by Mark A. Peterson 1996, 384 pages, $14.95 (paperback), ISBN 0-8120-9716-5. Published by Barron's Educational Series, Inc.
Basically, inventors have a choice of two paths in order to reap the benefits of their creativeness. They can sell (or license) their patent or they can start a business based upon it. The most frequent advice given to inventors is to sell or license. This advice is based on the generally accepted belief that the many special human qualities that creative people possess often do not include those traits that fit well into the business world. However, it is also generally accepted that the maximum financial rewards result from a successful business venture.
If you elect to become an entrepreneur, you will find the bookstores (and the Internet) are loaded with books claiming to be able to guide you through the treacherous business waters. Many promote fad theories that come and go like diet fads. This book is designed to teach lessons derived from the real world.
The author begins by pointing out that starting your own business is the best investment you can make. In the United States that opportunity is open to you if you have no formal education or if you have been "downsized" after twenty years of experience.
Mark Peterson emphasizes "that risk is inherent in any business". But you should-never confuse risk with gamble. The key is to "identify, understand, and successfully manage" these risks. The three key traits you must have or acquire are total commitment, stamina, and the ability to learn to sell.
Often finding a business partner is necessary to secure the talents you may not have. The author gives several cautions. Your partner should also share your work ethic. If he or she is a money partner, keep them continually informed regarding operations and the risks necessary to operate.
It is a very old cliche that time is money. However, everyday, businesses fail because their owners fail to manage their time. The author gives several common examples of how time is lost and how to avoid these losses. Among them, avoiding salespeople, using a simple sheet of paper instead of a complex scheduling system, and avoiding unproductive meetings (put a dollar cost and value gained on your meetings).
An old bit of advice that people still fail to follow is to never cosign a loan or guarantee a loan. As the writer points out, entrepreneurs still take this risk without realizing that this simple act may end up destroying their business.
The author strongly advises against leasing equipment. He feels "leasing is the worst of all worlds". If you doubt this, he suggests asking the leasing company to disclose what interest rate their leasing rate is based on. Also, clearly understand residual value. Along this line, avoid buying an office condominium. Rent.
Micromanaging risk can become a disease. The time cost of investigating a minor problem can far exceed the money recovered.
When dealing with professionals, such as lawyers, always establish the boundaries in writing with a letter of understanding and put fees in writing. He also cautions "never, never, never pay for the full amount of a job in advance of its completion".
At some time during your business life you will, through no fault of your own, have to deal with the legal maneuver known as deposition. The author gives advice about your testimony and a short transcript of a typical deposition.
The author gives three must requirements for selecting a CPA in this age of ever changing tax laws. He notes the dangers of FSBOs ("fizzbos" -- For Sale By Owner). The risks involved are greater than those involved in building the business.
Each chapter contains five or six concise (single sentence) "lessons". Some 173 are contained in the book and they are listed again at the end of the book. In addition 100 "review questions" are given at the end as mind stimulators.
For just $14.95, you get 384 pages of valuable business insights. Just learning, for example, why you should read every word of any contract you are asked to sign may save you more than a thousand times the price of this book.