March 22, 2011
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I can count on one finger the number of times I've received a review copy of a new book accompanied by a Barbie-like doll fashioned in the likeness of the author. The Entrepreneur Equation, just published by Carol Roth, is it. I get at least a half dozen books to review each week, so the Roth doll professionally packaged like a Barbie doll, and accessorized to mirror the cover image, was an effective attention getter.
Carol Roth has been featured in The World section of OPEN Forum and is a successful investment banker (helping her clients raise over $1 billion in capital), business strategist and media personality known for her sassy, sharp-witted and slightly irreverent business advice.
In The Entrepreneur Equation: Evaluating the Realities, Risks, and Rewards of Having Your Own Business, Roth delivers a refreshing departure from the typical treatments of entrepreneurship that all focus either on the question of "Can you do it?" or "How do you do it?" to tackle a different question: Should you do it?
The fact is, 99 percent of new business owners underestimate the cost of starting a business, 90 percent of businesses fail in the first five years and 60 percent never earn a profit over their lifetime. So an honest assessment of how to answer the "should you do it?" question is critical.
Reading The Entrepreneur Equation will definitely help improve those statistics.
Big idea:
Nearly every would-be entrepreneur operates from the wrong assumption—essentially an entrepreneurship-fits-all mentality. But not everyone is cut out to be an entrepreneur. "You can do anything you put your mind to, but just because you can, doesn't mean you should," writes Roth. The central question is one of suitability.
Key takeaways:
There is no single "equation." Rather, The Entrepreneur Equation is a series of evaluative chapters that all help assess and answer the central should you do it?question in a way that is meaningful to the individual and his or her personal circumstances, opportunities and goals, delivered through a structure that is essentially a 10-step "look-before-you-leap" reality check.
1. Define your motivation. Why do you really want to start a business?
2. Say hello to your new boss. You're not the boss; your lenders, investors and customers are.
3. Evaluate how well you work with others. Don't think you're escaping people; it's just the opposite.
4. Add up your responsibilities. Owning a business is like raising a child—it's a 24/7 job.
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5. Look at your management and industry experience. Have both before you start a business.
6. Take stock of who you know. If you're not well-connected, the road will be that much harder.
7. Be honest about your relationship with money. If you're a "No Money" or "Super Spender" or "El Cheapo" kind of money manager, beware.
8. Assess your personality type. The roller-coaster ride of a new business is not everyone's cup of tea.
9. Take a hard look at the marketplace and your competition. You'll have to outshine good competitors, and make up for the bad ones.
10. Test your scalability. If your business relies on your skills and yours alone, you may have a successful job, but not a business.
I also enjoyed the eight challenges inherent in being a female entrepreneur:
- Take me seriously. Angel investors and business colleagues sometimes assume a business venture is merely your "side-project" or hobby.
- Value my offerings. More than men, women tend to play down their services or are uncomfortable with charging what they're worth. If you don't believe in your value, your customers won't either.
- Think big. Women aren't thinking big enough. It's smart to focus on realistic goals, but female business owners should think in terms of conquering the market.
- Like me or hate me. Wanting clients to like you is human nature, but women entrepreneurs tend to go overboard by being too nice and too giving of their valuable time.
- Fear not. The fear of going after something and being rejected seems stronger in women because they are taught to be safe, while men are taught to be risk-takers.
- Go easy on myself. Women are harsh critics of themselves, which can sometimes make normal obstacles become insurmountable.
- Delegate. Because women are naturally talented in a variety of areas, they step up when projects need to be completed or gaps filled. Women need to delegate tasks and share responsibilities.
- Focus. Women are accomplished multitaskers, but when running a business, you can be more productive by developing a laser focus—concentrating on one important aspect of your business development at a time.
Liked most:
I liked Roth's "tough love" narrative voice. She fancies herself as Lucy Van Pelt of "Peanuts" fame—you know, "Advice 5 Cents...The Doctor Is In!" Lucy was always well-spoken and confident in doling out her advice to Charlie Brown, as is Roth in doling out hers to would-be entrepreneurs. "If they want the real answer," she writes, "or if I feel they need to hear the truth, I let it rip. If you have spinach in your teeth, I will tell you."
Best for:
Every aspiring and active entrepreneur, excluding, as Roth writes, "engineers and high-tech superstars with business models that can reach $100 million in sales within five years and are realistic candidates for venture capital funding. If you're that person, you are in a very small percentage of entrepreneurs (teeny-tiny in fact, as venture capitalists fund a fraction of 1 percent of all startups every year.)"
What others are saying:
"I love this book. It's a well-written, straightforward expose on what it takes to be a successful as an entrepreneur by an author who's not only an experienced and trusted adviser but a woman of considerable character and integrity." Michael Port, author of Book Yourself Solid and The Think Big Manifesto.
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KAREN MARTIN 1 year 2 months and 3 days ago
Great review, Matt. I haven't read the book yet - will get today. I hope Carol also hits on what I feel is a key personality trait for success as an entrepreneur: the ability to maintain belief in one's self and product when the going gets tough. In 18 yrs of biz, I've weathered 3 significant economic downturns. Surviving takes thick skin, unstoppable tenacity, clear vision, solid cash flow, and the patience of Job. Should you do it? It's incredibly rewarding, but it's indeed a 24/7 venture. People with low risk tolerance need not apply.