When Mary Kay Ash retired from her job in 1963, she took her life savings, $5,000, and opened her own business. Boy did it pay off! Mary Kay Cosmetics is now a billion-dollar company.
Or take Hugh Hefner. He financed Playboy with $8,000 in loans from 45 family members, friends, and other investors. Today, he’s a mega-millionaire. (His famous mansion, alone, has been appraised at $45 million.)
Successful entrepreneurs like Ash and Hefner who risked all their money (and sometimes their family’s money) to pursue a dream that others considered foolish get a lot of press. And with good reason. Their stories are exciting and inspirational. But they are also misleading.
These entrepreneurs are few and far between. Most business builders succeed by taking a far more conservative approach.
In his book The Leap, Rick Smith uses Bill Gates as an example. Contrary to popular belief, Gates didn’t drop out of Harvard, says Smith. He took a leave of absence — and relied on his parents’ financial support — while he developed his programming skills and made the contacts that led to Microsoft. If it hadn’t worked out, he could have gone back to finish school.
Look at Ben and Jerry. The two budding moguls started by selling their ice cream in a converted Vermont gas station. They had thought about opening a bagel shop. But they decided the equipment would be too expensive. Only after two years in business did they expand into wholesaling their products to local stores.
Google was a side project of two Stanford grad students. Dell Computer was started in a University of Texas dorm room for just $1,000. Apple’s first computers were hand-built in a garage and sold to local computer geeks. Wayne Huizenga started Waste Management with just one garbage truck. And he drove it himself.
So the truth is that the most successful entrepreneurs started small and took modest, calculated risks. They were not temerarious and brave, as the business magazines would have you believe.
Yes, starting your own business is the fastest and surest to grow wealthy. But you don’t have to — in fact, you shouldn’t — risk everything to claim your slice of the entrepreneurial pie.
I have started dozens of multimillion-dollar businesses. But I have never been willing to “bet the farm” on one.
I want all the benefits that come from owning a business. But I refuse to risk my hard-earned money or time on an unproven idea. I want my cake. And I want to eat it too.
That’s why I call myself a “chicken entrepreneur.”
A chicken entrepreneur is somebody who keeps his day job while he gets his ideal career going in the evenings and on weekends. He is an entrepreneur, because he is taking the initiative to start his own business. He is chicken, because he’s not willing to quit his job and lose the income.
By the way, I can’t claim credit for coining the term “chicken entrepreneur.” I heard it many years ago. I didn’t like it at the time, but I recognized that it applied to me.
Since then, I have done my best to promote the concept in all my business books. Because there are thousands and thousands of potential chicken entrepreneurs out there — dreaming of quitting their jobs and starting their own businesses, but afraid to do so.
In fact, anybody with modest intelligence and drive can be a chicken entrepreneur. That’s what’s so nice about it. You don’t have to be a wild and crazy risk taker.
Let me tell you about Alan Silver. (I profiled him in my book Seven Years to Seven Figures.) Alan has a multimillion-dollar supplement business. Now in his late 50s, he does what he wants when he wants. He spends much of the winter skiing from his vacation home in Park City, Utah. And when he’s back home in Boca Raton, you can often find him jogging on the beach after doing a couple of hours of work in the morning.
He started as a chicken entrepreneur.
A friend of his, a health newsletter publisher, was in talks with a vitamin supplier about a joint venture. But the supplier was reluctant.
Alan, who had been selling office supplies for 15 years, stepped up. With his friend’s help and mentorship, he started his own vitamin company with a very small initial investment. Mostly, he invested his time and energy.
The going was rough at the beginning. He didn’t know anything about marketing, supplements, or the health industry. But he was willing to learn. Keeping his sales job while working on the new business meant 10-hour days. But it was worth it.
Within six months, this side business had brought in more than $250,000 in sales. Alan reinvested most of the profits back into the business at first. But soon was making enough to quit selling office supplies. And within a few years, he was bringing in $10 million annually.
The Chicken’s Guide to Start-Ups
As a chicken entrepreneur, you learn about your new business while keeping the safe and steady income of your main job. You start small and build (and invest) gradually. This limits your risk in case your new business fails (as many do).
In exchange for taking less risk, you must work harder. You must be dedicated, willing to come home after a full workday and keep going on your side business.
It takes discipline, tenacity, faith, and a very understanding family to manage your business while keeping your day job. It’s not easy to work all day at the office and then go home at night to work on your own project. The competition for your time can become intense. But if you create a plan and follow it in an orderly fashion, you have a very good chance of eventually succeeding.
Mastering the Essential Skills
To succeed in any business, you must know certain things very well.
For openers, you must master the fundamentals of direct marketing. Direct marketing is by far the most efficient way to sell products and services profitably. It is essential for chicken entrepreneurs because it allows them to break into their market without losing a fortune on general advertising.
You must also learn about the kinds of products the marketplace desires and which price points are “sweet.”
You must know how those first sales are made — the specific marketing techniques to employ to generate a sale without spending too much money acquiring the customer.
You must understand the “back end” of the business, too (how to upgrade a new customer into buying higher-margin products).
Several of these essential skills, I am happy to report, can be acquired before you invest a dime in your new business. You can learn how to become a competent direct marketer by taking ETR’s course on direct marketing. You can learn how to sell products online through another program we offer. And you can start developing these skills immediately.
Learning about the market you intend to enter can also be done while you still have your day job. It is relatively easy to take advantage of the Internet or use flea markets to test new product ideas cheaply.
And you can learn the backend of the business by becoming a customer of a company selling a product similar to the one you want to sell. Create your backend strategy by seeing the kind of offers you get from them after you make your first purchase.
Avoiding the Most Common Start-Up Perils
There are several pitfalls in starting any new business. But as a chicken entrepreneur you can easily avoid them.
The most common is dictating to, rather than listening to, the market. New entrepreneurs often waste precious time and effort hoping to bring something brand-new and exciting to the marketplace. But if the product doesn’t exist, there is usually a good reason for it. It’s better to start with a better or cheaper version of a product that is already in demand.
The next-biggest mistake new entrepreneurs make is spending too much time and money on non-essentials like business cards and fax machines. Keep in mind that the fundamental activity of a business is the commercial transaction. Your best chance of success comes when you devote 80 percent of your initial resources to making the first sale.
Master the necessary skills, avoid the pitfalls, and your business will grow. At some point in the future, you may realize that you are making more money from your second income than you are from your first. That’s when you may choose to drop your “day job.”
P.S. Becoming a chicken entrepreneur allows you to ease out of a dead-end or unsatisfying job and slowly but surely build your own profitable business. And the best business to start these days is online. At ETR’s upcoming Info-Marketing Bootcamp, you’ll learn everything you need to get started with minimal start-up costs. Find out more here.
IDE’s Bob Irish tells me that the Daily Sentiment Index shows 90 percent of those surveyed are bullish on stocks. Sentiment has been buoyed by a 60 percent rise in the S&P. But if there is one thing we know for certain about investing, says Bob, it’s that the “herd” is always wrong. They come into the market well after all the experienced, informed investors have gotten out.
Here’s how “Sound Profits” contributor Steven McDonald puts it:
“These are the investors who see or hear about others making money and want to be just like them. The investment is based on nothing but social proof or the desire to fit in. This is the herd. These people are distinguished by making serious life-changing decisions based on no research, but rather on what they guess is happening.”
When the market inevitably drops, the herd will scramble to sell — at a loss. Don’t be part of the herd.
Dr. Al Sears uses a word I really like. “Progressivity.” When it comes to fitness routines, that means improvement from repeated changes in the same direction. And it’s a main part of his PACE exercise program.
The idea is that exercise is much more effective when you do a little more every time. You don’t exercise longer. You increase your intensity levels. And as your heart’s capacity picks up, you add resistance. Or gradually pick up your pace.
It’s also important to change your routine over time. Doing the same thing over and over — whether cardio or weight training — will lead to failure. Your body needs new challenges in order to grow and achieve results.
Hollywood would have you believe that successful businessmen are competitive creatures who fight their way to the top. And there are plenty of bestselling business books that support that view.
But my experience has convinced me that sharing ideas with competitors works much better than trying to take advantage of them.
I often attend “roundtables” of top executives in the publishing industry. A couple of dozen of us sit around and tell one another many of our best secrets. Why do we do it? Because we know that:
- Most of the important business secrets — in marketing, sales, management, and so on — can’t be copied exactly. They need to be reinvented to fit each business.
- Usually, you will do better if your competitors do well. Success creates success. Markets expand when good ideas are adapted by all. Great marketing ideas are meant to be copied. It creates more demand and increases the market.
- Most of your best secrets will never be copied anyway — even if you beg your peers to do it. That’s because only you understand how powerful they are.
- An exchange of ideas ultimately benefits everyone.