The Reluctant Entrepreneur: Turning Dreams into Profits

YOUR INITIAL CHALLENGE: GENERATING POSITIVE CASH FLOW

Every business has a unique potential for success that is realized when all the key elements are put together in just the right way. Once you understand this formula, profits come to you reliably and regularly.

Initially, your challenge will be to generate as much positive cash flow as possible.

Let’s say your business idea is to sell reading lamps through ads in the back of magazines. Your plan is to break even on the initial ad, and then sell additional products to the people who buy your lamps. You will do that by sending them a small catalog.

For such a plan to work, you would need to test various ads in various magazines. Then you would have to continue placing ads in those magazines while you fill your orders. In the meantime, you would be sending out your catalog to bring in more sales. The money from those sales would give you the cash flow to keep going while you fully and completely test your business model.

We’ll talk a lot more about marketing in Chapter Seven. The point I want to make right now is that in the beginning, you should focus on your highest-margin efforts. That is to say, you should continue placing ads only in those magazines that produce above-needed response rates for you. In this case, that would be the ones that generated more than enough cash to pay for the ads. Maybe enough to cover your order fulfillment costs and leave something to pay for the catalog mailing.

Later, after you have established ...