BizActually Podcast Ep. 4

Mircea Cornelison00:00

It's a brand new year, and today we're going to talk about some of the burning questions on so many people's minds, such as: Should I quit my job or drop out of college to start a business in 2022? And what's the first step? How do I know when I've confirmed that there is a serious opportunity here to build a profitable business? How secretive should I be about my idea? And how long does it realistically take to start a business?

Welcome to the BizActually Podcast, where we dive into what it's really like behind the scenes to build, manage, and grow a successful small business with real-world examples, cases, and stories. I'm Mircea Cornelison, here with my cohost Terry Cornelison, who has spent over 40 years building, managing, and advising businesses in the U.S. and around the world.

In addition to building several of his own businesses throughout his career, Terry has served as an SBDC Small Business Advisor, MBA instructor at Washington State University and the University of Minnesota Carlson School of Management, as well as leading multiple economic development projects around the world from Moldova to Mongolia.

You can also find our show notes and transcript of this podcast, plus the tools we mention in this episode on our website. Just follow the link in the description or check us out at bizactually.com/podcast/ep4.

Okay. So here's a question I found on Quora--a question that I've had before and a question that I think a lot of people have right now during the Great Resignation as they're calling it. "Should I quit my job or drop out of college to start a business in 2022?"

The recurring answer I saw in the comments was: Absolutely not. Keep your options open. Keep working at your job to pay the bills and maintain that cashflow and work on your business idea in any available spare time, but treat it as your second priority.

So what's our take?

Terry Cornelison01:47

Actually it's an excellent question, and it's on everybody's mind. My take is, you know, it depends. First of all, there's a ton of risk involved in any business you go into, just look at the statistics. You can find them on the internet. They're from the government sources from private research firms, but it's a very high risk to go into business. Most people are going to fail at some point. And why is that?

So since there's a lot of risks, then it's worth at least looking into it a little more deeply than, "Hey, I'm excited about going into business. Let me just drop out of college and open up like, well Bill Gates or...

Mircea Cornelison02:22

There's a lot more to those stories is if you look closer at them, but the reality is when you know, your current income is cut off, the clock starts ticking for you.

Terry Cornelison02:31

Yeah. And that that's a position which, you know, some people are motivated positively by that.

Like, "Oh my God, where's my rent going to come from? I'm tired of eating ramen noodles. I've got to make some money." And they get creative.

Very, in my experience, very few people get creative. They get desperate in those conditions. So it's probably not the best scenario to put yourself in knowingly.

Mircea Cornelison02:52

But you know, the good news is actually that you don't have to make the decision just yet.

What we recommend doing first, as in right now, wherever you are listening to this podcast, is a little exercise we call and other people call "Napkin Math." And basically the idea is just imagine that you're in business already. You'll open your doors tomorrow morning and think through what needs to be in place.

What does a day of operating your business look like from the moment you get up in the morning to the moment you go to sleep? What activities will you be doing? And what are the costs associated with these activities? How much does it cost to operate your business? How many customers can you serve or how many sales can you realistically make?

Just think it through. Get some ballpark estimates, maybe do a little research on Google, to get more and more accurate.

Terry Cornelison03:34

Yeah, that's exactly what I try to do with all my clients. That's what I do myself. And I find it's probably, it has proven to be the best approach to actually build a business that's solid that you can be profitable at from day one. And not that you're making tons of profit at day one, but you build the profitability into your business model. You have to think about that and plan for that in order to make it happen.

So there's a lot of little things behind the scenes that if you spend some time just thinking about it and then doing a little bit of research.... and this is not, this is not research like academic research. This is just practical stuff that we do everyday anyway. If you're going to buy a house or something, let's say going to buy a car, you don't just go out and buy the car. You know, "Hey, I'm just going to take my money and go buy a car."

No, you actually do some research and you see how much money it's going to cost. What features you want. You look and see, all right, what are other people saying about this car? What are the advantages or disadvantages? Hey. You look at this car, then somebody says, "You know, I looked at this car and compared it with a different car," and then you think, "Woah , wait a second. I didn't know that other car existed." So that's how this process that I'm talking about works for us in business.

Mircea Cornelison04:43

And it doesn't require you to make a decision immediately to quit your job. You can do this at the end of the day on the weekends, start thinking it through. And the math part of it, the basic equation, is just your sales estimates minus your cost estimates leaves you with that net profit before taxes figure. That basically what you're making, that's similar to your net income now with your current job. And your mission is to get that number to be large enough that it covers your current living expenses or the lifestyle you'd like to live, and hopefully much, much more.

Terry Cornelison05:13

And my way of doing this over the years has been--and it's exactly what I do for myself with the business we're doing right now and with every other business I've built. And with my clients, this is what I recommend. And it has proven to be successful for a number of reasons.

First, we create a scenario which is your dream business. And we do the math that you're talking about. We create very simple spreadsheet financials, but we create a scenario where the business you have in mind can be done and everything goes right. And you're making all the money living the dream. That scenario.

We set that aside, and then we do a worst case scenario where everything goes wrong and you end up... you borrowed money, you owe investors, you've gone bankrupt. And the best you can do right now is try to find another job. And in the short-term, maybe all you can get is like a job at McDonald's.

So that's the worst case scenario. Now you have the best case scenario, which you really need in order to build a business because you gotta be excited about it. Have some dream you're trying to bring into reality because it is challenging. It's fun, exhilarating, but very challenging.

And then to me, the reality check is okay, if everything goes wrong and you fail at this, which is not uncommon, and it's not the end of the world, but it is something that needs to be considered. Do those two, and then you do the one in the middle. The realistic... Okay. This is probably what could happen. You know, if everything doesn't go right, but everything doesn't go wrong, this is probably what will happen. So the preparation that I try to do with my clients and myself is let's look at those three scenarios. Then what do you do with them?

Mircea Cornelison07:01

We've actually created a pretty simple but comprehensive PDF guide along with two of these tools we use with our clients that can help you organize and keep track of this napkin math and help you put together these scenarios you're talking about with numbers, both of which are freely available to all of our podcasts listeners.

Just follow the link in the show notes below this podcast, or check us out at bizactually.com/vault. Like I said, these are the exact tools that we use with clients to help them think through their business idea and begin designing their business model from day one. And it, it actually becomes a game to find a realistic scenario, like you were saying in between, that you can begin building where your business generates enough income to cover all of your living expenses and hopefully far more. And as you move forward, that scenario could very well change. It could change radically or, you know not so radically, but at least you're engaging in sort of proactive entrepreneurship rather than just reacting to things that come your way.

Terry Cornelison07:53

Yeah. And actually there's a lot more that you can start discovering as you begin this process. But the process itself is just simple and straightforward, and it's like basically everything you do in business either brings money in or takes money out of the business.

So that's the formula: what's bringing money in and what's taking money out? "Bringing money in" is mainly sales and marketing. And the other side of the equation is what's it going to cost you to make those sales?

So, you separate those out and you start identifying what you have to do to make money, and then what you have to do to... as far as the costs and as far as finding customers and bringing them in.

Mircea Cornelison08:31

And through this kind of exercise, where you are right now, before you let's say, make the decision to thrust into building a business will help you really clarify your picture of what it will look like for you to switch over to running this business full time.

Terry Cornelison08:45

Exactly. So, the idea... and again, you can start at any time. In fact, if you want to get an idea of what it's like to start without any plan, there's a lot of places you can go, but one of them that comes to mind is Guy Ras. And he has been doing this podcast for four or five years.

Mircea Cornelison09:00

"How I Built This"

Terry Cornelison09:01

Yeah. And he actually has a book out now. I've just listened to maybe 20 or 30 of those episodes over the last three or four years. But they're reality. They sound like my clients, actually, over the years that come to me after they built their or started their business or built their business.

There's so much that you have to learn. It doesn't matter if you're dropshipping from Amazon, if you created a software service program, if you are building a pizza parlor, I mean, it doesn't matter what you're doing. This process works for you. As you'll see from reading stories about people who have succeeded, there are obstacles and roadblocks and all kinds of things that get in your path. So the journey is using those, figuring out ways to get over them, around them, through them, pivoting a bit, modifying things. So it's really an exciting journey, but it isn't like, "Well, we opened up and we're profitable." That's just the beginning.

Mircea Cornelison09:53

So let's say you've gone through some napkin math, and you think you've found a business model that can make you the money you need and want. What's the next step?

Terry Cornelison10:02

So now you've got something on paper, something out of your head on paper that... you've now created a scenario that looks like it will work for you to create your business. Now, you need to go out and start confirming those numbers, both on the revenue side--can you actually get people to buy your product? Do they want your product? Will they pay what you're asking for your product? How many people are out there? Where are they? You know, lots of questions you'll need to verify those sales numbers with. Lots of information, and lots of details that you can go out and find to verify the money coming in, the sales.

Then you need to look at the other side of it. What are the costs? The costs are, you know, where are you going to build this business? Do you need an office? Can you just work out of your bedroom with your computer?

Mircea Cornelison10:50

What vendors are you going to have relationships with?

Terry Cornelison10:53

If you have any kind of business that has retail trade--you're going to probably either build something, manufacture something, create something, cook something, and then you're going to sell it to someone--there are going to be other people involved. So, what is it going to cost you, you know, to get the raw materials? What machines or equipment will you need?

Mircea Cornelison11:10

Are you going to work with a local 3D printing workshop or a major manufacturer with mold injection?

Terry Cornelison11:16

Or if you're doing a software package, you know, you've got to hire, you're probably not going to do that all yourself, all the programming. So you're going to be hiring people with certain skills and you've got to manage those. What am I going to pay them? What kind of benefits? Am I going to bring them in as employees or somehow giving them percentage of the business. And lots of decisions to be made there.

Mircea Cornelison11:35

So basically it's just time to start rolling up your sleeves and doing some practical research. What they call primary research going out there and actually talking to people, interviewing industry insiders or industry experts, anyone basically who operates in the industry you're thinking about going into or has some experience there. Potential customers, and even competitors. We have a couple of podcasts on going out to your competitors and letting them help you shorten your learning curve.

In addition to that, hop online. Start researching your competitors, your potential customers, every cost estimate, every sales projection that went into your initial napkin math exercise.

And that's really where it begins. And through that process, you'll validate, hopefully confirm that your idea really is a high potential opportunity and that the business model you've already begun constructing is something that you can realistically bring into existence and then devote all your time to and make the profit you need.

And that process might be extended. It could take a few weeks, it could take a few months. But that is really the process that we recommend engaging in right after this initial thought experiment, napkin math exercise.

Terry Cornelison12:36

Yeah. And all this stuff can be done while you're going to college while you're working somewhere.

I remember reading in that same place where you found this. It was someone...

Mircea Cornelison12:45

Another commenter in the Quora thread.

Terry Cornelison12:46

Yeah, an answer in the comment thread. And he was talking about... if you're working, there's no reason you can't find 10 hours out of your day, at least six hours out of your day to do this kind of work or any kind of work in preparation before going into business.

Mircea Cornelison13:01

I have a friend right now in Chicago, who's working a corporate job. He has to work 40 hours a week, and he gets the 40 hours in and all his other time, 30 hours or so at least, he's investing in thinking through his next business venture. He's taking some programming classes. I mean, you can absolutely work a part-time job or a full-time job, even in this case, and start taking steps forward.

But here's a question: how do you know when you've confirmed that there is a serious opportunity here to build a profitable business? I mean, is it ultimately just a judgment call, in your opinion?

Terry Cornelison13:30

Yeah. Like most things in life predicting the future is a pretty challenging thing to do. But, you know, there's just ways you've lived your life already, you know. You're used to taking some kind of risks here and there. You've seen sometimes it works, sometimes it doesn't. You just put all those things together called common sense and you start making a judgement call.

Mircea Cornelison13:49

The benefit of going out there and doing this sort of research and getting real feedback from industry insiders and potential customers in particular, is that you're actually building, sort of an empirical argument for whether or not you should start a business. And you know, at some point you'll hopefully have enough positive feedback or enough feedback to help you either modify your initial idea or help you make a decision to pull the trigger and commit full-time or maybe stop for a while and think of something else.

With our clients, especially in the startup phase, we like to get to at least 30 interviews with industry insiders and potential customers, as we're doing online research and building the model and thinking through sales estimates, cost estimates...

Terry Cornelison14:28

You know, you could do a hundred, but you don't want to go too far in any direction here, because even if you did a hundred or a thousand, you still are not going to get any guarantee that what you're doing here is going to work. And 20 to 30, seems to be a pretty common statistical number for people to get a good idea of what they could expect.

Mircea Cornelison14:48

That's about the same number that you had your students at the MBA program at WSU go out there and interview.

Terry Cornelison14:54

Yeah.. And here's the thing, the value of doing this-- there's a lot of value in getting out there, both in primary and secondary --but one of the most important things is that we get excited about our new idea, our new business, whatever it is, and we're really excited about it. And we tend to filter everything we hear out there as positive. Like, "Oh yeah, this is the greatest thing." And our friends will tell us that this is really great. And maybe they think it is, or maybe they're just, kind of being nice to us, but it doesn't matter. We have to get other opinions. We have to get some unbiased opinions and especially the place to get those are from people who are possibly going to buy that product and pay you money for that product.

Mircea Cornelison15:34

Another commenter in this Quora thread encouraged the original poster not to be defensive when he encounters feedback that might be negative or critical. I've encountered this. Everyone, all my friends who've started businesses have encountered this. All of our clients have at some point come up against some negative feedback and really that feedback is critical. And the way you respond can be absolutely pivotal in designing a product or a service that people actually want and are willing to pay for.

Terry Cornelison16:00

Right. And you know, the thing is that if you get perspective on your idea, that's exactly what you need now because if it's just your idea, and it may sound great to you and it may have a lot of wonderful features to it, but just by getting that feedback, you'll get another look at it... you might think, "Woah, geez, I hadn't thought about that aspect."

In fact, I've got lots of experience with this with clients who are actually building prototypes. We have a client who built a fitness product prototype, one who built an ankle brace prototype. I had one who had a, a board game--it was a math game. He's a math teacher in high school, and he built this game and he'd used it in his classes over the years, and he finally said, "I'm going to actually make this a reality and sell it on the internet." So he brought it to me, showed me how it works, and he aske d, "Where do I start with this?"

Well, I know a number of people in this area where we live and work, and they do prototypes. They have little businesses, and they can look at your type of product that you're building. It may be a machined product or it may be a foam product, or it could be a wood product or whatever it is. And what are prototyping businesses? They're like. Geniuses and inventors themselves, but they also have the tools to take it out of their head and actually create a prototype example of what you can take to market. There will still be work to be done to it, but that's what they do, is get your idea--even if you already have something, they'll look at it, and they'll instantly start seeing ways it can be improved.

So in this case, as in every other case I've ever had, just that one stop with someone who can build a prototype for you will give you all kinds of feedback that will be really important for you when you put this on the market. They will know what really happens in the marketplace--where it'll wear and tear, and they'll see things you can't see. They'll see efficiencies, they'll see different kinds of materials that can be used in that product that might be stronger, cheaper, more durable, more aesthetic, you know, just all kinds of things.

That's just one example, if you're developing like a new product, of what you can learn from getting feedback.

Mircea Cornelison18:11

It's key to be receptive and keep an open mind. And this brings up another question that I know is on a lot of people's minds, especially new entrepreneurs and young entrepreneurs, it was on my mind when I started my first business. How secretive should I be about my idea? How careful should I be about telling other people, especially, potential competitors and industry experts I'm talking to or might want to talk to about my idea?

Terry Cornelison18:33

Well, I can't give legal advice. And my experience has been, most people are far too secretive. There are, you can get a nondisclosure agreement and some kind of confidentiality agreements and get people to sign those. And people that do sign those, they may give you feedback and all, and you'll feel protected against them.

So, if you have intellectual property that you really do have potential to capture a market because of that patent you may get on that or that copyright, or...

Mircea Cornelison19:02

What is intellectual property?

Terry Cornelison19:04

That's where you have designed or developed something that you can claim ownership to so that someone can't take that idea and then use it and market it and create a business around it.

I mean, this is just an example. So in business, that's what it is. You've created, you've gone to the trouble of designing, creating, and patenting something, and now you don't want to lose your ability to then develop that into a product and make your living from it. So you definitely have to be aware of intellectual property. If you have it, you need to have some form of protection. And it's not that difficult...

The thing is most people don't go to an attorney because it costs money to go to an attorney, and it seems like it's never ending money because they find things you ought to be doing, you should be doing, and you better do. And you know, that's their job. But any attorney who has experience in intellectual property, they can help you very quickly at a very reasonable price just to get a patent pending, just to file so that you got a protection for a short period of time, while you take your product or intellectual idea to the next level.

So there's lots of things that can be done for protection there. But overall, I would say in all of the businesses... and I worked with Washington State University in conjunction with their commercial office, we were taking all the intellectual property from Washington State professors, staff, students and commercializing that. So I've been a part of this process for a lot of years. Even though we protect as best we can, it's almost never a consideration. It's such a small percentage. So if you've got an idea for a new foot brace, I would advise you to stop by an attorney and say, "How significant would it be for me to get some kind of protection on this right now?"

Usually the advice is, you know, the most important thing to do is to get in the marketplace, find out if there's a need for it, and then start marketing it. And then bring on more protection later on because your big advantage is going to be out there. Because as soon as you have this thing in the marketplace, somebody else out there is going to see it. They're going to reverse engineer it, and they're going to be your competitor. Alright, so...

Mircea Cornelison21:14

And ideas are a dime a dozen, that's sort of a common phrase. And that really applies, especially in business here because probably more often than not your initial spark of insight or idea will change by the time you open your doors or you're generating profit.

So this brings up another question. Do you need to have personal experience or expertise in the industry that, where you'll be operating or building your business?

Terry Cornelison21:35

You don't have to have expertise, but there's some practical things to consider here.

I built a pharmaceutical manufacturing company a number of years ago from the ground up. I didn't intend to actually build it myself. I'd hired a professional from the industry who had 40 years of experience in pharmaceutical manufacturing. And he was going to build this, but he had a heart attack and died a few weeks after we broke ground.

So I had to actually build that and get it up and running, hire pharmacists, put everything together--HEPA filters and all the technical part of it. Plus I had to go out and deal with all the... 28 different federal, state, and local regulatory agencies I had to deal with. So I learned all that in real time on the job, so to speak, in building that pharmaceutical manufacturing company.

I don't recommend it. It's 24/7, high risk, but it was just the position that I was put into.

So the ideal situation in my thought is that if you can spend some time actually working in an industry where you're going to be having your business, you'll learn things that you can't learn from the outside very clearly. So if you can have a part-time job, or let's say you're going to open a pizza shop. A very simple example. All right, well, get a part-time job working as a delivery person, and then see if you can work making pizzas, and then, you know, just ask a lot of questions from the manager and the owner and anyone you encounter, from customers. You'll get an idea of what makes that business work just from being an , hourly paid employee in that business. And you can see whether you really like the business or not.

So, in an ideal situation, if you can get some experience in an industry, I believe it's very helpful.

Mircea Cornelison23:22

But you're not limited to building businesses only in the industries in which you've worked in the past.

Terry Cornelison23:27

No, not at all. In fact, one of the reasons I was successful in the pharmaceutical manufacturing company was because I'd built or helped to build or been a part of building at least a dozen businesses before that. So I had rolled up my sleeves and learned a lot of lessons and figured a number of things out. And most importantly, I learned to listen and look and observe and realize that things are probably not going to go exactly as I had planned. So be prepared, you know, and that means that you have ways of looking at different situations that you might encounter and considering options.

And you can do that easily. The way that we work with clients, that's a part of what we do.

Mircea Cornelison24:12

And if you don't have any experience in the industry in which you'll be operating and building your business, that's okay too. You're not saying, you know, first you need to go spend three years in that industry. But one of the ways to help shorten your learning curve is to get out there and start talking to people in that industry, even competitors.

And it doesn't have to just be the owners of businesses that you're competing against. It can be employees in that business, managers, supervisors, as well as anyone else who might have any experience in that industry to help you as the founder of this new business.

Terry Cornelison24:40

Yeah. I think we did a whole podcast on checking in with competitors, and we have more material, which we'll put in the vault about how to do that and really how to roll up your sleeves and contact them, how to choose what to say to them, what kind of questions to ask. But when you get out there and start talking with competitors, you learn a lot that you can only learn from people who actually are experienced in that business. So that's invaluable.

The other thing though, is when you talk with people in the industry who are advisors, consultants, associations that represent and support that industry. You have people like the Small Business Administration and their SCORE division, which are retired successful executives who go and help people in their businesses, give them perspective about what it's like in this industry. Then you have the SBDC, Small Business Development Centers, and they have people there who have a lot of resources that give you perspective about what are the trends going on in the industry? You know, where are they going in the future? What does it look like?

And so that you can figure that into your business model.

Mircea Cornelison25:48

So here's maybe the closing question for this podcast. How long does it take to start a business realistically? What's with that three month timeframe that we talked about in the past for your turnarounds?

Terry Cornelison25:59

Yeah. So what I've learned over the years with... because I've started a lot of international projects. I've built a number of businesses myself, and then I've helped a few thousand people to either start their businesses or turn around their businesses. And to me, there's a window. It's pretty much on average, not longer than three months. But within the first three months of either entering to do a turnaround or starting a project or building a business, you need to get momentum and focus.

This is my experience and I'll stand by it. And that's how we help our clients. There's a period of time that you have to get things going in the direction that you want them to go. And if that's a turnaround and you're going bankrupt, then you need to maybe even do that in three days, three weeks, you know, and not wait three months, but just to get it going in the right direction, that's enough.

But it has to be done quickly. And if you take more than three months, I've just found in business, whether it's a turnaround, a startup, that it's really, really difficult after that. It's hard to break the habits that whatever took you so long to get to that point where you're almost ready but you're not really in there doing what you've said you're going to do or you know, you could do. It's less likely to happen. It's kind of like you run out of energy, enthusiasm, positivity, whatever it takes, you know, to drive yourself, to put in the hours.

Mircea Cornelison27:28

There are social forces, as well, around you. I mean, your spouse, family, extended family, all sort of watching you as you're starting a business going the unorthodox route, and their positive support might start waning as well. And that's just a practical reality.

Terry Cornelison27:42

And you put the pressure on yourself too, because after a month or two, you're thinking, "Okay, well, am I going to succeed? And what are people going to think about me? And will I have enough money to get out of this, survive?" All those factors come into play.

Mircea Cornelison27:53

So about the three months, there's nothing magical about that period of time. It just is a sort of medium amount of time, not too short, not too long within which you can generate real momentum in your business, whether you're just starting out or you're already in business and you need to turn things around or get the next major thing done.

It's a great planning timeframe. And with our clients who are starting out from square one, idea phase, we use that first three months to go through napkin math designing their business model, we get out there into the real world and online and research the idea, develop the idea, get in front of real potential customers and industry experts, even competitors.

And we start formulating scenarios for them to get out there by the end of the three months and get the money they need to start their business or open their doors, if they're self-funded. That's kind of what we do in the first three months for pure startup.

Terry Cornelison28:43

Yeah. And the thing that three months is not, "Oh, I'm going to be wildly profitable and successful in three months." Some of the businesses that we start are profitable from day one, and we want profitability built in from day one. But you may not actually be profitable for a year or two years or three years. It depends on the business.

If you're building a manufacturing facility, it may take you a year or two years even to get up and running, to get everybody in place, all the equipment in place, all those kinds of things. And, but when you open your doors, then you start bringing in the revenues and you measure profitability from that point.

But from the point when you started the business, you got your incorporation or whatever it was when you had your official start, you break ground, you start building the facility, start getting the equipment, getting the people, getting the process in line. That may take you a couple of years. So I'm not saying at all that, okay, in three months you'd better be profitable. What you need is three months of... it's a measure--are you now focused and have momentum moving in the direction that you need to be going and things are working for you? That's what you need to have in those three months, whether it's a turnaround or a startup, that's what you need to measure.

It will be a different measure for each kind of business. If it's online, again, dropshipping from Amazon, you may be profitable in your first two weeks. Depends on how much work you did upfront.

So I'd say in three months in any business that I'm working with... The thing is we do the plan... And I mean, we're not talking about the standard business plan, but it is a plan that takes all of that into consideration. And it is a plan that you can take to investors, to banks, but we don't go about it in the standard way that you might read in a book. It has all those principles in it, but it's actually fun, and it's actually rolling up your sleeves and going out there and finding the answers yourself for every question that we can think of that you need to answer before you open your business.

So, I want to though, before we close, I want to go back to one point here that I made earlier. We actually create three scenarios. One is the best case scenario. The second is the worst case scenario. And the other is the realistic scenario.

What I'm talking about here is you need to have that full spectrum of like feeling inside you. I, you know, here's what I know could happen. Here's what I know could happen in the downside, and am I prepared for that? Can I deal with it? And here's what realistically could happen? Well, the realistic scenario is what you'll take to the bank.

So you need to understand that realistic scenario. They're not interested in you making millions of dollars and having your best case scenario. They're interested in how secure is the money, that they lend you, and are you going to be able to pay it back?

The ideal situation, your dream business, that's what you need to take to investors, to angel capital, to venture capital, if you go there. But because you've gone through all three scenarios, you are not just going out there saying, "Hey, everything's going to work perfectly and whatever." Because they're going to ask you, "Okay, so what happens if that doesn't work?"

Not a problem. Here's our fallback position, and then we'll build from there. You're prepared to answer any question that comes up because you've looked at all three scenarios. And they're not going to ask you about the worst case scenario, but in the worst case scenario, you are prepared emotionally, mentally for the worst to happen.

Now, here is what you do with those three plans. Once you get your money, whether it's your own money, or you borrow from friends and family, or get it from investors, or get it from bakers, then you take your realistic plan and your worst scenario plan, and you either delete them, you burn them, or you put them in the back of your miscellaneous file where it's very difficult to ever find them because you're going to operate on your best scenario.

Why operate on any other scenario? You want to operate and have your total focus on the best you can do,and you'll find your way there eventually, but you'll understand that when everything doesn't go right, not a problem. You've thought that through too. Now I'm back here on that position, I can build to there, but you're constantly looking at where you really want to go.

Mircea Cornelison33:15

Okay, we'll wrap it up there for this episode. Thank you so much for listening. If you're thinking seriously about starting a new business and you have some more questions that you'd like us to address in an episode, feel free to email me directly at mircea.cornelison@bizactually.com or leave a comment or review below this episode.

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