey says, “networking!”

Networking is defined as “a supportive system of sharing information and services among individuals and groups having a common interest.” In case this definition is too formal for you, I think of networking as a way of getting my name “out there.” Networking is a great way to meet likeminded individuals that can help each other achieve success through the exchange of certain assets and skills.

Now that you have a basic understanding of what networking is, you now need to know how to network. First thing first, define your purpose for networking. Are you trying to find support on a specific project or are you generally attempting to acquire contacts? Once you have defined your purpose for networking, you will be able to effectively focus your networking efforts.

Many cities have events were aspiring entrepreneurs can meet and greet. These events are free to attend and can create many wonderful contacts that could help you now or in the future. Additionally, many cities have organizations or clubs that are specifically formed by aspiring entrepreneurs for aspiring entrepreneurs. Search the terms “Entrepreneur Organizations” in your favorite search engine to acquire a starting point for your discovery.

Also, be aware of what your local college or colleges are doing. Many times it will hold conferences, seminars, or the like that is open to the public. Be aware of these events as they can be a great place to begin spreading your reputation.

These are a couple of simple ideas about where you can begin your entrepreneur networking journey. Look around, be creative, and you should be able to find other networking opportunities.

Tips on Developing a Reputation as a Credible Businessperson

No matter your field of business, your reputation is a very important attribute to maintain and to market. Becoming credible or reputable in your particular field will take hard work and discipline. With some discipline and creative marketing, you should be able to develop a powerful reputation that will bring a lot of business your way.

First and foremost, you have to be honest! Honesty in business will speak volumes about your character. If you can be trusted in and with a business transaction, word-of-mouth advertising will become your best friend. Referrals will start pouring in and making money will become second nature. If you “tell it as it is” (even if the truth is something the other parties do not want to hear) your clients, business partners, and/or customers will respect you for that.

Second, you have to know when to play “hardball.” Negotiating a contract (or any other item) can be a nasty, time consuming monster. You always want to get the best deal for your client, and this can sometimes mean that you and the other party may get into a heated debate. These can be avoided with some calming conversations, however, I can almost guarantee that this situation will happen at least once in your business career. If you represent your client to the best of your ability (whether in real estate or some other business) your client will know that you are looking out for his/her interests. The client will pay you back two fold: first, you will be paid your rate (whether commission or hourly) and second, you will receive referrals from that client.

Third, do not nickel and dime your clients. Whether you work for commission or an hourly fee, your clients are going to scrutinize every item on their final bill. If a client disputes a legitimate, significant charge you probably should not give in to their dispute. What is legitimate and significant? That decision is yours to make. On the other hand, you do not want to argue over something small if it prevents the large from being paid. Keep things in perspective and decide where you are flexible on billing arrangements.

Last, you have to know when to cut your losses. Not every client you meet or do business with is going to be all “roses and sunshine.” You are going to meet some clients you cannot stand, are not highly intelligent, and/or never listen to a word you say, which translates into you having to constantly clean up his/her mess. Sometimes you have to tell a client “no.” They might not like you in the short term, but when they discover that your decision was in their best interest (assuming your decision was in their best interest) they will develop a greater respect for you.

Characteristics of a Successful Entrepreneur

I could sit here and start rattling off random, “good sounding” characteristics (such as ambition, boldness, drive, motivation, etc.), but that does not really help you or me. Instead, I will tell you what I believe makes a “successful entrepreneur.”

First, a successful entrepreneur can do the impossible. He/she can make something out of nothing. Many people who start with nothing end with nothing. An entrepreneur does not follow this norm. No matter the disadvantages or set backs, a successful entrepreneur can change his/her situation to anything he/she wants it to be. A successful entrepreneur can change his/her stars.

Second, a successful entrepreneur knows how to seize opportunity. This one sounds easy, but in reality, many people let some of the best opportunities slide by unnoticed. Contrary to popular belief, “opportunity” does not magically appear at your doorstep (we should all be so lucky) and wait for your response. Opportunity is something that a person has to go out and find. You have to seek it out like a jungle treasure hunt and conquer the traps set along the way. A successful entrepreneur knows this and does this daily.

Third, a successful entrepreneur has to network. True, there are many “anonymous millionaires,” and although anonymous to you and me, they are not anonymous to the people that played a part in creating that millionaire’s wealth. You do not have to be world famous or have your own reality television show, but you do have to know a couple people in the particular “money making circle” of your interest if you want to achieve large amounts of wealth. Therefore, for example, if you want to develop real estate, it would be nice to know some contractors, other developers, some finance people, and even people at the various utilities companies.

Fourth, a successful entrepreneur knows when to walk away. There is going to be a time when you have to cut your losses. A successful entrepreneur knows when that time occurs. Remember, these are not the high seas. You do not have to go down with the ship! You may think that this characteristic contradicts the first characteristic I mentioned. However, the first characteristic relates to an entrepreneurs personal life and this point relates to business.

Last, once an entrepreneur has achieved large amounts of wealth, he/she gives back to those who have need it. A successful entrepreneur uses his/her wealth to help change the world for the better.

These are the characteristics of a successful entrepreneur.

Success - How Much of it is Luck?

As the famous saying goes, “I would rather be lucky than good.” However, your definition of success is going to make the difference as to whether luck is even an option. For example, if your definition of success is to have millions of dollars, then luck has played, and will play, a big role in the lives of many. Lottery winners, gamblers, game show contestants, etc., have received large amounts of money primarily through luck. Therefore, if “success” to you is defined by millions of dollars, you would love to have a little luck!

My definition of success is a little different. My definition of success is overarching. I follow the “health, happiness, and wealth” model. If you do not have your health, then you have nothing. It is that simple. What good are millions of dollars if you are too sick to enjoy them? Additionally, what good is money is you are miserable with your life? I only want a few things out of life. First, I want my family and me to be in great health at all times. Second, I want my family and me to be happy together and apart. Lastly, I would like to be wealthy. So how does luck play into my model? Truthfully, it really does not. You cannot be lucky and being a good family person. You cannot be lucky at being happy with your life. These are things you cannot fake.

Luck can play a small part in your travels and experiences towards achieving “success,” but if your definition of success is anything like my definition of success, you need to work on the more important things in life. Then, when you realize you have a great life, you will notice that making money becomes a whole lot easier. Take care of yourself and your family first; the money will eventually come into the picture. That is how I measure success.

How Much is Your Time Worth?

What one is paid versus what one thinks he/she should be paid is the ever existing conflict between employees and employers. “You can never become wealthy by working for somebody else.” You may have heard this in the past because I am definitely not the first to state it, but the quote is true. Let me make a distinction so that I am not misunderstood. I know many of you are thinking, “what about business executives and the such that make a couple hundred thousand dollars a year? These guys and gals are wealthy and they work for somebody!” The problem is, these people are not wealthy; these people are rich. What is the difference? People that are rich presently have a lot of money, but their money depends on their continued employment. If you take away the successful job of a rich person, he/she will not be rich for long. On the other hand, a wealthy person’s money does not depend on employment. A wealthy person has residual and passive income flowing monthly. If a wealthy person is employed, it is because he/she wants to be, not because he/she needs to be.

What does this have to do with determining how much your time is worth? Put simply, determining the value of your time determines whether you are going to be wealthy. Do not think of this problem in a purely literal sense. Do not think, “if I make $150 per hour and work full time for X amount of weeks per year, I could have X amount of dollars.” This way of thinking is short sided. Instead, you must consider what you do with your time.

I was reading an article that theoretically calculated the amount of money it costs to watch television. Do not get me wrong, I enjoy television as much as the next person and am not willing to give it up, however, this article really makes one think about the value of time. The article considered the electricity used, the extra dollars spent from watching commercials, the cost of a television, the opportunity cost, and many other variables. The author added up these costs, and compounded something like eight percent (8%) interest on the sum. The cost of watching television over the course of a number of years turned out to be monumental! The point of this story is not to convince you to give up television, it is to motivate you to use your time effectively and take advantage of the time you have.

If you want to make money, use some free time to plan for a way to do such. Do not give up because things are not happening immediately, just remember, it is only a matter of time!

Tips for Public Speaking

Public speaking is the number one fear for most people. For some reason, many people are nervous, scared, and sometimes downright petrified to speak in front of people. I must admit that I have been nervous before delivering a speech, however, public speaking has never been a real fear of mine. Therefore, I am going to share some tips that will help those who need it, to overcome their fear of public speaking.

First, you must recognize the situation and put it into perspective. For example, speaking as the professor in front of a classroom and speaking as a perspective student in front of a college admissions officer are two completely separate situations. First, the professor must speak in front of many people, while the perspective student usually only has to speak to one person. However, the perspective student will usually feel more pressure and stress due to the nature of the speaking. The professor should feel at ease because the students in his/her classroom are there to learn (in theory) from him/her, therefore, the students will see the professor in a dominant role. The student, on the other hand, will feel like he/she is at the mercy of the admissions interviewer. As the speaker, you need to find a way to create a sense of dominance. Make yourself believe that your audience is there to hang on your every word, that your speech or presentation is what the audience has been waiting for all day, and that you alone control the tempo, pace, and content of your words. If you can do this, you will find confidence and thus, peace when speaking.

Second, prepare, prepare, and prepare. Absent being one of the great historical speakers that have lead countries, movements, and social policy, you most likely will not be able to get up to the podium and/or stage and just “wing” a speech. The more prepared you are to give a speech, the more naturally it will flow from your mouth. The best speeches are the ones that do not sound like speeches, they are the ones that sound like somebody is just talking. Think about like this, you can always tell when an actor/actress is reading from the cue cards or has not memorized his/her dialogue. On the other hand, some actors/actresses have the ability to make you believe that everything they are saying was not prewritten. This is the goal for which you should strive.

Last, be yourself. I know that this is very cliché advice, however, it is very good and true advice. If you try to change your appearance and or speaking style, you are going to make your self more nervous and more anxious.

Stay calm, relax, know that you are dominant, know that you are well prepared, and go out there and knock ‘em dead!

What is the Best Education for an Entrepreneur?

Failure. I know this sounds counter intuitive but nothing motivates like failure. Failure is what separates the strong from the weak. Aspiring entrepreneurs that let failure consume their mentality until they no longer feel the motivational spirit or the entrepreneurial drive were never cut out to be successful.

Let me clarify something; when I say “failure,” I do not mean something so catastrophic that ends your career. When I say “failure” I am talking about the little setbacks that plague an investment or sometimes break a deal. These small but persistent problems are ten times worse than one huge problem. This is true because if one huge problem exists, it is still only one problem. If you have the strength and the integrity to fix the problem, then all should be fine. However, when you have seven, eight, nine, or whatever number of problems, this means that you have to be responsible for putting out that many more fires. It is the constant small problems that wear on an entrepreneur’s spirit.

Combating these small problems is tiring, however, for each problem you conquer, you gain a little bit more motivation, a little bit more drive, and a little bit more strength. Soon, all the little problems are fixed and your deal has been completed.

Thomas Edison once said, “If I find 10,000 ways something won't work, I haven't failed. I am not discouraged, because every wrong attempt discarded is often a step forward.” This is the best education for an entrepreneur. Remember that failure will most likely happen, but it is how you react to, and handle such problems that will determine your fate as an entrepreneur.

How Much has the Office Changed Since our Parents Were Running Corporations

It is extremely amazing how much the face of running a corporation has changed. With the internet boom, the rise of computers, and the advancement of electronic technology, corporate governance has changed dramatically.

Things used to be very structured. You were to always be in the office before your boss and were to always leave after him/her. You had to always be in the office, period. All of the processes were slow and information took a very long time to acquire.

Nowadays, it is rare day when you are in the office. Most of the time communications to and from your office are done on a PDA, smart phone, e-mail, and or fax machine. Corporate employees today have to be movers and shakers. Corporations today support free thinkers; people who “think outside the box” are valuable assets to a corporation.

This is not to say that the way things were done on the past was ineffective. Many corporations became extremely profitable by doing things the “old way.” However, you have to admit that the average age of a corporate CEO has dropped dramatically. It used to be that you work for a company for 30+ years and you were slowly promoted through the ranks. Now, people in their early twenties are starting and maintaining profitable business empires.

Many things have changes, but no matter how many formalities change, one thing will remain constant in the corporate structure: the potential to make money.

Understanding Oligopolies

An oligopoly is much like a monopoly except that at least two firms or producers exist. The fear that exists with monopolies also exists with oligopolies except that oligopolies can work out better for the consumer. For example purposes, let us use the satellite radio market. Sirius and XM are the two biggest companies in this industry. I believe that a small Canadian satellite radio company exists, but for the most part, nearly all satellite radio subscribers use XM or Sirius.

Currently, XM and Sirius are in an oligopoly. These two firms control the satellite radio industry. However, because they are such fierce competitors, this works out well for the consumer. The radio base technology gets better, the content gets better, and the number of available channels increase, yet radio unit prices have stayed low and monthly subscription rates have also remained low. This is obviously good for the consumer because it gives the consumer a choice. Although only two firms exist, you can still choose between XM and Sirius.

Oligopolies can turn ugly when the firms that exist in such decide to team up and form a cartel of sorts. For example, if XM and Sirius agreed that each would charge its customers $30 per month, short of canceling their accounts, there is not much a consumer can do. This price fixing and taking advantage of the customer is what law makers fear. This is also what is prevented by disallowing monopolies.

Law makers fear that XM and Sirius, if merged, would create a monopoly and do bad things such as raise prices on subscriptions and radio units. Compared to a monopoly a competitive oligopoly seems great. Just remember, because so few firms or producers exist in an oligopoly, there always exists a potential for abuse.

Multiple Streams of Income: Real Estate as a Business

Many entrepreneurs get their start in the real estate business. The real estate business can be extremely lucrative, you just have to know what, where, and how to get in. The real estate market, like so many other businesses, is cyclical. You have to know how to survive and be profitable in the bad cycles in order to create the wealth that is truly befitting an entrepreneur.

First and foremost, before you jump headfirst into real estate, you have to learn about the business and the market. Many would be entrepreneurs are hypnotized by the lore of getting rich quick. They think that every deal that they come across is the next million dollar investment. You can not be “star struck” by every real estate deal that comes your way. You have to carefully analyze every deal and even call in a second opinion when necessary.

As I mentioned, you have to know the market. Many entrepreneurs make the fatal mistake of jumping into the real estate market when it is “hot.” This type of market is called a “seller’s market.” You will know when the current market is a seller’s market by, amongst other things, dramatic raises in real estate prices occur. People think that this is the best time to get into the market, but this is simply not true. This is the time when you want to sell, hence the name “seller’s market.” It is simple economics; when more buyers exist than sellers, sellers can raise the price of their property and thus get more return on their investment.

In the worst case scenario, which occurs more often than you may think, would be entrepreneurs buy all their investment properties in a seller’s market. Once the market cools off (as it inevitably will), these would be entrepreneurs find that their investment properties have negative equity and the mortgages or obligations to investors become too expensive to bear. They end up losing their properties and their investment dollars.

The best time to buy is when the market is in the toilet. You can get property cheap, and if you have the knowledge, money, and time, you can follow the most well known real estate money making formula: (1) Buy, (2) Improve, (3) Hold, and (4) Refinance.

Legal Considerations for Entrepreneurs When Starting a Business

Entrepreneurs will face many hurdles when starting a new venture and/or business. Many will be tempted to plow right into the matter without first researching laws and regulations regarding their particular business.

I am going to let you in on a little secret, many entrepreneurs are dead before they even make their first sale! Why, you may ask? These entrepreneurs are in trouble because they made the classic mistake of not seeking the help of professionals. If you, as an entrepreneur, have the requisite knowledge of the law to begin and maintain your venture and/or business without fear of having done something inconsistent with the law, then you should be fine. However, most new entrepreneurs will just start a business without thinking of the ramifications of a bad contract, a badly negotiated lease, failure to properly incorporate and or organize, and/or failure to obtain financial assistance (whether it an accountant, financial advisor, bank, etc.), to name a few.

The most popular excuse used by entrepreneurs is that lawyers and accountants cost too much. Using this line of thinking, these people try to handle complex legal and financial matters for themselves and, most of the time, end up with a problem that will cost more to fix than it would have originally cost to avoid the problem. These types of entrepreneurs practice “stepping over dollars to pick up dimes.” I suggest you not be one of these entrepreneurs.

Do not fall into a legal and/or financial pit that could have been easily avoided. Starting a business is not as easy as opening the doors to your shop. There exists many state and federal considerations (whether they are taxes, permits, licenses, incorporation or organization or registration, proper accounting, employee matters, and/or stock issues, to name a few) an entrepreneur needs to consider before “starting a business.” Do not ruin your business before it starts by avoiding proper legal and financial assistance.

Financial Hardship and Homestead Laws

Many of us have faced times of financial hardship. In the current economy, real estate prices are in the toilet. If you bought real estate at the end of the most recent boom, you probably have negative equity in your investment properties. Additionally, you made a common investment mistake by buying when the market was hot, however, that is a talk for another day.

Many people are unaware of homestead laws. Homestead laws protect your primary residence from a forced sale due to outstanding debt, property taxes, judgment liens, etc. In fact, here in Nevada, a recent Court decision stated that judgment liens are void against fully exempt homestead property. It is the most inexpensive way to protect a large chunk, if not your entire home.

Homestead laws protect a certain value (be it equity) in your home. If your home is worth more or you have more equity in your home than the law protects, your home could still be “forcefully sold,” however, you would get the proceeds from the protected amount.

Homesteading a property is easy and cheap (usually the cost to record a document at your county recorders office). Check out your local laws and county recorder or assessor’s office and see if a homestead is right for you. It is the best, most inexpensive way to protect you home.

Do Not Be Fooled By Incorporation Fees

If you are planning to form a corporation, you have many options as to where to form. You may know that Delaware is a popular state in which to incorporate. Put basically, Delaware laws are very corporate friendly. I will get into the specifics in another post. Back to the point, many states advertise that you should incorporate in their state because the fees are less than other states.

Although this may be true, you have to consider where you are going to be doing most of your business. For example, Nevada demands a relatively inexpensive fee to incorporate. However, if you are doing all of your business in California, and merely incorporated in Nevada to save on the incorporation fees, consider this; in order to do business in a state other than the state in which you incorporated, you have to file for a foreign corporation certificate. This basically means that you incorporated in another state and want to do business in the present state.

What is the big deal with filing for a foreign corporation certificate? A foreign corporation certificate costs money, and has a yearly maintenance fee. So before you incorporate in a state to “save money” think about how much the foreign corporation fee is and do some serious calculations to determine whether you are really saving any money!

Another popular advertisement by states is the tax advantage pitch. Some states have a smaller tax rate than others. However, money earned in one state is taxed in that state. Therefore, seriously weigh the advantages of forming out of state against the disadvantages, and do not be duped by “money saving” sales pitches that may end up costing you in the long run.

There is a popular saying among entrepreneurs, “do not step over dollars to pick up dimes.” I implore you to avoid doing the same thing!

Need More Money? Try Cutting Your Costs!

I had a unique experience yesterday afternoon. I was talking to a friend that was having trouble paying his bills. He was wondering how he was going to make next months rent payment (he lives in Los Angeles and thus his rent is very expensive), his car payment, his student loan payments, and all his other bills. He kept wondering and asking me how to make more money.

During our long conversation, I was amazed that he was considering getting a second job (considering he already worked 60 hours a week). What amazed me further is that he never considered cutting costs. His entire motivation was about making more money.

First, let me start that making more money is a great goal. The entire purpose behind this blog is to share knowledge on how to acquire wealth. However, wealth accumulation can be a long process. Absent hitting the lottery, millions of dollars do not come overnight. It takes hard work, dedication, and motivation.

Most people in my friend’s situation think one dimensionally. The problem presented in paying bills. They think “I do not have enough money to pay bills, therefore, I need to make more money!” This way of thinking is not incorrect, but it can create many problems in the immediate future. Let us say that my friend got a second job on his days off. I guarantee in a month, he would have no energy and his primary job performance would suffer, as well as his health and personal life.

An easier way exists. I told him he needed to cut costs. Cutting costs will have an immediate effect. I told him to stop going out to eat so much (he went about three times a week), brown bag lunch at the office, and stop buying unnecessary stuff. Additionally, I told him to contact his student loan office and ask for a month reprieve. I think that most student loan providers allow the payee to request a “month off” without penalty. Taking a month off will put him a month ahead on his student loan payment.

There are many other little costs he can cut that will add up big in the long run. My biggest piece of advice for him was to NOT form a budget. Budgets are too hard and people never stick with them. All I said was to keep track of the costs that you eliminated. This way, he will be able to see a noticeable difference in his checking account, and most importantly, he may not have to pick up a second job!

What is the Purpose of your Corporation? – A Brief Look at the Doctrine of Ultra Vires

Many states have created a standardized document for forming a legal entity. These standardized forms were created partly to prevent lawyers from drafting and submitting extremely long incorporation documents and partly as a way to create ease of use for the general public. Most standardized forms contain a section for the name of the entity, the name of the resident agent, the name of the officers and/or directors, and a section for the corporate purpose.

We are going to take a closer look at the “purpose” section of an entity formation document. Today, lawyers generally use broad language such as, “any lawful purpose” in the purpose section of these documents. However, such was not the case many years ago. Incorporation documents used to be drafted with a very specific corporate purpose. As such, the doctrine of ultra vires was created by the courts. The doctrine of ultra vires was the cause of much litigation and judicial interpretation. The dictionary definition of ultra vires is “beyond the legal power or authority of a corporation, corporate officer, etc.” It is important to note that this doctrine, although traditionally applied to corporations, applies to all types of legal entities.

In plain terms, the doctrine of ultra vires applied to the “purpose” of corporate formation. For example, if a corporation was formed for the purpose of laying railroad tracks, that corporation could not engage in any other business. This makes sense if you think about it, but you can only imagine the limitations such a doctrine creates in this modern age. Today, corporations engage in so many different types of businesses and investments that if this doctrine was statutory majority law, instead of common law minority, you would see many more lawsuits due to a company’s participation in an enterprise that was not originally committed to paper in that pesky “purpose” section in the articles of incorporation.

The ultra vires doctrine was used both by the corporations and by other contracting parties. The problem with this doctrine is that it was easy to abuse. For example (using the same railroad laying track example above), if a corporation stated on its articles of incorporation that its purpose was to lay railroad tracks, the corporation was limited to pursuing only that business. Let us say that this corporation entered into a contract to manufacture railroad tracks. According to the doctrine of ultra vires, the corporation was prohibited from doing this. However, a court could only get involved if one of the parties complained. Therefore, as long as everybody got along, it technically did not matter that the corporation was conducting business beyond the limits of its stated purpose.

However, problems arise when a party wants out of the contract. For example, let us say that the railroad laying company is losing money on the contract for the manufacturing of railroad tracks. If the company wanted, it could get out of the contract by using the doctrine of ultra vires. It could argue that although it freely entered into the contract, it could repudiate the contract by stating that the doctrine of ultra vires prevented it from performing under the contract (in other words, the corporation was prohibited from manufacturing railroad tracks). The irony of this is that the other party that entered into the contract could assert the same thing if he/she/it wanted out of the contract. Basically, both parties in this example had a sure fire way out of a losing contract.

The dangers, pitfalls, and areas of abuse were wide. Additionally, you could see how this doctrine could create very unjust results. Two parties that freely entered into a contract could essentially screw the other if one was losing money. Due to this inherent unfairness, the doctrine has fallen out of favor. However, the doctrine is not nonexistent.

Lawyers combat this doctrine by creating a very broad “purpose” section. For example, as I stated above, usually lawyers use the “any lawful purpose” language when drafting a purpose section. However, you must be careful. Some state laws prevent the use of such broad language. Additionally, using broad language is not a guarantee against a lawsuit. Your safest bet is to know your local laws, draft broad purpose statements, and write a solid contract. So, for all of you entrepreneurs that want to form a legal entity, make sure your draft your articles correctly and carefully because something as simple as a “purpose” section can end up destroying a future contract!