Doing startups is also all about “the game”. The game of scoring. The game of beating the leaders. Beating the best on the market. Scoring by being the sharpest tool in the shed.

Be clear on the mission you have and let everything else fade away.

The real creative genius shows itself when you can operate under strict situations and still accomplish miracles.

I even create my own regulations, for me and for everyone I deal with. Tim Ferriss started that trend.

I have rules for more or less everything now. One girl I am chatting with on msn asked me if I was a weirdo or something. She asked “isn’t it hard living your life that disciplined and regulated?”. I said “No, actually, it is very liberating to have all these systems and rules in place. It makes me think less on mundane stuff and it gives me a good excuse to say no to many things and a good excuse to do some other things”.

For example let me give you an idea of systems I have:

-I check emails only at 12 (lunch time) every Monday- Friday.

-I only take business calls between 12 (lunch) and 15 pm, Monday-Friday

-I only give business associates 5 minutes to talk on unscheduled telephone calls. When the 5 minutes are up the call is over. No matter what.

-I only talk on the phone for 15 minutes with business associates if they have scheduled the meeting beforehand and if they have a clear agenda for the call. Otherwise the 5 minute rule is applied.

-I never take face-to-face business meetings. If a meeting is needed I will always send a proxy.

-I only check my Facebook account Friday evenings at 18pm – 19pm.

-I only do banking errands (only online, never physical) on Friday evenings at 18pm-19pm.

-I only do msn chatting sessions Monday-Sundays at 9pm-10pm.

-I never do in person consulting unless I receive at least 1222 USD per hour. And I only do consultancy via telephone/msn chatting session or via email. Never face-to-face (value is not in showing up, value is in delivering results).

There you go, a couple of my own regulations. Try doing whatever you want to accomplish, but do it within the rules of society, within your own regulations etc. That is truly what creativity is all about. Doing the seemingly impossible.

As some money gurus say: Think about yourself as paralyzed/handicapped. What then? If you could not move any other part but your head, your mouth and other facial functions, then what would you do to accomplish whatever you dreamt off? Impossible is a reasonable thought, but it is the wrong thought in this exercise. Just because you are living a handicapped life, or a severely limited life (in terms of resources etc) doesn’t mean you are off the hook. It just means you need to be much more creative and resourceful. Ok? Go ahead, conquer and divide. And please, people, comment. I don’t bite. How can I be of service if I do not get any feedback from you? If I can help you see the world from a slightly new point of view, then why not use it? Until next time…

It is simply this: line them up (like investment bankers sell companies by lining up bidders) and ask them “why?”. Why should you choose them as your next CEO or COO? Let them sell themselves to you, never the other way around as is usually done.

According to Welch you can never, and should never, be the one who presents to the employee prospects why they should join you. Why you are the best on the block. It will bite you in the ass sooner or later. Because they will see you as a weak manager. Only weak people beg. Strong people demand (or create criterias for others to follow at least).

This goes hand in hand with what I have written about customer sales. Set the price, set the stage and let the customer qualify to do business with you. You can help them along with loan credits etc (only as long as they are credit worthy of course), but never sell out (lowering prices etc). Never act weak. Jack Welch has more credit to his name than me. He is, after all, one of the greatest CEO’s in the history of the business world. If you don’t believe me, believe him.

As you can see, more or less all the information I present here, on this blog, is what the richest guys are already doing in practice (and have been doing for centuries and will continue doing for centuries). They use disqualification methods to build negotiable strength. If you are not in negotiable strength (no matter what the subject. It could be love, sex etc as well as money) then you are toast. Then you will be the dog. You will be the one everyone spanks. To be a winner requires stopping being a follower and a wimp.

Jack Welch also brought up another thing that is also in line with the investment banker reference above. He said: always have a succession strategy. Which basicly means: Have a lot of other CEO’s on stand-by if you need to remove the CEO you have (someday the CEO you have will start to have an ego-trip. They all do. That is the day you bring in the next winner).

Jack Welch mentioned one interesting thing in the interview regarding why companies pay such hugh severance packages (golden parachutes) to CEO’s. It was because of a very bad succession strategy. If you have no other CEO star to put in place, then you have a very bad negotiable position. I know you can all agree with that. So line those stars up and let one of them shine until the ego-trip becomes too big and then fire that ass and bring in the next star on the scene. That will keep your CEO’s and COO’s humble enough, longer. So that you don’t have to change the position all too often. You want to instill that fear in the top dogs. Never let yourself be hostage to the managers.

Why? Well, you know why. Why should you do business with mediocre companies when you could seemingly well do business with the best of companies? Why go through the hassle of doing business with mediocre companies ( even though they might be the cheapest in town) when you could buy yourself less headache by cooperating with the leading sources?

Tim Ferriss looks at it more or less the same way. He says: choose the best guy on any subject. Anthony Robbins says the same thing. He says: Go and read the leading book on a subject and you will become an expert in that field in a lot less time than if you where to read every second rate book. I totally agree. Go to the leading source and cut away the rest. Focus on quality.

If you want to become the best marathon runner in the world, then go and learn from the world champion in marathon. Find the marathon runner who’s record has never been broken (or find the one who holds the current world record in marathon). It is common sense (and as you probably know, common sense is seldom common).

So if you want to build a perfect company: find the world leading suppliers of whatever you need and the pay the price (it will be high, but you sure will get results).

As I mentioned above: if you start from scratch on everything (cash, credit and reputation), then build up your strength first and then quickly advance so as to remove all the headaches. Believe me: if you want to sell a company for a high sticker price, having great suppliers and a well oiled machine is a preferred thing. Even if you do not want to sell your company it is preferably better to have the best guys in the world take care of you than having to manage mediocre suppliers who always seem to need you to do the work for them, no?

Remember: the best company to own is the company that requires close to no input from you in regards to time, energy and money. Your company should be there to support your dreams and your lifestyle (not the other way around). Like a trust fund (remember those trust fund babies). While you are living the luxurius lifestyle on a remote carribean island then the company of yours shall be humming along with the best suppliers of the world.

Your job? Give the suppliers clear directives on what shall be done (this should take no time at all. One email a month should be more than sufficient. Let every supplier you deal with have direct access to a budget account and let your equally as world leading accountant keep track of spending).

Until next time, try it. And remember: your job as the entrepreneur is to act as the chief architect. You are God over your own corporate world. You just need to act as the Creator and let the sharp people do the mechanics.

Many people (I have been one of them for a long time until I changed my own mindset) who start companies act as victims to the suppliers. They say stuff like “well, it sounds great to start a company with a few dollars, but you miss the reality of what stuff really cost to purchase”. The thing is, they are wrong. Horribly wrong. The reason others follow industry norms (or whatever they like to call it) is because they obviously are poor capitalists in the first place.

A good capitalist/entrepreneur knows that you shall sell things for a big price, but purchase all stuff for a crazy low price. A capitalist also know that you shall only purchase quality value from desperate sources. Not the opposite source. Unethical? Well, only you can tell, but that is how you need to think.

That is extreme bootstrapping. The less you have to pay to start something up the less you have to invest. Logical, right? So why do people insist on paying more?

So always start with a total budget. Then list all items you need to have in order for you business to start. Focus on the few quality things you absolutely need to have to start the startup, discard the rest. As the author of Go Big or Go Home said “remove the fluff”. I agree. Remove it. Be cold hearted.

Then you look at your total budget and then you decide what each item on your “need to have” list will cost (the amount you will be willing to pay). Never break the budget.

The sharper you are, the less money you need to have to start your business. The more you do something the better you will be at it. It goes with everything in life. The better you become at something the faster you will do it, the less energy you need to invest and the less money it will cost. Just look at Tim Ferriss, the author behind the four hour work week book. He travels around the world and enjoys a lot of luxury in the process because he is a seasoned veteran of travelling. He knows the tricks of the trade so to speak.

What I want you to do now is: look at your current startup and then look at you projected total budget. Now divide it by 10 and do the same project with that new budget and have the world conform to your budget. It sounds crazy, but you need to think like this. It is not a choice, it is a necessity. Remember what I said above: find the desperate quality sellers and get the stuff you absolutely need at the price you have set as the maximum purchasing price. Think about yourself. Be egoistic .

Today I read about Kevin Rose who founded digg.com. He started a web venture with a top budget of $2000. Other people would have said “no, no. Impossible. It will cost at least $100,000 to launch”. There are so many examples of famous founders who do this all the time. It’s a mindset. Even if you have millions of dollars to invest, avoid it. Invest less and you will reach break even faster and you will not bankrupt your life if all things screw up. You want to minimize monetary risk by doing things as described.

The whole idea is to think like a pauper. Imagine you have no money and you can’t get a job and you can’t receive social grants or anything. It’s you and your imagination that will save you from starvation. How would you go about doing it? You really can start a business with no money. I mean there are cans on the streets right? Collect them and get money for them. Voíla, you are in business. The can collecting entrepreneur. Now save 30% of the money you make from those cans and buy food and other stuff with the remaining 70% (remember to buy from desperate sources so as to stretch every dollar further). Use the 30% to invest in advancement. Invest as you purchase everything else: by stretching every dollar through selective purchase from desperate quality sources.

Take care and do not forget to comment.

To have your startup story posted, just comment on this post. Don’t forget your email adress so I can reach you.

When I email you, you will recieve my email. Just email your story in a Word file format and I will go through it. The most interesting story is published on the blog.

Take care everybody.

The company I am discussing right now is a potential acquisition of an espresso machine resaler/agent. The company sells products in Sweden only, but there may be a future possibility to recieve an exclusive agent agreement for Europe as well.

The interesting thing about this company is that it is a pure turn-around case. It loses money every year. It also has a low solidity level. But the best part about this is:

-it does have approximately $100,000+ in annual revenue.
-It can be had for a song (meaning for 1 dollar in this case).
-It can easily be turned around.

The things to look for when looking to buy a turn-around object is a good and stable revenue base, it shall be very cheap to buy cash wise and it should be obvious from the get-go how you should get rid of debt on the balance sheet. Or at least how to restructure it so the income sheet and the balance sheet itself can look better. The numbers have to work.

Now, my fellow friends I want you to tell me about your own turn-around experience. I am certain some of you have experience from companies losing money. I have plenty by now. Losing money in business is an easy task. It doesn’t require genius. But having a company turn a profit on a regular basis, that requires an ounce, at least, of genius.

In this case they do have a pretty normal and healthy revenue base. But they somehow do not understand how to increase operating margins and there for they do have a problem with profitability. They spend too much money. For me, it is obvious what has to be done in this case. The biggest problem is found in product purchasing costs. They pay too much for the espresso machines. And they, I am certain, receive too little money for the products they actually sell. I even wonder if they have asked their customers what they would actually be willing to pay for these machines if they had a possibility to give input. If they did, they may have been mighty surprised that they would be able to raise the prices and there for increase operating marginal. Who even knows how much they can increase their prices? No one really knows, do they? The same goes with purchasing costs, do they even know how much they can decrease purchasing costs if they started discussing with the manufacturer? In this case it seems like the espresso machine company purchases via middlemen. I say: WHY? Why are you purchasing machines via a middle man? Purchase instead from the source, dumb people. Isn’t that saner or what?

I know: It sounds easy in theory. But it really is easy in practice as well. The hard part is actually doing it. Stop being a wussy and start doing what will save the company. Doing is what will take your company to new heights. Stop being so afraid of people telling you what an idiot you are for doing certain unconventional things. What will save you is being unconventional. That is how you win in business. You have to compete. And competing is being more clever than your opponents. Right? Everything in business relies on simple economical principles. It works just as well in a turn-around project as it does in a startup project. They are the same if you look at the basics.

It always comes down to this:
- Create revenue
- Minimze expense on that revenue
- Hence receive increased operating margins
- Hence receive a higher profitability level.

It works every time. The same logic applies.

Until next Saturday. Send me comments. Show me that this is a blog worthy reading. I know I am a forceful guy, but I still want comments so that I know what you want me to write about. Otherwise, why writing a blog? Also, show people this blog if you think it is worth reading. Show people this blog, ask them to write comments and ask me things. It is for free and there are no dumb questions. Questions that are never asked are dumb. So please, help me, help you. Take care everybody.

And as you may know from previous posts. You can have your own stories posted on this blog as long as it is startup related. Do you want to advertise your own startup project here? Well, then comment on this post and I will write to your email address and then we can discuss price and I can show you how the format will be. Very simple and fast. You pay what you think it is worth to be shown on this blog and I will agree or disagree to that price. Doesn’t that sound like a fair deal?

Many entrepreneurs treat their company finances as they do their own private finances. Badly that is. That is why so many company startups fail.

Some startups don’t earn any revenue so they, obviously fail because they burn money they don’t have. Expecting to earn some revenue in the future to make up for what happens today. Usually no revenue comes in and they are doomed. Bad news as you can imagine. But then you have startups that earn revenue like no one else. But still they go bankrupt. Why? See above for the answer: Bad allocation plan.

Say you earn $10,000 in revenue year one. What does your allocation technique look like? Do you even have any kind of allocation strategy? You better think about this, because bad money management is the curse of many fine companies. In Sweden we have SAAB, in the US we have GM for example. Fine companies. They earn a lot of revenue. So much revenue in fact it would make every normal human being salivate. But still they can’t make ends meet. Reason: bad money management. They spend more than they bring in and what they bring in is not properly re-invested etc.

Let me show you one way I allocate money in a company:

-Revenue (total): $10,000
-Investment account (30% of total revenue): $3000
-Salaries (total allocation): $2500
-Purchase of products/services: $1000 (I want to earn at least $10 for every dollar invested. I need the operating marginal)
-Other relevant costs: $3500

The investment account is used to purchase passive incomes and capital gains. A way of hedging the core business. The sum that is allocated to salaries will not be breached. I will have to use the product/services budget if I need additional help. There has to be rules for how much you can spend on hiring people. Hiring people and having salaries to pay is usually one of the biggest costs in a business. And it is not that easy to get rid of salaried people if you have too. You businesspeople know what I mean. Unless you say “to hell with the employment agreement”. Usually a stupid idea to begin with.

This is just a way of pointing at how you can stay in business when you have succeeded at getting paying customers. Earning money is no rocket science, but staying in the game can be. It takes strict rules. Strict money management policy´s that shall be followed no matter what happens.

You could operate a physical café, but taking online orders. You could then install a machine that verifies the orders instead of a human being. Sure it may not be that cozy (some people think that the human presence is very important. But there are hundreds of hundreds of ways you can create that cozy feeling without a human being working in the café), but it sure is effective and it will cost you less money to operate the café. This means you will have a strong competitive edge.

Online is primairly good because of the cost cutting possibilities and because of all the automatic functions you can implement. Many of those functions can reduce necessary manpower. Some see this (firing people) as horrible and evil, but you are there to make money foremost for you and your family and it’s your neck on the line. It is in your best interest to be clever and business minded.

If you take it one step further, you could make it possible for your café visitors to earn cash referring their friends (referal marketing). This way you could spend almost nothing on marketing. That’s more profit in your pocket. Your café would be almost like a big vending machine operation at once. How cool is that:)? From a big horrible and hard operation (it is always hard operating with a lot of people involved. Please reduce manpower if possible. Your life will be easier and you will keep more money) to a simple turn-key operation that is easily scaleable. And scaleability is what you should look for, always.

Do you see why both online and offline is better than one or the other by themselfs? You need to think “both”. How can you have both? After all: People do want to meet for a coffee. It would be hard or rather boring sitting in different places, in front of the computer, drinking coffee with an old friend. I think so at least. The whole idea with certain operations is the hands-on, real-time experience. Seeing people live, not on the computer screen. No:)? So combining that with the artificial online world is perfect business.

The poorest way of thinking is when you think you need to sacrifice one for the other. Sure you need to sacrifice a little at least, but not all. You sacrifice a little here and give it to this side here. See?
Having both is the essence of creative thoughts. It requires you to be clever.

NOTE: We are back on track. A new year has arrived and I wish you all a very good year and a prosperous year:). I hope you had a good Christmas Eve and New Years Eve. This year I will be trying harder assembling a team. If you are interested in being co-owner of this blog and share in the future profits then comment on this blog and I will email you a link where you can go to register as either my webmaster co-owner or viral marketing expert co-owner. See you soon.