I watched the third episode of Jamie’s Ministry of Food last night in which Jamie visits a hospital in Rotheram where the doctors showed him a special bed for fat people (visit the Channel 4 site to see a picture) and explained that the NHS is struggling to cope with the problems caused by us all getting fatter. Now my wife watched it and commented on how important it is that we teach our son to cook and how to eat healthily. Whilst I agree with her, I was really watching and thinking there’s a business opportunity here! A quick search on the Internet this morning seemed to confirm that as The Times notes (my emphasis):

Fat-related illnesses are costing the NHS around Pounds £2 billion a year while at any one time an estimated third of the UK’s hospital beds are filled with overweight patients.

Now I’m sure anyone who has looked at business opportunities both on and offline will immediately be thinking of diets programmes and weight loss, but no that’s not the business opportunity that jumped out at me. You see the doctor explained that each of the “fat beds” costs £66,000. However because the NHS can’t afford to make that kind of capital investment it has to rent the beds which costs a whopping £100 per day. That’s £700 per week, or £36,500 per year.

It seems to me that this is a better business opportunity than property investing - which previous fascinated the nation - you see most Buy-To-Let landlords put in a 15-25% deposit (around £30,000) and expect to get around £7,000 per year in rental income. If instead two investors teamed up and brought a bed they could generate around £18,000 of income each - and have no mortgage payments to make. On top of that there’s a growing demand (we’re all getting fatter) and it’s recession proof.

Going one step further if you made these beds I’d expect you’d be able to make them for around £30-40,000 (assuming that there’s a healthy profit margin in the £66,000 list price). I’d expect the beds to have a usable life of at least three years so something that costs you £30,000 to make would create a cash flow of just over £100,000 spread over three years. That’s a pretty damn good return on investment.

Having said that, I hope it turns out to be a very bad business opportunity as I’d rather see the nation learn to eat healthily and the need for these beds decline.

Picture by GiLaRio F.

The press release that I was sent with this books states:

The stereotype of the “angel investor” is a retired entrepreneur who see potential, asks tough questions, takes a large stake, and in a few years makes a massive return in an IPO. This outsider fills the gap between the venture capitalist and the professional investor, swooping in with cash and expertise to brings dreams to fruition.

Unfortunately Dr. Scott A. Shane observes, this stereotype bears no relationship to reality…

Which sums the book up nicely. According to Shane everything that is common knowledge about business angels (in America at least) is wrong. For example the typical (median) angel investment is just $10,000 and up to 40% of “investments” are debt rather than equity. It doesn’t stop there however, he bust just about any business angel myth you can think of. It certainly presents a very different impression of angel investors to shows such as Dragons’ Den.

There’s a lot of great content in the book so I’ve summarised several tips in the lists below.

Tips for angel investors:

• You’re more likely to be successful if you are a member of a angel investing group, although this may be because members of angel groups tend to be accredited (sophisticated) investors.
• Focus on the exit that the business can realistically make.
• Invest in an industry that you know.
• Get the valuation right.
• Structure the investment to minimise risk.

Tips for entrepreneurs:

• Angel investors don’t always provide “smart money”, many angels are passive investors.
• Angel money is likely to be more expensive than friends and family or bootstrapping.
• Consider debt rather than equity.
• Few businesses ever get angel funding - you might be better off spending your time on other activities.

For both angels and entrepreneurs:

• Read the book to find out lots more!

Scott Shane is an angel investor himself and a member of the North Coast Angel Fund. As well as being a business angel, Shane is a Professor of Entrepreneurial Studies at Weatherhead School of Management, Case Western Reserve University. He’s written or edited eleven other books including The Illusions Of Entrepreneurship which I reviewed earlier this year and over sixty articles on entrepreneurship and innovation management. The American business angel Frank Peters has an interview with Shane on his blog The Frank Peters Show.

Whilst the book is about angel investing it wouldn’t surprise me to find that a lot of the myths from the USA have come across the pond and are equally untrue over here. The tips for those looking for angel finance and those wanting to be successful angel investors are sure to be useful wherever you are based.

Like The Illusions Of Entrepreneurship, Fool’s Gold is an fascinating book and well written book, if you’re at all interested in angel investing I’d recommend that you buy it.

You can buy it from Amazon UK or Amazon USA.

A reader asks:

Can you tell me how to go about starting a DVD rental business?

Don’t. Of all the businesses you can start this has to be one of the worst. Here’s what I see as the main problems:

• Formats - The DVD format is on the way out, being replaced by High Definition (HD) formats, of which there are two HD DVD and Blu-ray. In a format war reminiscent of Betamax/VHS it seems that Blu-ray has won out and has become the dominant format. However you’re still left with a decision as to which format to support and if you start with DVDs when to make the change to Blu-ray.
• It’s also (I believe) a declining market because there’s increased competition from:
• DVD Rentals by post - companies such as Amazon, Netflix and so on provide direct competition offering unlimited DVD rentals by post for a relatively low fee and offer a far wider selection of DVDs than most shops can carry.
• Digital TV - those of us that can remember (vaguely) there being only three (or even less) TV channels find the number of channels available on Digital TV (and cable/Sky) dazzling and all those channels with all their content (including themed pay per view) provide an alternate to renting a DVD.
• Personal Video Recorders (PVRs) - Now that we can video several channels at once we’re using PVRs to record films, shows and documentaries when they’re on and watching them when it suits us.
• Online TV - and even if we and the PVR miss our favourite show there’s a good chance we can now watch it online.
• Video on Demand - as technology and bandwidth to our homes improves video on demand is finally going to become a reality negating the need to leave our homes to pick up a DVD or plan in advance to order one by post.
• The falling price of DVDs - Our local Tesco often has DVDs on offer from as little as £3 which whilst not being the latest releases can be as little as 6 months old and you still own the DVD after you’ve watched it.
• Ebay - It’s also possible to get a wide range of DVDs from Ebay for bargain prices.
• The Internet - it’s regularly noted that we spend less time watching TV these days and more time on the Internet - that also translates to less time watching DVDs.

A lot of this is indirect competition, but I’m sure it’s going to be shrinking the market for local DVD rental businesses so I for one wouldn’t start one.

Asking John:
Do you have a business question you would like me to answer? If so you can Ask John, enquire about using me as your Business Consultant or or you can ask on the forums where you’ll get both my input and that of your fellow entrepreneurs.

Anyone considering starting a business, or who has recently started a business might find the Business Startup Show interesting. It’s taking place on the 28/29th November at the Olympia in London and tickets are FREE.

It’s many years since I’ve been to one, but it was an interesting show, we met some interesting people, got some good ideas and bumped into Rueben Singh who we knew from school. The speakers are generally interesting and this year they have quite a number, most interesting are:

• James Caan from Dragons’Den- I’d make a point of listening to anything he has to say, he’s by far the best Dragon.
• Rachel Elnaugh an ex Dragon and the founder of Red Letter Days, however I’d probably give this a miss as it sounds like it might be a promotional effort for her book Business Nightmares.
• Martin Webb the presenter of Channel Four’s Risking It All and author of Make Your First Million.
• Levi Roots one of the Dragons’ Den success stories.
• Craig Upton who is speaking about SEO, I’ve no idea if he’s any good, but start-ups do need to be aware of SEO so it’s probably worth going.
• Stefan Töpfer because I enjoy his blog (which is one of the top 100 business blogs).
• William Brooks who is speaking about raising equity capital.

You can find out more at www.bstartup.com.

I quite often get asked "how can I become a millionaire", nearly as often I get asked "how can I become a multi millionaire" a good number also ask "can I become a millionaire". Well the good news is yes, you can become a millionaire and probably a multi millionaire. The bad news is there aren’t that many ways and there are no shortcuts, despite what you might read on the Internet.

Writing on this recently Seth Godin notes there are six ways to become a millionaire:

There are four ways to make a million dollars. Luck. Patient effort. Skill. Risk.

(Five if you count inheritance, and six if you count starting with two million dollars).

I think he’s missed marriage off the list but the key point that he goes on to make is:

Conspicuously missing from this list are effortless 1-2-3 systems that involve buying an expensive book or series of tapes. Also missing are complicated tax shelters or other ‘proven’ systems. The harder someone tries to sell you this solution, the more certain you should be that it is a scam. If no skill or effort is required, then why doesn’t the promoter just hire a bunch of people at minimum wage and keep the profits?

I’d have to agree with him there too. Out of all of these however I’d suggest you try patience effort (start a business and work hard at it), skill (excel at something) or a combination of skill and patience effort (be the best at something and work damn hard at it). So take a read on my post How To Make A Million Pounds and browse the Business Opportunities and Business Ideas on this site and get stuck in.

Oh and for those that want to know how to become a multi millionaire, the answer is simple, keep working hard once you make the first million.

For years small business owners, entrepreneurs, search engine optimisation experts and Google consultants have been complaining that Google tells you what not to do, but doesn’t provide a clear guide to what it considers to be acceptable search engine optimisation practices.

As of Yesterday however that has changed, Google has published it’s own Search Engine Optimisation Starter Guide. Here’s an edited version of what they had to say about it on their blog:

Webmasters often ask us … "What are some simple ways that I can improve my website’s performance in Google?" … We thought it’d be useful to create a compact guide that lists some best practices that teams within Google and external webmasters alike can follow that could improve their sites’ crawlability and indexing.

Our Search Engine Optimisation Starter Guide covers around a dozen common areas that webmasters might consider optimising. We felt that these areas … would apply to webmasters of all experience levels and sites of all sizes and types. Throughout the guide, we also worked in many illustrations, pitfalls to avoid, and links to other resources that help expand our explanation of the topics.

So there you have it, now there’s no excuse for being taken in by some of the less reputable Google consultants and SEO experts - or worse still letting your web designer build a site that doesn’t have the basic level of SEO correct.

Yes I get the irony, here’s me a self proclaimed “business expert” telling you not to trust business experts - and I mean it too.

Let’s be honest, most business experts have no experience running a business; no formal qualifications as a business expert (partly because there aren’t any; before you ask, no an MBA does not count. It’s a degree not a professional qualification).

Nor do they have any investment in your success. They’ll be getting paid whatever happens to your business. Sure some of them will pitch to you on the basis that their fees are based on the results they deliver, but they’ll also ask for a good chunk of the fees upfront based on estimated returns and it’s a safe bet their terms and conditions will make it hard to recover the money if you don’t achieve the results. Before you rush out and brand all business experts and consultants “con men” I should point out that their approach is quite reasonable, after all the advice they give might be brilliant, but if you don’t follow it then all their work is wasted and they’ll not get paid – which isn’t fair either.

So before you accept advice from an expert consider this; if they really knew exactly how to run your business and make it an astounding success and it was all “that easy” then don’t you think they’d be doing it themselves and getting really rich from it? That’s not to say there’s no reason to use them. What consultants and advisors are good for is advice, on specific problems and opportunities, but they aren’t experts on your business, that is, after all, your job.

Find You Lightbulb: How to make millions from apparently impossible ideas is billed as a book that provides help finding a business idea, getting funding or creating a brand.

Reading the first two chapters could easily put you off when you learn that Mike Harris is not an entrepreneur. As the Oxford English Dictionary defines it an entrepreneur is one who undertakes an enterprise; one who owns and manages a business; a person who takes the risk of profit or loss. However Harris didn’t own the businesses having set them up on behalf of his employer and while he may have stood to gain from their success he was almost certainly taking on no personal financial risk. Now there’s nothing wrong with that, but it does give you a different perspective to those of us that have started a business knowing that we’ve got to make it work or face loosing our homes.

The chapter on Insightful Insights is brilliant - EVERY entrepreneur should read this. It’s something many good entrepreneurs do, but sadly far too many do not despite it being a cheap way to establish how to turn a business idea into reality. The example of the US mission to put a man on the moon is a great choice. The chapter on finding business ideas is good too - years ago (when I first started) I’d have been tempted to say it was too hard - now I think it’s a great way - if you can’t make it happen then your probably not determined, organised or a good enough leader to become an entrepreneur. The chapter on funding again shows Harris’ experience is creating new businesses within the corporate environment as he focuses on high growth using venture capital. The chapter on smart risks however is something more entrepreneurs should read.

So who is Mike Harris? Well he was the founding CEO of Firstdirect and later Egg, in between those he was the CEO of Mercury Communications and later the chairman of Mercury One-2-One. He is now the co-founder of Garlik.

It’s a good book, but I’d only really recommend it to those looking to start high growth businesses that hope to have a turnover measured in the hundreds of millions as it’s just not relevant the the average business start-up.

You can buy it from Amazon UK or Amazon USA.

This weekend a flyer dropped through our letter box informing us of a newly set up dog walking service in Westbury. I was surprised at the rates - they charge £6 per hour for one dog and £10 per hour for a pair, which seemed quite high to me, after all walking my dog is something I enjoy, in fact I paid for the privilege of having a dog to walk!

Following a quick trip to Google however it seems that rates run from £5 per half hour for a group walk to £20 per hour for a one-to-one walk, which is quite astounding! On those rates the chap in the photo, could be making as much as £80 per hour! Given I’m currently trying to fit more exercise into my day I’m seriously thinking of working on a dog walking business plan - a couple of hours like that a day could make my wallet fatter and me thinner!

 But is setting up dog walking business a good idea?

Well according to the BBC, in 2002 there were 24 million UK households and 4.8 million of those owned dogs and at least 1 million owned more than one dog, so there’s a huge potential market. Looking at the market another way roughly one in five households in Britain has a dog. If you take flats and other housing that is unsuitable out of the equation then it could be as high as one in four houses, it certainly is where I live. So finding your target market is easy and reaching them is cheap - just put a flyer through their letter box, if for example just one in 25 dog owners takes up the service you would only need to post 100 flyers to get a customer. If each customer pays you just £5 per hour, five days per week, 40 weeks of the year then each customer could be worth £1,000 per year to your business. I suspect however that only a third to a half of your customers would be regulars, the rest being shorter term work covering the owners illness, holidays, work related travel and so on. So each customer might only be worth an average of £200. Therefore if you wanted to build a small business around it, earning you £24,000 per year, you would need 120 customers, which if these numbers panned out would mean you’d need to be based within a reasonable distance of 12,000 homes.

How to start a dog walking business

Starting a dog walking business is easy and relatively cheap. You’re main costs are going to be advertising and marketing, which if you use a flyer you which print yourself should be around £20, per thousand flyers plus the time it takes you to deliver them. I would also suggest contacting all the local kennels as they may well require regular dog walkers or cover for when theirs are unavailable.

As dogs are "mans best friend" they are dearly loved so once you start walking the dogs you’ll need to make sure you have insurance cover for the dogs in the care of your dog walking business. You may find the owners insurance covers you otherwise it’s time to look for an insurance broker, from a quick search on the Internet it looks like this will cost your business around £200 per year.

If you don’t want to start the business from scratch then you can always look for a dog walking business for sale. Or if you’re ambitious once you’re up and running you might like to buy other dog walking businesses and/or hire extra walkers in order to expand your business. I don’t think there are any dog walking millionaires, but that’s not to say it couldn’t happen!

Is it for you?

Well if you love dogs and you’re after a home business opportunity, or you have entrepreneurial teenagers looking to earn some extra pocket money then starting a business dog walking could right for you or even your whole family.

If you run a dog walking business, or after reading this you start one, please get in touch and let me know how close you are to these numbers.

Photo by Steve Deger.

The Knack: How Street-smart Entrepreneurs Learn to Handle Whatever Comes Up by Norm Brodsky and Bo Burlingham is the summation of Brodsky’s experience as and entrepreneur. He shares with us the mistakes he’s made and the lessons he’s learned in his time in business. Over the eighteen chapters a number of common mistakes entrepreneurs make are examined and advice from either Brodsky’s own experiences or those of the readers of his Inc. column are shared with the reader.

There are some great stories in the book, including how dinner with a king gave him a competitive advantage and how some cute kittens defined his business. Throughout the book he makes some excellent points, to pick out a few:

• There is no one single formula for success.
• Resilience is important.
• If you’re new you simply can not compete on price.
• Don’t try new idea, improve on an existing idea instead.
• Too many low-margin sales can drive you out of business - a common mistake and something I blogged about recently in Don’t Make A Sale Just For The Sake Of Making A Sale.
• Salespeople should work as a team - I’ve rarely seen this in action, but I couldn’t agree more.

Norm Brodsky is the co-author (with Bo Burlingham) of Inc. magazine’s Street Smarts column through which they advise small to medium businesses on how to grow. Brodsky started out as a lawyer but soon decided to change vocation. He has been an entrepreneur for 30 years, launching eight businesses including one which was a three-time Inc. 500 company. In December 2007 he sold his business for a reported $110 million.

Bo Burlingham is an editor-at-large of Inc. magazine and the author of Small Giants: Companies That Choose To Be Great Instead of Big. He joined Inc. in 1983 and was the executive editor until he stepped down in 1990 to focus on his writing. He was a founding member, with Tom Peters of PAC/World, an international organisation of business leaders and observers. Between 1992 and 1997 he served on the board of Body Shop Inc. the US subsidiary of The Body Shop.

The Knack is an easy, enjoyable read, in fact it’s probably the most enjoyable business book I’ve read this year, simply because I found myself agreeing with so much of it. In the introduction Brodsky says:

…you know what they say: A smart person learns from his mistakes. A wise persons learns from other people’s mistakes.

I couldn’t agree more - it’s also far cheaper to learn from other people’s mistakes and that’s why, unless you’re an experienced, successful entrepreneur, I believe you should buy this book - Now!

You can buy it from Amazon UK or Amazon USA.