Deciding to start a business is a lot like bungee jumping. You need to leap off the cliff and have faith that the cord will hold you. Entrepreneurship and risk taking come hand in hand – to succeed you must be innovative and take chances others have not dared to take before.

Bill Gates is one of the most successful entrepreneurs of all time – but when he started off he was not sure that he was going to succeed. According to Gates:

“We bet the company on Windows. It was a risk that’s paid off immensely. In retrospect, committing to the graphics interface seems so obvious that now it’s hard to keep a straight face.”

Hindsight is always 20/20 but it takes a true entrepreneur to see an opportunity and go for it. Having said that, here are some ways to make the leap a little less scary.

1) Start off part time

It is hard to build a real business working only part time but it can be a great way to test out an idea to see if it works before you go full force into it. Michael Dell started his company while at university and when he saw the demand was overwhelming for his computers he quit to start his business. Get going in the evenings and weekends to test out your concept and see if customers are willing to bite before committing yourself.

2) Build around a customer

The best way to start a business is to find a customer with a problem and offer them a solution. Most entrepreneurs, however, build a product around their passions, invest a lot of time and energy, and never really have a business plan or a customer to sell to. Just because you love your product it does not mean that customers will respond with their wallets. Find someone who is willing to pay you for what you have to offer and build your company around them. This way you ensure that money is coming in from day one.

3) Stay cash flow positive

One of the main reasons why new business owners shut down operations is they run out of cash. They spend too much developing features that their customers do not care about and on marketing initiatives that do not pan out. When you start a business try to start small and get some immediate revenue coming in. Think big but act small and make your mistakes without using up a lot of money. Find a low cost way to get started in your industry, bring in some initial paying customers, and then expand your spending once you have some money coming in. A good example is to start by offering a service first before deciding to create and market a product which can be more costly but have a higher return. It may mean sacrificing progress in the early days but it insures that you are still around in the long run to execute your big vision.
Evan Carmichael

The Blogger’s Choice Awards is compiling a list of the top blogs that are having an influence on the blogosphere. The winners are determined by blog readers when they vote for their favorite blogs. To make it easier to vote for our blog we have updated the badges so they take you right to the voting page.

So far we have been nominated under two categories – Best Business Blog and Best Marketing Blog. We have received 8 and 10 votes for the two categories respectively. This puts us on the 5th page out of 75 for the Marketing section. Your votes continue to help us showcase young entrepreneurship and we appreciate your support!

Thank you again to Jenluv who was the first person to nominate our blog! Another special thanks goes to Ralphdoeslogos who recently nominated us for both categories.

If you vote for us, please leave a comment and let me know so we can show off your website in an upcoming post – please make sure to include your website if you would like to get mentioned.

Evan Carmichael

To celebrate hitting the century mark in RSS subscribers I wanted to share some of the posts that helped get us here. After 173 posts, here is a list of some of the ones which have sparked conversation and interest amongst our readers.

15 Comments

• Is Google’s New Algorithm Update Impacting Your Site?

13 Comments

• A Powerful Way To Get Online Rankings: Sitemaps

8 Comments

• Is Your Entrepreneurial Peak Age 26?
• How To Make Yourself Look Big

7 Comments

• Writing Press Releases For Your Business – Part 1
  
• How To Get More Done In Your Day
• Ways To Bootstrap Your Business
• Blog Update – March Re-Launch!

6 Comments

• Do You Have A Million Dollar Idea?
• How To Make Money Online
• Modeling Masters – Ray Kroc – McDonald’s

5 Comments

• Should You Use PPC Or SEO – Part 2
• 4 Tips To Choosing A Business Name
• You Need More Than An Idea
• Can colleges and universities “teach” entrepreneurship?

4 Comments

• Entrepreneurship Is About Survival
• Is Facebook A Viable Way To Promote Your Business?
• Are North American Entrepreneurs Too Cocky?
• Entrepreneur Profile – Johnny Cupcakes
• Get Student Interns
• Review Our Blog – #7 – Josh Houghton
• Apprentice Winner Funds Young Startups
• An Intro To Google Filters – #1 Google Sandbox
• Young Entrepreneur Profile – Kailen’s Candy Catering
• Blogger’s Choice Awards
• Review Our Blog – #4 – Get Noticed First

If you are new to the blog then some of these posts will be great reads for you while if you are a long time reader you can benefit from going over them again! With the top posts being SEO related I will continue to make sure to add content on how to improve your website rankings as well as other useful tips to help you grow your business.

I am looking forward to reaching 200 next!

Evan Carmichael

I logged in today to see that we had reached 101 regular subscribers through our Feedburner RSS feed. Thank you for your continued support!

Tomorrow I will take a look at some of our most popular posts that helped build up our readership. This will help me know which topics to focus on going forward as well as give those of you who are bloggers some idea of what are popular topics to blog about. In the meantime I wanted to break down how people are using our feed. Our top sources of subscribers are

• Google FeedFetcher – 39 subscribers
• FeedBurner Email Subscriptions – 12 subscribers
• Netvibes – 12 subscribers
• Firefox Live Bookmarks – 11 subscribers
• Bloglines – 7 subscribers
• My Yahoo – 3 subscribers
• Other – 17 subscribers

The RSS feed has been up since the beginning but the email option is a relatively new addition. I am pleased to see that it has already moved to the number two spot with 12 subscribers. If you have not already given your readers to subscribe to your blog by email, get it going tonight! It is a quick section of code that FeedBurner gives you for free.

I used to use My Yahoo to manage my RSS feeds but have more recently moved to PageFlakes. I would be interested in hearing how you are using some of the other programs to keep track of and manage your RSS feeds!

Thank you again for your support! I will continue to write posts to help young entrepreneurs launch and grow successful businesses!

Evan Carmichael

The dream of most entrepreneurs is to build a company and then sell it for a huge profit to a strategic buyer. We read about the YouTubes of the world and other acquisitions that lead many people to think they can do the same. So how do you set up your business for that strategic sale?

1) Start with the end in mind – show some profits

Most businesses use smart accounting practices to reduce their profitability. By doing so you pay less taxes but you also can hurt the price tag you get for your business. Buyers typically will look at the past three years of financial data, most important of all is your bottom line, so you need to show them that you are making solid profits. You may pay more taxes but it will pay off in the long run with a higher valuation.

2) Know when to get out

Industries go through cycles. There are booms and busts and you need to time them well to maximize how much you can charge when selling your company. You cannot always sell when you want to because the demand will not be there to justify selling. For example, if you had an online business and tried to sell it after the dot com crash you would not have gotten a lot of bidders eager to buy you out. You can never perfectly predict the market but a good indication is when big companies who are normally not in your industry start making big investments. For my first company, a biotech software business, we knew the market was hitting its boom when a venture capital backed company raised $800 million US to acquire businesses and enter our industry. Unless we wanted to wait another 7 to 10 years for the next big boom, it was time to get out.

3) The perfect buyer is likely not be in your industry

The best valuations usually come when someone has a burning desire to own what you have (a strategic buyer). Strategic buyers typically will look at your business, see how long it would take to get to your level of technology and market penetration, and then make a financial decision. If it would take them one year, for example, to get to where you are at now, how much money and opportunity lost would it cost them to do it themselves? These strategic buyers are usually either companies in your industry who need an edge (ie you do something that compliments their offering very well) but usually they come from outside your industry. The perfect buyers to target are companies which are cash rich, have begun making acquisitions in related industries, and have made statements about expanding their markets. You can look at a company’s acquisition history and what their executives are saying in their annual reports and interviews. Get on this boat early because they usually will only make one acquisition per market segment. They are either going to buy you or your direct competitor.

4) Be flexible

Deals often fall apart because the entrepreneur is too stubborn about the terms of the deal. I am not suggesting that you take it easy and accept the first offer that comes to you. You have spent a lot of time and effort building your business and you deserve a good price. That being said, you should plan out in advance what you are willing to accept and be prepared to be flexible on some of the terms. Besides pricing some of the common areas where deals can fall apart include:

• Owner financing – the company buying you may ask you to finance some of the purchase price. This means that you do not get all of the money right away. You will get a portion up front and the rest financed over a period of time.
• Equity financing – you might get asked to trade some of the sale price in for equity shares of the company that is buying you. An example would be to get 50% in cash right away and 50% in equity of the combined new business. This requires you to take a longer term approach and you will need to feel comfortable with the management team that will be running your business. If their company fails your shares will be worthless.
• Transitioning -  you will probably get asked to stay on board with the new company to help them make the transition and understand how your business works. It could be as little as a few weeks up to a couple of years. Are you willing to work with the new company for two years to help them make the transition?

5) Talk to your advisors

The most important person you need to talk with is your lawyer. She will make sure that all your ducks are lined up properly and that you do not get taken advantage of in the final purchasing agreement. Make sure you do your homework and get a good lawyer who has been through the acquisition process a number of times before. You want a bulldog in your corner. You should also talk with other entrepreneurs who have sold their businesses and ask for their advice. What would they do in your situation? What mistakes should they avoid? If you are being acquired by a company which has bought out other businesses recently, call up the owners of those businesses and ask them about their experiences and advice.

If you have sold your business recently, are going through the process now, or are planning on selling in the future I would love to read your comments!

Evan Carmichael

Most entrepreneurs who start a business will fail. The statistics vary but as many as 80% of people who start a business today will no longer have their company in 5 years. That is a pretty big failure rate.

According to the Body Shop founder, Anita Roddick:

“I started The Body Shop in 1976 simply to create a livelihood for myself and my two daughters, while my husband, Gordon, was trekking across the Americas. I had no training or experience and my only business acumen was Gordon’s advice to take sales of £300 a week. Nobody talks of entrepreneurship as survival, but that’s exactly what it is and what nurtures creative thinking.”

What many new business owners fail to recognize is that entrepreneurship is first about survival, then about building a company. I have seen too many entrepreneurs to count who have grand visions of where they want to go but never even get to first base. They close down shop before they can execute any of their big plans because they run out of money.

If you cannot make enough to pay your basic bills then you will not be around in the long run to fulfill your dream. It takes a lot longer to get a company off the ground that most people think and in the beginning it is all about survival – do whatever you need to do to keep yourself, and your company, going.

This will mean sacrifices. Maybe you have to take a part time job until you have enough money to support yourself. You also might need to take on clients who might not seem “ideal” at first. You can always fire them later on when you have a more solid base of support but money is money and you will need anything you can get your hands on when you are first starting a business.

Think big, keep the grand vision – but act small. Make sure you have enough in the bank so you can survive the rough early days and see your company vision through.

What have you done to keep your company going to make sure you are still around to see the next day?

Evan Carmichael

If you have been a regular reader of this blog, you will have seen one of these badges in the middle column.

These are the Blogger’s choice awards which look at the top blogs for a number of different categories.

Our Young Entrepreneur blog has been nominated for both Best Business Blog and Best Marketing Blog.

We are trying to spread the word about the importance of youth entrepreneurship and would greatly appreciate your support in the Blogger’s choice awards by voting for our blog!

To vote all you have to do is click on one of the banners for the Blogger’s choice awards on the right. Then, at the top right of the page that loads, enter YoungEntrepreneur.com/blog and press submit. From there you can choose a category for our blog and nominate us!

We are trying to get ranked for Best Business Blog and Best Marketing Blog so those would be the categories we would most appreciate your help for!

If you vote for us please comment and let me know so I can showcase your website and link to it on our blog!

Thank you very much in advance!

Evan Carmichael

Here’s a great success story about a young Torontonian entrepreneur.  Sharon Galor, President of Toronto Dance Salsa, is the owner of Canada’s largest salsa dance school.  With over 3,000 students attending salsa classes at her school annually, this young entrepreneur is busy with her thriving business.

What is interesting to note is that Sharon gets all of her business through two main avenues:  referrals and online leads.  She has brought in 3,000 students and has spent a grand total of $0 on marketing. How does she do it?

“Really the secret is Search Engine Optimization.  Create a website that fully markets the key words you are looking to rank for and focus on obtaining quality links for the website and quality content.”

Sharon has also worked on creating an online community through an active discussion forum and two blogs.  This increases the popularity of the website as well creates additional content for the search engines to find.

In just a little over a year, her website has gone from ranking 20th-40^th for Toronto salsa lessons and Toronto salsa classes to being in the top 1-3 spots.  This increase translates to hundreds of additional leads and students and has doubled her student base in a short period.

The moral of the story?  Invest time and energy in creating a high ranking website and reap the benefits of an increased online presence. It goes to show that you do not have to have a product or sell ad space to make money online. An effective online campaign can help support and promote your existing services that are delivered offline.

Evan Carmichael

Last week I discussed the pros and cons of using Pay-Per-Click for your online marketing. Today I wanted to conclude the two-part series by taking a closer look at Search Engine Optimization (SEO) and seeing if it is the right fit for your company.

What Is Search Engine Optimization?

Search Engine Optimization is working on the on-site and off-site factors that help you rank organically in the various search engines. Using Google as an example, it helps you rank on the left side of the page whereas Pay-Per-Click helps you rank on the right side of the page.

Pros of Search Engine Optimization

• Drive More Traffic – More people pay attention to the organic results versus the sponsored results. Ranking at the top of the first page for a search term organically will drive much more traffic than paying to be number one in the sponsored links section.
• Ongoing Cost Minimal - The biggest expense comes at the start with SEO. You have to identify the right keywords, build the content, develop linking partnerships, and submit your site to the search engines. There will always be additional work to create more links and content but the bulk of the cost is at the start and not ongoing like Pay-Per-Click.
• Cheaper In The Long Run - After you do the work to get to number one, you do not have to pay for each click that goes to your website. The almost fixed startup costs can be spread out over all of your organic hits and will usually give a much greater ROI than Pay-Per-Click.
• Click Fraud Not An Issue – If an unqualified lead clicks through to your website and leaves you do not have to pay for it. Similarly, if someone clicks on your website by accident or your competitors click through while doing research on you, your marketing budget does not get pinched like it would under a Pay-Per-Click campaign.

Cons of Search Engine Optimization

• Startup Costs Significant – This is the biggest con of SEO. It can be very expensive to set up at the start, especially if you do not know what you are doing and have to bring in a professional. Expect to pay dearly for the service. If the price is cheap then you likely are not dealing with a true SEO expert. Make sure to check references and examples of successful projects.
• Longer Term Traffic – While PPC can bring you traffic right away, SEO requires a longer term approach. It could take three months before Google even indexes your content pages. It will take even longer to build your links and establish a credible PageRank. Are you willing to wait it out?
• Negative Impact On Web Design – SEO often requires that you change the architecture and layout of your web page. You will need to add more content and improve the keyword frequency of the important words you want to be ranked for. Having a website with a flashy graphical interface may look really cool but it will not help drive traffic to your site through the search engines.

So which is better – PPC or SEO? The answer is: it depends. Review the pros and cons of each to better understand your own situation. Many entrepreneurs often use both campaigns simultaneously and generate results from PPC and SEO.

I would love to hear what your experiences have been with PPC vs. SEO.

Evan Carmichael

I had a conversation today with one of my Mastermind Group members about making money online and thought I would share some of my suggestions. My entrepreneur friend is a recognized authority in his field but he is constantly trading his time for money. He wants to build a business where he can remove himself from the operations and he wanted to pick my brain on how to do it. I gave him the following suggestions to leverage his authority status and make the move online:

1) Write a blog, sell a product

One of the blogs I read on a daily basis is Aaron Wall’s SEOBook. Aaron never fails to disappoint by posting informative, timely, and easy to implement search engine optimization strategies. Since the SEO world is always evolving I appreciate Aaron’s expert and common sense advice. If you read SEOBook you will notice something strange that you do not see on many blogs these days – there are no ads. Aaron provides great information, has established himself as an expert and makes his money by selling his SEO services (still trading time for money). But he also sells his e-book on SEO which will run you $79. Because he has the credibility from the well-written blog, people trust him and it allows Aaron to stand out in a very crowded field of SEO “experts”. The lesson here is simple: write a blog to establish your online credibility and then sell a related product that gives away all the secrets you touch upon in the blog.

2) Turn your services into a product

No matter how you look at it, if you offer a service, you are trading your time for money. You have to be attentive to your customers and if you stop working, you stop getting paid. A great way around this is to videocast your service and charge a subscription fee. A recent example to look at is Salsa Boot Camp. Salsa Boot Camp is a website that was created by San Francisco salsa instructor Evan Margolin. Instead of running many classes which require his physical presence, Margolin records his salsa moves and puts them online. He sells monthly subscriptions and, 4 months after its launch, Margolin has increased his subscription fee from $9 to $37  per month and is making over $20,000 per month. By turning your service into a product you can pre-record your expertise into different segments and sell subscriptions online so you can make money while you sleep.

3) Create great content – and lots of it

The final suggestion I gave him was to generate a lot of great content and sell advertising space. While some bloggers are making 6 figures with their blogs, most are lucky if they get $10 per month from AdSense. It is very difficult to get enough quality content up on your website to make a viable living from it – you need to create critical mass. I learned this two years ago when I made a dramatic change to my website – I was no longer going to be the main writer and I would recruit others to help provide content. Fast forward to today and I now have over 1,000 writers and 25,000 pages of content on my site. My editors review the articles and I am removed from the day-to-day process. My authors benefit from the increased exposure they get on my site and the opportunity to meet my small business readers. There is no way I could have written 25,000 articles myself and it is unlikely that you will generate enough content yourself to make a serious income from your website. Pick a niche that has not been overly exploited, make a great looking website, and recruit experts to write for you so you can build your content base.

The advice gave my Mastermind Group member a few things to think about and I hope has sparked a few thoughts in your mind as well.

Evan Carmichael