Franchising Analysis

Franchising is a business model in which many different owners share a single brand name. A parent company allows entrepreneurs to use the company's strategies and trademarks; in exchange, the franchisee pays an initial fee and royalties based on revenues. The parent company also provides the franchisee with support, including advertising and training, as part of the franchising agreement.

Franchising is a faster, cheaper form of expansion than adding company-owned stores, because it costs the parent company much less when new stores are owned and operated by a third party. On the flip side, potential for revenue growth is more limited because the parent company will only earn a percentage of the earnings from each new store. 70 different industries use the franchising business model, and according to the International Franchising Association the sector earns more than $1.5 trillion in revenues each year.

Franchising

Franchising is the practice of using another firm's successful business model. The word 'franchise' is of Anglo-French derivation - from franc - meaning free, and is used both as a noun and as a (transitive) verb.^[1] For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods that avoids the investments and liability of a chain. The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Thirty three countries, including the United States, China, and Australia, have laws that explicitly regulate franchising, with the majority of all other countries having laws which have a direct or indirect impact on franchising.

Overview

The following U.S. listing tabulates^[3] the early 2010 ranking of major franchises along with the number of sub-franchisees (or partners) from data available for 2004.^[4] As can be seen from the names of the franchises, the USA is a leader in franchising, a position it has held since the 1930s when it used the approach for fast-food restaurants, food inns and, slightly later, motels at the time of the Great Depression. As of 2005, there were 909,253 established franchised businesses, generating $880.9 billion of output and accounting for 8.1 percent of all private, non-farm jobs. This amounts to 11 million jobs, and 4.4 percent of all private sector output.^[5]

1. Subway (sandwiches and salads) | startup costs $84,300 – $258,300 (22,000 partners worldwide in 2004).

2. McDonald's | startup costs in 2010, $995,900 – $1,842,700 (37,300 partners in 2010)

3. 7-Eleven Inc. (convenience stores) |startup costs in 2010 $40,500- $775,300, (28,200 partners in 2004)

4. Hampton Inns & Suites (midprice hotels) |startup costs in 2010 $3,716,000 – $15,148,800

5. Great Clips (hair salons) | startup costs in 2010 $109,000 - $203,000

6. H&R Block (tax preparation and now e-filing) | startup costs $26,427 - $84,094 (11,200 partners in 2004)

7. Dunkin' Donuts | startup costs in 2010 $537,750 - $1,765,300

8. Jani-King (commercial cleaning) | startup costs $11,400 - $35,050, (11,000 partners worldwide in 2004)

9. Servpro (insurance and disaster restoration and cleaning) | startup costs in 2010 $102,250 - $161,150

10. MiniMarkets (convenience store and gas station) | startup costs in 2010 $1,835,823 - $7,615,065

Mid-sized franchises like restaurants, gasoline stations and trucking stations involve substantial investment and require all the attention of a businessperson.

There are also large franchises like hotels, spas, hospitals, etc. which are discussed further under technological alliances.

Two important payments are made to a franchisor: (a) a royalty for the trademark and (b) reimbursement for the training and advisory services given to the franchisee. These two fees may be combined in a single 'management' fee. A fee for "disclosure" is separate and is always a "front-end fee".

A franchise usually lasts for a fixed time period (broken down into shorter periods, which each require renewal), and serves a specific territory or geographical area surrounding its location. One franchisee may manage several such locations. Agreements typically last from five to thirty years, with premature cancellations or terminations of most contracts bearing serious consequences for franchisees. A franchise is merely a temporary business investment involving renting or leasing an opportunity, not the purchase of a business for the purpose of ownership. It is classified as a wasting asset due to the finite term of the license.

A franchise can be exclusive, non-exclusive or 'sole and exclusive'.

Turning Passion Into Profits: A Wine Wizard Bets on Old World Science

Start with the grape-growing methods of medieval French monks. Add in a spiritual science called “biodynamics,” which was formulated in the 1920s by German philosopher Rudolf Steiner and spawned the international organic movement. Mix together with artisanal techniques that promote heirloom fruits and vegetables, protect water tables and maintain nutrients in soil -- and you have the wine that has become Randall Grahm’s life’s work.

After three decades in the wine business, at age 59, Grahm has committed to producing vin de terroir, or "wine of place” (from the French terre for “earth”) in the New World. This Old World model cultivates grapes that so intensely express the alchemy of a specific place -- climate, geology, soil, water, biodiversity, biochemical composition, ecosystem -- the wines produced from them offer consummate originality and quality that can’t be reproduced anywhere else.

“The holy grail is to make a completely differentiated product,” says Grahm. “In this new weird economy, you have to either do something more efficient than anyone else, [more] cost-effective, or you must produce an utterly distinctive product. From an agronomic standpoint, that’s wine that expresses a sense of place. It’s unique, costly, tedious and risky. But, ultimately, if you achieve it, you’ll have something infinitely precious.”

Randall Grahm is on a vision quest that could seriously eat his lunch -- or make viniculture history. “Randall is one of the most interesting people in the business,” says Andrew Waterhouse, professor of enology at the world-famous viticulture school at University of California, Davis.

Shaking up the wine industry

A Los Angeles native and University of California, Santa Cruz, alumnus, Grahm wandered into the biz in 1975 via a clerk’s job at a Beverly Hills wine shop, working up to salesman and manager. “I got an intense education,” he says, noting the opportunities it provided him to taste great French wines.

Next came a plant sciences degree in 1979 from the University of California, Davis, where, he says, he became obsessed with pinot noir.

By 1981, with some family help, Grahm had purchased property near the town of Bonny Doon in the Santa Cruz Mountains, south of the Bay Area, establishing Bonny Doon Estate Vineyard (now Bonny Doon Vineyard).

Under the Bonny Doon label, Grahm pioneered a series of innovations, such as development of French Rhone and riesling grapes in California. At its height around 2006, Bonny Doon sold about 450,000 cases, more than 5 million bottles. Grahm also earned a reputation as a smart winemaker, cheeky showman, poet-philosopher and pathological punster (he’s a self-described “vitizen of the world”).

“Everyone in the industry knows of Randall Grahm being something of a renaissance man — progressive and innovative,” says Allison Jordan, executive director of the California Sustainable Winegrowing Alliance.

Where Grahm has led, the industry often follows. So when he began dramatically unwinding his business six years ago and selling off his property and moneymaking labels to focus on high-end wines, few would outright dismiss the left turn.

Rethinking the path to success

Grahm’s decision to “put my money where my mouth is” arose from life-altering events. In 2003, at age 50, he had a daughter — Amélie, now 9 —  with his partner Chinshu Huang, an alternative energy business developer. A year or so later, he suffered a near-fatal bout of osteomyelitis, a bone infection, which required months of drugs, healing and wearing a heavy neck and head brace. Both experiences made Grahm take stock.

“Life is short,” he says today. “If I were to die, I thought people would say, ‘What a great marketer he was.’ I didn’t want to be remembered for clever marketing. If producing terroir is a supremely difficult thing to achieve in the New World, it should not mean I shouldn’t try. It was years since I discovered I loved wines that express a sense of place. But I wasn’t doing it.”

Long interested in sustainable practices, Grahm had begun experimenting in 2002 with biodynamic principles, which emphasize biodiversity and a view of nature that’s holistic and interconnected. It also prescribes what seem like some truly woo-woo demands (for instance, burying a lactating cow’s horn filled with manure in the soil for its fertilizing abilities).

“The movement is steadily growing in the U.S., though it’s more popular in Europe,” says Jim Fullmer, executive director of the Demeter Association, a biodynamics certifying organization. Adherents swear that once you taste biodynamic wine or food, you’ll never go back.

In 2007, Grahm’s Ca’ del Solo wine won Demeter certification — not an easy task. So he’s moved toward making wines closer to his beliefs. But being biodynamic doesn’t necessarily lead to a wine expressing its terroir.

Love at first site

After six years of searching for the perfect property, in 2010 Grahm purchased 280 acres in San Juan Bautista, in San Benito County, to establish his boutique vineyard. “It has unique geology, incredible energetic presence, extraordinary exposures and interesting soil,” he says. The site also is sacred to the Native American Mutsun tribe. “I saw it in a dream before I visited it,” Grahm adds.

He named the estate Popelouchum, Mutsun for both “paradise” and “village,” and now has about 80 acres under cultivation. He has high hopes of growing the special grapes that will produce wines representing this absolutely original terroir in six or so years.

Meantime, he’s producing other wines with grapes he purchases, running Le Cigare Volant, the Bonny Doon restaurant and tasting room named for his signature wine, and appearing at foodie events around the country to publicize his products and book, “Been Doon So Long: A Randall Grahm Vinthology.”

Randall Grahm isn’t the type to sit around waiting for his grapes to grow. But he’s nonetheless laser-focused on the future: “My gamble is whether I can ultimately produce wine with qualities so unique that no one will be able to emulate it,” he says.

How Teen Inventor Went From Sketch to Prototype in 6 Months

Necessity may indeed be the mother of invention. Sometimes, though, an actual mother is the necessity -- for the inventor at least.

That’s the case for Carter Kostler, a 14-year-old ninth-grader from Virginia Beach, Va., whose parents invested time, research and personal funds to make his vision a reality.

Six months after dreaming up his concept for a fruit-infused water bottle -- a product designed with the goal of improving one’s health and the environment -- Kostler’s invention recently received patent-pending status. And with a little help from the Kickstarter community, he’ll soon kick his bottle-making enterprise into full gear with his first production run.

The young entrepreneur expects to have 1,000 bottles arriving in stores during the first week in December, possibly in time for the Christmas shopping season.

“This has been the greatest experience of my life and I consider myself so fortunate to have parents that believed in me,” he said.

Kostler got the inspiration for the Define Bottle -- his first entrepreneurial venture -- from watching his mom Carla Weisman cut up fresh fruit in the mornings to make “spa water” in a pitcher. When she left the house, though, she couldn’t bring the fruit-infused water with her.

That got him wondering, “How can we make spa water portable?”

Soon, he came to his parents with sketches, and the family quickly went into action. They researched and found a patent attorney, an industrial design company and a branding firm -- all, coincidentally, in California. The family never met any of the consultants in person.

The industrial design firm signed a non-disclosure agreement, and started making renderings, coming up with some 40 concepts, says Weisman. The family narrowed down their choices, and the designers developed a prototype.

“We really let him take the lead of his vision on it,” says Weisman, who filed the patent application in her name because her son is a minor. Kostler, who is interested in marketing, also worked on branding the bottle. And with a recommendation from the industrial designers, the family found a production facility in China.

Weisman said she and her husband have invested about $35,000 in the project, trying to be “as lean as possible” on the costs. Now Kostler, who has made a movie documenting his experience, hopes to raise $10,000 on Kickstarter for production of the bottles, which he expects will retail for $30. The campaign is slated to start in mid-September, says Kostler.

The Define Bottle is a contemporary-looking glass and bamboo cylinder that’s small enough to fit in standard cup-holders, with two chambers to keep ice and fruit away from the spout. A version made of BPA-free Eastman Tritan -- that is, a plastic-like copolyester is also in the works, says Kostler.

“Aside from [my interest in] improving health, it was important to me to do something good for the environment also,” says Kostler, who notes that fruit-infused water is healthier than soda and other artificially-flavored drinks.

While Kostler has received some interest from web traffic for the Define Bottle, he says it would be premature to shop the concept around to bigger companies now. Instead, he plans to focus on his startup -- and high school, which he just began this week.

“I read everything I could get my hands on about being a teen entrepreneur and came across some great resources and really helpful mentors,” Kostler says. “From reading articles, I found authors that I connected to and reached out to them for any advice they could share.” He started joining online groups and forums, including those geared toward teen entrepreneurs like theTeen Business Forum YoungEntrepreneur’s forum and OnStartups.com.

He suggests that all young entrepreneurs research the experts in their fields and contact those they admire or feel could offer helpful advice.

“By reaching out to people, I was surprised just how willing they were to offer advice and mentor me,” he says. “I’m 14 and actually have some pretty cool connections on LinkedIn. I emailed them, let them know my story and simply asked for advice.”

“I hope that one day I am successful and can pass on my experience,” adds Kostler.

Barbara Corcoran's Advice for Aspiring Entrepreneurs

Ever wondered how your business idea would fare on ABC's Shark Tank? Investor Barbara Corcoranhas funded countless companies, many of which have gone on to enormous success. She's learned to spot the startups that are most likely to succeed -- and most likely to get funded.

Corcoran looks for several common characteristics in every company she funds. She shared them at a day-long seminar on entrepreneurship at the Tribeca Rooftop in New York City last Thursday, offering insights that can help you build a stronger business. Use her criteria as a litmus test for your own small business or startup. Here's how: 

1. Use simple language. When you want to attract others to your cause, forget the insider jargon: plain language works best. Identify the essence of your company's product or mission and summarize it in one short sentence that will tell others what it's about.

Tiffany Krumins, CEO and inventor of Ava the Elephant, appeared on the first episode of Shark Tank and described her product in a simple sentence: "Ava helps children take medicine." Her message was so clear that Corcoran knew she wanted to invest. "Fancy talk doesn't work," Corcoran says. "Entrepreneurs have to talk plain to get bought." 

2. Solve a problem you know from experience. When you're looking for your next business idea, focus on problems you've grappled with firsthand. Most likely, others have faced the same issue, so you'll know you're filling a need.

For example, Ride-On Carry-On, a kid's chair that turns a rolling suitcase into a travel stroller, was invented by a flight attendant who needed a better solution for traveling with her two-year-old son. "Whenever I see an entrepreneur who invents a business out of real life experience, it is almost always a good business," Corcoran says.

3. Identify your difference. In a saturated market, Corcoran looks for products that stand out -- products with a clear difference. She remembers Villy Custom, a cruiser bike company she funded in the third season of Shark Tank. The founder was a former fashion designer whose striking cruisers were truly unique. "They were the best looking bikes I had ever seen," she says.

In other cases, the founder stands out, rather than the product. Corcoran loves to point out that the co-founder of Pork Barrel BBQ, from Shark Tank's first season, looks like "an adorable pig," a marketing advantage that none of his competitors have. "You've got to have a gimmick," she says.

4. Persist past rejection. As an aspiring entrepreneur, many people will give you 'no' for an answer. Corcoran looks for people who won't stop there. "Pushy people always deliver," Corcoran has learned from experience. "They want it, they want it, they want it." 

After Corcoran was accepted as a Shark Tank investor, she received another call saying the network had decided to go with someone else. Rather than backing down, she suggested that she and the other woman compete for the spot. As you know, Corcoran won. "All the best things that happened to me happened after I was rejected," she says. "I knew the power of getting past no."

4 Ways to Get Your Product on the Shelves at Whole Foods

To some entrepreneurs, the ultimate accomplishment is snagging a spot on the shelves of Whole Foods Market. But before you book your meeting with a store rep, you need to be sure your product fits the chain's demanding quality standards and the needs of its customers.

"The Whole Foods shopper is slightly different in that he or she is driven more by health and taste than by price," says Phil Lempert, a food analyst and trend watcher known as theSupermarket Guru. "You don't want to force-fit your product into Whole Foods if it isn't quite right."

So what's an entrepreneur to do to crack this market? First, it's important to understand that Whole Foods is decentralized. The company is organized by regions--11 in the U.S. and one in the U.K.--and each one has autonomous purchasing teams for all product categories. At the same time, decisions are also made on the local level. So, a single supermarket in the chain of 332 worldwide can opt to stock your line. "There are many paths to getting your product into our stores," says Jeremiah McElwee, executive Whole Body (supplements and personal care products) coordinator at Whole Foods in Austin, Texas.

Here are four strategies that can help you make the cut and grow your business:

Know What Makes Whole Foods--and Your Product--Distinctive.
If you think you're ready for your Whole Foods debut, first visit the company's website, which lists acceptable and unacceptable ingredients, quality standards and other important guidelines. "If your product doesn't fit, go back to the drawing board," McElwee says. If it does, make sure it meets one more requirement: distinctiveness. Whole Foods isn't looking for me-too products, McElwee says. For example, an existing Whole Foods vendor found a source for fair-trade cacao from a small tribe in Panama. "This company is going to be making chocolate bars and supplements using this super high-end antioxidant," McElwee says. "This was such a compelling story--it's a functional food, it's fair-trade, and we had nothing like it in the stores so it made sense to launch this line of products nationally."

Pitch Your Local Whole Foods Store First.But don't count on that kind of national launch. When Irene Costello, cofounder of Boston-basedEffie's Homemade decided to try to expand the company's crackers and biscuits beyond specialty food stores, she and her partner first approached the local Brighton, Mass., Whole Foods store. "We had an untried, untested product line so we had to prove ourselves," she says. "We did demos at this store and met the marketing manager. She liked us and loved our first product, the oatcakes. She got behind the brand." Once Effie's established a track record in Whole Foods' North Atlantic region and the brand won some industry awards, Costello decided to gauge interest in stocking the line at more Whole Foods stores. Today, Effie's products are available at 93 stores in five regions.

Study Store Layouts.Before you meet with a local Whole Foods buyer, study the store aisle-by-aisle so you know exactly where you think your product should be stocked. "Think of the store in real estate terms and sketch out whether your product is meant as a quick counter pickup or whether it's strictly a grocery or bakery item," says Mitchell Merrick, vice president of domestic sales at Jessie Steele, a whimsical apron and kitchen goods company based in Berkeley, Calif. "Tell your rep where you could see your product in the store. You want to lead the horse to water so to speak." Initially, Jessie Steele items were stocked only in the Whole Body department with personal care products, but the company eventually got them in the grocery aisles of some Whole Foods stores, too. The products are now stocked in about 30 stores in the Pacific Northwest and North Atlantic regions.

Build Buzz at Farmers' Markets.While you're getting your Whole Foods paperwork in order, sell your wares at your area farmers' markets. That's where many Whole Foods buyers browse regularly, looking for regional artisanal goods. That was the lucky discovery of Chris Buskirk, cofounder of Scottsdale, Ariz.-basedGina's Homemade, a line of soft Italian cheeses and biscotti. "When we started selling at farmers' markets, we didn't know there was any likelihood of the Whole Foods buyers seeing us there," he says. "We were primarily interested in developing a brand identity and getting our product in front of people who cared about food." After a few months working the farmers' markets, Buskirk started calling his local Whole Foods without getting a response. After several attempts, he finally reached a buyer, who knew about the company both because of the farmers' markets and because Whole Foods customers were coming in and asking for Gina's Homemade. "Happily, our line got approved on the spot" after a tasting, Buskirk says. Gina's Homemade is now available at the seven Whole Foods stores in Arizona, as well as the two in southern Nevada.

Entrepreneur's annual look at the brightest ideas, the hottest industries and the most insightful innovators

Brilliance expresses itself in many ways--from the esoteric tinkerings of a mad genius to the profit-heavy balance sheets that illustrate the work of astute executives. Sometimes brilliance is merely a deceptively simple, why-hasn't-anyone-thought-of-this-before solution to a nagging problem.

The products and services represented by our annual roundup of 100 Brilliant Companies are a little bit of all of these. It should come as no surprise that our list is heavy on digital technology, with apps, development platforms and gadgets related to mobile phones, social networking and health care, as well as some mind-blowing inventions that are just plain cool.

On the opposite end of the spectrum, we found much to admire in low-tech brilliance--most notably that with retro hipster appeal, as chronicled in our new-this-year category Geek Chic. Throw in a bit of fun from food, shopping, music, art and travel, and you have our list of the best ideas, the brightest innovations--and, yes, the wackiest notions dreamed up by businesses in the last year.

But brilliance is not merely subjective: In some cases, it can be quantified in dollars and cents. This is not to say that these companies are necessarily the most lucrative in their fields; few of them, if any, are that. But to get a sense of the potential value of the businesses on our list, we spoke to leading venture capitalists to find out what qualities they look for in investment targets in several of our categories. It's a fascinating window into the minds of the people who are betting big on tomorrow's brilliance, today.

Our hope is that, as you dip into our 10 categories, you'll find ideas that inspire, excite and delight you--and, more than anything, perhaps galvanize you to create a bit of brilliance yourself.

To Find Your Next Great Business Idea, Narrow Your Focus

When you’re just starting out in business, narrowing your target market can be difficult for fear you’ll be excluding part of your potential customer base.

But if you can clearly define a market and its needs upfront, you can tailor your product or service offerings narrowly to meet that demand and quickly gain more wallet share than your competitors.

What exactly does this mean?

1. You could be like the enterprising young woman in northern California who discovered a secondhand store’s almost hidden section of distinctive children’s clothes and toys. As it turned out, the store’s owners wanted out of what they saw as a dead-end business. The woman took over the lease and reoriented the entire operation to focus only on children’s products, turning a 1,200-square-foot “dead-end business” into an 800-square-foot startup that was profitable in six months and expanded into a new downtown location.

2. You could be like the mechanic who went through the lengthy and fairly expensive process of getting his auto dealer’s license so he could go to the local car auction to make bids, specifically on older model BMWs. He didn’t want to sell the whole cars, but rather to take them apart and create a line of aftermarket parts for BMW owners and mechanics.

3. You could be like the computer repair technician who decided to strike out on his own in the highly competitive field of information-technology services, only to discover a more specialized market that offered higher rates, more loyal customers and more referral business. That narrow market turned out to be Apple computers.

These examples illustrate a general truth about business opportunity: The true opportunity may not be apparent at the outset. Niches exist in every broad category, and your job as an entrepreneur is to figure out what they are and whether they offer a profitable business opportunity.

Looking at the marketplace this way could also change your thinking on the true nature of a startup. There’s no rule that says you must start from scratch, in your garage or the back bedroom of your house.

Simply walk or drive along any street and you’ll pass any number of businesses struggling to make ends meet because they aren’t selling what their market truly wants or needs. Like the owners of the dead-end secondhand store, they may not even know what their best-selling and highest profit items are -- or that those very specific items are sitting in a neglected section of their store or office.

Category leaders tend to be highly focused, and many times, that focus can appear too narrow. But companies with focus grow precisely because their niche is so distinctive. If you think this applies only to the small retail store or the Macintosh repairman, take a look at what BrandZ, a division of WPP, lists as the 10 most valuable brands in the world:

1. Apple
2. IBM
3. Google
4. McDonald’s
5. Microsoft
6. Coca-Cola
7. Marlboro
8. AT&T
9. Verizon
10. China Mobile

These companies have built their business on a single word: focus. In the case of top-ranked Apple, its greatest success has come from a single product, the iPhone.

So start to expand your focus by doing a more narrow analysis of your market and what people are buying -- or would buy if given the option. Don’t worry about the sales you might be missing by not offering everything to everybody. Your narrow focus could deliver more business than you can handle, producing higher-margin cash flow to enrich your bottom line.

How to Get Paid to Blog

Want to make money blogging? Here's advice from someone who's been there, done that -- and turned the effort into an enviable full-time living, while never veering from her mission of helping people live more simply.

Meet Tsh (pronounced "Tish") Oxenreider, whose online introduction includes the line "no, my name is not a typo," and whose self-description reads, "Writer. Editor. Entrepreneur. Drinker of fine beverages." In fact, beverages prompted her first revenue goal. "I started blogging as a platform to write, a hobby I was good at," she says, referring to the launch of her first blog, "Simple Mom," in 2008. "I'd read up on the relatively new concept of pro blogging and thought it'd be nice to earn some latte money. Income was an idea but not a major goal."

Fast-forward to 2012.

Oxenreider's revenues have doubled every single year. Her vision has expanded into a six-blog network, Simple Living Media. She works out of "various coffee shops" wherever she's living (currently Bend, Oregon) or traveling (most recently the Middle East). Her husband, Kyle, now handles accounting, payables, records and trouble-shooting. An ad manager coordinates private ad sales. A freelance team of "wives, moms, sisters and friends" includes an editor for each blog except the flagship blog, "Simple Mom," which Tsh still edits herself, though she "spends most of her time chasing three little kids around the yard." 

Among bloggers, she's pretty much living the dream. Here's how she got there and her advice for others.

Barbara Findlay Schenck: Out of 180 million bloggers, only a small fraction make money. What do you say to those who think it can't be done?Tsh Oxenreider: The main mistake I hear is that bloggers think they're too small. Most don't make it more than three months, in part because they compare themselves to well-established blogs and feel overwhelmed. I tell them not to compare your Chapter 1 to someone else's Chapter 20.

How long did it take before your blog made money?After about six months, I sold the first ads for about $30 each. I had maybe 500 subscribers at the time. I studied established blogs with audiences similar to mine, made a spreadsheet of who advertised on their pages, wrote up a form email and sent each contact a personalized message saying I'd be accepting ads the next month. Four wrote back and bought into the purpose of the blog, the good price, and a professional and friendly relationship. That lit a fire and drove my next small goal for revenue and traffic growth.

Have you used pay-per-click ads such as Google AdWords?I know a number of bloggers who do it well, but I write about simple living and advocate simplicity, so I maintain control of all ads. I waited several years before joining the invitation-only ad network Federated Media, and I personally approve every ad we accept.

I hear from bloggers who are concerned that ads will make their sites look too commercial. How did you accommodate ads while avoiding that trap?If you think you might sell ads someday, make space for them from the get-go. Then when you post ads, readers won't wonder what happened or question your motives. My blog always included a block in the upper right-hand side for six 125-by-125-pixel standard blog buttons. I filled the space with information or affiliated sales ads that drove revenue until businesses bought the space.

You've watched revenues grow from four $30 ads to a full-time income. Where does the money come from?There's no single geyser of income. A lot of little streams flow into a bigger river, as is true for every single revenue-producing blogger. And it's seasonal.

On the whole, ads -- including privately purchased ads, network ads and affiliate ads that generate revenue through Amazon and from sales of other bloggers' e-books -- account for probably half the revenue. Another third comes from sales of my traditional and e-books. Freelancing, which pays well because of the platform the blog provides, accounts for the rest.

Your post titled "My Top 11 Blogging Tips" advises others to "decide your reasons" for blogging. What do you mean by that?I started while living overseas, struggling to find motivation and wanting to make some money. I'd never tried entrepreneurship, but I knew I liked to read mom and productivity blogs. The mom blogs were by women and the productivity blogs were by guys. I couldn't find one that merged the two, so I decided to start my own with a goal of helping people live simply. I followed the advice I now give to others. Do it for the love of it and not for the money. The money will follow, but be willing to do it for free.

3 Easy Exercises to Boost Your Creativity

As an entrepreneur, your job is to be one step ahead of the market, always ready with the next big idea. Whether you want to design a new product or disrupt a market, you need to be able to come up with creative solutions for problems of everyday life.

Creativity often eludes us because we're accustomed to certain norms. "We're highly socialized and have fixed assumptions about what the world looks like," says Barry Staw, an organizational behaviorist at University of California, Berkeley. "You have to try to envision another world."

To do that, Staw suggests a series of exercises, all designed to help you consider a wider range of options as you brainstorm.

As you do each of these exercises, resist judging your ideas for as long as possible. "A creative person is willing to suspend their caveats for a longer period of time," Staw says. The selection process can come down the road -- creativity requires freedom.

To flex your creative muscles, try these three easy exercises: 

1. Re-imagine a familiar situation. To think more creatively, consider alternatives to obvious choices. If you assume that a restaurant will buy and prepare the ingredients for your meal, then make a list of other options. Perhaps the customers bring their own ingredients for the chef to prepare, or the restaurant provides ingredients that customers cook at their tables. "Think of opposites or radical differences," Staw says.

That exercise can lead to exciting new business ideas. For example, companies like Bag Borrow or Steal and Rent the Runway, which both allow customers to rent high fashion goods, started as alternatives to the assumption that we have to own our wardrobes.

2. Practice breaking the rules. "To learn how to act creatively, you have to violate norms," Staw says. Practice breaking the rules with harmless violations that might be embarrassing or uncomfortable, like asking to read a poem over the loudspeaker at the grocery store, or offering to help the usher hand out programs at a play.

It's okay if you get shot down -- the point is to get comfortable trying options that most people would rule out immediately. Staw calls these "lessons in chutzpah" because they help you gather the nerve to take creative risks. Just thinking of rules to bend promotes creativity because you force your brain out of its comfort zone.

You can also look for ways that others are breaking norms. For example, Staw's son discovered that teenage girls like mismatched socks, so he created LittleMissMatched, a colorful teen clothing line.

3. Make a list of things that bother you. As you go about your day, Staw suggests creating a "bug list," or a list of annoyances. You might list slow internet or noisy air conditioner units. "Usually, if something has bothered you, that means there's a hole in the service," Staw says.

By thinking of possible solutions, you may stumble on a product opportunity. For example, one frustrated inventor created a stemware tether to stop wine glasses from chipping in the dishwasher.

Grooming entrepreneurs in Asia

MALAYSIANS may not be familiar with the name Ramya Weerakoon. But in Sri Lanka, Ramya is quite a household name, having built her own business from scratch despite the challenges of being a single mother in a conservative society.

Ramya's gentleness and humility belie the inner strength and steely determination that has brought her to where she is today a successful businesswoman leading a diversified and export-oriented business in Sri Lanka.

During a short bus ride to dinner place in Macau, Ramya, the chairman and managing director of Ramya Holdings Pvt Ltd of Sri Lanka, shared her philosophy, “the more the odds were against me, the more determined I became to persevere through and become successful”.

It is easy to strike up a conversation with someone who is as friendly as Ramya. And as she opens up, she tells her life story, which in fact is an inspiring one.

Ramya was widowed in her early 20s after losing her husband in the Sri Lankan Civil War in the early 1980s. When tragedy struck the family, Ramya was then still heavily pregnant with her second daughter.

As a young widow and single parent in her conservative society then, Ramya became some sort of a taboo in her community. She was looked down upon, and every attempt to get financial assistance to start a small business to feed her family was turned down.

To cut the story short, Ramya says she went ahead, took the risk and mortgaged the limited assets that she had then to raise finance. She managed to start a cottage business, which has since grown into an internationally recognised organisation, specialising in garment manufacturing for luxury brands, horticulture and leisure.

Ramya's company, which is named after herself, is now providing thousands of jobs to her local community. And she feels content in what she is currently doing in helping to build up her community.

Indeed, Ramya is the epitome of a successful entrepreneur, which is characterised by an individual or group who takes risk to innovate new products, services or technologies and turn the innovation into a productive venture or business.

She was among the many successful Asian entrepreneurs who had attended the inaugural Asia Entrepreneurship Forum (AEF) that was held in Macau last week.

Organised by Enterprise Asia, a non-governmental organisation based in Malaysia, the AEF is an annual event that seeks to bring together established entrepreneurs, government leaders and academia from the region to share their insights into entrepreneurship. The whole idea is to promote entrepreneurial development in the region as a source of economic growth.

Malaysia will play host to the AEF next year, with the event expected to be held in the historical city of Malacca.

Growth engine

Increasingly, the role of entrepreneurship in driving national economic development is being emphasised by experts around the world.

The United Nations University World Institute for Development Economics Research (UNU-WIDER), for one, finds from its study that global development has entered a phase where entrepreneurship will play an increasingly important role. It argues that entrepreneurship will contribute to growth and employment creation in advanced, emerging and least-developed economies alike.

UNU-WIDER's two-year study has resulted in the publication of a book entitled, “Entrepreneurship and Economic Development”, in which the institution also stresses the role of the state in supporting entrepreneurship development to ensure a desirable social outcome.

At the AEF 2012, Enterprise Asia chairman Tan Sri Dr Fong Chan Onn(Malaysia's former Human Resources Minister) argues that nurturing and developing entrepreneurship, especially among the young, is a key growth engine of any country. Entrepreneurship, he points out, has immense potential to deliver the much-needed socio-economic benefits to a country's people.

And in the current challenging economic times, experts say, entrepreneurship development can well be the answer to overcome the storm.

“Entrepreneurship can help an economy ride out a downturn,” Fong says.

Noting that the global growth engine is already shifting from the West to the East, Fong argues that Asia could sustain its dynamic momentum through entrepreneurial development, especially in a still-fragile global economic environment.

“In today's shifting market, entrepreneurship can be the single most important foundation in developing Asia into an economic powerhouse,” Fong says.

“Under the current challenging economic situation around the globe, Asia has demonstrated that even under extreme pressures and challenges, it is steadily becoming the global leader or world economy and has maintained positive growth throughout.

“In order to sustain this growth, it is vital for all of us in Asia to build on our entrepreneurial resources and build a borderless world,” he explains.

The global economy is currently experiencing unprecedented volatility and change.

The US economy, for one, remains in the doldrums, with stubbornly high unemployment rate and below-par growth. The “fiscal cliff” that is supposed to hit the world's largest economy early next year only serves to exacerbate the fragility of the country's financial health.

And to make matters worse, the eurozone debt crisis remains unabated. The problems plaguing the 17-nation European region seem to deepen by the day, with no convincing solutions in sight. Already in recessionary phase, the negative developments in the eurozone are threatening to curtail global economic growth.

While Asia remains a bright spot of growth in a gloomy world economy, the region will still have to contend with the spillover effects of Western economic weakness through the financial and trade channels.

“Asia will not be immune to the economic weaknesses of the western developed nations,” Alicia Garcia-Herrero, chief economist for emerging markets of Spain-based financial group Banco Bilbao Vizcaya Argentaria SA, reminds entrepreneurs gathered at the AEF 2012.

“The spillover effects are something that Asia will find difficult to avoid, given that we are living in such a highly-interconnected world,” she explains.

Garcia-Herrero believes the trend that Asian entrepreneurs have to contend with in the days to come will be in the form of increased protectionism, the signs of which are already emerging amid the deteriorating global economic conditions.

Fong believes the key for Asian entrepreneurs lies in strengthening ties and collaborating closely to promote intra-regional business opportunities.

On another note, Fong emphasises that government policies alone could not change the fate of the Asian societies, but entrepreneurs could be agents of change in determining the progress of the region.

What Type of Business Should You Start?

You've made the decision to start a business. Now you're asking yourself, "What type of business should I start?"

You already know that there's a world of possibilities out there for anyone who wants to start a business. How can you possibly winnow them down to find the type of business that's right for you? The approach outlined in this article will help. Once you've worked your way through these five decisions, you will have a much better idea of exactly what type of business you want to start.

1) Retail or wholesale type of business?

Where do you want to be positioned on the supply chain? Retail businesses sell goods directly to consumers, usually in small quantities. Wholesalers buy goods (often in large quantities) from manufacturers or importers and then sell them to retailers and other distributors.

2) Franchise or independent type of business?

Many established companies offer franchises, which are basically copies of their companies. If you buy a franchise, you are buying the right to sell the parent company's goods and/or services in a specific area. Besides paying a franchise fee, you will also have to pay royalties and perhaps additional fees to the franchisor. You will also be expected to abide by the terms of the franchise agreement, which will often lay out exactly the way you will do business. Buying A Franchise explains the advantages and disadvantages of franchises and what to expect.

An independent business is one that you create and nurture on your own. Starting a independent business allows you the control and freedom that you won't get from a franchise operation.

3) Product or service (or mix of both) type of business?

If you are a trained professional, such as a dentist, accountant or realtor, your business is going to revolve around the professional services you can provide. But there are many professionals that also have the opportunity to offer related products, if they choose to do so. If you're a photographer, for example, you may decide to sell cameras, picture frames, and photo paper.

If you're not a trained professional, the key to deciding whether to focus on products or services when you're thinking about starting a business is determining where your true talents lie and what you most enjoy doing. Would you be happiest telling someone how to do something, doing something for them or offering them the products they would need to do the job themselves?

DO NOT base this decision on whether or not you enjoy selling or are good at it. No matter what type of business you start, you will be involved in sales.

Mediterranean Restaurant Business Plan

Executive Summary

On the Water is a new Mediterranean restaurant on the Sunset Strip. On the Water will target both fun-seeking as well as sophisticated diners looking for good food in a fascinating atmosphere. On the Water will seek to earn 85% gross margins through an innovative setting, a wonderful menu, and an experienced restaurateur.

The Market

On the Water will be targeting locals and tourists who are active restaurant seekers. There will be a special focus on young adults with $15K-$60K of income looking for good food and a great time. In addition to the young adults with money to spend, On the Water will also be targeting adults and tourists known to frequent Sunset Blvd. The general demographics are males and females ages 20-50 with some or all of a college education. In addition to local Hollywood area people, On the Water will also serve party animals from neighboring cities and tourists.

Historically, if there is a dip in the general economy, the restaurant industry is usually effected far less that the overall economy. To some degree this is because of people's perception that food, regardless whether it is from the grocery or a restaurant is a fundamental necessity of life and spend accordingly.

The Service and Products

One thing that is always consistent with On the Water is their impeccable service. All server staff hired have extensive experience and all go through three weeks of training, ensuring benchmarked customer service. On the Water's services are all delivered in their extraordinary atmosphere which includes a comprehensive art and culture collection from Mediterranean Europe. This provides an authentic surrounding that at times seems to distract everyone as they analyze the wealth of artifacts on display.

The menu is Lily Valdivia's pride. It is a culmination of over 20 years of cooking. The menu contains traditional favorites such as hummus, baba ganouj, and tabouli. These favorites are differentiated through the use of the freshest organic ingredients. Most people are not aware of how much better the items taste when they are prepared with the freshest ingredients and made with love. Other menu items are kebobs, chutneys, flat breads and desserts. Everything is fresh, homemade, and prepared daily.

Management

The restaurant is led by Lily Valdivia, an industry veteran. Her restaurant experience began 12 years ago as a server. She quickly moved up to fine dining serving where she perfected her formal, customer-centric serving approach. For the last five years Lily has been the manager at a European restaurant with over $2.5 million in annual sales. As mentioned earlier, Lily started cooking 20 years ago as a child in Greece. Lily came from a large family and it quickly became her responsibility to cook for the entire family. Her mother, who had three generations of traditional recipes, trained her. Lily quickly mastered these and began experimenting with her own dishes. The feedback from her family was always very positive. She knew one day she would have to parlay this skill into a business opportunity.

On the Water is forecasted to reach profitability by month two. Sales are forecasted to reach $1,785,000 by year two and grow to $2,345,000 by year three. We forecast a high net profit on these sales.

Characteristic of Entrepreneurship

The entrepreneur has an enthusiastic vision, the driving force of an enterprise.
The entrepreneur's vision is usually supported by an interlocked collection of specific ideas not available to the marketplace.
The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving.
The entrepreneur promotes the vision with enthusiastic passion.
With persistence and determination, the entrepreneur develops strategies to change the vision into reality.
The entrepreneur takes the initial responsibility to cause a vision to become a success.
Entrepreneurs take prudent risks. They assess costs, market/customer needs and persuade others to join and help.
An entrepreneur is usually a positive thinker and a decision maker.

The Entrepreneur

Entrepreneurs have many of the same character traits as leaders. Similarly to the early great man theories of leadership; however trait-based theories of entrepreneurship are increasingly being called into question.
Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking.
Such person-centric models of entrepreneurship have shown to be of questionable validity, not least as many real-life entrepreneurs operate in teams rather than as single individuals.
Still, a vast but now clearly dated literature studying the entrepreneurial personality found that certain traits seem to be associated with entrepreneurs:

David McClelland (1961) described the entrepreneur as primarily motivated by an overwhelming need for achievement and strong urge to build.

Collins and Moore (1970) studied 150 entrepreneurs and concluded that they are tough, pragmatic people driven by needs of independence and achievement. They seldom are willing to submit to authority.

Bird (1992) sees entrepreneurs as mercurial, that is, prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness. they are cunning, opportunistic, creative, and unsentimental.

Cooper, Woo, & Dunkelberg (1988) argue that entrepreneurs exhibit extreme optimism in their decision-making processes. In a study of 2994 entrepreneurs they report that 81% indicate their personal odds of success as greater than 70% and a remarkable 33% seeing odds of success of 10 out of 10.

Busenitz and Barney (1997) claim entrepreneurs are prone to overconfidence and over generalisations.

Cole (1959) found there are four types of entrepreneur: the innovator, the calculating inventor, the over-optimistic promoter, and the organization builder. These types are not related to the personality but to the type of opportunity the entrepreneur faces.