Each Friday, The Simple Dollar reviews a personal finance book of interest.

Writing about kids and money is a fairly sticky topic. I’ve read several books on the topic and only bothered to review a few on here. The best one I had read so far, David Owen’s First National Bank of Dad, was really entertaining and offered some thought-provoking material, but in David’s own anecdotes, he didn’t practice what he preached, leaving me wondering what the point was.

For the most part, those books quibbled over issues like whether or not to give your child an allowance, how to convince your child to save, and how to introduce various money topics, such as credit cards. Troy Dunn, the author of Young Bucks, takes a different tactic. His focus is entrepreneurship for kids - how can you show your kids how to work for their own money in a fairly safe environment and also see the clear rewards of their effort?

Dunn is a self-made millionaire and the father of seven children, so he has extensive experience in both the entrepreneurship and parenting arenas. Do these combine to make a thought-provoking book of parenting advice about personal finance, or does it fall flat like many others?

One - Millionaire Mentality
Dunn argues right off the bat that there are three harmful myths that parents tend to share with their children that subtly guide them away from entrepreneurship and successful money management. First, a college education is the key to business success, which is something I’ve become less and less convinced of myself as of late. Second, a job with a good corporation will secure your child’s financial future. I don’t agree with that one, either - all it takes is a memory of Enron to show how fleeting even the biggest corporations can be. Third, children shouldn’t have to worry about money when they’re young, as there’s plenty of time to focus on finances when they’re adults. I think there’s a general sense that this third one is a myth, at least among people who think about their finances carefully. So many of us who are in debt trouble today came into that situation because of a lack of experience with money in our childhood.

Two - Mentor Magic
Dunn argues that you should be a business mentor to your children, encouraging them to think creatively about the things that they can accomplish with their time, their work effort, and their ingenuity. Have you ever told your kids to enjoy their childhood because when they grow up, they’ll have to work? That paints an extremely negative view of work, one that’s going to rub off on your kids. Instead of thinking of it as a fun challenge that they throw their passion into, they instead dread it. Change that by encouraging their creativity, offering only suggestions to channel it a bit, not stifle it. Even more importantly, Dunn encourages no allowances at all and no splurging, either. While that seems really harsh to some, his point is that an allowance encourages your children not to work and plan for what they want. Instead, you should encourage them to be little entrepreneurs, earning that money.

Three - The Millionaire March
What are your child’s natural talents and traits? What adjectives do you use when you think about your kid? Almost all of those, from stubborn to outgoing, are elements that point a child towards something productive they could be doing with their time. Dunn suggests simply taking those traits and coming up with an idea for a small business that the child could run. What fits their natural tendencies? The key, though, isn’t to push your great idea for them on them, but hold onto it and slowly push them towards developing it themselves.

Four - Business Building Blocks
So you have this great idea for how your kids could make money for themselves, but have you thought through it clearly? Dunn spends this chapter outlining some of the key things you should be thinking about well in advance of your kids so you’re prepared for it, from safety and seed money to legal requirements and logistics. Dunn also suggests starting as young as possible, assigning your youngest children (five and under) simple tasks and paying them immediately for them. We’ve already started doing this a bit with our two year old, believe it or not - he earned fifty cents for picking green beans the other day (seriously, yes, a two year old picked enough green beans for a family supper and earned fifty cents for his work). When they’re between the ages of six and ten, you should start them on very simple businesses - like, for example, collecting aluminum cans in the neighborhood. He suggests trying things at this age because they’re still happy for attention and deeply enjoy spending time with you. After that, it gets trickier - you’ll have to convince pre-teens that things are possible.

Five - The First Meeting
So, how do you get started? Dunn suggests waiting until there’s something that they want that they can’t afford, giving them incentive. Then, suggest the idea of starting their own little business with questions, not by offering commands that seem like more work. “Why don’t you try earning the money?” Allow them to be creative, then just guide that creativity with some more questions, and eventually transition that into coming up with a business plan with them. Just let them lead - ask questions that makes them think about all of the things you’ve already considered. That way, when the idea comes to fruition, they’ll feel as though they built it.

Six - Business Begins
Once the ball is rolling, you’ll have to guide your child through many of the logical steps of a basic business. What exactly are you going to provide? What is a sensible price? How will you market it? What are the startup costs, and how will those be handled and repaid? As a parent, you should consider these things and offer your child good suggestions that will help them out. Show them the prices of comparable items. Show them how other businesses advertise - what makes an effective poster? Let them decide, but be there to help them along and help them avoid any obvious pitfalls.

Seven, Eight, and Nine - Big-Buck Businesses
Here, three chapters are devoted to ideas for microbusinesses for your children to take up. In all, twenty eight businesses are suggested over the three chapters, with a detailed description, the startup costs, needed materials, potential income, and suggested marketing strategy for each one. While reading these, many others came to mind - this is really just a starting point to get your (and your child’s) creative juices going.

Ten - Business Pitfalls
Obviously, such a business is not going to be all roses and cherries. One big problem that children face at the lemonade stand is people who play hardball - they “power negotiate” or they simply don’t pay up for the service provided by the child. Don’t let your child get disillusioned - talk to them about it seriously. Help them to develop a healthy sense of skepticism (but not paranoia or mistrust). Eventually, they’ll be able to apply that skepticism successfully in other aspects of life.

Eleven - Sweet Returns on Passive Revenue
Your child is earning money and building up a nice little amount. What should they do with it? At first, obviously, they’ll probably purchase the item they’ve been talking about, but after that, it’s a good idea to encourage them to do something wise with it. Perhaps they can hire an assistant, paying that assistant some portion of the proceeds to help with the business. They might also want to reinvest it, buying a better lawn mower or more supplies. They may also want to invest it in something more than just a savings account. Again, talk with your child about these decisions and make sure they choose one that makes sense.

Some Thoughts on Young Bucks
I think you have to be entrepreneurially minded to encourage your kids to be entrepreneurially minded. Most of this advice works best if you’re an entrepreneur (or at least self-employed) with kids, because most of the thought process here will already be natural to you.

The “no allowance” thing is interesting. I think the idea is strong, though, as long as the child has the opportunity to earn direct rewards for extra work. Dunn points towards this with young children in the fourth chapter.

I think this is much more like the direction that I’d like to encourage my children to go than some other books I’ve read. I’d like my children to see the basics of personal finance management as young as possible, see the connection between work and money, and see the value of saving and budgeting as early as they can and repeat it for as long as possible.

Is Young Bucks Worth Reading?
If you have kids, I think Young Bucks is well worth reading. The idea of encouraging your children to follow an entrepreneurial path is worth serious consideration. I know in my family it’s one that we’re pondering over as we watch our young ones slowly progress from being babies to being toddlers, then on to being young children. How will we teach them how to spend and use money wisely?

Given that, I don’t think Dunn’s overarching ideas about child entrepreneurship are necessarily something every parent will agree with. Young Bucks is, in some ways, a perspective book - it’s a how-to for encouraging your child to be an entrepreneur. But do you want your child to be an entrepreneur? That’s a question you really have to answer for yourself, and this book just provides one side to that argument.

From my perspective, though, Young Bucks was a very enjoyable and thought provoking book to read. It goes up right next to First National Bank of Dad as the best reading I’ve come across for thoughts and interesting reading on how to financially educate your children, and it tackles the topic in a much different fashion. Well worth reading if you’re a parent of young children.

Each Sunday, The Simple Dollar reviews a personal productivity, personal development, or business/entrepreneurship book of interest.

When I look at my life, it becomes quite clear to me that if I ever wanted to start a small business (and, no, I don’t quite consider my solo writing gig to be a small business, although big swaths of this book do apply to my wife and I), I would need the blessing of and a lot of support from my wife. She really is the cornerstone of so much of my life - without her working hand in hand with me, I would never be able to get any significant project off the ground.

Honey, I Want to Start My Own Business has the same perspective: a successful small business owner that’s married already has a business partner. Only by working in concert with your spouse can you really hope to achieve great success in business, whether it’s through direct support (i.e., your spouse is helping you with the business) or indirect support (your spouse is understanding of the challenges and helps you find the space you need to get things done).

Let’s see what insights Azriela Jaffe has to offer us in this book.

1. Exploring Self-Employment Alternatives: Considering Family Issues
Two big things stood out at me in this first chapter.

First, in a completely unusual move for a book on this topic, there were three pages of additional suggested resources on the topic of exploring your self-employment options. This book didn’t profess to have the answers on finding the right small business for you - it sticks right with the target area, which is how that small business will relate to your relationship with your partner.

The bigger one, though, was a list of fifty questions to consider if you’re looking into self employment. Before I quit my desk job and started The Simple Dollar, I really believed I had considered every angle of the decision, but this list of fifty questions spurred dozens of discussions with my wife. A sampling:

38. How does this business option mesh with your partner’s work and livelihood? Is it synergistic, harmonious, and complementary? How will it conflict?
42. How will this business option improve, solidify, or sustain your relationship?
43. How could this business option jeopardize or deteriorate your relationship?
48. Do you hope to pass the business along to your children?

These (and many others) were all issues I hadn’t really considered before, and they were well worth considering.

2. Combining Marriage and Entrepreneurship: Three Models of Joining Together on the Entrepreneurial Journey
This chapter discusses three potential different models for a entrepreneurial household: full partnership (where both partners are involved in the business), dual entrepreneurship (where both partners are involved in separate businesses), and a supportive spouse (where only one partner is involved in the business). Each type is given about fifteen pages of coverage, outlining the specific considerations for that type of relationship.

Obviously, the third one (a supportive spouse) applies best to my situation, and most of the description there is pretty apt. My wife and I find a lot of creative ways to be flexible around each other’s needs, and that’s really the key to being a supportive spouse.

3. Financial and Family Planning: Planning Ahead to Avoid Disaster
Here, Jaffe offers ten guidelines for financial and family planning:

1. Acknowledge the existence of risk.
2. Identify your risk personality and that of your partner’s.
3. Clarify how much you and your spouse are willing to risk materially to be self-employed.
4. Form mutual agreement about material risk.
5. Hope for the best, but plan for the worst-case scenario.
6. Establish guidelines for money management and decision making.
7. Allow the differences between how you and your partner handle money to work to your advantage.
8. Discuss money issues at a time and place that will be productive.
9. Define your boundaries for personal sacrifice.
10. Plan for the details of entrepreneurial family life.

These ten guidelines make a great deal of sense and deserve some careful attention during the early stages of any self-employment or entrepreneurial initiative. Each one is given a few pages’ worth of individual attention in the chapter.

4. The Joys and Challenges of Working at Home: How Working at Home Can Work - and When It Can’t
This portion of the book felt the most familiar to me in my current situation. It was a real and honest assessment of the good elements and the bad elements of working from home, not just a whitewashed projection of how things should be or ought to be.

For example, in my own situation, the flexibility that working at home has given to me has been tremendously enjoyable, but that flexibility has a powerful flip side - it also means that interruptions become much easier. This chapter actually projects such a phenomenon, as well as the interesting challenges of working at home with little kids who don’t understand (and shouldn’t be expected to understand) the need for “work time” and for “play time.”

5. Communication Skills: Understanding Your Partner and Getting Your Point Across
At this point, the book somewhat switches gears and begins to focus on basic relationship issues. Why? Jaffe makes the case that entrepreneurship works best in the context of a strong relationship and that having the tools to make your relationship successful will make it much easier for you to make your entrepreneurship successful.

Jaffe starts off with the idea that communication is fundamental, something I strongly agree with in any relationship. My favorite insight? “Imagine that your partner is an animal from another kingdom. He or she may be nurtured, sustained, and excited by very different experiences than you are.” For example, after some significant time learning and observing, I discovered my wife truly loves very gentle back rubs over the full length of her back - they can actually put her to sleep. So about once or twice a week, she falls asleep to this. It’s a simple thing that takes very little effort from me, but it makes a world’s worth of difference to her. If you can find some things you can do like this for your partner, it’ll make a huge difference in your relationship.

6. Win/Win Conflict Resolution: Resolving Conflict at Work and at Home
What about the inevitable conflicts? Jaffe again offers some strong advice, starting with the suggestion that you figure out how to resolve the conflict within yourself before addressing your partner with it. If you can figure out a healthy solution on your own, you eliminate the need for direct conflict.

If you do feel the need for conflict, figure out what you actually want to communicate and what you hope to get out of the conflict before you go in, and make both of those very clear right off the bat. Be realistic in both, however; your partner has needs and wants, too. The less clear you are about your reasons for being upset and your desired solutions, the less likely it is that you’ll get the resolution that you want.

7. Keeping the Romance Alive: Creative Ways to Protect and Nurture the Intimacy of Your Relationship
Set aside time. That’s the real key. When both members of a relationship have very full lives, it’s often hard to find time to focus on your relationship.

For my wife and I, the way we’ve found to make it work is to simply spend an hour or two together before bed, just talking about things, doing simple household chores, or reading right next to each other. For example, this evening we’re going to spend the hour or two before bed preparing appetizers for a party this weekend, talking and just enjoying each other before we go to sleep.

8. This Isn’t What I Bargained For: Coping with Hard Times and Coming Out Stronger
The book closes with a brief look at crises and some suggestions for fixing them. My suggestions largely match up with hers, but really boil down to having two things at all times, no matter what you’re doing. You should have an emergency fund with several months’ worth of living expenses, and you should have a backup plan for what to do if your current endeavor completely falls apart. I’m very thankful that we have both.

Some Thoughts on Honey, I Want to Start My Own Business
This was a very thought-provoking book for us. Here are a few of them.

After reading this, I don’t feel like I adequately thought through all of the ramifications of my career shift. There were so many aspects of the choice to become self-employed that I didn’t really give enough thought to, and that made me feel both a bit guilty and quite energized to talk through the decision again with my wife. I feel like it really was the right decision in the end, though.

My wife really makes this site possible, in so many ways. It’s easy to forget how much she supports my day-to-day life when I’m writing and working feverishly in the office with the door closed by myself. When I open the door, she’s there, though - her smiling face, creativity, and wonderful deeds make this all work.

I wonder how many couples don’t think about these things at all when making a major leap. I thought we had handled it in great depth, but there were many areas we didn’t even really talk about at all. In a less communicative couple, I can see one person just making the leap largely without the spouse on board, and that just seems like a recipe for disaster.

Is Honey, I Want to Start My Own Business Worth Reading?
If you’re in a long term committed relationship and you’re either considering self-employment or a small business or are already involved in such a situation, read this book with your partner and, more importantly, talk about it with your partner.

Honey, I Want to Start My Own Business has started more conversations with my wife than any other personal finance or business book I’ve ever read (except for possibly the venerable Your Money or Your Life). On almost every page, there was something that came up that I jotted down to discuss with my wife later, and we spent several hours in the car recently mostly talking about how my writing endeavors intersect with our home life, almost entirely fueled by concepts from this book.

This one is a hidden gem. It’s not one that’s on every bookstore’s shelf, but if you can get a copy of it and you’re in that audience, it’s a very rewarding read.

Each Sunday, The Simple Dollar reviews a personal productivity, personal development, or business/entrepreneurship book of interest.

I like Michael Masterson’s books. In the past, I’ve given high marks to three of his works: Automatic Wealth, Automatic Wealth for Grads, and Ready, Fire, Aim.

Because of my enjoyment of his other books, I decided to look past the wariness I felt about the title of this, Seven Years to Seven Figures. The title gives me a big “get rich quick” vibe, and that’s a type of book that I actively choose to stay away from. I decided to give this one a shot, solely because of my faith in the author.

Is this just a boring, generic, bogus “get rich quick” book? Or does Masterson actually offer some compelling advice in this area? Let’s dig in and find out!

A Look at Seven Years to Seven Figures

The meat of this book (the middle eight chapters) focus on a series of specific cases where individuals managed to build seven figure wealth in seven years or less. In other words, this is a “teach by example” book. Some people thrive on these, others don’t.

Another thing to note is that most of these stories revolve around entrepreneurship, often entrepreneurship that is seeded at their current job. For most people who have the drive to do something big but don’t know where to start, this type of story is perfect.

One: What the Heck Do I Know?
Masterson opens the book with his own story, relating how he started at an editorial position in a newsletter-writing business and leveraged his work into a bigger salary and eventually a stake in the business itself. In other words, he knows what he’s talking about. The portion I found most impressive, however, is that he recognizes that nothing would have happened had he not made a deep and serious commitment to making it work. He was basically a person with too many dreams - he wanted to write, he wanted to explore, and he wanted to do many, many other interesting things. The problem was that he didn’t have the freedom to follow those dreams, so he committed to doing what he needed to do to make them come true - and that was to build enough savings in the bank that he could make choices about his life without regards to the income consequences.

Two: Are You Ready for Wealth?
Masterson is blunt here: if you want to actually do this, the only way to do it is by making an absolute commitment to making it happen, then diving into entrepreneurial activities and saving it. That means spending less than you earn in both senses of the word - work hard to earn more, but don’t spend to match it. Instead, invest that difference. Masterson says go hardcore - if you really want to make this work, you need to not only be busting your butt to maximize your income, but you need to be saving 50% of what you make.

I like this attitude. If you want your dreams to happen, you have to work for them. Period. Sitting around dreaming about being rich isn’t going to cut the mustard.

Three: Audrey Maxwell
Audrey started out as a copywriter who spent money as fast as she made it, even leading to a negative net worth at one point. She turned this around by doing three things: she turned her reputation as a quality hard working copywriter into the foundation of a business, figured out the sweet spot of pricing that business, and started saving that money to build personal equity (starting by buying a house in a good neighborhood). The real lesson learned? If you know you don’t have the skills to make your own business work, know what skills you do have and find people that can complement that in a business.

Four: Alan Silver
Alan’s story is really all about “chicken entrepreneurship” - in other words, he kept his day job while making something else work. This is more or less what I did with my writing - I wrote in the evenings and the early mornings while still maintaining my day job. While this does provide financial security while making entrepreneurship work, it’s hard - very hard, especially if you have a family. Masterson encourages people who try this to seek help - find a mentor who can provide advice and guide you.

Five: Bruce Buffer
Yes, the brother of boxing announcer Michael Buffer. Basically, Bruce figured out how to really effectively market his brother and got on board with the business end of Michael’s career. What’s the lesson here? Pay attention to what’s going on around you and look for opportunities that are just waiting to happen. Basically, Michael was very good at being a ring announcer and fairly good at promoting himself, but didn’t have the foresight into building it into something bigger and sustainable. That’s where Bruce stepped in, building his brother’s announcing talent into a larger business (and dabbling in ring announcing himself with UFC).

Six: Justin Ford
Justin was basically very confident of his skills as a copywriter, but he had no money - he had recently declared bankruptcy. So, while maintaining his day-to-day copywriting job, he also took on some copywriting opportunities where he didn’t get paid. Instead, he would just receive some percentage of the income that the company earned from the ad. Since this was essentially free advertising, several large organizations agreed, and Justin put his skills to work on some very successful direct marketing campaigns, earning a percentage of the income from those campaigns. He took that extra money and, instead of spending it, invested it in real estate, buying land wherever he could find a bargain deal.

Seven: Ken Morris
Ken liked antiques and building furniture. He made the observation that there was a lot of cheap, old wood to be had in his area, so he took to building “imitation” antiques from this old wood, giving newly-built furniture an antique look. He sold these items at far below the price of equivalent antiques to people who were interested in having the antique look, but weren’t worried about the authenticity and didn’t want to pay the price. As his business took off, he eventually moved into making the furniture for others to sell, and then moved on to training others to do it. Once that happened, he had a significant amount of cash in the bank and was able to move on to new endeavors - such as becoming a homebuilder. What’s the story here? Ken did what he was passionate about - building antique-looking furniture - and he found the right market to sell such items (the southern Atlantic coast). In other words, he knew what he was passionate about, so he invested the time and effort to find when and where that passion would sell.

Eight: Monica Day
Monica desperately wanted to become a copywriter, so in between jobs, she basically decided to spend six months making it happen or failing. Instead of using that period of downtime between jobs to hunt for a new one, she threw herself into correspondence courses on copywriting and taking on as many spec jobs as she could in her spare time. Once she began to get some nibbles, she hunted for mentors and basically by sheer force of will pulled herself towards success. The valuable lesson here is to just go for it. Don’t wait around for the “perfect” opportunity because it won’t come. Instead, put forth your own consistent and honest effort and see where it will lead you. Effort and passion make all the difference in the world.

Nine: David Keller
David was a doctor who believed that alternative medicine was a valuable route for many people to look at for their personal health. So, he basically leveraged his positive reputation as a medical doctor (and the connections he had) to start an alternative medicine consultation business. In other words, he took his pre-existing reputation and his own beliefs and theories and passion and packaged it all together. He started a newsletter to share his views and began consulting with companies he believed in in the natural health business, writing articles and other materials for them in order to help promote their products. Eventually, this new direction earned him substantially more money than his old medical practice. What’s the lesson to be learned? It’s good to be an expert in a field, much better than being just another person in a much larger field. Keller rode his passion and general medicine expertise into being a leader in the alternative medicine niche - and did very financially well for himself in the process.

Ten: Brad Solomon
Brad was an accountant with a knack for communicating ideas with people, and he was bored in his accounting job. Eventually, he built a friendship with another fellow who was involved in a customer relations business, and he had taken on more jobs than he cold chew. Brad thought it interesting, and decided to give it a shot, as this successful person agreed to mentor him and Brad was ready to try a new challenge. This mentor recognized Brad’s skill set and built a bond with him, eventually teaching Brad how to build his own strong public relations business. The lesson here? Don’t let a great mentor slip by. If someone’s interested in you, is very successful themselves, and is willing to be a mentor for you, that’s an incredible opportunity.

Eleven: The Baby Boomer Challenge
The book begins to wind down here with a very simple argument that baby boomers - and thus anyone under that age - should focus seriously on building their own wealth following the advice on this book, because the social structures available for retirement aren’t reliable. Don’t count on Social Security, Medicare, or pensions to save you - do it yourself or it might not happen at all.

Twelve: Lessons from Life: What I’ve Learned about Building Wealth Quickly
You really only need three things to make this all work: a plan of action, the time to make that plan work, and the willpower needed to actually do the work. Many people have one or two of these things - you have to put forth a lot to be able to do all three. I agree with this conclusion - it’s basically the thread that ties all of these stories together.

A Few Thoughts on Seven Years to Seven Figures

“Chicken entrepreneurship” is a slick idea that everyone should try. A side business, particularly one without a significant additional investment from you, is one of the best things you can do with your time. You can build new skills, new relationships, and earn more money, plus it’s a brilliant way to use your spare time.

Masterson tends to focus on the areas that he knows. In some ways, that’s good - he’s obviously in the know about the areas he focuses on. In other ways, it makes for a book with hints of repetitiveness. For example, Masterson made his first chunk of change in copywriting, so unsurprisingly he focuses on several people that also used copyrighting to leverage themselves well.

This isn’t really a “get rich quick” kind of book. It’s about people starting legitimate businesses that took off and sharing what they know. There is no “plan” here that will put cash immediately in your pocket. I was quite worried about a “get rich quick” scheme when I started, but there is no get rich quick scheme - it’s really about hard work and finding mentors.

Entrepreneurship doesn’t work if you’re not frugal. If you’re just blowing everything you earn, it doesn’t matter how good of an entrepreneur you are, eventually everything will collapse. Masterson definitely understands this and preaches it throughout - when you’re making good money, you should be investing a lot of that money.

Is Seven Years to Seven Figures Worth Reading?

If the idea of “chicken entrepreneurship” appeals to you at all, Seven Years to Seven Figures is a worthwhile read. I felt a lot of kinship with a few of these people, particularly Alan Silver, who took a dream of writing, dabbled in it on the side, and eventually built it into something that was sustainable.

Masterson doesn’t sell entrepreneurship as some sort of easy route, though - it requires a lot of work and isn’t a path to yachts and Cristal. If you’re looking for a book to paint you a happy picture of entrepreneurship, this probably isn’t it. Instead, it’s realistic - if you put in your heart and soul, Masterson has a lot of good pointers that can make the difference between utter failure and some degree of success.

In the end, though, Seven Years to Seven Figures and books like it come down to you. You have to be willing to suck it up and make a significant commitment yourself or else they’re simply not worth reading. It’s a potentially lucrative (and liberating) path, but it’s only that way if you’re willing to commit.

Each Sunday, The Simple Dollar reviews a personal productivity, personal development, or business/entrepreneurship book of interest.

One topic that doesn’t get nearly enough coverage on The Simple Dollar (or on other blogs as well) is entrepreneurship - the transformation of an idea and a passion into a full-fledged business. It can be a splendid way to make money, either as an individual or as a larger enterprise, but it comes with a lot of risk.

Because I’m now effectively self-employed, I’m becoming more interested in entrepreneurship as a topic, and so I’ve decided to start absorbing some books on the topic. I decided to start with this one, Ready, Fire, Aim, because I’ve read two other books (Automatic Wealth and Automatic Wealth for Grads) by Michael Masterson and found them both to be compelling reads.

This book is a relatively large volume, weighing in at just under 400 pages, and it covers each stage of the development of a business from an individual idea or passion into a large organization. Quite honestly, my interest is centered around the early stages - the place where people try to make side businesses work and eventually build that into self-employment or a very small business with just an employee or two. While the resulting path is worth looking at, my primary interest - both personally and as a personal finance blogger - is in those nascent steps.

Does this book have enough compelling meat on the bone to make it a worthwhile read? Or is it just overblown common sense fluff? Let’s take a look.

Digging Into Ready, Fire, Aim

As I mentioned above, the book is broken down into pieces that describe the growth of an idea into a side business, then into a small business, then into a large one. Masterson handles this progression chronologically, starting with the idea.

Part One - Being All That You Can Be

Introduction - The Very Best Job in the World
Masterson defines the best job in the world in very clear terms on page six: “I work when I want, where I want, and with whom I want, doing only what I want to do.” That’s why entrepreneurship is such a strong carrot to so many people - it really is a great job … if you can get there. That’s a mighty big if, however, and it’s a climb that many people fail to accomplish because they don’t put all of the pieces together. The purpose of Masterson’s book is to lay out most of the potential traps people fall into along the way and provide some advice on how to chart a path around them.

Ch. 1 - Getting to the Next Level
Masterson’s main idea for the book is that there are four levels in building a business. For me, the first level is the most fascinating - he calls it infancy, and it mostly revolves around making the first cost-effective sale, and the big challenge is that you really have no idea what you’re doing. I strongly identify with that feeling - I’ve felt that way about most of the endeavors I’ve been involved with. The other stages are business growth stages: childhood (developing more products quickly and becoming profitable - in other words, replicating the success that pushed you out of the first stage), adolescence (turning the chaotic growth into an orderly system - in other words, taking that replication process and making it orderly and refined so that it’s easier to do), and adulthood (continuing the growth and encouraging the business to run itself).

Ch. 2 - Why Employee Size Matters: A Different Way of Measuring the Four Stages
Another way to look at the growth of your business is in terms of the employee count, though this one has much blurrier lines. He uses the idea that you can only effectively delegate to and communicate with seven people at once, so he identifies the first stage as being you and up to seven employees, the second stage as being eight to forty nine employees (in other words, a maximum of two layers of delegation between you and any employee), the third stage as being between fifty and three hundred forty three employees (in other words, a maximum of three layers of delegation between you and any employee), and the fourth stage being anything larger than that. This also makes quite a bit of sense, in a sad way, because the more layers there are, the bigger your organization is, but the less control you have over it - it begins to run itself.

Ch. 3 - Becoming a Five-Star Business Genius
Masterson argues that to start a business and keep it going, a person must have five key skills: the ability to come up with new ideas, the ability to sell products, the ability to manage systems, the ability to develop superstar employees, and the ability to take action. Different skills matter at different levels of growth - early on, for example, the idea and the salesmanship are the central skills, while later on the ability to manage systems and develop quality employees is the difference maker.

Part Two - Stage One: Infancy

This is the area where most of my interest is, as I’m self-employed - effectively, a business with one employee.

Ch. 4 - The Supremacy of Selling
Without sales, it is very hard to sustain an ongoing business. This is the principal concept behind this chapter, and he’s right - if you can’t sell anything, you’re not going to make it. It’s true for any method a person might try to use to earn money. Take writing, for example. If I’m not able to sell pieces of writing to publications, I don’t earn anything. If I can’t “sell” what I’m writing for The Simple Dollar, readers will go away (in other words, if I start writing garbage, you’ll stop reading). It’s true for almost every business I can conceive of, from running a restaurant to repairing computers - if you can’t sell it, then it probably won’t function as a business.

Ch. 5 - Your Optimum Selling Strategy and the Four Fundamental Secrets of Selling Your First Product
Masterson argues here that there are four big questions you need to ask yourself to determine the optimum selling strategy for your business:

1. Where are you going to find your customers?
2. What product will you sell them first?
3. How much will you charge for it?
4. How will you convince them to buy it?

Obviously, different businesses have different strategies for answering these questions. For writers (like me), the goal really is to find an audience that’s willing to read what you write - the infamous “1,000 true fans” concept. In other words, the success of creative types is often entirely based on their audience. I truly have you guys to thank for making The Simple Dollar possible - thank you, truly, from the bottom of my heart. (Along the same lines, I’m genuinely not impressed by artists and entertainers and educators who take their fan base for granted or actively work to alienate them.) The chapter goes on from there to discuss pricing strategies and other basics of how to make the sale of a product work - solid information for the beginning entrepreneur, all around.

Ch. 6 - Mastering the Copy Side of Selling
In order to sell something, you have to be able to describe it and pitch it in such a way that others will be intrigued enough to spend their money on the product. Masterson offers some solid advice here (focus on benefits instead of features, make the product seem like it fills a need and not a want, and make it better than - or at least seem better than the competition), but I found this chapter to be a mere faint echo of the truly excellent Ogilvy on Advertising, which I glowingly reviewed a while back. If you’re trying to sell something (which basically means if you’re trying to start a small business), read the Ogilvy book.

Ch. 7 - Secondary - Yet Important - Priorities for Stage One Businesses
There are really three tips in this chapter, all of which are useful in areas of life outside of a business. The first, have a mentor, means to find someone experienced in your area of interest and ask them routinely for advice and suggestions, so that you can learn from their world lessons. The second, be a mentor, means to pass on what you’ve learned to others who might follow in your footsteps. The last, set clearly defined goals, merely gives you a goal to reach for as you yearn to grow what you have.

Ch. 8 - The Problems, Challenges, and Opportunities Faced by the Stage One Entrepreneurship
This chapter largely reiterates the key points of the previous chapters in the section: go cheap on everything but directly selling the product, get a mentor or two and learn from them, and don’t overprice your product right off the bat (because right now you need sales and loyal customers). Solid material, but just several pages of reiterated filler.

Part Three - Stage Two: Childhood

There may perhaps be a point in the future where I’m able to develop a business that grows to this point, but as of yet, I’m not there. Still, it’s interesting to know what lies ahead.

Ch. 9 - From $1 Million to $10 Million and Beyond
The second stage occurs when you’ve figured out how to successfully sell one product. Now that you’ve achieved that one successful product, the time has come to start brainstorming and either add more products to the mix or significantly improve (and thus diversify) the existing product. Not only that, the strategy you came up with to sell the original product will eventually stop working, so you need to be ready to tweak your selling strategy and perhaps even devise a new one. That’s a lot of effort - why do it? With a stage one business, you’ll probably make enough money each year to match a good salaried position, but your business likely doesn’t have much equity in it yet - not much value for the long haul. Stage two is about building that equity value that will add up over the long haul - making your business actually worth something significant to others.

Ch. 10 - Innovation - the Key to Second Stage Growth
The key to stage two growth is innovation, period. You need ideas to develop new products and update old ones. What can you do that’s interesting, useful, and sellable? Stage two growth is all about the creativity, and that means you’ll likely benefit from getting some highly creative types involved with your business at this point. In fact, I actually know one business that has an individual whose chief job is to just come up with potential ideas and do the first level of massaging them. He basically pitches a new idea every week - most of them are failures, but a few are being grown into products as I type this.

Ch. 11 - Speed: Putting Ready, Fire, Aim into Your Business
The growth of your business in this stage is directly related to the speed of your ideas. The quicker you can come up with good ideas that can be developed into products you can sell, the faster your business will grow. Masterson’s big suggesting is testing the product - if it seems like a solid idea, make a simple version of it (or a small number of complete versions) and let your trusted customers test it and tell you what’s wrong. They’re loyal and will give you good feedback, which will allow you to fix any problems and improve the product for final release. So, let’s say you’re a writer of a personal finance blog, and you’re thinking of writing on a different topic (say, cooking). The best way to launch that cooking blog would be to mention it to the readers of your already-existing personal finance blog and let them help you hone the exact direction it should go in, making it much higher in quality.

Ch. 12 - Getting Ready
This is the ready portion of the title of the book, and it basically entails just getting a product up and ready to be launched as quickly as possible. Don’t worry about finding potential customers or anything like that, just get a new quality product ready to go and get it out there. Your initial sales of the product will come from your existing customers anyway, who don’t need a strong marketing push in order to be interested. The key isn’t developing some great marketing plan at this stage - the key is getting the product done and ready to go.

Ch. 13 - What Are You Waiting For? Start Firing Already!
Again, if you haven’t gotten the memo yet, get it done and get it out there. Don’t worry about developing the marketing initially. The key is speed - don’t worry about perfection and don’t let the little tasks bog you down. The absolute focus is getting the product itself ready to go and out the door, not with periphery issues.

Ch. 14 - Aiming the Product
Once the product is out the door, however, then you can worry about sharpening the product. Pay careful attention as to who likes the new product and see if you can identify any patterns in that. See if you can eliminate specific aspects of a product - like ingredients in a food product - to reduce cost without reducing quality. For example, one of my closest friends claims that his “secret barbecue” sauce went down from having originally eleven ingredients to currently having four (and I don’t know what they are). See if you can improve the little details, too - sharpen the packaging and the presentation.

Ch. 15 - Aiming the Marketing, Part 1: A Quick Crash Course
My favorite quote from the entire book comes from this section:

Despite your success at creating a million dollars’ worth of revenues so far, you may be harboring bad feelings about the selling process. You may still harbor negative ideas about the ethical validity of business. You may also be afraid of selling.

Don’t worry. These are the thoughts and feelings that anyone who has been educated in the United States is likely to have. Having them simply means you’re smart and sensitive.

Most of this chapter is devoted to the idea of whether or not marketing is needed at all, and if it is, what parts are ethical and which ones aren’t. For the most part, Masterson seems to encourage people to make up their own minds about things and not cross any personal ethical boundaries, almost implying that companies that do cross boundaries that you’re uncomfortable with might be companies you don’t want to buy products from. His advice: treat the customers the way you would like to be treated. That’s an ethical standard I wish all companies lived by.

Ch. 16 - Aiming the Marketing, Part 2: Understanding the Buying Frenzy
If you read nothing else in this book, read this chapter. If you’re at the library and browsing for books, grab Ready, Fire, Aim and just flip to this chapter, no matter whether you’re interested in being an entrepreneur or not. Over about thirty pages, Masterson provides the best description of consumerism and the ethics of the seller that I’ve ever read. Is it ethical for a person to sell a luxury item, and if it is, what’s an ethical way to market that item? Masterson’s argument is basically that a seller has only responsibility to the product. In other words, a seller should only be concerned about selling a quality product that does exactly what is promised, not in the financial situation of the customer. The customer should have the wisdom to decide whether they actually can reasonably afford the item. I agree with this perspective in a bubble, but I start to have a harder time with it when advertising and marketing intentionally manipulate people’s self-image and feelings, causing them to associate positive feelings with a product that aren’t based in reality. That makes me uncomfortable, and as a consumer and a writer about consumer issues, it’s something I write about a lot and try to combat effectively. Does that make the seller unethical? I generally don’t think the salespeople on the floor (unless they’re using cheesy high-pressure tactics - and those are doomed to failure over the long haul) are unethical - I usually blame the large-scale marketers who carefully plot how ads can tweak people’s emotions. Whew! Good stuff here.

Ch. 17 - Ready, Fire, Aim in Action
Here, Masterson just gives some specific examples of the whole “ready, fire, aim” idea in action, showing how businesses execute the entire plan from having one successful product to having another one. Masterson picks some compelling success stories that really show how this can work in vastly different genres (side businesses that grow up, producing an album, and making a movie, for starters), but it’s missing what I always like to see from examples - how people work through problems in the process.

Ch. 18 - The Problems, Challenges, and Opportunities Faced by the Stage Two Entrepreneur
As with the previous section, this is just a summary of the key points from the second stage of business growth. The key point here really is that ideas are paramount and ethics are starting to become important, too. In effect, this is a Cliff’s Notes for the whole section, so if you just want to grab this at the library and get the high points, go to these chapters.

Part Four - Stage Three: Adolescence

Similar to the previous section, this is a “look ahead” at some of the things to think about when it comes to the long term.

Ch. 19 - Making the Stage Three Transformation
The third stage is really all about structure. The second stage was about rapidly developing products and getting them out the door, but if multiple products become successful, then you have a major enterprise on your hands without a whole lot of structure around it. Your focus as an entrepreneur when your business begins to have multiple layers of leadership and more going on than you can keep track of is to build a reasonable structure to contain all of this growth. In effect, you have a locomotive flying down the tracks and not enough rails to run on - you need to get those rails laid, pronto.

Ch. 20 - Changing into a Corporate Leader
The surest sign that you’ve reached the adolescent stage of growth is that there’s simply too much information being thrown around for you to keep track of it all. You either can’t get the access to all of the data you want (meaning the data tubes are clogged) or the sheer volume of data is overflowing everything. At this point, you can no longer have your hands on every tiny decision at the company and that means it’s time to transition from being an entrepreneur to being a corporate leader. It’s your job not to make every quibbling decision, but to make sure that decisions can be appropriately made by the appropriate people. There are countless business books on how to do this, advocating all sorts of things - the key is to take the time and implement things that work for you. Another key is to remember that marketing is still your main job, but now you’re marketing to different people - potential great employees, investors, and often broad swaths of consumers at once.

Ch. 21 - Filling Your Stage Three Business with Stars and Superstars
Of course, doing that means hiring quality people that you trust - many business books refer to these people as “stars” and “superstars.” How do you get these people into your organization? Give them almost infinite upside - the better they do, the better off they are, almost without limit. Barriers and job descriptions aren’t important with people of this caliber - you just need to point them in a general direction and let them loose to show what they can do, and you can usually quickly tell if they’re up to it or not (if they’re constantly foundering, they might not be what you need). When you find these people, mentor them and cultivate them. Talk to the top people in your organization all the time, share your ideas, and listen to what they have to say and where they think you should go.

Ch. 22 - Bottlenecks, Bureaucracy, and Politics
Every organization begins to deal with these issues eventually, and Masterson offers one central cure. Make your company’s central mantra about the customers, period. Nothing else matters but the customers. If a situation arises that’s slowing things down or creating a distraction, ask everyone involved how this helps the customer. Have people prioritize their work based around that principle. Usually, that means letting other people do their thing - if someone sends out a memo specifying the exact formatting of a company memo, this should be shot down immediately. How does it help the customer? It doesn’t. When someone plays political gamesmanship to get ahead, ask the people involved directly how they’re helping the customer. They’re not. Cut through the nonsense by focusing on what really matters: the people you’re serving.

Ch. 23 - The Problems, Challenges, and Opportunities Faced by the Stage Three Entrepreneur
Again, this chapter provides a concise summary of the materials that came before: let go, build the necessary structures, hire good people that you can trust and let them do their thing, and focus entirely on making customers happy. Everything else just follows from those tactics.

Part Five - Stage Four: Adulthood

The closing section seems tacked on a bit, as it addresses huge businesses that are likely addressed much better by books for large businesses, like Built to Last.

Ch. 24 - The Last Big Change
If you’ve managed to get a lot of good people on board, developed some sensible flows of information, and the company’s products are still growing and you’re still adding new people, you have a real winner on your hands. Unfortunately, it also means that you’ll have to step back even further - the company is now out of your hands and effectively running itself. The best you can do now is guide it - find strong, ethical leaders that can keep pushing things forward and keep asking the right questions. It’s also the point where you’ve got a huge asset that you’ve built up - your business is worth a ton. What do you do with it? Take it public? Sell the company? Keep running things and eventually pass the business off to your handpicked successors? I know what I’d do.

Ch. 25 - Acting as Your Company’s Main Investor
In essence, your role now is that of an investor in the company. You’re likely the largest shareholder in the company - and perhaps the only shareholder. Your focus should be on building long term value for that share. Make choices that keep the business growing, but keep it ethical and healthy so that it will stay vibrant for a long time. In some ways, it’s still about the same things it was when you started: a reflection of what you consider ethical and right, and built on the backbone of your ideas. Keep that in mind - and make sure the people who will run your company in the future believe in the same things. That way, your investment will continue to pay dividends for a very long time - in both the literal and figurative sense.

Some Thoughts on Ready, Fire, Aim

I was left with several thoughts while reading Ready, Fire, Aim. Here are a few of the more interesting ones.

Ideas are simply the key to everything. If you are creative and can consistently generate workable ideas, you’ll always find success at something in life. This book basically boils down businesses to a series of creative endeavors, particularly in the early stages - how do I create one product, how do I sell that product, how do I create more products, how do I sell those products. I’d go so far as to say that creativity is the most powerful skill a person can have in the modern era.

I understand now why some people actively choose to “keep it small.” Many of the problems faced by businesses as they grow are ones that don’t interest me very much. Developing a corporate culture? Yawn. Developing procedures for others to follow? I’d rather not. I think if I ever grew something to that size, I’d sell it and go do something else with my life (likely volunteer work, because at that point I wouldn’t need to earn any income).

The key to making the stuff in this book work is drive. If all of this seems exciting to you and you can’t wait to try out some of these things, then you’re probably ready to be an entrepreneur. But that’s not everybody - if this stuff sounded as boring as can be, you’re probably cut out for a different path in life. You’ve got to have the drive to make all this stuff work - without it, things will fail.

Is Ready, Fire, Aim Worth Reading?

This is a solid introduction to the things a person needs to think about while growing a business. It made me think carefully about many of the choices I’m making as a self-employed writer and consider the choices I may be making in the future if I choose to develop some of the other possibilities I have floating on the back burner.

My biggest complaint about the book is that it almost feels like too much was jammed into this one book. Because of that, the portion I was most interested in - the infant stage - felt really compressed, even in a large book like this one. For me (and for many readers), a book focused in on the specific growth stage that we’re involved with as entrepreneurs would be quite insightful and useful - I’d happily read Masterson’s book on the infant stages of a business.

On the other hand, seeing the concepts that a large business has to deal with versus the concerns of a small business was insightful. There are a lot of things you can focus on when you’re making a nascent business work, but if you follow the “generic business book” advice, you’ll quite likely follow the wrong ones for what a small business needs.

Masterson makes that distinction quite well, and because of that, this book is a very solid read for anyone interested in entrepreneurship, from baby steps to building something big.

Since quitting my “real” job to become a full-time writer, I’ve heard many rather negative comments from friends and family who seem absolutely shocked that I’d quit a stable, solid-paying full time job to hide in my home office every day. The comments went all over the place, ranging from a general idea that I just decided to start being a jobless derelict who is relying on my wife for income to anger that I would put my children at such financial risk.

In reality, this is actually a move towards being an entrepreneur, and I wasn’t surprised at all to find out that the biggest entrepreneurial inspiration in my life was one of the people most in favor of the move once I laid out all of my plans.

A sidebar: Is being a writer being an entrepreneur? Definitely. The modern era, especially with the advent of the internet, is changing the role of writer quite a bit. The internet gives writers a platform upon which to sink or swim themselves, based on their own merits. When I publish on The Simple Dollar, I’m using a platform I built myself, not just submitting a written piece to a publisher somewhere. This platform required me to have a lot of skills: technical skills, marketing skills, and so on.

Those skills, combined with a lot of passion and a lot of readers who support what I’m doing (and without that support, this wouldn’t work), have made it possible for me to swim, and also made it possible for me to open all sorts of interesting doors: writing a book, for starters, and several other very interesting things that hopefully will be coming down the pike soon. Even writing a book alone is much like any other form of entrepreneurship: I create a proposal, shop it around to publishing houses, and try to fish out a book deal.

So who is this entrepreneurial inspiration who gave me the thumbs-up to make the leap and actually gave me the inspiration to even think about it as a possibility?

I call him Dad.

My father was a born entrepreneur. He worked at a (somewhat) steady job for thirty five years, but that was just his regular income. He devoted much of his free time to other pursuits that earned money: small-scale commercial fishing, small-scale commercial gardening (growing what we needed, plus quite a bit more), welding, and other tasks that earned him a fairly steady side income through thick and thin.

When I was young, he was often laid off from his job - the company he worked for had serious economic problems in the 1980s and would often temporarily lay off large chunks of their work force. We persevered, mostly thanks to my father’s entrepreneurial bent. As soon as he was laid off, he’d throw himself heavily into the fishing and the gardening, employing me and my brothers as helpers in the activities. Thanks to my father, I know how to grow a garden, I can run a trot line, and I know how to hunt for deer and trap wild game.

These were activities that were self-directed, that led to us having the things we needed to survive as a family. But it went beyond that, too.

If a friend needed a helping hand or some food on their table, my father would make sure they had it. He’d stop in, see them, and leave behind what they needed. We never talked about it, but I saw him do it many, many times, and it left a lasting impression on me.

He would also take the time to befriend everyone he met, from the president of the local bank to the ragged jobless guy living in a shack down by the river. He knew them both by name and treated them both as friends. When the time came and he needed help, the guy at the bank would lend him money, no questions asked, and the guy down by the river would help him run trot lines, no questions asked. He spent his entire life building friendships and equity in other people, and that has paid off many times over.

In short, all of the elements I needed to know to be an entrepreneur, I learned from him. Do it yourself, because no one will do it for you. Follow something you’re passionate about, because that will make the work into play. Invest love and care into the people around you, because that care will pay dividends for the rest of your life. The more income streams you have available to you, the more likely you are to easily weather any storm.

I didn’t have all the things I wanted growing up, but I had most of the things that mattered: a loving home and a set of parents who genuinely cared for me and wanted me to succeed in life. When I look back on my childhood now, I realize that most of the tools I needed in life came from there.

Entrepreneurship isn’t about starting and building a giant corporation. It’s about the freedom to choose what you want to do - and when you’ve found it, chasing it yourself and building it into whatever you want it to be. My dream is the freedom to write whatever I want and earn enough from that endeavor to give my children a wonderful childhood and to grow old gracefully with my wonderful wife. Entrepreneurship means I’ll figure out the plans to make that happen, and my own father is my inspiration for doing just that.

Each Sunday, The Simple Dollar reviews a personal productivity or personal development book.

About a year ago, I began to really look at The Simple Dollar as the beginnings of a small business - likely one that would only ever have one employee (me), but a business nonetheless. I proceeded to dive into a big handful of recommended business books, but most of them made no impact at all on me - they either didn’t apply to me or were filled with platitudes so generic that they didn’t matter.

Then a reader of The Simple Dollar sent me his copy of Built to Last with a little inscription inside: “This book will change the way you think about The Simple Dollar and any goals you have with it. Good luck.”

I was really intrigued by this, and even more intrigued when I opened the book to the introduction and read the following:

We’ve come to understand since publication that, ultimately, this is not a business book, but a book about building enduring, great human institutions of any type. People in a wide range of noncorporate situations report that they’ve found the concepts valuable - from for-cause organizations like the American Cancer Society to school districts, colleges, universities, churches, teams, governments, and even families and individuals.

What’s so compelling here? Built to Last, in a nutshell, tries to extract the reason for success behind some of the greatest corporate success stories in American history. What do companies like 3M, Boeing, Sony, and Hewlett-Packard have in common, and what made them rise above the pack and keep enduring?

The idea that this subject could extract principles that apply to any organization, from Exxon-Mobil down to an individual person running a small, self-employed business, and that this book is so highly respected in the business community says that there might be something compelling for all of us between the covers. For instance, I read it for ideas on how to make The Simple Dollar a long-term thing. Let’s dig in together and see what there is to learn.

A Deeper Look At Built to Last

The Best of the Best
The book opens by seeking to identify visionary companies - best of breed companies within their respective areas that have endured over time. Some companies peak and then fall off (like, uh, Enron) and others stay around for a long time but never stay on top of any area (like Colgate, for instance). The book winds up identifying a list of eighteen companies - Citicorp, Procter and Gamble, Philip Morris, American Express, Johnson and Johnson, Merck, General Electric, Nordstrom, 3M Ford, IBM, Boeing, Walt Disney, Marriott, Motorola, Hewlett-Packard, Sony, and Wal-Mart - that have persisted at or near the top of their respective areas for a long time, surviving leadership changes and drastic changes in the marketplace. While I can think of a few companies that could be added to this list (Microsoft immediately comes to mind), I do have to say that all of the companies here did reinvent themselves and manage to stay relevant for a very long time (even if a few are having troubles right at the moment).

Clock Building, Not Time Telling
When you look at that list of companies, what do they make? You’ll probably come up with a long list of answers, but they all made one thing in common: an organization that could survive any personnel change, product change, or market change. Great ideas and great leaders might have helped in some cases, but neither one of those is absolutely necessary. What mattered was defining a process that worked regardless of the product, the idea, or the personnel.

Let’s translate this to blogging, something I’m interested in. You could compare The Simple Dollar to a completely different blog - say, amalah (an excellent parenting blog). We write about completely different topics and have almost no audience overlap, yet we’ve both found success in our respective areas - personal finance blogs and parenting blogs. What do we have in common that has value? We both write in a conversational tone. We both write very regularly, so that our readers can expect posts on a consistent basis. We both write on material that matters to our audience - we don’t write sidebar posts about our cat getting sick that are completely disconnected from the topic at hand. We’re both working on ways to make our message more permanent, through downloadables and book deals. It’s reasonable to think that these are elements of success that build a continually successful blog - and I’d bet that a lot of people would agree with that.

More Than Profits
Another interesting piece of the pie is that these companies all have goals in mind that don’t mention profits. Their mission doesn’t directly involve making money - money just comes in as a result of successfully completing the mission. They use a compelling example with Merck, who gave away millions of doses of Mectizan in the third world, a drug that cures “river blindness.” It brought them no profits at all - in fact, it was by itself a giant net loss. They did the same exact thing in Japan after World War II - they sold streptomycin there at cost because the Japanese couldn’t afford expensive medicine. What happened after that in Japan? Merck became the dominant American pharmaceutical company there because they didn’t just talk the talk about healing the world, they walked it, too.

I’ve taken this lesson to heart recently. What is the mission of The Simple Dollar? It’s to talk frankly about financial issues and help people to get back on track financially, regardless of where they came from. If I make money in the process of doing that, that’s great - it’s wonderful to receive some compensation for my time. But the mission of the site is to help people financially. That’s why I made some difficult choices recently, particularly in getting rid of most of the ads. I am violating my own mission by having payday loan ads or other ads that encourage poor financial decision making on the site, and while I’ve come to the viewpoint that such a stand is a bit extreme, it’s where my heart lies. In the long run, I firmly believe that following my mission above all else will pay off - I’ll reach more people than ever before. And that, my friends, is how I define success.

Preserve the Core/Stimulate Progress
A successful company usually has three or four core principles - outside of those principles, the company should be willing to change anything. Companies get into trouble when they start holding onto ideas and “rules” that are less important and refusing to change when the market changes. Built to Last uses IBM as an example here, showing their three core principles (give full consideration to the individual employee, spend a lot of time making customers happy, and go the last mile to do things right), the success IBM had when they followed them (up until the mid-1980s or so), and the failures after they started adhering to secondary principles, like corporate culture and such.

What are The Simple Dollar’s core principles? I sat down and thought about this for a while, and I came up with three. Simplify and humanize personal finance and growth is pretty much the core principle of the site, and these relate to my other two principles: never recommend a principle that I wouldn’t follow myself and be open and honest, even in failure. Everything I write or do related to The Simple Dollar comes from these three principles.

Big Hairy Audacious Goals
Here, Built to Last uses Boeing as the primary example, talking about how time and time again the company bet its entire future on what they saw as the next evolutionary step in the airplane. The challenge, though, is to make sure that these big goals are in line with your core principles - it wouldn’t make sense, for example, for Ford in 1909 to revolutionize the railroad industry.

What’s a big goal for The Simple Dollar? A book deal? 100,000 subscribers? My biggest goal, actually, would be to be able to have enough passive income to focus on spreading this message full time - the other items are just pieces of the puzzle to get there.

Cult-Like Cultures
Another element of long-term success is that people in the organization believe in the principles in the organization. This is how often companies with great success bring in new management that doesn’t believe in the company’s principles - and then proceed to derail everything. Think of Bob Nardelli at Home Depot, for example - he came into a company with some core principles, basically chucked them out the door, and installed a version of what worked at GE. A lot of the Home Depot folks didn’t like that much at all, and it created a long period of internal strife there.

In other words, everybody involved needs to believe in the same principles. When that fails to happen, then the organization begins to waste a lot of effort working against itself instead of working towards those goals. From my perspective, this is even greater encouragement to throw out the things that don’t work.

Try a Lot of Stuff and Keep What Works
Continuing this same thread, Built to Last also encourages trying a lot of different things, seeing which ones work, and sticking with the ones that do work. Thus, most successful organizations (like 3M) encourage people to spend a percentage of their time simply trying out new things instead of doing the same old same old. A lot of innovative companies do the same - Google comes immediately to mind.

I do the same thing with The Simple Dollar. I constantly try out new topic areas to see how they fit, try new writing styles, and take contrarian views. Some of these things work - some of them don’t. But each time, I learn something new about myself and about people reading this site, and that makes the site better and more useful for everyone.

Home-Grown Management
The book also encourages companies to look for management from within, something I strongly agree with. Almost every large company that brings in a new management team from the outside - particularly from another industry - winds up with some significant problems. For example, Jack Welch came from within GE and Lee Iacocca (at Chrysler) came from Ford and both saw great success, but Bob Nardelli came from GE to Home Depot and it was a big mistake.

I truly hope to find a mentor for The Simple Dollar someday. I would like to transition the entire site to the right person when the time comes (though that’s a long way off). But, if I don’t find the right person, I’ll just stop the whole thing - I want someone who is intimately involved with the site to take it over and I want that person to believe in the same things.

Good Enough Never Is
Built to Last believes the biggest enemy of all is complacency. Complacency is the point where you let competitors overtake you because you believe you’ve earned your spot. That never happens - someone’s always waiting to take your place in a competitive market.

How do I keep trying to work harder? I read the negative comments and rarely look at the positive ones. This even includes the ones that are obviously people trying to grind an axe that is unrelated to me. The negative comments usually point me to where I need to improve - the positive ones, while reaffirming, usually carry the message that I don’t need to improve. And that’s dangerous.

The End of the Beginning
The last principle is that success isn’t the end of the road. It’s merely the start of it, because now you have to live up to that success. Where can you go from here? It’s an eternal question that some companies can answer and some cannot. If you have all of the tools in place, you can usually find the answer to that question. It’s a powerful question to always think about, even if you believe that you really are the best - how can you get better?

Building a Vision
This chapter largely concludes the book by stating that all of these pieces do in fact intersect and come together, showing you a true vision for your organization. This isn’t buzzwords or “mission statements,” but the actual realization of the path you have left to travel and the tools you have to get there.

Buy or Don’t Buy?

Every person who does any sort of side business or is involved in running anything should read this book. It made me think about The Simple Dollar and my other side businesses in a very deep and careful way and it made me realize that the core values I’ve adopted really are the most important thing of all.

I really just scratched the surface of this book in this writeup, trying to point out a few of the principles that relate to what I do. This book is far deeper than that and not only relates to things done within an organization, but with how you choose to live your life as well. It brought me to some serious realizations about my principles and what I’m doing - you’ve already seen some of this in the last few months, and I think you’ll start to see more of them.

Read this book - it’s really worth it. It’s a bit of an older book, so you should be able to get it from your library or from PaperBackSwap quite easily.

When I was young, I was a budding entrepreneur. In the late 1980s, one could easy get forty cents a pound for aluminum, so I adamantly collected cans. I provided garbage cans for neighbors to toss their empty cans in, then I would go on a route and collect those cans, adding them to my own collection. Eventually, this became a pretty profitable enterprise for a ten year old boy living in a very rural area - I could make $30 or $40 a week working a few hours a day around whatever else was going on.

Unfortunately, several events killed my entrepreneurial spirit - chief among them, a painful experience where my collected aluminum for most of a summer was stolen by someone I trusted. The wind left my entrepreneurial sails - and it didn’t really come back until the last few years.

That’s a true shame, in my opinion, because I missed out on the best years to be an entrepreneur - late childhood until you settle down with a family. You have the time and the freedom to really let your sails unfurl and let that entrepreneurial wind push you towards your dreams.

Now that I’m a father, I’m looking at my children starting to grow up and I realize that it won’t be long before they reach the age where they will want to earn their own money. Here are seven techniques, learned from observing the parents and mentors of young entrepreneurs, that I intend to use to encourage my own children to make their own success. These techniques will work for anyone you might want to mentor, from

Let them see the possibilities from a very young age. Even now, I’m pointing out to my two year old son that people work to earn money. “Dad and Mom go to work every day so they can make money. We use that money to buy food, to buy our house, and our clothes. Usually, the harder and smarter we work, the more money we make for our time.” I try to constantly show him better ways of doing stuff - like it’s easier to stack the plates when taking them out of the dishwasher then putting the stack away than to put the plates away one at a time. That’s more efficient, and that’s the key to success.

Let their options for earning money be a choice with differing levels of success. I’ve fostered that a bit by having him help with household cleanup - he has some required things to do, like cleaning up his Legos, but he can sometimes earn a quarter by unloading the plates and saucers in the dishwasher, for example. He’s learning that he has an entrepreneurial choice - he can either go play and not stack the plates, or he can stack them and earn a quarter. Most of the time, he wants the quarter - he’s learned that quarters can be taken to the store to buy a new car. Tying the two pieces together, he’s learned that stacking the plates first gets the job done faster (while still doing it just as well as before).

Always provide positive encouragement. The worst thing you can tell someone is that they can’t do it. Instead, point out that they can do it, but before they get there, they’re going to need to add some skills. This is something that my parents and mentors both did quite well - my parents were always adamant that I could live my dreams once I got an education, and lately my mentors have shown me that effort and diligence can carry you quite far. I know that I can’t follow every dream, but I know that with the right tools, I can follow most of them - and it’s because of encouragement that I believe it.

Help them brainstorm. Entrepreneurship feeds on ideas, usually starting with a core idea that gets developed into a profitable enterprise. This requires creativity and critical thinking, and most of the time, both processes can be helped along with a guiding hand. Listen to their ideas and offer your own. Be willing to be a sounding board for what they’re thinking, and offer positive suggestions. For example, let’s say your nephew wants to start a lawn care business. He needs to think about equipment, about marketing, about policies and prices, and about time to execute these things. Suggest these, watch the wheels turn, and offer some help when it’s needed.

Strongly encourage them to plan ahead. The more planning one does in terms of the future, the more likely long term success will occur. Encourage them to write an actual business plan, and be willing to be an editor of that plan. Encourage thought about where this might potentially go, and whether or not it makes sense to make different basic choices to get there. Should you buy a sturdier lawnmower now, or get a cheap one to get started and upgrade later?

Invest in their work. Many beginning entrepreneurs are stymied by a lack of capital. They can’t afford equipment, business cards, or needed services. Offer to be an “angel investor” for their small enterprise, giving them an interest-free loan to get started. That way, you’re letting them get started while the fire is still burning hot and not putting them in a financial trap, either. I’ve invested in the budding entrepreneurship of multiple people in the last few years, including a person who’s starting a beverage company.

Let them fail, but help them get back up. Failure is going to happen. Vital equipment will fail, a key customer will quit, or all of your work product will get stolen - I’ve seen all of these happen. Let the person feel failure for a bit, but then help them get back up off the ground. This is something that I wish had happened to me when I was younger - I was reeling from the punch, but no one encouraged me to get back out there and keep fighting. Instead, I began to believe that entrepreneurship wasn’t for me - the biggest mistake of all.

The most important thing? Don’t be afraid to be a mentor. If you know someone who’s starting a business, offer to help them in some way, even just in the form of someone to bounce ideas off of. You’ll get nothing but benefit from this in the long run, in the form of a local businessperson who values you and a stronger sense of community and of your own sense of entrepreneurship.

I’ve had the opportunity to launch two successful small businesses in my life. Because of this, I regularly get emails from readers who are quite excited about starting their own business. They write out their plans to me and send it on, hoping to get some feedback on their ideas. What I’ve found, though, is that almost all of my responses boil down to the same handful of things. Without further ado, here are the ten things you should do before starting any sort of small business.

1. Clarify what you plan to do.
It’s easy to dream about something you want to do. One of my readers is dreaming of opening a coffee shop in his neighborhood. Another reader really wants to start a blog on video gaming for busy thirtysomethings. A third reader is trying to develop a seminar series. All of these are potentially great ideas, but they all need some more thought. Here are some specific points that you should try to answer before anything else.

What sets your idea apart from what’s already out there? With The Simple Dollar, I was aware that there were personal finance blogs out there. I sought to set myself apart by writing quality content with my own real voice and update it on a very consistent schedule, something that I didn’t see in the personal finance blogosphere at the time.

Who are your customers, do they actually exist, and how will they find you? You don’t have to research this (that will come later), but you should at least be able to define who these customers are and have some idea how they will find you. You should also honestly ask yourself whether there are enough of these customers to sustain what you want to do.

How will you actually make money at this? With some businesses, it’s obvious: you’re going to sell a product. With other great ideas, it’s not so clear. Where will the money actually come from? What will the costs be (roughly)?

2. Find a mentor.