Author: Carol Roth
Publisher: Ben Bella Books -300 pages
Book Review by: Sonu Chandiram
An entrepreneur may be just an investor in a business or may take an active role in running it, as much as being physically present in the location of the enterprise.
Many books on entrepreneurship extol the benefits of being an entrepreneur or a business owner. Make more money than you ever dreamed off, the authors point out on the covers (so that they can make the money with skyrocketing sales of their book). In a business, the only limit to the amount of money you can make is the one you set upon it, they write. The sky is the limit, they add, unlike in your job where you pretty much know your income limit, give or take a few hundred or a few thousand dollars.
Here are some more of the blurbs you find on the jackets of books on making money through a business: Enjoy the freedom to take time off from your business at anytime. Set the hours of work you want, and the number and lengths of vacations you jolly well please to give yourself. Be your own boss. Fire your current boss. If your job is boring or not what you really want to do in life, get rid of it now. And on and on, focusing on the plusses of having your own business.
Carol Roth is a realist. While she understands that many new businesses do succeed, she does not only ask you the question: Could you be an entrepreneur? She asks: Should you be an entrepreneur? If you want to be one among the hundreds of thousands of people with dreams who start businesses in the United States each year, some of the other concerns she raises in this book are: do you have the temperament, the frame of mind, the attitudes and personal qualities necessary to become a successful entrepreneur or business owner?
Having been in business for many years, I say to you: Ask not just yourself but your family members, relatives, friends (and even enemies): Do I have the drive, the customer-service desire, the equity- and wealth-building ability, the financial mindset, the goal-setting habits, the multi-tasking capacity, the people skills, the risk-reward assessment capability, and the self-motivation to start a business and take it to fruition? And these are by no means all the key required qualities for a startup business owner to have a successful outcome.
The economic statistics administration, an agency of the US Commerce Department, shows in a report on its website (http://www.esa.doc.gov/Blog/2011/03/23/business-startups-why-entrepreneurs-didnt-start-2009-and-why-thats-likely-change) that the number of business startups with at least one employee (besides the owner) declined from 550,000 in 2006 to about 400,000 in 2009. There were fewer startups in 2009 than even all the way back in 1980 when there were 550,000 such new businesses that began operations. This statistic may mean that people are ever more cautious in leaping into a new business venture. Or when comparing 2006 and 2009 numbers, it could attributed to the recession (which, contrary to superficial news reports, has not ended, as I write this review)
It has been reported widely in the media that the failure rate of new businesses is very high. Carol Roth states that as much as 90 percent of new businesses lose some or all of their investment within a few years, but she cites no data source.
So, should you be an entrepreneur? Answer this question of yourself now, then ask yourself again after you have read this book carefully. Read it to find out the risks and rewards of starting and owning a business. I suggest you invest a few dollars and a few hours to go through its 32 chapters in 300 pages, before plunking that $200,000 or more your savings or borrowed money into your dream of becoming a millionaire business owner.
No data out there is available that pins a definite number as to the average investment required in a new business in the United States.. There are of course hundreds of types of businesses that one can get into, so the range of investment sums is very wide indeed.
But you can get quite close to finding out what is an average investment required when you look at franchises, especially franchise restaurants
Don Sniegowski, writing on September 11, 2009 in a Business Week blog entitled How Much Does a Franchise Earn on Average? states that the investment in a typical franchise ranges from $200,000 to $500,000. While most franchisors do not reveal the average return on investment or even net income to franchise buyers, Don writes: “My view is that an average franchisee will probably make, say $60,000 a year by working probably 60, 70, or 80 hours a week at the outset.”
You can consider the $60,000 earned as your salary. It is payment for your work, not a return on your investment. This is not net income, which is income derived after paying one or more people others a salary plus all other costs and expenses. And this amount probably does not take into account the cost of money, whether it is your own or coming from your family, friends or your friendly neighborhood bank.
I believe (I do not know for sure) that most franchise owners gain experience and knowledge initially by taking training courses, working in the business themselves to learn how much money they can have left over after paying for equipment, cost of goods, salaries, and all operating expenses. Once they see a decent return on their money and time investment after a year or several years of operation, they go ahead and buy more franchise locations.
There is much to consider before making the leap to business ownership, and Carol Roth’s book covers much ground. We will not get into the details of the contents because our purpose is to give you the theme and essence of this book.
There are four sections in this book. The first one relates to you the main assumptions, myths, and realities of entrepreneurship. The second section helps you assess your fit with entrepreneurship, or whether you basically have got what it takes to succeed in business. The third is doing the assessment in reverse, by asking and answering the question: does the business you are looking at, fit with you?
Section Four has an interesting title and helps you make your final decision on whether to start a business or forget about the idea: Assembling Your Entrepreneur Equation, and a Few Reminders in Case You Get Sucked in By the Hype.
I believe this book is not meant to discourage you from starting a business. Its chief value, unlike others, is to help you take a realistic look at the feasibility of business success for you. This is where Carol Roth is so refreshingly different from authors of other books on this important subject.
The potential rewards of entrepreneurship are tremendous, but the risks of loss of money and time are also great. Look before you leap is her word of caution to you, because most new businesses in the United States end up getting closed.
