Expert Tips: The Entrepreneur Equation
with Carol Roth—entrepreneur, author and consultant
Carol Roth’s rapid rise in the investment banking industry has positioned her to
become one of the country’s most successful and sought-after business advisors,
serving a diverse client base that ranges from solo entrepreneurs to Fortune 500
enterprises. She’s translated her frank, straightforward approach into the upcoming
book, The Entrepreneur Equation, which will help entrepreneurs more realistically
evaluate the risks and rewards of starting a business. This month, Carol discusses how
smart planning can better ensure lasting success.
Markets, localities, and industries are responding differently to the economic
recovery. Are there any general trends or issues entrepreneurs should factor into
their financial projections for 2011 and beyond?
Clearly, there is pent-up consumer demand to spend. However, consumers are
looking for deals. Businesses have to be aware that their customers may be very price Carol Roth
-sensitive and spend a lot of time comparison shopping, which could eat into sales Chicago, IL
and/or margins. This may not be entirely long-term in scope, but I wouldn’t imagine it www.carolroth.com
going away any time soon either. firstname.lastname@example.org
How has the past few years’ upheaval in the financial markets affected the way
banks evaluate business plans?
The good news is the largest banking institutions are allocating more dollars and Online Workshops
resources to small business endeavors. But the fallout from the lax lending decisions
of several years ago has led them to focus on the creditworthiness of the business
The Entrepreneur Equation
and the entrepreneur. You want to show that you really have a viable way to by Carol Roth
generate a return on the investment so that you can pay back the interest and Listen anytime!
principal on the debt.
Are other alternatives to banks that may be more accommodating to a small Developing a Business Plan
business’s pitch for financing? with SCORE and Visa
It’s important to first evaluate if there is a way around financing, at least temporarily Listen anytime!
or perhaps to get you to the next milestone. Bartering, partnerships, and plain old
bootstrapping are ways many businesses are trying to get around the current Why Customers Come
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Crowdfunding, where you solicit money from customers or fans, is also rising in
popularity. However, there are some legal implications if you do that in a
traditional capital raising structure, so you should get appropriate counsel prior
to engaging in it.
Friends and family have always been the most effective source of outside capital
for businesses. In fact, they often invest to support you as a person rather than
seeking a return on their investment. That said, the investment should be taken
seriously. Personal relationships can get sticky when morphed into business
Regardless of the type of financing, you always want to evaluate the pros and
cons on taking the investment and decide if the rewards greatly outweigh the
risks. And never take money from anyone who can’t afford the loss of the entire
You’ve written that women entrepreneurs sometimes think too small when it comes to their short- and long-term business
plans. What’s the key to changing this mindset?
Sometimes women are uncomfortable with risk, or worried about disappointing others if they fail. This keeps us from thinking big
and from pursuing capital and other resources required to go bigger. Women need to have more confidence in their ability to
succeed and understand that if the risk/reward tradeoff makes sense, there is no reason why they can’t go bigger. Also, many
women have “superwomen” syndrome—they are used to doing everything themselves. But you can’t build a true business alone;
it’s important to learn how to delegate and teach others how to do the things you are good at.
Why is it important to consult with a SCORE advisor at the earliest stages of the business planning process?
I truly believe in the mantra, “If you fail to prepare, you prepare to fail.” Part of being well-prepared is having trusted resources to
advise you objectively, like SCORE advisors do. Opening and running a business is a very emotional process, so it is great to have
the resources and feedback of others who can see the “forest through the trees” when you are too close to the situation to be truly
objective. A SCORE advisor will act as that resource; plus, you can leverage his or her experience and insights.
You teamed up with SCORE for a workshop based on The Entrepreneur Equation that is available now online. Who would
benefit from watching this webinar ?
The workshop is based around understanding that “not all businesses are created equal,” and the risks and rewards associated
with not only entrepreneurship, but the types of businesses that are too dependent upon their owners. It’s an absolute must for
anyone who is thinking of starting a business or in the early stages of a business. It is also incredibly valuable to those who have a
business but may be stuck, re-evaluating their business model, feeling overwhelmed or overworked, or trying to figure out how to
get to the next level.