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“This is the beginning of a new day. When tomorrow comes, this day will be gone forever; In its place is something that you have left behind. Let it be something good.” – Author Unknown It’s been a few months since we’ve sent the Entrepreneurs’ Chronicle, so welcome back and welcome to 2005! Here’s issue sixteen of the Entrepreneurs’ Chronicle.
1. News Update
In December Broadwick and Virante moved from Chapel Hill to a 6,000 sq. foot office in Durham, North Carolina. Both companies continue to grow quickly. News and open positions are listed below.
Open Broadwick Positions Software Developer Marketing Internships Open Virante Positions Marketing Internship Design Internship
Welcome back. This is our first issue since August and we’re excited to be back! This content-filled issue begins with the article, “Turning a New Business into an Enduring Company” that covers what you need to know to navigate through the legal, administrative, system creation, and efficiency challenges that a new organization faces. Our second article, “How to Build Wealth Through Entrepreneurship” covers the basics of making a significant amount of money by building value and a lasting organization touching on the the topics of business type selection, entity selection, equity, liquidity, acquisition, and public offerings. Our third article is a review of how my 2004 goals fared and my plans for 2005. The fourth article is an excerpt from Zero to One Million and discusses the history of the market system from 12000 B.C. to 2003 A.D. Finally, we’ve provided free content you may use on your web site and listed our book recommendations for current and aspiring entrepreneurs and business leaders. If you have any comments, suggestions, or would like to contribute content to be published in the newsletter or online, I encourage you to contact us at myoung@virante.com. Please do feel free to forward this newsletter on to your colleagues and associates. On behalf of the Zeromillion.com team I thank you for being a subscriber. Yours entrepreneurially,
Note: This is an updated authorized except from Zero to One Million: How to Build a Company to $1 Million in Sales. Learn more about the book and purchase your copy today from Amazon.com for $10.85. Turning a New Business into an Enduring Company As your business grows, you will need to build systems and processes and attempt to automate as much as you can. You’ll need to build distribution systems, inventory systems, marketing systems, follow-up systems, customer support systems, research and development systems, accounting systems, and hiring systems, among many others. From the beginning of your business, as you create each system, write down the details, as well as any general business rules and procedures in an employee handbook. This book will become invaluable as time progresses. The Employee Handbook for Broadwick Corporation is currently 38 pages and contains background information on the company, founders’ bios, a listing of officers and the Board of Directors, a company description, a description of our main product, product frequently asked questions, a company timeline, a list of persons to know, an overview of agreements, and office procedures and policies including a/an:
As we grow the business and things change, we continuously add to the handbook. Always remember that investors do not like to invest in systems where the system goes home at night. If you can build proper systems so that your business will operate properly, whether or not you are there to oversee it, your business will grow faster and be much easier to sell. Although it takes longer to set up the system than to do it yourself, in the long run you can save a lot of your time and effort by setting up the system. It’s More Than a Handbook Building your company from a new business into an enduring organization creates some growing pains. Putting in place an Employee Handbook can’t help with all of these. You’ll also need to do payroll, ensure compliance with HR laws and regulations, and ensure your books are up to higher standards. Specific things I’ve learned as being the CEO of a company going from 2 to 9 employees over the past year include:
Focus on Efficiency As you go from being a small start-up to an international player in your industry, you’ll have to manage the operations of a number of activities. In all cases, focus on creating efficiency and optimizing every operation. The more you can automate your operations the better. As an example, we can take a look at a recent client of mine in the nutraceuticals industry. This client sells various products that improve health and reduce pain. When I began working with the client, they were making a few dozen sales per day through their web site. When a sale would come in, they would have their shipping person type in the customer’s information into a label maker, print out postage on stamps.com, type in the address a second time, get a box from the closet, construct the box, find the proper product and put it in the box, find the proper literature and put it in the box, manually enter the address for the third time as well as the product, description, quantity, and cost into QuickBooks and print out an invoice, put the invoice in the box, tape the box up, apply the stamps.com postage, and then go to the post office to mail the package. When they told me everything they did to ready an order, I was stunned at how inefficient and wasteful their process was. It took over 15 minutes to prepare a single order—whereas the nutraceuticals company I worked with in high school was able to complete a full order in less than 45 seconds on average. After I consulted with them their system was much more efficient. Now, instead of typing in the label they download all the new order data from their database all at once and automatically mail-merge all the labels into a Microsoft Word file. The fulfillment person simply had to open Word, start the feed of the labels into the printer, and hit print. They could print ten labels in thirty seconds, instead of spending one minute on each. Next, I got rid of their need to use stamps.com for postage. I alerted them that instead, they could simply set up an account at their local post office, pay in advance with a check, and take all their packages in through the back door each afternoon. They’d just drop of the packages, tell the attendant which account they were from, and the USPS would handle applying the exact postage. This knowledge saved another 2 minutes per package, as the fulfillment person no longer had to weigh the package, type in the company and delivery address, and print and apply the proper postage. The next thing we optimized was the packaging. Instead of using a hard to construct box, I told them about padded self-seal mailers. They were not only 1/4th the price of a box, but also required no construction or tape. Finally, I advised the company that there was no need to include an invoice with the product, as the customer received their invoice via email. This removed the need to re-enter all the data again into QuickBooks, print out the invoice, and put it in the box. This saved a full four minutes per order. They could now automatically importing the sales data into QuickBooks in a batch at the end of each week. It would take 30 seconds to import 1000 orders, instead of 30 hours. By optimizing their shipping operations as such, we saved the company hundreds of dollars each week and increased the maximum capability per day from 45 orders to 450 orders. In your own company, there are likely numerous areas where an efficiency review would be helpful. See what efficiencies you can create and how much money you can save by focusing on automating and optimizing the operations of your business. Properly navigate the process of creating systems, developing an employee handbook, dealing with payroll and HR, establishing an accounting process, and focusing on efficiency and you’ll be well on your way to turning your new business into an enduring company. Ryan Allis, is the author of Zero to One Million: How to Build a Company to $1 Million in Sales. He is also CEO of Broadwick Corporation, a provider of permission-based email marketing and list management software IntelliContact Pro and CEO of Virante, Inc. a Chapel Hill, North Carolina based web marketing consulting firm. Ryan, who is 20, is a junior at the University of North Carolina at Chapel Hill, where he is an economics major and Blanchard Scholar. Additional information on the author can be found at www.ryanallis.com. This article may be republished online as long as the byline remains.
Note: This is an authorized except from Zero to One Million: How to Build a Company to $1 Million in Sales. Learn more about the book and purchase your copy today from Amazon.com for $10.85.There are many different ways to become wealthy in our world today. You can become rich through inheritance, crime, entertainment, sports, or building a business. There are certain advantages and disadvantages to each method. Receiving an inheritance can be very helpful, but many do not have this option and even those who do often do not know how to properly manage and grow this money once they have it. As a criminal, you can make money fairly easily and very quickly, unfortunately your conscience may get to you, you’ll destroy your reputation, and likely spend much of the rest of your life in a jail cell eating pre-packaged thawed lima beans. One can surely make a lot of money through entertainment but unless you are extremely talented, are a white rapper, or win American Idol or star in Eurovision, the chances are slim you’ll make it. Professional sports is an option. Again, however, the chances are very low and the chance of serious injury, numerous surgeries, and a life of chronic pain, worn cartilage, and sore joints does not sound too appealing. That leaves being an entrepreneur. While there are many risks to being an entrepreneur, it seems that as long as one learns from his or her mistakes, keeps his or her ear to the marketplace, and persists, he or she will eventually succeed. The dynamic, always changing, life and the chance for significant personal gain make building a business the choice many make who wish to obtain financial security and become wealthy. There are two ways to build wealth through entrepreneurship. The first way is to build a business and pay yourself a salary. If your business grows large enough to have an ample net profit margin, you can re-invest part in your company and still have enough pay yourself a large salary. You may personally earn a few hundred thousand dollars per year, and may be happy with this amount, at all times maintaining majority ownership in your company and doing things the way you like to do them while still making time for other commitments such as a family. This method of becoming wealthy is often associated with that of the lifestyle entrepreneur, small business owner, family business owner, and the S corporation. It is surely one option. While a few hundred thousand dollars per year may make many happy, in order to make tens or hundreds of millions, you’ll have to change your goals, thinking, and methodology. In order to make hundreds of millions of dollars, you’ll have to build a high potential company. To use this method you’ll have to be a high potential entrepreneur and a C corporation. You’ll have to develop a novel technology, obtain solid intellectual property, or have a good business idea. You’ll need to write a complete business plan and pay $15,000 for a private placement memorandum to be created so you can raise equity capital from accredited private investors, angel investors, or venture capitalists, in turn giving up a significant portion of ownership to the investors. You’ll have to bring on a top tier team, in turn giving up a good part of the remaining ownership to your initial founders and top performers. You’ll need to bring on additional products, build systems and processes, outsource operations across the globe, launch international marketing campaigns, use derivatives to hedge risk in overseas currency markets, and attract seasoned executives and newly minted MBAs to your growing firm. You’ll need to attract a solid Board of Directors led by representatives of your investors and industry leaders. And you’ll have to reach proof of concept, raise a second and third round of financing, ensure your books meet GAAP standards, expand market share, and turn profitable. Finally, you’ll have to attract potential acquirers or talk to investment bankers about going public. If a company wishes to buy your company, you’ll go through a process of extensive due diligence and evaluation. If you choose to go public, you’ll file form S-1 with the Securities and Exchange Commission, have a prospectus created, and go on an investor road show to pitch the merits of investing in your company. Finally, you’ll sell, part or all of your company—either to an acquirer or the public markets. Your equity, your ownership, will soon be liquid and you’ll be able to cash in on the past six years of ninety-hour weeks. You may make $5 million, you may make $500 million—dependent on the market capitalization of your company and the amount of equity you were able to retain through all the financing rounds and option pool dilutions. This is how, at the basic level, the system works. Going public or selling a company is a dream of all high potential entrepreneurs. If you can start with a product that the market demands, raise funding, build a good team, establish market share, turn profitable, add additional products and revenue streams, and position yourself as a market leader in your niche, you’ll make it. This process is not exactly easy, however, and more often than not, even the most experienced, well educated, well connected entrepreneurs fail at following this path. Then again, there is nothing wrong with deciding to become wealthy through the cash flow of a small or lifestyle business. Ryan Allis, is the author of Zero to One Million: How to Build a Company to $1 Million in Sales. He is also CEO of Broadwick Corporation, a provider of permission-based email marketing and list management software IntelliContact Pro and CEO of Virante, Inc. a Chapel Hill, North Carolina based web marketing consulting firm. Ryan, who is 20, is a junior at the University of North Carolina at Chapel Hill, where he is an economics major and Blanchard Scholar. Additional information on the author can be found at www.ryanallis.com. This article may be republished online as long as the byline remains.
2004 took me to New York City, Boston, Chicago, Washington D.C. x2, Houston x2, Providence, Bradenton, Florida x3, Asheville, Kansas City, and Charlotte. I acheived and surpassed many of the goals I set for myself at the beginning of the year and have gone from a manager of a company with 77 clients and two employees to a manager of a company with 1290 clients and nine employees. It’s been a joy to build the team and watch this company, Broadwick, grow so rapidly. My web marketing consulting company, Virante, added sixteen new clients during the year, including one client that it helped take from $14,000 per month at the beginning of the year to $130,000 per month at the end of the year. I’ve truly been blessed to have supportive parents, a wonderful girlfriend, and tremendous co-workers. I thank all the persons who have been important to me reaching many of my goals in the past year. At the end of 2003 I wrote down a few goals for 2004. They were:
Regarding Broadwick, we beat even my expectations for the year. We ended up doing approximately $54,000 in sales in December alone and am very happy to share that we are on track to do $1.4 million in sales during 2005–allowing me to reach a goal I’ve had for a while of building my own company to $1 million in sales after building two other companies to $1 million+ in sales as a marketing consultant. Virante added sixteen clients during 2004 doing web marketing consulting, search engine optimization, web site design, and ecommerce development. We added our first employee Malcolm Young in May as Director of Client Services and are about to hire a second full-time employee this month. I am continuing to work to put the systems and procedures in place to continue to expand the company. I was very happy to have had the opportunity to teach six Junior Achievement sessions this Fall on the topic of personal finance to students from Chapel Hill High School. Junior Achievement is an international non-profit organization developing a network of volunteers who teach personal finance, business, civic, and economics lessons to students from 1st through 12th grade. I’m very happy to be a volunteer and very much thank JA President David Chernow for his endorsement of Zero to One Million. My fourth goal was one I sadly did not achieve. I initially was considering taking a month off during the Summer of 2004 to volunteer with Operations Crossroads Africa in Tanzania. In March, however, I was contacted by Sunday Ogunsanya who asked me to be the keynote speaker at a conference in August for the Youth Development Entrepreneurship Foundation out of Lagos, Nigeria. Unfortunately for YDEF and Sunday, however, the foundation was unable to raise the needed funds to put on the conference and at the last minute had to postpone it. I remain hopeful I’ll be able to get to Africa soon and continue to explore my interest in human and economic development. In 2004 I spoke at the Lead America Business & Entrepreneurship Conferences in Boston and Washington D.C., the Congressional Student Leadership Conference, the Collegiate Entrepreneurs’ Organization Conference in Chicago, and the Young Entrepreneurs’ Summit at George Mason University in Virginia. For 2005,I am currently scheduled to speak February 26 at the Dollars and Sense Conference in Greensboro, North Carolina, April 14 at the National Young Entrepreneurs’ Conference in Milwaukee, and the CEO Conference in Chicago in November. If you’re organization might be interested in having me as a speaker I encourage you to contact myoung@virante.com for details. Finally, in August I made the decision to come back to UNC-Chapel Hill after taking the 2003-2004 school year off to focus on growing Broadwick and Virante. I took Introduction to Fiction, Personality Psychology, History of the World After 1945, and Development Economics. I ended up with a 3.58 GPA for the semester. I’m on track right now to graduate either in May or December 2006. So what am I up to in 2005? Well, my main focus will be building Broadwick and Virante. I also hope to get two more semesters at UNC under my belt, buy a home, successfully manage my stock portfolio, speak at conferences, promote Zero to One Million, and continue to explore my interest in human and economic development. If you are interested in my current life plans I encourage you to download and read the one-page PDF “Statement of Life Goals & Objectives” last updated December 31, 2004. Once again, I thank everyone who has helped me have such a great 2004 including my family, my girlfriend, my friends, my partners, my employees, and my clients. I hope you are similarly inspired to kick butt in 2005 and make it one hell of a good year. Ryan Allis, is the author of Zero to One Million: How to Build a Company to $1 Million in Sales. He is also CEO of Broadwick Corporation, a provider of permission-based email marketing and list management software IntelliContact Pro and CEO of Virante, Inc. a Chapel Hill, North Carolina based web marketing consulting firm. Ryan, who is 20, is a junior at the University of North Carolina at Chapel Hill, where he is an economics major and Blanchard Scholar. Additional information on the author can be found at www.ryanallis.com.
Note: This is an authorized except from Zero to One Million: How to Build a Company to $1 Million in Sales. Learn more about the book and purchase your copy today from Amazon.com for $10.85. One of the most important advances needed for the creation of a market system took place sometime between 12000 and 10000 B.C. with the advent of specialization and the start of the Neolithic Age. Instead of each tribe hunting and gathering their food, different persons within each tribe would become experts at a certain task such as hunting, gathering, cooking, tool making, shelter making, or clothes making. As methods of agriculture improved, the first towns and cities were seen. Dependable food supplies allowed people to build permanent houses and settle in one area. As settlements increased in size, new forms of society such as religious centers, courts, and marketplaces developed. The advent of towns produced further specialization, creating jobs in tool making, pottery making, carpentry, wool making, tool making, and masonry, among others. The specialist created items faster and of a better quality than each family making its own, increasing standards of living. The earliest signs of the market system at work can be seen with the advent of bartering within tribes as far back as 6000 B.C. in Mesopotamia. If Tom had twenty cows and Igor had eighty hens, and Tom and Igor agreed that one cow was worth four hens, then the trade could take place. The problem with the barter system, however, was that in order for a trade to take place, both parties had to want what the other party had. This ‘co-incidence of wants’ often did not happen. The demands of growing business and trade caused a money system to be developed. Silver rings or bars are thought to have been used as money in Ancient Iraq before 2000 B.C. Early forms of money would usually be specie, or commodity money. Examples range from seashells, to tobacco leaves, to large round rocks, to beads. While the money system still had much development to go through (credit and paper money did not yet exist), its invention over four thousand years ago was of crucial importance to the world we live in today. The use of an accepted medium to store value and enable exchange has greatly enhanced our world, our lives, our potential, and our future. By the year 1100, the prevailing system in the Western World was feudalism. It was a world of kings and lords, vassals and serfs, kingdoms and manors. Long distance trade was expanding and new worlds of foreign spices, oriental treasures, and luxurious silks were discovered. Three hundred and fifty years later, after weathering a Black Death and the Hundred Years War, Europe emerged by expanding trade to new levels and building the foundation for the start of the competitive market economy we know today. With a population spurt starting around 1470 A.D., cities, markets, and the volume of trade grew. Banking, initially started by Ancient Mesopotamians, grew to new heights and complexities, the guild system expanded, and the idea that a business was an impersonal entity, with a separate identity from its owner, took hold. Silver imports from the new world drove expanded trade and bookkeepers created standardized principles for keeping track of a firm’s accounts based on Luca Pacioli’s advances. Early entrepreneurs, called merchants and explorers, began to raise capital, take risks, and stimulate economic growth. Capitalism had begun. It began with much resistance, however. The idea of gain was shunned and shamed. The practice of usury, charging interest on loans, was banned by the Church. Jobs were assigned by tradition and caste. Innovation was stifled and efficiency was forcefully put down, punishable by death. In sixteenth-century England, when mass production in the weaving industry first came about, the guildsmen protested. An efficient workshop containing two hundred looms and butchers and bakers for the workers, was outlawed by the King under the pretense that such efficiency was improper. Makers of innovative buttons in France in the late 1600s were fined and searched and the importation of printed Calicos cost the lives of 16,000 people. The world would soon see, however, that innovation was generally a good thing that made lives better and that efficiency was a path toward a higher standard of a living. As Robert L. Heilbroner says in The Worldly Philosophers, "The precapitalist era saw the birth of the printing press, the paper mill, the windmill, the mechanical clock, the map, and a host of other inventions. The idea of invention itself took hold; experimentation and innovation were looked on for the first time with a friendly eye." Fortunately for Europe, new schools of thought sprung up in the 18th century that promoted commerce, and not the hoarding of gold, as the source of wealth. Adam Smith further backed this idea and was the first to capture and explain the essence of the marketplace. He did so in his famous 1776 work An Inquiry into the Nature and Causes of the Wealth of Nations, slaying the mercantilist dragon in the process. Within, Smith outlines certain laws of the market that are worthy of mention. Smith explains that self-interest acts as a guiding force toward the work society desires. As Smith notes in Wealth, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their self-interest." While one would naturally assume that everyone following only his or her self-interest would not create a very good society, there is another force that prevents selfish individuals from exploiting the marketplace. That regulator is competition. A man who permits his self-interest to run away with him will find that competitors have slipped in to take his trade away; if he charges too much for his wares or if he refuses to pay as much as everybody else for his workers, he will find himself without buyers in the one case and without employees in the other. Those workers will go to the competitor who is willing to pay more and those customers will go to the competitor who charges less. The wonderful paradox of the market, through the interaction of supply and demand and competition, creates a price that properly allocates industry so as to produce the proper quantities of goods and services. No intervention, planning, or forethought is needed to create exactly what society desires, in the exact amount it desires. What a wonderful contraption the market is! As long as society can promote competition and innovation, standards of living will continue to grow and wealth will increase. So the theory goes. Unfortunately, our world cannot be simplified to quite this degree. Such things as crime, corruption, and market failures do exist. There are some cases where the government should be involved, and there are other cases when the government should have less involvement. This topic will be dealt with in a later section of this chapter. Now that we understand the basics of how the market system works, let’s progress with its history up to the present day. Following Smith there were many other economists, ideologists, sociologists, and philosophers that pontificated on the workings of the increasingly complex marketplace. Ricardo outlined the all-important principles of trade while Malthus predicted overpopulation and doom. Mill contemplated on liberalism while Bentham promoted utilitarianism. Marx painted a bleak picture of forced labor and surplus value while Keynes later showed there sometimes was a reason for an active government. By the time of Smith’s death in 1790, the nascent Industrial Revolution had already reared its head. The effects of the Renaissance, the humanist movement, and the new focus on science and empiricism would translate into the launch of a movement that would impact the world as none before it had. It was this revolution, often harsh and cruel, that prompted thoughts of communism and created robber barons and titans. It was also this same revolution, however, that led to the development of the innovations, technology, and standards of living we have today. From the Industrial Revolution, the concept of mass production and economies of scale came about. Bigness, trusts, and vertical integration became the key to riches in the day. It was Andrew Carnegie and J. P. Morgan in steel, John D. Rockefeller in oil, and Henry Ford in automotives. While many of these titans often had questionable ethics, no one can deny that they were innovators. They forged alliances, developed new ways of doing business, and created efficiency across industries. Out of necessity, regulatory organizations such as the Environmental Protection Agency, the Antitrust Division of the Department of Justice, the Securities and Exchange Commission, the Food and Drug Administration, the Financial Accounting Standards Board, and the Federal Trade Commission would soon be created in the United States while similar organizations were created across the developed world. Theodore Roosevelt would go on his trust-busting and anti-monopoly campaigns while Franklin D. Roosevelt would create new laws relating to the distribution of wealth. John Maynard Keynes would go on about public spending while Milton Friedman and Frederick A. Hayek would fight large government in the name of freedom. Lyndon Johnson would forge his Great Society while Reagan lowered taxes. The Berlin Wall would fall, and the Internet as well as increased trade and flow of capital would create profound change in business. The markets would go dot com crazy and then crash, burn, and slowly recover. We’ve gone from hunting, gathering, bartering, and grunting to specialization, miniaturization, internationalization, mass-production, and six sigma—all due to the invisible hand, innovation, and industry. And such is the history of the market system. Ryan Allis, is the author of Zero to One Million: How to Build a Company to $1 Million in Sales. He is also CEO of Broadwick Corporation, a provider of permission-based email marketing and list management software IntelliContact Pro and CEO of Virante, Inc. a Chapel Hill, North Carolina based web marketing consulting firm. Ryan, who is 20, is a junior at the University of North Carolina at Chapel Hill, where he is an economics major and Blanchard Scholar. Additional information on the author can be found at www.ryanallis.com. This article may be republished online as long as the byline remains.
If you have a web site that has to do with business, entrepreneurship, marketing, web marketing, ebusiness, personal development, or economics and would like high quality free content for your web site, you may syndicate the following articles from our web site. These articles are stored in zip format and can be downloaded by clicking on the appropriate link. We simply ask that you keep the author byline at the bottom of each article per the instructions included with each zip file. If you choose to use any of the articles we ask that you notify us at info@zeromillion.com. 48 Articles – Authorized Excerpts from Zero to One Million
The following books are recommended for reading by aspiring and current entrepreneurs and business leaders. The books in bold are must reads. Please em ail any recommend
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