Watching Out For Bad Advisors
Recessions always seem to result in an increase in the number of people starting businesses. This is a good thing. At the same time, the internet seems to have exploded with the number of people claiming to be experts at Entrepreneur advising or consulting. This article has been written as a result of the growing issue of entrepreneurs being taken advantage of by unqualified or outright fraudulent advisors and consultants. This is the first in a series of articles that addresses how Entrepreneurs can lower their risks and costs yet maximize free resources and information such as how to achieve Search Engine Optimization (SEO) or marketing without paying a penny.
- Companies, services, scams and unqualified consultants or advisors
- What information is free
- When you should be paying for a qualified advisor for and how to distinguish between fluff and true experience
Companies, Services, Scams and Unqualified Consultants or Advisors
Scam artist, unqualified advisors and marketing predators often offer quick income tips, promises of internet traffic, fund raising guarantees, or business and marketing plans. Others are trying to sell you information through webinars, eBooks, seminars or classrooms that can all be found online for free. It is critical that if you seek advice you speak with someone who has done all functions of a start up many times and not just a piece of it. If you wouldn’t ask a store clerk how to handle engineering issues then why would you even listen to a social marketer tell you how to set up your business? More on identifying pretenders will be discussed in an upcoming article.
Being “An Entrepreneur” is a mindset. The ability of someone to sell a product, good or service does not make them an entrepreneur or even a qualified advisor, the ability to sell makes them a good salesperson. An Entrepreneur recognizes Opportunity, develops a plan to capitalize on the opportunity and implements that plan to business fruition.
When starting or running a business an entrepreneurs have two major obstacles to overcome. The first issue is of course is “How to Do” or the mechanics of starting a business. Information, advice and resources describing the mechanics of starting or running a business are available online at a number of private and government websites or in person at a local center such as the Small Business Development Center, SCORE or other Micro-Enterprise Development Centers for FREE. You do not need to pay a penny for this guidance. To make use of these resources it is always best to think your idea through first before you make any contact. No one is going to think or should be thinking through your idea for you!
Checklist for Thinking Through Your Idea : Who, What, Why, Where, How and When
- Identifying what business you will be in?
- Why will you be in that business?
- What is your market?
- How large is the market?
- Who are your competitors?
- Why will consumers buy from you instead of someone else?
- How will you go after your customers (developing a market plan)?
- Who is going to do the work, will you have a team and are you ready emotionally and financially?
- Where will your business be (physical location, internet based, home based)?
- How will you fund your venture?
- When is your business going to start, and will it be part-time or full time
- What is your passion?
- What resources do you need to go forward?
- Where will you look for resources?
- Where is your head at?
Answering the preceding questions before you talk to someone will help you because you now have the basic building blocks for a business plan and can explain your idea to your closest friends and advisors in a more organized and concise manner.
For now avoid at this stage:
- Having someone else to do your business plan for you. Business plans come in all shapes and sizes. Some are used only as a guideline of actionable items and others are used to raise capital. You do not need a business plan in order to start a company. You may need one in combination with a “Road Show” presentation and other items in order to raise capital.
- Paying for the following types services (marketing, SEO optimization, accounting software, promotional items (other than business cards), classes on how to set up a website or blog, fund raising, lead generation, books, seminars, paid networking sites, etc.). I repeat – Marketing and other SEO tips and tools are available for FREE.
1) Because your first monies should go to the legal and physical development of your good or services such as registering the business, obtaining the proper licenses, registering a domain, Intellectual Property (IP) if needed, selection and purchase of a web format. Note. Many web page designs are free, others have minimal costs involved. There are countless tools and plug-ins available for free or minimal amounts that can guide you through a website setup.
2) “Cash is King”, your ability to manage early stage cash goes a long way toward your credibility if raising money for growth or development.
What you might be paying for at this stage is:
- Professional expertise on the type of business to set up (Corporation, Sub-Chapter S, Limited Partnership, Sole Proprietor)
- IP fees – If your business will have IP – get professional help by a firm that can provide references. No references = no check. Don’t fall for the excuse that they do not disclose client information.
- Market research, competitive research. This is important to understand who you competitors are and why they might buy from you. Market research can be time consuming however it is critical whether you are a home based business, service company or have a new product
- Assistance in developing cash flow, capital requirements, spreadsheets, budgets etc., if you are not very good with numbers.
- Engineering assistance for technical development
- A person who can review your plans. Plan review is very important as the excitement of a new idea often leads to oversight of key questions. Make sure the person you speak with has not only the experience but also the education to be able to provide you with the latest knowledge base and business development tools.
Be very cautious of any contact that makes promises of success. No one can guarantee success of fund raising, market share, internet traffic, sales, store traffic etc. During the planning stages you might pay for tasks but not for future promises.
The second major obstacle an Entrepreneur faces is being ready emotionally for the journey. Read “Riding The Emotional Rollercoaster of a New Venture” to understand the emotional rollercoaster that is heading your direction. Underestimating the impact a struggling new venture may have on your lifestyle, family or mental health can lead to a business failure almost as fast as your cash flow drying up. If you are willing to pay for this service there are some questions one should ask yourself and them before engaging a consultant, life coach or advisor:
- Have they every failed?
- Why did they fail?
- What did they learn?
- How did cash flow affect your lifestyle
- How do manage the top and bottom of the roller coaster?
- Are you willing to tell me what I need to hear and not what I want to hear?
- Will you be there when I fall?
Too often, life coaches, entrepreneur advisors and consultants have never experienced the hardships of starting and running a business. Far too many “experts” claim 1-3 successful ventures and a book but have never experienced the hunger necessary to coach and develop an entrepreneur. Don’t let your enthusiasm for starting a new micro-enterprise or new venture cloud your judgment.