One of my regular readers is preparing to open their first store in his small town — with a rent of US$400 per month, about 600 square feet on a nice road — I’ve been helping him design the right business plan and preparations so that he’ll have a much better chance of survival. Most new businesses fail because the owners get too aggressive in spending money but not time. The most successful businesses are those that open earlier than the door says and close later, with the business owners spending a significant period of time at the store after-hours taking inventory, cleaning up, and making the place look comfortable.

The only process I haven’t been able to help him with has been his local regulations regarding how to open a business. The lease is fairly simple (I always recommend getting a realtor and a lawyer before approaching a landlord for a lease), and getting his accounts open should be pretty quick once he has everything ready. Now he’s at a stopping point because of the paperwork he has to deal with on the government level.

The first thing to do to start a business legally is to get a FEIN — a Federal Employer Identification Number. This is similar to a social security number — it gives a business an identifier in paying taxes and filing paperwork. You can apply for an get your FEIN fairly quickly. The form is the IRS SS-4 form, available online here.

Once you receive your FEIN, you’ll want to contact your local State taxing body or department of revenue to acquire a business license — usually a sales tax ID number or other identification number for filing sales tax and other fees. Your state’s revenue department website can be found at this site. I highly recommend actually going to your local state revenue location to discuss the particulars in person — expect it to take more than a day as the bureaucracy can be intimidating. Be nice, be friendly, and get everyone’s name and ID number.

Once these two important pieces of paper are in your hands, you have to go to your county office. Some counties have power over the villages in regulating businesses, especially on county highways or roads. A quick call to the county will generally get you the information you need to apply for any licenses.

Once the 3 licenses are out of the way, go open a bank account for your business. All you need is the licensing from the government bodies and you’re set — maybe an hour total at the bank.

You can now apply for your reseller accounts with your wholesalers and distributors. This takes time, sometimes weeks, so it is best to get them started immediately after receiving your licenses above. After you apply for these accounts, I’d recommend researching a merchant account company — they process credit cards. I prefer buying a used credit card terminal on eBay, and some of these higher feedback-rated companies can get you great deals on merchant accounts. I must have paid almost US$3000 more over 3 years because I let my bank handle the account. Ouch!

Now that you’ve got the licensing and the accounts started, and know how you will collect your income and where you’ll place it, the worst part is ahead: the city or village. Sometimes a city or village won’t talk to you until you have a lease and a property, but then you can’t get a lease or property (a big risk) if you don’t know if the village or city will give you a permit to sell your products! It is a chicken-and-egg situation, and I highly recommend finding a podunk lawyer firm located close to your city hall. This is generally where the cronies work — the sons or cousins or friends of those in office.

Give them a call, sit down with your one free consultation, and ask them how you can get your business open in the least amount of time possible. The costs will be higher than doing it yourself, but you can shave 3-6 months off the process. I once opened a retail store in less than 5 days, and the retail store next door to me took 6 months. I made more than 5 times over what I paid the lawyer to “file my paperwork.”

Once that’s out of the way, get insurance. I lost almost US$50,000 in a theft when we were underinsured — almost closing my business for good. I’m still paying off that debt over 2 years later.

After that’s done, the next step is getting your occupancy, again another local village monstrosity. I’ll get more into this detailed step, as well as deeper detail on all the previous steps, throughout the coming days and weeks.

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I get a few e-mails every day asking me why I write “for free” or if I make money on my various websites. The answer is usually pretty basic: I don’t really write for free, and the money I make writing is used to fund others, but could turn into a viable income if I wanted to spend the time focusing on that portion.

The new big business for everyone seems to be making money online, somehow. I believe eBay is the best way to make money on the Internet from your home, but it requires real work — building up a market of items to sell and then staying on course. If you get lazy, you’ll end up with negative feedback and no real way of getting ahead. The most successful sellers on eBay spend more time dealing with software than you’d spend in a regular 9-5 job. A good friend of mine makes a good 6 figures annually, but he also spends a good 60 hours a week coding, packing, selling and dealing with irate buyers. The money is good but he never gets to see his family or friends.

Making your own website (or blog) is a great way to get started in finding an income online, but it isn’t easy. Income streams from writing online are directly tied to how many readers you have and what you’re writing about, and the competition is fierce. I know many people who have tried to write and gave up after just 2-3 weeks. For most people, your income in the first year might not even hit a few hundred dollars.

That’s the rub, actually. There ARE a rare few people who made money overnight — yet the ones who did are not being honest with you. The Million Dollar Homepage kid spent thousands of dollars and hundreds of hours on buying promotion for his site, and this knowledge didn’t come to light until AFTER he had collected his million bucks. Even successful “home grown” websites such as slashdot didn’t really start making money until they were corporate-sponsored or even bought out — and it took years to get there. When they were new sites, the Internet was still relatively new so their competition was minimal if there was any. Today there is more competition than you’d believe.

If you’re going to try to make money online, I’d stay away from the various “make money online” schemes that you’ll come across on your daily readings. Go ahead and find some that you can read up on — every one of those sites is generally not a good way to make anyone money except for the person who owns the site and charges you for their guide. I found the ultimate rules for making money on the web and I’ll share them with you.

The ultimate rules for making money through the internet are:

1. It takes time. Just like a “real” business, expect to invest 18-36 months of your life, full time, in building your site, no matter the subject.

2. Others will get ahead of you because of using fraudulent “black hat” techniques to get more visitors. The biggest internet advertising firms are fighting these black hat fraudsters, so over time they may make a lot of money, but in the long run they’ll get nothing and be banned from all the systems.

3. It takes money. The best way to generate traffic is to go out and buy advertising for yourself — this way others who run similar sites to yours may end up displaying your advertising, bringing users back to you. This means more traffic, which might mean more money.

4. It takes focus. If you want to run a website dealing with diamond studded dog collars, you want to find information that is unique but you want to make sure you update the site consistently. If you only update it once a month, you’ll see your visitors dropping and the search engines ignoring you.

5. It takes patience. I don’t mean time here, I mean real patience. I’ve helped a few people start their websites, and they’ve seen huge peaks early on — great income streams within just a month or two. Yet they quickly fell back to earning just pennies an hour and they were frustrated so they stopped publishing. The Internet is no different than the retail market — there are up weeks and there are down weeks. The week before Christmas is great for websites focused on presents, the week after Christmas is great for websites focused on deals and values. The month after Christmas is usually bad for product sites but great for diet sites.

6. It takes intelligence. If you can’t spell and don’t have a concept of proper grammar, you’ll look like an idiot. Take some classes or read some books and get a basic idea of how to write. There are dozens if not hundreds of books at your local library or bookstore.

7. It takes confidence. If you write from a “poor me” perspective, people will get sick of you quickly. You not only have to believe in your topic, you also have to believe in yourself. Readers can quickly see if you’re a fraud or if you’re real, and if you’re there for the long run or just a quick buck. That leads to the final rule:

8. It takes a desire to ignore the income. Write because you truly like the subject you’re writing about. Write because you’re ready to invest in your future. Don’t write to make money. I see all over the Internet links on buying good keywords to write about — these are mostly fakes. I also see people asking questions on what is the best topic to write about — the answers don’t mean anything. Write about what you love. If you’re one of the best of the billions of people out there, you’ll do great. If you’re not into the subject, you’ll be out in weeks.

Through all the rules, you have to understand one thing — if you plan on making money, it is now a business. If it is a business, ALL these rules are valid and MUST be followed. For those not interested in making money in writing online, though, these rules still hold true to anything you want to do.

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I’ve always been a fan of business mentorship opportunities — where a younger entrepreneur offers their services to someone already succeeding in business, in exchange for learning the ins and outs of the trade. These opportunities are becoming harder and harder to provide for, with various local and federal regulations making them criminal. This doesn’t mean that a young entrepreneur can’t find a mentor, though, one just has to look a little harder and ask around more.

For most entrepreneurs, their first job will likely be in the retail or food service (restaurant) sector. Working for a mass merchant or a large restaurant chain offers only one real reward: income, and a limited one at that. I’ve spoken with various local business owners though (the so-called “ma and pa” stores and restaurants), and have been surprised that most were open to the idea of mentoring to someone interested in a future of running their own business.

It isn’t easy to get your foot in the door, though, as the youth of today often times come across as irresponsible and lacking in loyalty. This is where a teenager can set themselves ahead of the rest though — by showing interest in a local business, you can probably find yourself some great opportunities in your own neighborhood.

The most successful adults I know today were able to “slave” themselves out as teenagers — working the lowest paying jobs that gave them the best insight to running a business. You’d be surprised how much you can learn bussing tables or cleaning cars, but the average youth looks at the income and doesn’t see value in working for less.

If you already have an idea of what market you see yourself in, you should consider finding the oldest and smallest ma-and-pa business in that market in your home town. Don’t be afraid to visit them on a slow day and inquire about what needs they might need met. Be honest about your desire in running a business in that field, and you might be surprised that they’ll take you up on it. Initially offering them very basic (and low paying) services is a great way to prove your loyalty to them, and quickly grow into a job that gives you better insight into how a business is run. Don’t be ashamed or embarassed to offer yourself as someone who will help clean up and organize an office or a restaurant (even after hours), as you’ll gain the respect and trust of the person who knows the business best.

Working for a megacorporation might give you the opportunity to grow within that company, but it will likely not offer you much insight into running a business. Instead, you want to exchange your hard work for the ins-and-outs of a business: how do they handle ordering? How much is their rent and utilities? How much paperwork do they file with the local authorities? How much money do they take home at the end of the month after everyone has been paid? When are the busy times and the slow times, and how often do they have to save their big profits to make up for the really slow periods?

These are the things you need to understand now, as a teenager. The actual income is irrelevant and I think getting paid might actually get in the way of earning the real profit: the knowledge you won’t learn from a book or an Internet site or even in college.

Summer is coming quickly, and once you’re out of school for the year, you’ll already have missed the time you need to get to know the local business owners. Find out if there is an organization in your town focused on local business owners — usually its called a Chamber of Commerce or a Village Business Association. See if you can go to one of their meetings (maybe with a parent in tow).

The best opportunities for the youth comes from giving up your time in exchange for the knowledge of someone else. The profit you earn (information and experience) far outweighs the money your friends might be making working for a large chain store. In 10 years, they’ll still be working for another large company, and you might be running a competitor to it.

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A few months ago I was trying to help a local new father find new ways to bring in a few dollars without requiring a major lifestyle change. He works a typical 9-5 job about 15 miles from his house (down the street from mine), and he makes the drive himself.

Originally I had talked to him about carpooling, which I know helps many people save a significant portion of their gas budget. Because his boss needs him to use his car from time to time, this was unavailable to him.

I was driving the same road he drives, and saw a billboard for a fantastic deal on pizza — carry out only. In my community, a decent large pizza runs about $17 delivered, and this billboard was advertising one for over 60% off. The light bulb went off in my head, and I gave my neighbor a call.

There are many things we do in life that are time-occupiers but don’t allow us to do anything productive. The drive to work and back is one of the worst - some of my friends waste 2+ hours a day in this drive. I personally would rather move closer to work (or work closer to home) than bother, but it seems to be the norm. I’ve always spent my drives to clients thinking of how I can make that time productive. I’ve come up with unique ideas, but the recent one I proposed seems to be the oddest solution to a problem many of us face.

I explained to my neighbor that many families are just as busy as his is — they don’t often have time to cook dinner. While I’m a low-carb kind of guy, I do know how quick and easy a delivered pizza can be. I also know that families tend to spend money to put something hot on the table. Lastly, I knew that families in my area tend to be attracted to anything that saves time versus money.

I told him to consider a weekly pizza delivery service. We’re not talking about working as a pizza delivery guy (which can be very good income but also very bad, based on tips) — we’re talking about working as a secret contractor/reseller. I helped him design some nice flyers (about a nickel a piece printed in full color) and have his teen kid flyer up some doors. I usually hate flyer spam, but I’ve never had a problem with local “spam” from kids who mow lawns, plumbers who fix toilets, or the like. I’m a hire-your-neighbor kind of guy.

The flyer offered families a hot pepperoni pizza, every Friday, for $12 delivered. All the neighbor had to do was jot down their address and drop the flyer off in the mailbox mentioned. The pizza is $7 carry-out, so the $5 isn’t much but it adds up.

The first week my neighbor netted over $75 including tips. Week 2 he is over $150. This guy earns about 3 times that in his 40 hour job. He made $150 in week two in just under 25 minutes. Almost a month later and my own household is taking advantage of the deal, and he’s considering opening the idea up to the larger community. With about 70 homes in our subdivision, he’s already found nearly 30% in the system. I’m shocked, actually, but it seems that people are busier than I thought, and they’re all very interested in saving $5+ PLUS THE TIME to make the call and wonder when things will get delivered. This way, they get it at the same time every week, for the same price. Very simple.

The idea IS crazy — but it shows that a little bit of thinking and a little bit of marketing works. I told my neighbor to start throwing the flyer onto the delivered pizzas, and to also talk to other people in his neighborhood to maybe sell them advertising space for a few bucks a month, just to cover his printing costs.

Do I want to deliver pizzas? Not if it takes 6 hours to make $10 an hour. Yet this neighbor of mine isn’t losing more than a half hour a week and he’s making incredible bank. Is the job for everyone? Not a chance, but if you look at the least productive time you spent consistently every week, you might find ways to turn no income into a good income, or even a little income that is still paying more than the big zilch you were previously getting.

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I see so many adults ruin their lives over failed business ventures, usually over a few simple rules that hold true time and again. I myself have ruined years of investment by breaking some of these rules, and I can only hope that a little thought and a lot of warning can give some younger readers here the chance to prevent the same mistakes.

When you become an entrepreneur, you take on total responsibility for the business you’re entering. Employees of a business take on a little responsibility, but the owner of the business takes it all on. The risk of losing everything is the reason why there is also a great reward in self-ownership.

Yet often in business we think we can pass on some of the risk to others, while still reaping the whole reward. It is very easy to find others to pass risk on to, but sharing the risk means sharing the rewards: usually you’ll share more of the reward than you want to.

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The biggest common mistake I see in businesses is in the integration of third parties into the business ownership. We think we can’t handle the business entirely ourselves, so we bring on friends or family into the business to balance the work load. In almost every situation I’ve come across, these partnerships are predestined to fail. When you consider the work you’re sharing, you have to consider the amount of work you’ll have to do to keep the partnership relationship working, and the amount of work you’ll have to do to jockey for the better rewards. I’ve seen husbands and wives battle because of running a business together and one person blaming the other for doing less work or taking more profit.

One of my most successful businesses is a corporation run by two partners, and it has had its own share of ups and downs. Even though the business is profitable and stable, I know that the friendship that I had with my business partner is not what it was 10 years ago. I think we also both agree that we’d have done better as competitors who worked together rather than partners.

Why did I bring on a partner? I figured I’d be able to handle a bigger customer base in the long run. While this was true, I also had to continue to pay out half of the business earnings when work was slow. Looking back, I believe the best solution would have been slower initial growth of the company that eventually led to bringing on employees or contractors to handle the overflow. I don’t regret forming a corporate partnership, but I’ve been lucky that we’ve lasted nearly a decade versus the quick corporate death that most partnerships face.

Another big problem that many new and seasoned entrepreneurs face is sharing the financial risk with others — usually banks, credit card companies, or friends and family. There are times when your cash flow is short of what you need, and it seems easy to just call the bank and get a short term loan, or charge your shortfall to your credit card. Even worse, we sometimes turn to family to borrow the money just until the next customer pays. From my experience, every one of these can be detrimental — I’ve found that the businesses best suited to bank loans and credit lines are those who don’t need them to survive.

Cash flow is the most important need to keep a business afloat, short of you being responsible for your job. I can not count how many businesses I lost because of bad cash flow management — and I can tell you honestly that all my successes were due to having a little extra cash in the bank to cover the unknown. My best advice to the new business owner is to take your first 3 paychecks from the business and sock them away. Having 3 months overhead covered in the bank is even better, and my friends with the most successful business all have over a year of cash available without going to the loan officer or calling up a family member.

Asking a family member for a loan is an absolute deathtrap to businesses. We humans seem to feel that we don’t need to hold ourselves to the same accountability with family as we would with a bank. If you need to ask a family member for money because you can’t get a loan or get a credit line, you’re in deeper trouble than you realize and the loan will likely go unpaid when the business collapses. As I said earlier, the people who need money the least are the ones who can get loans the easiest — banks know who the worst risks are.

If you find yourself in a cash flow challenge, the best thing you can do is to be honest with your customers and make temporary cut backs to overcome the shortfall. I had to cancel a huge project before it began because of a budget problem, but the customer was happy that I was honest, and they hired me again in the future for another project. In another situation I lost one of my top customers because of a budget shortfall that I tried to overcome by robbing Peter to pay Paul, and I still feel guilt over losing that customer almost 12 years ago.

The last warning I need to share returns to the family and friends issue. My father told me that you shouldn’t make businesses with friends, but you should make friends in business. This is so true, and carries on to family as well. I see successful family businesses often, but we rarely see the ones that fail — these greatly outnumber the successes. And when a business fails, it is normal for those involved in the business to part ways. Losing a friend or breaking up a family is not worth the risk of profit. If you want to involve friends or family in your business, bring them on as employees, or consider working with them contractually as suppliers or third party providers. A little nepotism hurt no one when one can cut off any leeches. When the leech is your partner, though, it can change your life for the worse if problems occur.

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After 18 days of silence, I finally have returned from my run through Europe and Asia. I had expected to write on the go, but the lack of good Internet connection points limited me to only 2 accesses to my e-mail on the go.

I learned more on this trip than any other in my life — probably because the trip was very specific in showing me opportunities in other countries. I will be heading out again likely in a few months, and will be sharing my experiences with the entrepreneurs who read this site as well as those of you who dream of self-ownership.

The biggest opportunities I saw were in India — the land of outsourcing and low wages. The average person I spoke with made less than 5000 rupees a month — that is about USD$115 per month! This is a real job too — engineer, entry level lawyer, new doctor.

With very low wages, you’d think that there aren’t opportunities to make money, but I was surprised at the level of growing wealth within the middle class. India feels like an ancient country in every way, even the richest people don’t have the cleanest water or even air conditioning. Yet with each day, the new generation wants to be more Westernized, if only they knew how.

Over the next few months I will share my thoughts on the world and how you can take advantage of the new global economy. Today I just wanted to let you know that being a jetsetter is not as scary as it might have been in your parents’ day.

My trip through Europe and Asia was very cost effective — for around US$3000 I spent 18 days in two continents. $170 a day is a lot, of course, but I traveled very well and stayed in very high end hotels. I believe my trip could have paid for itself had I cut back on some of this higher quality service I’d desired.

If you’re young, saving US$2000 for a yearly trip to another continent should not be hard — we’re talking $40 per week. I can save this amount just in joy-ride gas and bottled water that I used to spend when I was younger.

I went to both continents with very little research — just get up and go. Most people I encountered spoke English (broken but useful), and not once did anyone attempt to rob me, threaten me or even rip me off. The markets I attended were very honest and open — they wanted me to return. It is not the world of the 1980s, everyone now has a cell phone it seems and they’re hungry for tales of the West.

If you’re under 25, now is the time to save and go. By the time you’re 30, other responsibilities might make it nearly impossible to take the 2+ weeks you’ll need to properly digest a given market. I found opportunities in Poland, Switzerland, India, Germany, and many more surrounding countries — without much work or investment. While the income from these businesses would not be very much, getting your foot in the door when an economy is growing is a great way to build a very successful business when the economy is booming.

Don’t be afraid of looking at different markets — even one in the country you’ve been born in. I’m from Chicagoland — high cost of living with high wages. I believe I could live a more comfortable life moving to a smaller market, and I keep that option open should life’s ups and downs give me reason to. Yet I also leave the door open to the rest of this huge world we live in, and my future likely will lead me to move on the opportunities I am sowing right now. Take advantage of your youth to see a bigger picture; even if you don’t take advantage of other markets, you may find yourself happier in the life you’re living today.

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