To Slay Giants, Think Like an Entrepreneur

by Ram Charan

Sooner or later, every company enters a new market. You might be an inventor selling a better mousetrap, or a Fortune 500 executive launching a new division to rev up growth.

Whatever the case, at some point you'll need to think like an entrepreneur -- whether it's to launch a new product or service line, extend to a new market segment, or establish a beachhead in a new geographical territory.

The reality, as every entrepreneur knows, is that most markets already have existing competitors. Even the largest companies in the world sometimes find themselves the small fish in a big, new pond. And the bigger fish already know the territory; they have the scale, connections, and market share to make life difficult for newcomers.

Still, there are tried-and-true ways to swim with the sharks, and start and grow a business. There's always room for new entrants, if they follow a few sound principles of entrepreneurship.

There are three steps to effectively entering a new market:

1. Don't buy into old-line definitions of a market and its segments.

Identify the competitors and their value propositions, and then figure out if a new segment makes sense.

In 1986, for example, Honda executives thought that young professionals who owned Civics and Accords but were ready for an upgrade wanted something different from what luxury carmakers like Cadillac, Lincoln, Mercedes, BMW, and others could offer.

So Honda launched the Acura division, whose cars didn't have the prestige -- or price tags -- of its competitors, but were still high in performance and quality, didn't skip on luxury trimmings, and came backed by great customer service. Acura's unique mix of value, performance, and service sold 109,000 cars in 1987, a strong first full year on the market.

2. Be creative with execution.

In 1997, Red Bull began to market its carbonated blend of caffeine, amino acids, and natural stimulants in the U.S. as an "energy drink," not a supermarket soda. But it couldn't flood the airwaves or the newsstands with advertising, and didn't have the pull to put cases of cans on supermarket shelves.

So the company got its products in front of customers at sporting events -- the more extreme, the better -- and in bars and clubs. Nearby convenience stores then began carrying Red Bull, and consumers drank it up.

In 2004, the private company reportedly earned $2 billion in global revenues, and it holds a commanding share of the fast-growing energy-drink market it practically invented. Red Bull might have been just another cola wannabe had its clever marketing not trumped the brands and distribution power of the major beverage makers.

3. Change your moneymaking approach to be different from the market leaders.

By not playing in the same soda markets as Coke and Pepsi, Red Bull didn't have to compete on price, where it probably couldn't have won. It successfully sells its 8.3-ounce cans for $2 each, a premium over larger servings of sodas and iced teas.

On the flip side, while big companies entering new markets need to think like entrepreneurs, too, they can also leverage their scale and resources in new ways. Acura was able to build on and leverage Honda's engineering and manufacturing prowess to give consumers a lower-priced luxury car option that didn't sacrifice on quality or creature comforts.

Don't Sit Still
If the good news is that you've successfully entered or created a market, the bad news is that you'd better be ready for a competitive reaction. If you've been successful, you'll almost certainly wake the sleeping giants and draw in newcomers.

For example, since Acura's launch, Cadillac and Lincoln have dramatically retooled their lines, Mercedes and BMW have added "entry level" models, and Toyota and Nissan have launched the Lexus and Infiniti lines, respectively.

To make matters difficult for Red Bull execs, Coke and Pepsi both now have their own energy drinks, and so do other entrepreneurial firms, like Hansen Natural. Mergers can also change market dynamics quickly, so be ready to intensify.

As competition heats up, key leaders need to grow, too. Many fast-growing companies eventually face a time when their leadership suites need to be upgraded. Sometimes, more "professional" managers need to be hired, as eBay and Yahoo! have both done at the very tops of their leadership suites.

The Risks of Giant-Slaying
There may be times in which a new entrant's growth stalls even though it does everything right. Innovating, moving quickly, and offering something unique -- be it customer service, technology, value, brand association, or a different mix of attributes -- should give the entrepreneur a good start.

But giants have a lot of power in their scope (i.e., bundling different products and services together), brands, relationships, and customer bases. Think of Microsoft's successful battle with Netscape over the web browser market. Clearly, not every big company is slow or can't innovate. Some are very good at figuring out new market segments and can shift huge amounts of resources -- both capital and great talent -- to defend whatever turf is under attack.
Not all big companies are afraid to take risks, either; indeed, because of their size and resources, they can afford to take them. GE, for example, brings those advantages to almost every market in which it competes.

Against such competitors, things can be very difficult for the ambitious newcomer. Indeed, if a big competitor is really good at what it does, there comes a time when an entrepreneur should ask whether exuberant growth is really in the cards.

Be realistic and take care not to let your ego get in the way. Great entrepreneurs (like Virgin's Richard Branson) know when to pull out of a losing battle, and how to rekindle their entrepreneurial spirit and go back on the offensive when there's a new opportunity for growth.

How You Can Pay Yourself First

Article by Bernard Ng

It's the beginning of 2007, the beginning of a new year. It is also a time when you start to make resolutions or goals for a brand new year.

I am sure among them you might have some that are related to wealth creation or accumulation. (If not, you better start thinking about that now).

One of the easiest and powerful way to accumulate wealth is to follow the "Pay Yourself First" rule, which was one of the teachings Rich Dad taught in Robert Kiyosaki's "Rich Dad, Poor Dad".

What does "Paying Yourself First" mean and how you can follow it? Basically, it means you simply set aside a certain amount of money each month that you will not touch (pay yourself), even before you pay your bills and expenses (pay others)!

Here's a step by step guide which you can follow:

1. From the amount of money you make each month, you decide how many percent of your monthly salary or income you want to set aside. When you get your paycheck, the very first thing you do is to put this amount aside, hence the "pay yourself first".

The percent to set aside differs from individual to individual depending on each comfortable level and wealth target. Most people recommend 10% to 15% of the monthly income to set aside, but I suspect that you might need to go up to 20% or even 30% if you want to reach your financial success.

2. Decide what you want to do with this amount which has been set aside. Many will simply put the amount into their saving accounts. However, the idea of paying yourself first is to use it for your wealth building. You should be looking into investing them instead of just saving them. Saving alone will not help you to reach your financial success.

Let the money earn you more money by investing it. Consult with your financial planner or advisor to decide the kind of investment portfolio that suits you. I would recommend that you setup what is known as an automatic withdraw from your bank account to your investment institution for your investments. This is when money is automatically taken out of your savings or checking account each month and put into your investment.

Generally, you have to select a certain day each month for when the transaction will occur, and it will happen every month on that day, just like paying your bills. In this way, it does not rely on your ability to set aside a certain amount each month. It relies on the computers who automatically invest your money for you. It is also easy once you realize how you don't miss the money.

3. Next, you pay off your bills.

4. Live on whatever is left over from your paycheck. It does not however imply that you need to use up every single cents of what is left. If you have surplus, then good for you. If you have a substantial surplus, then go back and re-adjust your investment amount. Increase you monthly set-aside amount for investment, and let it generate more money for you.

5. And finally, NO CREDIT CARD DEBT! Don't spend on credit. Also be very careful with home equity loans and car loans. It's easy to get into trouble with both. If you are disciplined, you can pay yourself first without running into a credit rut.

First, keep your personal expense low. Don't go out and spend your money on "ego" toys like a new car, a new outfit or a long vacation. Not until the habit of paying yourself first has built up enough assests for you to afford them.

Second, when you come up short, don't dip into your investment to pay off your creditors. Robert Kiyosaki believes that if you are under pressure from creditors, the pressure will actually inspire you to come up with new ways of making money. Look for other ways to tide over.

As you start to build assets, you will see that the income from your assets will allow you to pay for your personal expenses and expanded your means for you to live the livestyle you want.

Paying Yourself First is a simple yet powerful concept. It is so powerful that it could be apply to other area besides money. You can apply these same principle to time. Pay Yourself First if you are a busy working mother.

You need time to take care of yourself so that you can take care of your family!

Bernard Ng keeps a blog "Wisdom of the Rich Dad" at http://www.richdadwisdom.com, where he shares lessons learnt from Robert Kiyosaki's 'Rich Dad, Poor Dad'. Article Source: http://www.simplysearch4it.com/author-articles/11611/1.html

Investing: Assets That Are Lifeboats in a Shaky Future

Filed under: Robert Kiyosaki - Admin @ 11:17 am

As retirement nears, millions of Baby Boomers are scrambling for deck chairs on the Titanic. For about 30 years now I have been watching a major financial disaster developing.

Its contributing factors include the shaky financial foundations of Social Security and Medicare, compounded by most Americans’ lack of financial education and entitlement mentality.
As a result, my investment strategy is to get out of anything that’s "paper with ink on it." I explain what this means and what investments I favor later in this article.

Speed and Agility Will Win the Day

But first, let me discuss the iceberg known as Financial Excess, which I believe lies before the SS U.S.A. In the last three decades, we as a nation have only increased our excesses, accelerated our mistakes, and mismanaged America’s wealth. Turning the ship’s wheel at this time — hard left or hard right — will do no good. It’s too late.

So it’s not a good time to be captain of SS U.S.A., or the skipper of SS Big Mutual Fund or SS Pension Plan. In the coming years, I believe big will not be better.

Instead, for many of us, it’s better to be a small, disciplined investor. I believe speed, financial education, and maneuverability will prove to be better than size. It’ll be far better to be in a well-stocked lifeboat than be treading water with millions of pensioners and laid-off workers, many with their party hats still on.

Why so pessimistic? Well, I would rather be known as a realist. Most of us are aware of the problems ahead. Some are:

1. A pervasive entitlement mentality.
It’s not just the poor who are expecting a government hand out. Everyone from senators to farmers and retirees expect it, too. Unfortunately, this problem is not an issue for my generation, the Baby Boomers, but will fall squarely on the shoulders of the children and grandchildren of Baby Boomers.

2. Social Security is a small problem when compared to Medicare.
As of 2004, Social Security was a $10 trillion off-balance-sheet liability. Medicare is a $64 trillion liability. The Social Security fund will begin to run in the red around 2015. The Medicare fund is already operating in the red, a situation that started in 1992. The combined $74 trillion off-balance sheet IOU to Americans is more money than is available in all the stock and bond markets of the world. This means life or death will be determined by your wallet, not your doctor.

3. A lack of financial education.
Many people do not know such basic realities as:

• A 401(k) is not a retirement plan (it’s a savings plan).
• Bonds aren’t safe.
• Saving money is risky.
• Why mutual funds have such low returns.
• What is inflation.
• Why workers are taxed more than owners.
• Why pensions are disappearing — legally.

People know there’s a problem, yet they continue to do the same things. Today millions of people have trillions of dollars riding in the stock market, their homes, savings plans, and bonds — financial assets that worked in the past but probably won’t work when the SS U.S.A. hits the iceberg.

Investing in Tangible Value

As an investor, I’m investing against the U.S. dollar. Let me be clear: I’m not investing against the U.S. — America is a rich, productive country. But our dollar is toast. Those who have followed my articles know that in 1971, our dollar stopped being money and became a currency, a piece of paper with ink on it (see "Why Savers Are Losers").

In my opinion, that means getting out of anything else that’s "paper with ink on it" — anything backed by the full faith and confidence of the SS U.S.A. That means I’m very suspicious of stocks, bonds, savings, and mutual funds, especially if they’re U.S. dependent. Although I love real estate, I’m suspicious of any piece of property that doesn’t generate cash flow today. I don’t invest in future appreciation of real estate — not today, at least.

Today, I invest in assets with tangible value, especially assets that go up in price as the dollar’s purchasing power sinks. Today, I have large positions in gold, silver, and oil.

For the small investor, I believe buying silver coins is a safe bet. As the dollar drops, silver will hold its value or go up. I don’t recommend buying coins for numismatic value (rarity). A friend has his son buy one silver dollar a week instead of saving money in the bank. As I write this, that’s worth about $12 a week. He keeps the coins in a safe-deposit box. It’s not big investing — but it’s a great habit.

In today’s economic environment, it’s better to save silver than to save paper with ink on it, and that includes cash, mutual funds, stocks, and bonds. If it seems unpatriotic to short the dollar and other forms of U.S. paper, then buy a few U.S. silver and gold coins. While I’m bullish on America, I’ve been very bearish on our dollar for years.