Posted by Dave Lorenzo - Business Coach

Carnival of Career Intensity – Post Five

Steve Faber presents How Can I Be a Successful Entrepreneur? posted at Get Debt Free.

Are you mired in debt, barely scraping by every month, and looking with envy at those whizzing by in a sparkling, new BMW or Lexus? Why are they able to enjoy such a lifestyle and you aren’t? Do they know some special secret? Are they incredibly hard workers? Do they ever see their families? Maybe they won the lottery or they’re from “old money”. 

Well, there are a few possibilities. Many of those who are living the so called “good life” are incredibly hard workers. You’ll notice it’s 7:30 at night, you’re heading home from the gym, and they’ve still got their Armani on. That’s because they’re just finishing another 12 hour day. Some do have spectacularly high incomes. Millions of them own their own successful businesses. However, many of those people that look outwardly successful are really just leveraged to the hilt. All the accoutrements of success they display so proudly for all to see are really just a house of cards, secured by massive debt. While these people look to be successful, in reality they are leasing the good life. Imagine the pressure they have to live with every day. It can be pretty hard to make such a big nut every month.

Here’s a sample of what it can be like for one of those “House of Cards Millionaires” -You’ve got $679 for the BMW lease and another $599 for the Lexus. Insurance for such nice rides isn’t cheap either. Add another $300 a month for the insurance. That killer house on the golf course that’s the envy of your friends and business associates is really a fine pad, but although you’ve managed to build a nice bit of equity, you still need to cover the $5,200 mortgage payment every month. Add in other necessities like electricity, gas, cable TV, insurance and Internet access, and that stellar monument to suburban architecture sucks over 6 bills a month out of your wallet.

The country club membership is de rigeur if you’re living on the back nine anyway, so add another $750 to the monthly total. If you’ve got your own business, maybe you can find a way to claim it’s a business expense, but you’d better talk to someone about business out there once in a while. Putting away a little bit for retirement and the kid’s college fund will require still more; say another $1,000 – $1,500 a month. Getting your hair done, buying food, health or tennis club memberships, cell phones, and recreation can easily add an additional $2,000 to the monthly bills. Let’s see, that’s about $12,000 a month in cash going out, before taxes, each and every month. Ouch! I hope you both work. You’ll have to gross about $18,000 a month, depending upon your tax bracket, to pay for all this stuff. You’d better not have any disruptions in your income, or look out!

Now you’re starting to see why even so many of those who you may think are living the good life are, in reality, racking up massive credit card balances like so many other folks. They’re committing one of the cardinal sins of personal finance; living beyond their means.

There is a chance, however, that they really are a successful entrepreneur. Their business paid for the new Escalade (nothing wrong here, but please, leave the dubdubs to someone else) because it has a gross weight over 6,500 lbs. Ditto the portion of the mortgage payment earmarked for the home office and “conference room”(Home Theater). Both the husband a wife are employees of the business, which pays them a handsome salary every month. To keep corporate income, and thus taxes, low they also receive a healthy bonus every quarter. Now, that’s probably more of what you had in mind when all those thoughts of the good life went coursing through your brain.

Why are some entrepreneurs successful, while others are doomed to failure, or worse, eternal near success? There are a myriad of reasons. Some businesses are founded with a great premise, others aren’t. The basic idea has to have merit, and the marketing plan must be sound, or even the most astute business person will have trouble making the business successful. There’s no denying however, that you can give two different people the same product or service, the same market, and the same financing, and they can experiencing vastly different levels of success. Why?

According to a study by the University of Alabama, successful entrepreneurs share some important characteristics. Some of these are innate, but others can be learned, and you can always work to improve any area where you need a little boost. Here the important characteristics they found that had the most impact on success in an entrepreneur: 

• Drive – Successful individuals are highly self motivated.
• Follow Through – Do what you say, and make things happen.
• Staying positive – Nothing kills success like a negative attitude.
• Objectivity – Successful business owners can realistically assess risks
• They respect money – Frivolity has no place when trying to be successful
• Being proactive – Successful entrepreneurs anticipate both problems and opportunities and act accordingly. Those that only react are doomed to mediocrity.
• Communication – One of the hallmarks of success in all areas of life is the ability to effectively communicate ideas, weather in writing, electronically, graphically, or verbally. Never stop in your quest to improve the communications skills of yourself and others in your organization.
• Technical knowledge – The successful individuals were technically sound, both in the business and operational aspects of their business. 

In addition, you can’t be afraid to take risks. There is a definite relationship between risk and reward in business. They key is in knowing which risks to take and how to mitigate them. Furthermore, as I noted already, many successful businesspeople are unafraid of hard work. Many work extremely hard and are rewarded handsomely for it. However, it’s even more important to work smart. Effort, correctly applied, will always be more successful. It’s much better than being eternally in debt.

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