Every week our firm gets phone calls from clients around the country who have lost their money by investing with friends, family or neighbors they trusted.

In nearly every case, in the beginning there was a guarantee of unusually high returns with no risk, and of course the promises of success from a trusted relationship. However, by the time they call our office, the money is gone, their calls are being ignored and they need legal advice on what to do next.

In the worst cases, people have borrowed money against their own homes or used their retirement plan in order to fund risky investments and businesses in anticipation of higher returns, but now their nest egg is gone.

I am constantly amazed at how many people will invest or loan hundreds of thousands of dollars to their neighbor or fellow church member without getting anything in writing or security. I just hear the constant excuse: "I didn't want to hire a lawyer because it would have made the relationship uncomfortable and I trusted them."

Investing with people you know or who seemingly have a great reputation and tract record may be comforting, but it has no bearing on whether an investment is sound or the documentation to protect you is sufficient.

In fact, I typically recommend my clients not invest with close friends and family. This standard practice has two important benefits: In the beginning, it takes emotion out of the equation and helps you to focus on the merits of the opportunity. On the backend, when things get nasty or go bad, you will not hesitate to aggressively protect your interests and go to court if necessary.

Most people don't like to sue their family and friends -- it makes family reunions, local sporting events, neighborhood parties and church functions too uncomfortable. I strongly encourage you to think about this ugly feeling and follow your gut before investing or doing business with a close friend or relative.

This doesn't mean you can never invest with close friends and associates. I simply suggest you go into this type of relationship with your eyes wide open. Realize you're playing with fire and with a different set of rules. Here are some important guidelines to follow:

In a partnership or transaction with a close personal friend or family member, emphasize the fact you want to consider all of the best and worse-case scenarios so there's a game plan and you won't ruin your relationship.

Ironically, people use less documentation with friends and family when they should actually use more. Go the extra mile to even over-document the transaction so emotion is taken out of the equation.

Beware of guarantees, aggressive sales pitches, requests for secrecy and situations where people need money urgently. Ask the hard questions before you hand over your money, not after.

Tell them you promised your spouse or parents you would always use an attorney when you invest your money in a project like this and you still respect and trust them as a friend. A lawyer won't tell you if the investment is good or bad, but whether it is documented properly and whether or not you're protected if it doesn't perform as expected.

Bottom line: if you feel you can't ask for thorough documentation, or could never sue or send a nasty letter to the person you are going to be in business with, this is probably a project you should walk away from to hang on to the relationship.

Courtesy: www.entrepreneur.com

If you want your company to be the best, there are three rules:

1. Be better.

2. Don't be cheap.

And 3. There are no other rules.

That's according to a recently released book co-authored by Deloitte director Michael Raynor and strategist Mumtaz Ahmed, The Three Rules: How Exceptional Companies Think (Portfolio/Penguin, 2013). Raynor, who earned his doctorate from the Harvard Business School, and Ahmed, along with a team of researchers, analyzed a database of 25,000 companies across hundreds of industries spanning 45 years to identify those companies that were statistically "exceptional."

Defining "exceptional" was a project in and of itself, but it began with one question: "How much of a difference is enough to make a difference?" What Raynor's team ended up doing was generating something of an actuarial table for business success. "If somebody says I am 82 years old. Is that person old or not? Well, if they live in the Northern Islands of Japan, that is early middle age because those people live forever. If they are from Tanzania, they are probably the oldest person in the country. What counts as old is a consequence of your context."

Raynor and his team also developed a mathematical algorithm that corrected for age of business, date, amount of debt, size and industry, among other variables. The goal of the analysis was to strip out the effects of luck and variation to come to an answer to the question: "What do managers do to make companies great?" says Raynor, who is based in Mississauga in Ontario, Canada.

After identifying 344 top performers, Raynor and his team, who officially started working on the project in 2007, looked for common traits to define how those exceptional businesses acted.

The team largely came up empty.

However, when Raynor and his team started to look at how those exceptional companies think, the principles started to become clear.

They are as follows:

1. Better before cheaper. Differentiate yourself from your competition based on quality, not price. While you may achieve some level of success undercutting your competition with cheaper prices, you will almost never become exceptional on a price-based model.

2. Revenue before cost. It will be more valuable to your company to drive your revenues higher than it will be to drive your costs lower. Cutting costs may result in some degree of success, but, most likely, your company won't sustain an exceptional level of greatness.

3. There are no other rules. Technology, talent, markets, people -- it can all change. But don't mess with Rule 1 or Rule 2.

Exceptional companies include long-haul trucking company Heartland Express and teen clothing retailer Abercrombie & Fitch. The companies are all publicly traded companies, larger than the sorts of companies that many young entrepreneurs may have on their hands. But Raynor says the three rules still apply to younger, smaller companies, if with a modicum of compassion in the application.

Consider the rules "a compass, rather than a map," says Raynor. "You are lost in the forest and somebody says civilization is North. If I hand you a compass, I have done you a favor. You still have to be creative. You can't just walk straight north, you will bump into a tree, walk off a cliff, do whatever it is you do. And so sometimes you have got to go East, West, double back South even and really pay attention to cost for a while, but you want to make sure that over time, you are pushing your company in one direction versus another."

Very often, new startups are especially cash strapped. And Raynor recognizes that. But the rules of putting quality and revenue first still apply on a comparative level.

"If you want to have higher profits than your competitors, the way to do that systematically is not to have lower costs than your competitors," he says.

Raynor cautions that this doesn't mean businesses should put "gold-plated Aeron chairs and Godiva chocolates in all the conference rooms," but that businesses should figure out where they are better than their competition and exploit that gap with higher prices or higher volume, not lower costs.

"It is all about your relative position. If you want to be relatively more profitable, you want to have relatively higher volume and/or relatively higher price" than your "relevant" competition, he says.

Courtesy: www.entrepreneur.com

Everyone needs a little inspiration from time to time – especially entrepreneurs.

If you're looking for advice on how to rock the business world and live a successful and meaningful life, consider the words of leaders like Bill Gates, Mark Zuckerberg and Michael Dell. They might just have a trick or two up their sleeve.

Advice from 18 of the wealthiest and most influential leaders in history.

Some excerpts:

"Your most unhappy customers are your greatest source of learning." – Bill Gates

"Your time is limited, so don't waste it living someone else's life." – Steve Jobs

"Failure is the only opportunity to begin again more intelligently." – Henry Ford

"Done is better than perfect." – Mark Zuckerberg

courtesy:www.entrepreneur.com

During a recent radio interview on the BBC, the host asked me what advice I would give to young people who want to start their own businesses. In the 46 years since I launched Student magazine, the world has certainly changed. The uncertain economic outlook and the relentless pace of technological advances make replicating Virgin’s success much more challenging for today’s young entrepreneur.

At Student magazine, we expressed our opposition to the Vietnam War and the Cold War; these days, governments now face the more nebulous threat of terrorism and instability in the Middle East and Africa. Back then, American and European markets were generally stable; today, the economic power of Western nations is being challenged by the fast-growing economies of Brazil, Russia, India and China, and growth opportunities and new markets can be found around the world.

There is also marketers’ new ability to bypass traditional channels -- TV, radio and newspapers -- and build a strong following online for their companies via Twitter, Google+, Facebook and new applications such as Path and Klout. This means that most startups are able to launch with smaller marketing budgets, and that entrepreneurs can break into new markets fast. It also means that successful companies must defend their positions, because their products can go out of fashion just as quickly as they caught on.

But during the radio interview I found myself arguing that while the world may be changing quickly, the steps to building a good business have not. The five simple guidelines we followed when we started the magazine and then Virgin Music remain as valid and useful as they were in the late 1960s and early 1970s.

1. If you don’t enjoy it, don’t do it. You must love what you do.
2. Be innovative: Create something different that will stand out.
3. Your employees are your best asset. Happy employees make for happy customers.
4. Lead by listening: Get feedback from your staff and customers on a regular basis.
5. Be visible: Market the company and its offers by putting yourself or a senior person in front of the cameras.

Virgin Media founded its Pioneers program to promote aspiring business people and help them to network. One of our best known pioneers is Jamal Edwards, the founder of SB.TV, an online music and lifestyle channel, whose company and business model remind me of Virgin’s in our early days.

When Edwards started out, his company was just himself and his camera; he started posting videos of rap performances for his online followers. He was doing what he loved, and soon he developed a cult following for his passionate, innovative and authentic early videos of musical events.

Once he had established a brand and a following, Edwards and his team extended SB.TV’s reach into more areas, including music and lifestyle, merchandise, clothing and even a record label. Traditional brands like Puma and Nando’s (the fast-food chain) started calling, wanting to discuss deals and endorsements.

Edwards has also made his own luck by spotting talent. In 2010 a struggling singer-songwriter sent a video to SB.TV that was accepted and placed on the company’s YouTube channel. The views kept racking up, and eventually the rapper Example offered the unsigned young singer a chance to tour with him. This was none other than Ed Sheeran, whose career was effectively launched by SB.TV.

Edwards remains very busy and very visible, promoting SB.TV and himself wherever he can -- on his website, in partnership with Google Chrome and in the media, he tells the story of his company and their dreams and successes, getting the message out. And he knows that good business depends on backing your people and being a good listener. Despite his early successes, he remains down to earth, always willing to listen and constantly trying new ventures.

If you have the right idea and execute properly, your startup’s launch date does not matter. While the business environment has changed, the basic rules remain the same. Rather than getting nostalgic about how things used to be, embrace the new opportunities and challenges available to you now.

courtesy: www.entrepreneur.com

We all know fitness is important to our health, but did you know it can also be good for your business? Elizabeth Robinson, a Philadelphia-based personal trainer and creator of VitFit, a mobile app for customizable downloadable workouts and Dega Schembri, co-owner of City Fitness Gym in Washington D.C., say regular physical activity can make you a better entrepreneur.

Here are seven ways physical activity can improve the health of your business:

1. Build your network.

Whether working out at the gym or participating in a team sport, fitness can help you network with prospective clients or strengthen existing business relationships. Robinson met several of her business investors and clients through fitness activities. "A lot of barriers break down when you're working out with somebody," says Robinson. Fitness challenges open a window into individuals' personalities and allow you to communicate with others in a very different way and consequently learn more about each other than would normally be possible over a cup of coffee.

2. Get your creative juices flowing.

Exercise not only tones muscles, but improves brain power. A 2012 study by the Montreal Heart Institute showed aerobic exercise increased cognitive function. This is because exercise increases blood flow to your brain, meaning a jog might be just what you need before a brainstorming session.

3. Reduce stress.

Physical activity reduces stress hormones and increases the production of endorphins that give you a natural high. Getting in a workout, whether before work or during the workday can allow you to approach your work with a calmer mindset. "The more stressed you are, the more unable you are to make really good, rational business decisions," says Schembri.

4. Boost your confidence.

Whether building a business or going through a rough patch, even the smallest fitness win can help you gain the confidence you need to achieve larger goals in your business life. "Having a great workout translates into every area of your life, making you feel more accomplished at the end of the day about everything that you do," says Robinson.

5. Overcome business challenges.

Training for a fitness challenge such as a marathon can help entrepreneurs re-learn the importance of goal-setting and determination. Schembri participated in her first triathlon when she was 58-years-old and says the vigorous training regime she underwent to achieve her fitness goals helped her to be a more tenacious entrepreneur. Removing the word "can't" from her vocabulary made her view obstacles as simply another challenge to be overcome, she says.

6. Improve your energy.

Ditch your morning cup of coffee and head to the gym instead. A 2008 study published in the Journal Psychotherapy and Psychosomatics concluded that inactive individuals who normally complained of fatigue experienced increases in energy of up to 20 percent and decreased fatigue as much as 65 percent by participating in regular, low-intensity physical activity. "Exercising regularly helps you sleep better, and if you sleep better you’ll have more energy during the day," says Schembri.

7. Learn to let go of control.

"A lot of business owners think that they have to do it all, [but] there's a lot of stress that goes along with that level of control, power and decision-making," says Schembri, who argues power-hungry entrepreneurs can benefit from a personal trainer. "When you hire a trainer you're acquiescing to someone else, accepting that you're going to let them direct you," says Schembri. Participating in team sports can also teach control-freak entrepreneurs about the importance of entrusting others with important tasks, proving they don't have to do it all on their own to have a successful business.

Courtesy: www.entrepreneur.com

Virgin Empire founder Richard Branson’s first job was selling Christmas trees. NBA Dallas Mavericks owner Mark Cuban’s first job was selling garbage bags. Las Vegas Sands Corporation CEO Sheldon Adelson’s first job was selling newspapers. Groupon co-founder Eric Lefkofsky’s first job was selling carpets. And Elon Musk, the founder of Telsa Motors and PayPal, started his working life writing video games.

From their humble beginnings, all of these self-made billionaires have changed course scores of times. The infographic below, generated by San Francisco-based startup organization Funders and Founders, shows just how many different businesses these legendary entrepreneurs launched.

Funders and Founders also analyzed all 1,426 billionaires in the world. From there, the company segmented out the 960 that are self made and determined that 830 of them earned their wealth from more than one business.

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.

Courtesy: www.entrepreneur.com