Posts Tagged ‘Business’

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Creating an organization or small business is the dream of the majority of initiated individuals living in developed societies. There are a multitude of factors that will influence every venture’s “success” or “failure”. Throughout my entrepreneurial and professional career, I’ve witnessed and been part of organizations that have succeeded and that have failed. Real world & academic experience has enabled me to draft a list of the” 10 Commandments for Aspiring Entrepreneurs”. Unfortunately, your idea is at the mercy of the economic and social forces beyond your control. The survival rate for most small businesses after six years is only about 40%, so the odds are against you.

The success rates for many ideas are attributable to “right place at the right time” factors. An amazing idea at the wrong time (no demand) has a low success rate. A mediocre idea at the right time (high demand) has a high success rate. Below are the “10 Commandments for Aspiring Entrepreneurs”. Breaking any of these commandments is almost certain to shake the foundations of your dreams and send your organization spiraling into an entrepreneurial Inferno.

 

1. Thou Shalt Believe in Thyself

Regardless of how awesome or mediocre your idea may be, you must be confident. You will have supporters, you will have critics. You will have constructive feedback, you will have useless feedback. Trust in your instincts and surround yourself with positive influences. Your idea is like a newborn baby and it must be protected and nurtured in this jungle of ideas. Realize that there is a difference between confidence and arrogance. Confidence will power you through hard times and sleepless nights. Arrogance will betray you and warp the reality of your situation.

2. Thou Shalt Draft a Comprehensive Business Plan

Drafting a highly structured organizational/business plan is critical for all Entrepreneurs. Your plan doesn’t need to be extremely dense and conventional to be successful. However, you do need to be able to explain specifics regarding your idea/product. What need does it fulfill? What is your target market/demographic? What are the Strengths/Weaknesses/Opportunities/Threats regarding this idea? How much money will it cost to get it off the ground? How much money will it make in the short-term/long term? What is your long term strategic plan? Where is the math (financial calc/market summary) that supports everything that you are hoping and dreaming about? A strong plan displays your level of dedication, organization and vision to potential business partners and investors.

3. Thou Shalt Know Thy Limits

There will be sleepless nights, frustration and headaches. Things will not go exactly as planned and because of this, you will be pushed to your mental and physical breaking points. It is important that you understand your personal limits and realize that ultimately your health is more important than an idea that may begin to affect you like a virus. Many people make the mistake of becoming completely consumed by an idea and begin to ignore their basic human needs.

4. Thou Shalt Surround Thyself with Like-Minded Individuals

Dynamic, hard working, trust worthy and skilled. They need to be all of the above. People in small organizations need to be comfortable wearing different hats. These people need to be hard workers or you will be picking up the slack for them. There needs to be trust amongst associates. They should bring a strong set of skills to the table, skills that you may be lacking. These people are your safety net; they are also responsible for your baby’s well-being. Choose them wisely.

5. Thou Shalt Exercise Prudence with Finances

Budgeting and forecasting expenditures is absolutely essential. Most people are amazed at how quickly they can chew through $100K because of unknown variables. Plan for the worst, hope for the best. A financial mistake can have a lasting effect on your organization, hindering its ability to fully recover in the long run. Have alternate financing options available to you in case of a rainy day. Don’t wait until you are desperate to seek alternatives.

6. Thou Shalt Protect Intellectual Property

If you have a catchy word, name, or symbol (Nike logo) – Trademark it. If you have a new invention – Patent it (lasts 20 years). If you are an author of an original piece of work (literary/musical) – Copyright it. Great ideas are neither patentable, nor copyrightable. You need to have anyone involved in your idea sign an NDA (non-disclosure agreement). Beware of intellectual property trolls who are vigorously trying to steal your idea in order to profit from it. If someone steals your idea/logo from you and trademarks/patents it, ownership belongs to them legally. Take the additional steps to protect your idea before you become fully emotionally and/or financially vested in it.

7. Thou Shalt Beware “The Ides of March”

Trust your associates and business partners, but get everything in writing. People tend to honor their obligations more religiously if they know that they can be legally held to their signature on a document. After all, people aren’t perfect and you will always be surprised in the world of business ventures. Another reason to get everything in writing is because it will help organizing task lists and remembering important promises that you may have made. After all, you aren’t perfect either 🙂 .

8. Thou Shalt Be Optimistic

The glass is half full. The glass is a quarter full. The glass is a tenth full. Do you understand what I’m saying? Always focus on the positive aspects of your ideas development. Energy is very real and if you let yourself get poisoned by negative energy, your thought process and demeanor will change. Exercise to control your stress levels and don’t restrict yourself from your leisurely activities (you will have to limit them). If youre body/mind is healthy, you will be infinitely more productive and your idea will benefit from this added productivity.

9. Thou Shalt Network

Networking is extremely important, be it through a social network or in person. You never know who might know someone, who might know someone, who might be able to get you past a hump in your ideas development. The stronger your network is, the more options you’ll have. If you need to fill a void in your team or perhaps find some unconventional financing, your network will be the best resource.

10. Thou Shalt Not Fear the Unknown

Fear leads to anxiety, anxiety leads to irrational decision making. Think outside-the-box and eventually you will find a solution to any problem. Fear is a natural human emotion and takes experience to master. Unfortunately, your business can’t afford any bad decisions. The more that you become comfortable exploring different horizons that are outside of your comfort zone, the more skilled and dynamic you will become. The more skilled and dynamic you are, the less you have to fear.

 

 

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Helpful links for starting a business:

http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business

http://www.legalzoom.com/

http://www.bankrate.com/finance/personal-finance/3-ways-to-get-a-small-business-loan-1.aspx

http://www.wikihow.com/Think-‘Outside-of-the-Box’

What is a Bitcoin?

Bitcoin is a worldwide digital currency that was created in 2009 by an entity using the alias – Satoshi Nakamoto. It is a peer to peer, decentralized, non-regulated currency. Bitcoin is not controlled by banks, governments or other authoritative entity. The supply of Bitcoins is regulated by a process called mining, which makes this digital currency resistant to dramatic inflation (supposedly). Bitcoins can be stored digital wallets, or in cloud servers. In short, Bitcoins are mediums of exchanges much like any other “real” currencies. The US Government maintains the circulation of Dollars, but there is no central agency that controls Bitcoin. Owners of Bitcoins are able to maintain anonymity, which is very appealing to a certain percentage of each population. Owners of Bitcoins are able to avoid taxes when paying for transactions over the internet. Bitcoin is the first mainstream peer to peer cyber currency, much like Napster was the first mainstream peer to peer file sharing software.

Physical Bitcoin - Storage device for encrypted digital key

Physical Bitcoin – Storage device for encrypted digital key

How are Bitcoins created?

Much like gold is excavated from a mine, Bitcoins are excavated by digging through data. It takes computers with brute processing abilities to mine for Bitcoins. Individuals such as you and I, are incentivized (mining rewards) to contribute our computing resources and joining as “nodes” on the Bitcoin network. Every single time any transaction happens in the Bitcoin network, it needs to flow through every user’s software. It is almost like blood cells flowing through your veins. This increases the integrity of each transaction and hopes to battle fraud and hacking attempts. Mining is more akin to rolling dice than solving problems. To understand mining, one needs to understand what a hash function is. Put simple, a hash function takes an input and creates an output based on a criterion. The output is consistent every time you perform the function on a given input. It is very difficult to determine an input, given only the output. For example, the square root of 3 is: 1.73205080756887729352744634150. Now take the digits from the 6th place from the decimal all the way to the 10th place: 08075. The square root of 3 is the input (1.73205080756887729352744634150) and output is 08075 (6th place from the decimal all the way to the 10th place). Pretty simple right? Input – Output. Now imagine, given the output of 08075, that I have asked you to provide me with the correct (unknown) input. You would need to try out billions upon billions of inputs; this is what is referred to as mining. An excruciatingly difficult task, which must be solved with the processing power of computers. The process of mining is regulated by Bitcoin software. Every single time a user “cracks the code”, they are awarded with 25 Bitcoins. This is how the supply of Bitcoins is regulated in cyberspace. The algorithm built into the mining software adjusts itself accordingly in order to stay on pace for 21 million Bitcoins by 2140. 

Who’s mining?

Whenever there is serious money to be made, there will be serious competition. Mining requires massive electrical and computational resources, so naturally, the affluent and tech savvy will be the first to “strike gold”. However, your average Joe is able to engage in a strategy called pooling. Pooling simply means linking up with a bunch of “friends” via network in order to create a massive processing force (imagine 100,000 computers in a warehouse). The aforementioned “shared” processing force is able to compete with the few supercomputers that the affluent have working towards mining. Whenever a pooled community strikes gold, the dividend is shared among the pool members. The process of mining is cumbersome and can be as random as winning a mini-lottery. It’s all about which computer gets lucky and deciphers a code first. Darwin’s theory is applicable in cyberspace as well as real space.

Supercomputers used for mining Bitcoins.

Supercomputers used for mining Bitcoins.

What are Bitcoins worth?

The price of Bitcoins started at around $0.05 per Bitcoin in 2008 to as high as $1,116 in late 2013. The price of a Bitcoin is currently about $690. Bitcoin pricing has been pretty volatile lately. The cyber-currency is not insured by agencies such as the FDIC and has proved to be quite volatile as of late. Similar to financial instruments, there are institutions that allow consumers to buy Bitcoins at fair market values (for a fee). Unlike financial instruments (stocks, bonds), Bitcoins intrinsic value is derived purely from speculation. Traditional financial instruments are valued by their collateral (a company or country).   The real question is: Are you willing to invest your resources into an unregulated, decentralized, uninsured, volatile, cyber currency?

Bitcoin values from Jan. 1 2013 through Mar. 3 2014, via Coinbase.

Bitcoin values from Jan. 1 2013 through Mar. 3 2014, via Coinbase.

   

The present and future of Bitcoins
 

Mt Gox, an online exchange for people to buy and sell their virtual money, filed for bankruptcy in a Tokyo district court last week. Mt Gox was a poorly run venture that has been hacked for Bitcoins since 2011. The most recent hack caused the company to lose about $500 million worth of Bitcoins. After Mt Gox crashed on Feb 24, the value of Bitcoin fell to $440 after reaching highs above $1,000 in November. A wild 50% decrease in about 3 months.

Flexcoin, a provider of “cold storage” for client Bitcoins, announced last Tuesday that it has closed on the aftermath of being hacked of some $600,000 worth of the cyber currency. On Wednesday, Flexcoin announced, “Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.” This sucks for anyone who was using Flexcoin as a virtual bank instead of stuffing their Bitcoins (hard drive) under their mattress. Remember, Bitcoins are not insured.

Supporters of Bitcoin say that the anonymous, decentralized Bitcoin is a way to evade large banks, payment processors and governments that make billions of dollars each year as financial intermediaries among consumers. The Winklevoss Twins (guys that fought Mark Zuckerberg over Facebook), are heavily vested in Bitcoins and are attempting to create an ETF (exchange traded fund) for Bitcoins. An ETF would be taxed and riddled with many fees. This is an excellent way to get rich from fees that are derived from people trading a digital currency that has no intrinsic value. 

I believe that the price of Bitcoins are heavily inflated and lack any collateral whatsoever. I also believe that the Bitcoin is a scheme that has been orchestrated by a group of individuals who are attempting a “get rich quick scheme” and succeeding. Bitcoins have a market capitalization of $8.5 billion dollars so far. Consumers who are leveraging themselves heavily on Bitcoins are rolling the dice.  When the housing bubble burst in 2008, there were a handful of individuals that were rolling on the floor laughing with very large sums of money. The rest of us suffered the consequences of a crippled economic system, foreclosures, unemployment, ect. The individuals that created the Bitcoin are waiting for their turn to roll on the floor laughing. Stay tuned.