Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with Carol Roth about a jobbie, a job-business or a bona-fide business? @CarolJSRoth Carol helps businesses grow and make more money. She’s a deal maker & business strategist to corporations, small businesses & entrepreneurs who has raised $1 billion in capial, $750mm in M&A deals.She is also the Author of The Entrepreneur Equation, http://amzn.to/eSsnBj
Smallbizlady: How do you define the difference between a jobbie, a job-business and a bona-fide business?
Carol Roth: A jobbie is a hobby disguised as a job or a business. A job-business is a business that is really more of a job. You pay for the pleasure of having it and it is 100% dependent upon you. A bona-fide business isn’t dependent upon any one person for its existence.
Smallbizlady: What are the pros and cons of each type of business?
Carol Roth: A jobbie is a great way to test out a business, if you keep to a defined budget and have an exit plan. It’s also great if you want to have a hobby that produces income. But if you want to really have a sustainable business, you have to move past a jobbie. You also need to be realistic about its potential and not invest so much money that you never generate a return!
A job business is entirely dependent upon you, so if you go on vacation- no money comes in. If you get sick, nobody services your clients. It is often easier to start, but can lead to you working more hours for the same or less pay with more stress than if you had a regular job.
A bona-fide business may require the most in terms of resources, but gives you the best opportunity for work/life balance and a return on your investment (of both time and capital). Plus, in many cases, you get the opportunity to contribute more to the economy from your growth and help more people.
Smallbizlady: How does the fact that not all businesses are created equal impact your business’s opportunity?
Carol Roth: When you evaluate your business as a whole, or any investment, you have to look at the risks and rewards. Just because you can do something, doesn’t mean you should. This means taking a critical look at your opportunity to see if there is enough upside for all that you give up- your time, your money, and your energy.
Smallbizlady: Why is it important to know what kind of business you have and you want?
Carol Roth: So many entrepreneurs fall into business because they are enamored with an idea or a passion and don’t spend enough time thinking about what they want to get out of it. It’s impossible to maximize your success if you don’t know what success means to you and what you want to accomplish. Ask what you want to get out of your business. Do you want to build something? Do you want to help even more people? Do you want to create jobs and growth in the economy? Do you want recognition as a savvy businessperson? Are you looking for a hobby? It is totally up to you, and there is no right answer, but make a conscious decision. You can’t keep score if you don’t know what game you are playing.
Smallbizlady: is it important to set goals for business?
Carol Roth: You can’t come up with a path, plan and a strategy for success if you don’t know where you want to end up. Having a goal means a defined intention, time frame and scope. Wishing and hoping isn’t a goal. And the more specific your goal, the better. Writing it down also makes it tangible for you.
Smallbizlady: How do you know if your goal is big enough?
Carol Roth: If you don’t have at least a few people giving you a sideways glance or laughing, you probably aren’t thinking big enough. Small business owners tend to limit themselves by not stretching their goals. You don’t have to be huge, but try something uncomfortable, like tripling revenues or doubling your blog readership. If you don’t achieve it, it’s ok, but it’s worth a try!
Smallbizlady: How do you take the leap from job business to business?
Carol Roth: Take time off- a half day a week, a couple of weeks per year, whatever it requires to build a strategy to pursue your new, big goal. There is always a to-do list, so if you just keep doing and doing, you will be on a treadmill and not really move ahead. If you close up shop, you will be able to focus on moving forward. You may lose money for a few days, but it may be necessary in order to get off the treadmill. Be willing to take a couple of steps backwards to make a huge leap forward.
Smallbizlady: How do you get the help you need when starting a small business?
Carol Roth: One of the biggest mistakes business owners make (that keeps them in job-businesses instead of bona-fide businesses) is refusing to get help and trying to do everything themselves. It’s the classic working in rather than on the business issue. Here are four quick things you should do to get help:
1) Know what resources you need
2) Ask! We have personal, professional, alumni, social and other networks, so use them! Most people are very willing to offer help if they know what the heck you need.
3) Make it Easy-Focus on one thing per “ask”- not five, with a clear call to action. Also, be as specific as possible and remove obstacles and “hoops” to jump through.
4) Be Grateful (Not Greedy)-Make your “ask” appropriate to the relationship and be selective. And don’t forget to thank them!
Also, don’t overlook the opportunity to partner- formally or informally with other business owners as a means to fill in core competencies that you are lacking.
Smallbizlady: Why is it critical for small businesses to appropriately value their time?
Carol Roth: Small business owners, particularly service providers, struggle with pricing. Especially since only a fraction of their time is billable. Make sure to charge based on value, which encompasses your time, your experience and what the customer gets out of it.
Also, for those struggling with charging, remember that nobody will buy the cow if you give away the milk for free. Your time is valuable. If you don’t think so, your customer won’t either.
Smallbizlady: How does your professional positioning impact your business?
Carol Roth: You attract what you put out there. If you compete on price, you will attract price-mongers on clients. If your image isn’t professional, others won’t take you seriously. Make sure that you are projecting the image you want to project. Investment, commitment and a determination show up as professional.
Smallbizlady: Can a one-person business be a bona-fide business.
Carol Roth: Absolutely. You just need to frame it in a way that it isn’t fully dependent upon you each day. A great case study is AskDaveTaylor.com. This web resource features how-to’s and FAQs on technical topics. Even though he currently answers the questions himself, he could sell the business and someone else could assume that role. Also, his archive is evergreen, so the amount of new content he has to add each week is minimal. A brilliant online model.
Smallbizlady: What are some ways to create recurring revenue in your business model?
Carol Roth: Another way to move towards a business is to create recurring revenue streams, so that you are growing your base of business-instead of replacing it- each year. You can look into membership programs that renew yearly one option. Also consider an audit, where you go back and evaluate issues or opportunities for your customers or clients each year for a fee.
At a minimum, make sure to ask for referrals and testimonials as a way to extend your marketing efforts and build your business base.
If you found this interview helpful, join us on Wednesdays 8-9pm ET follow @SmallBizChat on Twitter.
For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.
Wonderful interview ladies. Carol – I especially like the idea of providing an audit service by annually evaluating issues and opportunities for your clients. This is a fresh idea I hadn’t heard of and helpful in my business.
Very good interview with a ton of good information!
That Carol Roth sure is one smart business resource. I just realized that I missed #smallbizchat this week. I’ll be back next week. What a great learning tool.