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Profits from Your Passion

You have a dream. And that dream involves more than just following others, punching a time clock, or showing up at a cubicle on a schedule created by someone else. Even if you’re doing that now to earn a living, you know that your long-term goals involve satisfying a much more important need: following your passions, talents, skills, and desires. Your dream is to someday—maybe today—start and run your own business.

You have a passion. Perhaps you’re a snowboarder and spend all spring, summer, and fall waiting for that glorious moment when you can buckle your board on your boots and really begin living. Or you’re a craftsperson devoted to designing and building custom cabinetry from recycled or sustainable sources. Or maybe you’re an avid fashion designer with an eye for predicting which styles are going to become the Next Big Thing. You want to make your avocation your vocation. But you’re not sure how to begin.

You have training and talent. You’re a highly skilled pastry chef. Or you’ve just graduated from engineering school with top honors. You’re good at what you do, but that won’t be enough out there in the marketplace. Most professions require you to do more than simply practice your skill or craft well. You need business skills to back up your flair for design, your knack for software programming, or your talent as a musician. But how do you acquire those skills?

You want more than what conventional employment options will provide. You may have—or be planning to start—a family, and a nine-to-five job isn’t compatible with your parenting ideals. Or you’re a free spirit who would feel hampered by a traditional employer-employee relationship. Or you want to earn the kind of money that just wouldn’t be possible on a salary, perhaps even become truly wealthy. Yet when you search the Internet job boards, all you see are ads for the usual. You want to take control of your own destiny. But how do you proceed?

You want to move your business forward, but you’re being held back by your lack of business knowledge. Or you may have jumped feet first into a business before realizing you don’t quite have all the know-how you need to make a go of it. Whether you’re one of the scores of freelance technical writers struggling to differentiate and market themselves to potential clients, or a software engineer with a brilliant idea but no clue how to turn that into an actual business, you need to acquire the business skills to support your vision.

In all these cases, you have a passion—and a talent—for something that would place you beyond the boundaries of most traditional employment situations. And you are either dreaming of being able to turn that passion into a sustainable living, or have already started down that path. Most importantly, you want to take control of your own destiny. This book is designed to help.

Think Like an Entrepreneur

What you are dreaming about is called entrepreneurship. The origin of the word is entreprendre, French for “to undertake.” Notice that this word emphasizes an attempt to act, and not the outcome of that action: you undertake something, and the implication is that what matters is that you have started on a journey and accepted that it’s an open-ended one. Someone who needs an extremely high level of security might be challenged by an entrepreneurial lifestyle, yet a lot of people who don’t think of themselves as embracing risk become entrepreneurs. The key is that although a successful entrepreneur takes risks, those risks are measured. Though entrepreneurs frequently go out on limbs, the ones that make it generally test that limb first to make sure it has a good chance of bearing their weight.

Entrepreneurship can be applied to virtually any field or profession. No matter what products and services are currently on the market in your area of expertise, there are always opportunities to improve them and to better serve the customers who buy them. That said, if you’re a true entrepreneur, you likely possess the following key characteristics:

■ You are driven to succeed. You’re so motivated to achieve your goals that you are prepared to overcome obstacles that would likely discourage or stop others.

■ You are a self-starter and go-getter. Rather than waiting for someone to issue instructions, you take initiative. And you can be innovative—you constantly think “out of the box” when attempting to meet challenges.

■ You routinely see opportunities where others see problems. Rather than feeling defeated when you encounter roadblocks to your goals, you feel energized. Challenges spur rather than deter you.

■ You take control of your own destiny and bear responsibility for your own actions. The buck truly stops with you when it comes to dealing with the results—both positive and negative—of decisions you make or actions you take.

■ You are willing to give up the security blanket of corporate life. You don’t mind working without the safety net of a regular paycheck or the benefits and social structure that an established employer provides.

■ You thrive on change. In the entrepreneurial world, change is a given. But rather than fearing it, you welcome it and enjoy the excitement of the ride.

■ You understand the importance of making a profit. You know that all of your best intentions and actions are for naught if you aren’t actually making a profit—that is, bringing in more money by selling a product or service than it costs you to provide it.

The Economic Importance of Entrepreneurship

Entrepreneurs make enormous economic contributions to societies around the globe. In the U.S., for example, according to the Small Business Administration (SBA), small businesses represent 99.7 percent of all employer firms, employ half of all private-sector employees, and are responsible for more than 45 percent of the total private payroll. Moreover, they generate between 60 percent and 80 percent of new jobs annually. In terms of innovation, they also lead the pack: small firms produce 13 times more patents per employee than large businesses, and their patents are twice as likely to be among the top 1 percent cited by other inventors submitting new patents.

Most importantly, entrepreneurship is a road to financial freedom. The U.S. Federal Reserve reports that equity in unincorporated businesses made up the second largest share of total household wealth, second only to home equity.

CASE STUDY

Passionate and Powerful: Surf Divas Make Waves in Southern California

Twins Isabelle, “Izzy,” and Caroline, “Coco,” Tihanyi always knew they’d start a business together one day. The only question was, which one?

One thing was certain: the business would have to revolve around something the women absolutely love d. “We believe that you have to be passionate about what you do if you want to succeed,” says Coco. Agrees Izzy, “Going into business without that passion is like getting married without being in love. It just won’t work in the long run.”

In the end, founding Surf Diva, one of the world’s most successful surf schools for women—and one of the few women-owned businesses in the male-dominated surf industry—turned out to be the most natural decision in the world.

Having grown up by the ocean in San Diego, both women gravitated toward the outdoors and sports in general and the beach and surfing in particular. Izzy was a championship surfer who put herself through college at the University of California, San Diego (UCSD), teaching others how to surf. Coco, after earning her degree in communications, also at UCSD, was employee No. 4 at Reef Sandals, a local startup that made surfers’ shoes which is now a globally recognized entrepreneurial success story. And it was a warm May evening in 1996 when the sisters sat down to have a glass of wine and found themselves talking about their dreams. “Izzy said she wanted more girlfriends to surf with. I said I wanted to design clothes and do business development,” recalls Coco. “We thought we saw an unmet need in the local surfing industry. We got all fired up and said, ‘Let’s give it a try!’”

The fact that Izzy only had $324 to her name to begin with didn’t deter her one iota. They were determined from the beginning to be self-sustaining and not take outside money, and today they still plow all excess cash back into the business. “We both worked other jobs for almost three years before we were able to quit and do Surf Diva full time,” says Coco. “We felt it was very important not to go into debt.”

With their comp any still privately held, the women don’t divulge their annual revenues, but at last count they had between 50 and 70 employees—more in the summer, due to the seasonal nature of the sport. The Surf Diva Costa Rica Surf Adventure, which the sisters founded in 2004, takes women and families on a high-end all-inclusive surfing vacation in Costa Rica, and has become one of the most popular women’s adventure destinations in the country. In 2007 they acquired the La Jolla Surf Camp for Kids, in La Jolla, Calif., and the Australian Surf Academy, a co-ed surfing school for teenagers. “We believe in always trying new things,” says Coco. “That’s part of the fun of having your own business.”

Both women urge would-be entrepreneurs to follow their dreams—but also to not be shy about paying their dues in more traditional ways. “We didn’t jump into this when we were 19 years old,” says Coco. “We did our internships when we were students, got our degrees, worked for other people, and climbed the business ladder before we felt the time was right.” Agrees Izzy, “you should never think of a job as just a job. Think of it as an education that comes with a paycheck. There’s so much you can learn from others, even when you’re just making the coffee.”

Sooner or Later, Everyone Is an Entrepreneur

Entrepreneurial endeavors are nothing new. Yet we seem to be entering a golden age of entrepreneurship. Although much attention is paid to technology-based startups—particularly those related to the Internet—you can find entrepreneurial behavior throughout all industries and geographic locations around the world. There are a variety of reasons for this:

■ No more “company men” (or women). The days when people assumed they would be working for one company all their lives are long gone. The reasons for this are many. For starters, a large number of businesses today run extraordinarily “lean.” Rather than hiring full-time permanent employees, many businesses are opting for part-time personnel or temporary or contract workers. And those that do hire full-time workers find that the average tenure of an employee is much shorter than it used to be. This is likely exacerbated by the fact that lifelong full employment is no longer a given. The average person born in the later years of the Baby Boom has held 10.5 jobs from age 18 to age 40, according to the Bureau of Labor Statistics of the U.S. Department of Labor. Indeed, many people have two or even three “careers” over the course of their lifetimes as their interests change and evolve.

Technology is also dramatically accelerating the rate at which markets—and therefore new businesses—are created or evolve. First of all, businesses that once required a huge upfront investment in infrastructure, equipment, and staff can now do a lot more for less. What can’t be automated in house can easily be outsourced to partners who are seamlessly connected electronically so that they become part of the “virtual” team. And then there are the businesses that have sprung up to provide technology solutions to entrepreneurs. Web design firms, search marketing specialists, third-party IT services providers, and all sorts of consultants represent just a few of the new types of business opportunities that have emerged.

■ Lifestyle drives career choices. Increasingly, surveys asking about job satisfaction bump up against the same fact: people are willing to forgo larger salaries to meet their ideal lifestyle goals. These generally involve more flexibility in work hours, less time spent commuting, and more time for family, hobbies, exercise, or interests other than those that actually generate income. Indeed, possessing a dream of a lifestyle that couldn’t be satisfied by a traditional job is one of the key reasons that people choose the entrepreneurial path.

■ Financial considerations. Many people simply don’t feel they can meet their financial goals by working for an hourly wage—or even a professional-level salary. The publicity given to young multi-millionaire founders and early employees of high-tech startups has fueled many people’s dreams. No surprise that a lot of people feel that they can achieve their financial goals more fully and easily if they’re self-employed—or employ others.

business BUZZ

words

“entrepreneur”

According to the Miriam-Webster Dictionary, an entrepreneur is one who organizes, manages, and assumes the risks of a business or enterprise. In his book Venture Capital Investor, David Gladstone says that one of the key characteristics of an entrepreneur is a desire for independence and autonomy. Furthermore, entrepreneurs would rather manage than be managed. Entrepreneurship, therefore, has much to do with a need for personal, as well as professional, control.

Does Failure Mean You’ve Failed?

One of the key defining factors for successful entrepreneurs is the ability—or rather, determination—to not view failure as failure. Rather than taking setbacks personally or becoming discouraged by them, successful entrepreneurs seize them as an opportunity to learn—and to apply that lesson to their next attempt. Indeed, many venture capitalists and other investors in entrepreneurial ventures won’t provide funds to anyone who hasn’t had at least one failed business.

There are any number of people who eventually made it big who tried and failed first. More than a decade before releasing its iPhone to huge success, Apple introduced an early personal digital assistant (PDA), the Newton, which died a quick death. The founder of FedEx, Frederick W. Smith, got a “C” on a business paper outlining his idea when he submitted it to a professor at Yale. The now-ubiquitous Post-its failed all the market tests that 3M routinely uses to determine whether to release a product to market. Scratch the surface of most successful entrepreneurs, and you’ll find at least one significant “failure” that they’ve used to gain valuable experience.

The Advantages of Entrepreneurship

As many books and motivational speakers will tell you, there are numerous advantages to the entrepreneurial life. These advantages fall into three general categories: personal, professional, and financial.

■ Personal benefits. Much of the payback people get from their entrepreneurial ventures is personal. Having the independence and flexibility to make time for family, hobbies, or other activities is a huge draw to the entrepreneurial life. It also provides an opportunity to do something you have a passion for than spend the majority of your waking hours performing tasks you have little real interest in. And, increasingly, location independence is a huge benefit: many people want to live in a particular geographic area—say, close to the mountains or by the ocean—or perhaps in a place where there aren’t an abundance of jobs. Avoiding long commutes is a growing priority, as is the ability to work virtually from anyplace to enable a more footloose lifestyle.

■ Professional benefits. You will also reap extensive professional benefits from your entrepreneurial endeavors. For starters, you can advance more rapidly than you would in a traditional office setting. You won’t be limited by what your boss thinks. You won’t be held back because you lack experience or seniority. You will succeed or fail on your own merits.

You’ll also be able to fully leverage your creativity and ingenuity. Rather than simply carrying out other people’s ideas or implementing their visions, you reap the professional benefits of any exciting insights or “ahas” you get. You can be aggressively proactive at pursuing exciting new ideas for products and/or services, and you can pave a path or create a legacy for those who come after you.

Finally, you will thrive due to the sheer adrenaline factor. Entrepreneurs are challenged and surprised every day, and because of this they grow at a much faster rate professionally than their counterparts in traditional employment situations. And because you’re the boss, you can invest in further education and training as you want or need it.

■ Financial benefits. The financial benefits of running your own firm can be substantial. Research performed by Thomas Stanley and William Danko for their best-selling book The Millionaire Next Door found that self-employed businesspersons were four times more likely to be millionaires than those in traditional employer-employee roles. Your earning potential is theoretically unlimited—you can go as far as your business idea will take you. You also benefit directly from your success. The fruits of your labors belong to you. You can take as much or as little out of your business as you choose. And you are untethered from the economic ups and downs—and whims—of a traditional employer. You make, and reap, the financial rewards of your own hard work.

The Challenges of Entrepreneurship

Naturally, entrepreneurship isn’t without its challenges—and risks. There are a number of things you will inevitably have to confront and surmount on your journey. Among other challenges, you will need to find ways to manage the following realities:

■ Your income may fluctuate considerably. You won’t have the comfort of that steady paycheck. What you sell to customers or bill clients is what you get. You will inevitably experience dry spells or have times when your resources are stretched. And you may need to look beyond your own means for the cash to grow your business or even to keep your doors open if times get tough.

■ You’ll need to be self-sufficient. You must be a disciplined self-starter. And depending on the type of business you start, your goals, or the speed at which you grow, you may be working on your own most of the time. You won’t have the traditional “network” of coworkers to turn to for support or assistance. If your computer breaks down, you’ll have to figure out how to get it up and running again—either yourself or by hiring outside help. You’ll either do your own books or find a good accountant. And you won’t have the built-in social structure of the traditional workplace.

■ You’ll work hard. This is a given of the entrepreneurial life: self-employed individuals tend to work longer hours than the typical employee. You don’t get paid for the time you’re not working. This means that you will lose revenue for each day you are sick and for vacation days. Moreover, it may take time to get adequately paid for the work you actually do; many entrepreneurs have to continue doing their “day” jobs until their entrepreneurial ventures are established.

■ You must be a fast learner. Unless you are a very unusual person, you will be largely jumping into the great unknown when you start your business. You may have a deep understanding of your professional field—nursing or engineering or culinary arts—yet it’s a given that you will be confronted hourly with unanticipated challenges. Your ability to learn the ropes and pick up on things quickly will be one of the prime determinants of your success.

■ You’ll need benefits. Even employees of the largest companies are not being provided with the same level of insurance and retirement benefits as in the past. When you’re starting your own business, you have the same kind of decisions to make as the largest Fortune 100 companies: What kind of health benefits will you be able to afford—both for yourself and for any others you employ? Which insurance company (or companies) will provide them? How will you fund these benefits? Likewise for retirement savings—both your own and for any employees. Will you contribute to a 401K? What you decide will depend upon your personal as well as business priorities and resources.

■ You must cope with constant change. The one constant you face is change. And just when you think you have everything under control, something new will come along—count on it. You will need to develop your capacity for dealing with the unexpected.

Traditional to Entrepreneurial

Just about any skill that has historically been harnessed to fulfill a traditional job can be turned into an entrepreneurial venture. Likewise, people are increasingly leveraging their hobbies to build successful businesses. Here are some examples of how traditional jobs and skills can be applied to entrepreneurial goals.

TRADITIONAL JOB/HOBBY	ENTREPRENEURIAL APPLICATION
Skilled cook/baker	Open a restaurant, bakery, catering company; start a line of specialty food products
Associate in law firm	Open your own legal practice; contract your services to other law firms
clotheshorse	Open a retail clothing store; design clothes; start a fashion company
Engineer in large manufacturing company	Found a startup based on a new idea in your field; become a consultant to manufacturing companies
Sports enthusiast	Develop new equipment; open sporting goods store; offer personal training services; start a sports camp
Animal lover	Open a grooming business; offer pet training services; open a doggie daycare facility; start a dog walking service