Start-Up Expert Bob Reiss So what does it take to become an entrepreneur, to face the inherent (and exciting) risks of starting a business? Bob Reiss answers that million-dollar question.
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The guts, the glory, the risks. It's all there in the worldof entrepreneurship. The trick is to figure out if you're readyto handle not only the thrills and chills of starting up, but thelong-term challenges of keeping one step ahead of yourcustomers' needs.
In Low Risk, High Reward: Starting and Growing Your Businesswith Minimal Risk (Free Press, $27.50), author Bob Reiss, alongwith co-author Jeffrey L. Cruikshank, methodically explains whatyou need to start a business, from entrepreneurial traits andnumeracy (dollars-and-cents sense) to managing risk and gettingyour first order. We've asked Reiss, who's also the founderof his own company, R&R Recreational Products in EnglewoodCliffs, New Jersey, to share some of the knowledge he's gleanedfrom his real-world entrepreneurial experiences.
Entrepreneur.com: What are some key attributes of asuccessful entrepreneur?
Bob Reiss: The first one is passion. Of all theattributes, this is the only one I don't believe you can teach.Everything else is learnable; passion is innate. If you don'thave a really strong passion for your idea, don't go aheadbecause you're gonna have to put way too much work into thisthing and it'll feel like work. If you have passion, itdoesn't seem like work. It's fun.
I think another attribute is curiosity. Curious people are muchmore creative. Asking questions really triggers innovation, and asyou know, not only in small business, but even in largecorporations, innovation is key.
Another interesting attribute is a high energy level. Iinterviewed about 27 entrepreneurs for this book, and almosteverybody had very high energy levels and they all seemed to workout. I always thought I was crazy because every time I traveled inthe early days before hotels had health clubs, I'd run aroundthe parking lot at night, and people would look at me like I was alittle bit crazy. But I'm convinced now that the better shapeyou're in, the better your mind works. You need less sleep. Andparticularly in a small business, you're the key person and youhave to take care of that engine.
I think flexibility goes without saying. You have to be flexiblebecause things change so fast, and in the new Internet economy,that's even truer. The only caution I have with flexibility isyou want to be flexible, but you do not want to be flexiblewith your core values. Whatever your true beliefs and your missionare, you don't want to deviate from that.
It's good to have a little bit of an ego as long as it'sunder control because that will give you the self-confidence youneed. You have to be mentally tough because you're going tohave lots of setbacks. When you get a setback, you got to comeright back and do better.
One of the things I'm big on is integrity, and you'vegot to start that from day one in your business. People love to dobusiness with and will help people they trust. In the book, I list35 ways you can build trust, just to give people an idea. Listen topeople you deal with. People trust you more if you listen to them.You want to admit mistakes right away. Another thing I'm big onis paying your bills on time. Like a maniac, pay your bills on timeand suppliers will take care of you. Don't steal people'sideas. Never BS. If you don't know anything, tell them youdon't know anything. These are the little things that willbuild trust over time.
Entrepreneur.com: Why is creativity so important for anentrepreneur?
Reiss: You're going to have to innovate if you'restarting a new company. A lot of people think the word"creativity" has to do with being naturally good at artand design. You need to be just as creative in every phase of thebusiness. You have to be creative at raising money. [You have todecide] what your product is going to be. After all, none of usreally ever reinvent the wheel. We're [just] coming up with newideas and trying to do something a little different. We have todifferentiate ourselves from the other person to get started.
To have an organization that's creative, you have to work atit. One of the things you don't want do is to hire [people whoare similar to you,] which we tend to do. You want to hire peoplewho are different than you because you want to have people speakfreely. You have to be able to listen to what you think arehair-brained ideas because sometimes there's a good one. Andyou want to encourage all the people you buy from to give you theirideas.
Many people say they have an open-door policy. Yeah, but thedoors are always closed and most employees don't believe youhave an open door. So you've got to work and convince themyou're open to all their ideas because their ideas can createall kinds of new products and ways to do business that areprofitable.
Entrepreneur.com: In your book, you dispute the idea thata business idea has to be totally original.
Reiss: That's a myth that stops a lot of people whoreally want to be in business and are probably very qualified. Theythink they have to have this brilliant new idea. It's reallyhard to do. Look at it like a Scrabble game. You're playingScrabble and you have a five-letter word that you got credit for.All I do is add one letter to it, which changes the meaning of theword, and I get credit for all the work you did also. It's thesame thing in business. Come up with something a little different.Take an existing idea and sell it to a new channel that no one everthought of before. So you need to look at different ways but youdon't need earth-shattering ideas to get started because youcould wait a long time for that.
Entrepreneur.com: You say that knowledge, confidence andexperience can mitigate risk. What else can mitigate risk?
Reiss: There are two kinds of risk. One is risk to thebusiness and the other is risk to your personal ego, which ismainly risk of rejection, and a lot of people confuse the two.I'm not so concerned about the risk of rejection. Many peoplewill not go ahead because they're afraid their idea will getturned down or someone will say it's stupid. Those kinds ofrisks are really opportunities to learn.
[The risks I'm more concerned with] are those that candamage and hurt the whole business. And when you look at thoserisks, it's kind of like beauty: It's in the eye of thebeholder. Two people look at the same exact situation. One personsees calamity, and one person sees a great opportunity to make alot of money. And the difference is one person has the experienceand knowledge base. They understand the business, see how thingscan happen and can solve the problem.
The other way to reduce risk is to think of ways [to lessen theamount] of money your original plan called for. For example,let's look at a lot of the expenses you probably put in yourinitial business plan: I'm gonna hire salespeople. Why hire asales force to start in a small business? Why not use sales reps?You don't have to pay them the salary or benefits. You pay themstrictly commission based on production. If they have no sales, youhave no expense. Instead of buying a fax machine and other officeequipment, why not lease it in the beginning? Instead of goingnational with a new idea, why not test it in a small locale? Workout the kinks before you put all your money in it.
Entrepreneur.com: For someone past the start-up stage,what are things to take into account for planning the future of thecompany?
Reiss: I'd like to see two titles in the company:vice president of today and vice president of tomorrow. The problemis that small-business owners can't afford that, so the sameperson is wearing two hats. While you're putting out fires andtrying to survive, you [also] have to think about tomorrow andthat's a difficult thing. But you do have to plan for tomorrowor it's gonna come up at you unexpectedly. You're gonnaneed new product.
You've got to work hard at getting out of your day-to-dayenvironment where you're dealing with all these immediateproblems. Get away for a weekend. Talk to other entrepreneurs. Tryto go to trade association meetings. I like to go to other tradeassociations. I like to go to department and chain stores and shopareas of business I'm not in to see how they package here, howthey do things there. Go to the apparel area and see what thecolors are. What are the next colors for this fall? Try to makecontacts with people who can tell you that. See what other peopleare doing. One of the best ways to plan for tomorrow is to sit downwith your customers and say, "What do you see as your problems[in the future]?" Or, "If I had a magic wand, what kindof product would you like?" And you get a lot of stuff thatway. And that's what you have to do when you're small andyou can't afford to hire research teams to do expensivesurveys.
If you're selling a product in stores, go into the store andtalk to the clerks who sell. Go in at 10:30 in the morning whenit's not crowded, and they will give you so much informationabout your product, about the customer, about your competition. Andthey just love to talk, but nobody ever asks them.