The

En t repreneur ’ s

Gu idebook

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A Comprehensive Guide to

Launching and Growing an Online

China-to-USA Products Business

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J e s s e K r i e g e r

The Entrepreneur’s Guidebook SeriesPublished by Our Soul-SOL Connections

San Francisco, California

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For my father, Ken Krieger, who is the human embodiment of the phrase “whatever you believe, you can achieve.”

For my mother, Susan Wetzler, who personi!es the volunteer spirit in American society

For my sister, Michelle Krieger, whose interests in social justice and opportunity know no bounds.

...and for all the friends and mentors who have helped me along the way: Supernova baby!

Most of !e Entrepreneur’s Guidebook series of books are available at special quantity discounts for bulk purchases for sales promotions, fund-raising, and educational needs. Special books or book excerpts also can be created to "t speci"c needs.

For details, write or telephone Special Markets, Our Soul-SOL Connections Publishing Group, 100 Tamal Plaza #106, Corte Madera, CA 94925; (415) 927-2100.

An Entrepreneur’s Guidebook Series BookPublished by Our Soul-SOL Connections100 Tamal Plaza, Suite 106Corte Madera, CA 94925

First Trade Electronic Edition 2011

Copyright © 2011 by Jesse KriegerAll rights reserved. !is book, or parts thereofmay not be reproduced in any form without permission.

Cover design by Aaron Wolverton

Published in the United States of America 3 4 5 6 7 8 9 10!is book is printed on acid-free paper §§

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ContentsPrologue 6 Who SEZ You Can’t Do !at? 6 China-USA Products Businesses 9Introduction 10Manifestation: 12The Principles & Practices of Entrepreneurship 12 Manifestation Principles 13 The V-MOC Framework 14 Standing on the Shoulders of Giants to Reach a Higher Plateau 15 Vision 18 Setting Your Vision 19 Mission 21 !e Mission Statement 22 Mission Statements of China-USA Traders Both Large and Small 25 Operations 26 Executing on your Mission to Realize Your Vision 27 Compliance 29 Tuning the Machine for Optimal Performance 30 Recasting the Traditional Pro"t & Loss Statement 31 A Few More Words on Compliance 32 Manifestation Practices 33 The O-VAR Framework 34 An Example of O-VAR in Practice 35 Visions are Comprised of Objectives 36 Missions State !e Values of the Founders 37 Leadership Values 38 Operations De"ne the Actions to Execute 40 Compliance: Expectations Versus Results 41Getting Started: The Big Picture 42 Your Online China-USA Products Business 42 Understanding the Opportunities in China-USA Trade 44 China: Global Manufacturing Intermediary 51 Overview of The Operations Model 54 Understanding !e Model !rough A Customer’s Experience 57 Technical Analysis of the Narrative 60 Summary of !e Operations Model 71Components of The Operations Model 72 !e Website: Your Online Worldwide Storefront 72

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Researching Niche Markets,China-USA Traders Style 76 8IQL�<ZINÅK��+8+���� � � � � � � � Instant Tra#c 86 6WV�8IQL�<ZINÅK��;-7���� � � � � � !� Search Engine Optimization 90 Combining CPC and SEO: Maximizing Tra#c and Minimizing Cost 92 SEO Strategies for Internet Entrepreneurs 94 SEO- & PPC-Spending Timeline From Launch 99 O-VAR: Search Engine Marketing 100 :MNMZZIT�<ZINÅK���;WKQIT�5MLQI� � � � � ��� Twitter: Joining !e Conversation 103 Top 5 Twitter Utilities You Should Know 104 O-VAR: Social Media Marketing 105 Google Analytics: !e Fine Art of Tra#c Analysis 106 Sales Team: Turning Customer Interest Into Sales 108 Sourcing Agents: Your Eyes and Ears on !e Ground 111 Production Team: Assembling Your Virtual Production Department 114Guiding Principles and Strategies 118 Logo Design 119 Website Design 120 Copywriting 120 SEO Provider 121 AdWords Campaign Management 121 Sourcing Service Providers - Finding Top Talent Online 122 Your Virtual IT Department 128 How to Con"gure Your Technologies & Infrastructure 128Case Studies 130 Altitude Shoes 130 Home Pizza Maker 132 A Co$ee Lover’s Company 135Final Considerations 138 Business Structures 138 Naming Your Business 144Conclusion 146Bibliography 148

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Prologue Who SEZ You Can’t Do That?

There I was, in a hotel in uptown Kingston, Jamaica, waiting for a phone call from the team that had brought me down here to put together the financing for an ethanol dehydration plant. I arrived late the night before and had just learned that I wasn’t the only investment banker invited to the party. Apparently, this wasn’t so much the beginning of a wonderful working relationship, as it was a trial-by-fire competition between the two remaining firms the developers liked, to see who would get this lucrative piece of business. There was I, sweating profusely in a suit jacket in the middle of the tropics, and there were they, a team of Canadian ethanol specialists with millions of dollars of financing in place from a regional bank in Canada that was bullish on ethanol. We were waiting for a call to go present our (supposedly finalized) plans for approval by the Minister of Energy and Commerce of Jamaica, and I could tell the Canadians were trying to get me un-invited.

The project itself was a facility to be located on the main bay of Kingston where ethanol from Brazil with 5% water content would be pumped into our facility, heated up to evaporate 3% of that water, then loaded back onto the same ship and sent to USA as ethanol “processed in Jamaica,” effectively circumventing a $0.51/gallon import tariff on Brazilian ethanol. The facility would be immediately profitable if built, and would provide a tax windfall to Jamaica, however the operators were wary of having to wade through a thick swamp of bureaucratic paperwork for every shipment and face costly delays if forms weren’t filled out correctly. So we wanted to see if the Jamaican government could ease the administrative burden in exchange for a quick turnaround developing the project and bringing it online.

The call came, and before the Canadians could suggest “that my presence wasn’t required,” I bounded out of the hotel and jumped in the car with the two business partners, who were putting the project together, before they could get a word in edgewise

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“The Canadians said they’ll take their own car and meet us there.”

“Sounds good, let’s go!”

When we all arrived at the meeting, however, the internal politics ceased and we turned our attention towards the Honorable Minister of Energy and Commerce, Phillip Paulwell, who strode into the room like a bolt of lightning and began peppering us with questions.

“Gentlement, is the financing in place to complete this project quickly if I give it final approval?

Quick glances at each other, followed by a collective nod of agreement.

“How about the engineering specs, did you determine whether the overpass is strong enough to support a two-way pipeline running to the harbor from the processing plant?”

“Yes sir, we have the blueprints and feasibility study here with us.”

“Ok, and I understand that you’ve already completed an environmental impact report, which my team says looks fine. Thanks for that. So, do you have any questions for me? Asked Minister Paulwell.

I spoke up as the Canadians were talking amongst themselves, “Well, yes sir. In fact, after researching the filing requirements for dehydrating ethanol in close proximity to a waterfront, it appears that there are overlapping jurisdictions and some uncertainty as to what forms need to be filed, when, and with whom. It would help considerably if there was a single agency or point of contact for administrative issues so we can ensure timely processing and maximize the throughput of the plant.”

“Hmmm. Yes, it is a problem here in Jamaica sometimes. Too many people want to put their hands in the cookie jar,” Minister Paulwell said slowly, laying on the Jamaican accent thick. “I tell you what I can do. I will declare the site where the processing plant is to be located an S.E.Z!”

….Silence. We all looked at each other, not knowing exactly what that meant.

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“Yes, the boy has a good point, we will declare it a Special Economic Zone!” Minister Paulwell declared triumphantly, waving at me, ‘the boy’.

“None of the other bureaucratic rules or jurisdictions will apply. You will be pre-cleared to conduct all ethanol processing business unimpeded and simply remit a flat per-gallon tax to the government. If any other agency gives you a problem, you refer them to the Ministry of Energy and Commerce. Now how does that sound?”

I remember wondering if that was even possible, to decree such a bold action without consulting other branches of the government, or some long drawn-out process. But then I realized this man did indeed have the final say over all matters relating to energy and commerce in Jamaica, and our ethanol plant definitely fell squarely into both of those categories. The meeting ended shortly thereafter, and in the end, the investment bank I represented was awarded the business.

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China-USA Products Businesses

The Opportunity of a Generation Online

Even though I never saw Minister Paulwell again, his excited proposal to create a Special Economic Zone made a lasting impact. For it is this same mechanism that is responsible for the huge opportunities that exist in China-USA trade today! The concept of an administrative zone that is free from bureaucracy, import/export tariffs, and ambiguous jurisdictions has been expanded to include entire cities in China. In fact, the largest Special Economic Zones (SEZs) in the world are all in the southern Guangdong province of China. Less than an hour from the international ports of Hong Kong, these SEZs create a friction-less trade corridor between factories in China and consumers in America.

Truly, as a business selling products, it is cheaper and easier to produce goods in a factory in south China and have them sent directly to American end-customers than it is to coordinate manufacturing and logistics in America. When you factor in the ability to have Chinese factories stockpile branded packaging with your company’s logo, and a two- to three-day day shipping time to anywhere in the USA, there exists a unique opportunity to create an online storefront, process orders for goods, and have Chinese factories fulfill them to your customers in packaging with your logo stamped on all sides.

Presently over $300 billion of “Made in China” goods arrive in American markets each year. That number is growing as a confluence of economic and politcal factors maintain this favorable business relationship between the #1 and #2 largest economies in the world. There is an unprecedented opportunity right now to start new businesses that leverage this relationship, and take advantage of the low cost manufacturing and logistics support on offer from Chinese manufacturers. In doing so, you can explore new industries, bring your ideas to market, and set up a business that works for you, with a virtual production department and back office.

THIS BOOK DESCRIBES EXACTLY HOW TO TAKE ADVANTAGE OF THAT OPPORTUNITY!

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Introduction

Starting a business from scratch is tough, and I’ve often found that there are few solid guidelines that take you successfully from beginning-to-end. I’ve read scores of business biographies and autobiographies trying to understand the essential necessities of business. But, since the experiences of all companies and individuals are unique, there is only so much to be gained by reading about what someone else did, when what you really want is actionable information and a blueprint for success in a specific type of business like China-to-USA trade.

In the Entrepreneur’s Guidebook to Launching and Growing an Online China-USA Products Business, it is not my goal to fill your head with far-fetched concepts or nonsense. Everything contained in these pages seeks to be clear, concise and to the point. It is my objective to give you the tools and knowledge necessary to launch an online business that sells products manufactured in China to customers throughout the U.S. and the world.

In addition, you’ll be presented with a time-tested approach to building successful businesses of all types in an easy-to-understand framework called V-MOC, which stands for Vision, Mission, Operations and Compliance. So you can think of this book as both a general roadmap of the terrain, and a set of specific driving instructions to get you to your destination, which is equivalent to actualizing your Vision, as we’ll see inside.

It is the vision of The Entrepreneur’s Guidebook to give you a comprehensive understanding of what it takes to create a new business. I have personally consulted to and launched numerous businesses that sell products manufactured in China to American customers, as well as to customers all around the world.

The important lessons learned through my personal business initiatives, and over nearly a decade of consulting work, is right here in this book. As a result, the Entrepreneur’s Guidebook is a book of best practices gleaned from experience.

I hope that you benefit from the hard-won wisdom laid out in this book,

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and that reading it enables you to avoid many of the headaches that can arise when launching a business. So, let’s get started laying the foundation needed to build your Online China-to-USA Products Business!

Sincerely,

Jesse KriegerFounder and Managing DirectorChina-USA Traders Limited

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Mani f e s t a t i on :

The Principles & Practices of

Entrepreneurship

__________________________

PrinciplesThe V-MOC Framework

Vision, Mission, Operation and Compliance

PracticesThe O-VAR Framework

Objectives, Values, Activities and Results

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Manifestation Principles

The V-MOC FrameworkVision, Mission, Operations and Compliance

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The V-MOC Framework

Vision, Mission, Operations and Compliance

One of the most basic questions that many of my clients ask is: “How do I start building a business with Chinese suppliers?” I answer them with The V-MOC Framework. V-MOC, which stands for your company’s Vision, Mission, Operations and Compliance, is the most basic concept in business. Combined, they are the fundamentals of making money, and without understanding and incorporating V-MOC principles, you can easily lose your way and become frustrated by not producing the results desired.

V-MOC has been called many things by many people. It has been called a Business Plan, a Game Plan, an Operating Manual, a Marketing Strategy, a Company’s Purpose and anything that involves seriously looking at the opportunities and resources that are available to start and operate a business. All of these monikers are valid, however they are all sub-sets of the V-MOC Framework, which describes both the map and the terrain of the wilderness that is launching a new business.

Before setting out on an adventure into the wild, it is helpful to have a roadmap and compass to guide you to your destination. Studies have shown that when you have a well thought-out business plan before you launch a business, your chances for success go up dramatically. This is intuitive since a business plan is nothing more than a written account of what you plan to do, when, with whom, and how.

Although it is intuitive and seems quite logical, I am always amazed at how many people are willing to skip this crucial first step when the excitement of a new opportunity arises. It is easy to find yourself “in business” without any idea of what it takes to make a decent profit, not to mention living a balanced life. Working hard to build a successful business that generates income is one

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Entrepreneurship:

Being in the Business of

Making Dreams Come True

thing, while living a life full of enjoyment and satisfaction can be quite another. Fortunately these two ideals are not mutually exclusive, and can, in fact, be complimentary so long as you love what you are doing and conduct your business and personal life both ethically and strategically.

Behind the scenes at all successful businesses, one can find The V-MOC Framework being implemented. It is the underlying framework that encourages prioritizing your activities, allocating your time effectively, and making sure the most important things get taken care of, even at the expense of other lower priorities. It is about organizing and balancing resources against a stream of new opportunities. Running a business need not be complicated if you clearly state your objectives up front (at least to yourself) and how you are going to handle different situations that come up. Businesses are a manifestation of the qualities you instill in them, so laying out the Principles and Practices that you are going to adhere to when dealing with employees, customers and vendors is an essential precursor to success.

It is important to get oriented to the way the V-MOC Framework functions, as it is more than just a corporate mission statement, or an operating manual. The V-MOC Framework is the fundamental set of principles by which your business operates. V-MOC lets you chart your long-term goals and measure all your day-to-day activities against them, while checking for deviations and ensuring that things run in accordance with your standards of conduct.

Standing on the Shoulders of Giants to Reach a Higher Plateau

The Universe works on a fundamental principle of energy and there is a hierarchy of energy that permeates all of life. Business writers from the likes of Napoleon Hill, Norman Vincent Peale, Dale Carnegie and Steven Covey use this principle to formulate ways that help in manifesting dreams in everyday life.

NAPOLEON HILL used a 6-step process in his groundbreaking book Think and Grow Rich. The process primarily consisted of writing down what you want to achieve, identifying what you are willing to give up to get there, and

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in what time frame, then reviewing it no less than twice a day. Hill pioneered a concept called autosuggestion, whereby you condition yourself for success through repetition and positive affirmations. He knew quite well that the mind would take on as its own, that which you believe in, and reinforce that belief through constant repetition.

NORMAN VINCENT PEALE, with his Positive Mental Attitude approach to life, gave us a spiritual basis for accessing God’s power of creation. He believed that it was your attitude that enabled you to access the forces of creation to manifest what you want. He realized that there was another power that was outside of the physical human realm that brought your beliefs into being. In the Entrepreneur’s Guidebook, it is Vision that helps you manifest in the physical world through the Mission-Operations-Compliance framework: V-MOC, which could just as easily have been written: V => MOC, as the Vision is what initiates the following sequence of events.

DALE CARNEGIE had you recognize that people were the most important ingredient in making things happen; that the energy and intent you bring to bear on interactions with other stakeholders is what inspires people to go above and beyond to help you fulfill your Vision. In his seminal work How to Win Friends and Influence People, he had you view what you were doing through the eyes of others, and be sincere in connecting with those that are important to you. In the business context, this means shooting it straight with the service providers working for you, as well as with your employees and customers. In the next section we’ll put some of these ideas into context with a complementary framework to V-MOC that focuses on an individual’s approach to working within your business.

Modern writers like Tony Robbins and Steven Covey stress the concept of prioritizing what is important, and using this as a compass in achieving results. Most of today’s writers have embraced the concept that your energy and belief systems produce your thoughts that affect your emotions and subsequent behaviors. This can be thought of as a comparable model with the acronym B-TEB, which operates parallel to the V-MOC Framework.

Suffice it to say that Operations and Compliance aspects of business (i.e.

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most day-to-day activity) flows forth from your overarching outlook on life and from your opinions and thoughts on a great many subjects pertinent to business. By keeping your outlook positive, and your thoughts attuned towards success, you will stack the odds in your favor for actualizing your Vision through the execution of your Mission via the Operations and Compliance mechanisms that underpin your Online China-to-USA Products Business.

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Vision

‘The best way to predict the future is to invent it.’ - Alan Kay, Computer Scientist at Apple

“The habit of being happy enables one to be freed, or largely freed, from the domination of outward conditions.”

- Robert Lewis Stevenson

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Setting Your Vision

To Have a Clear View of the Destination

In order to take advantage of the V-MOC Framework, you must start by defining a Vision of where you want to be. Your vision is something to be pursued, an illustration of what ultimate success in your business means to you. For our purposes the idea is to have some form of successful business that leverages the unique opportunities available for selling products made in China to customers in the USA and beyond. Depending on your objectives and personality when going into launching a China-to-USA products business, your vision statement could be one of the following:

�� To own a profitable business that provides enough disposable income to travel in style for three months every year, and allows the time to do so.

�� To operate a market-leading business in an industry that is personally interesting, and to work with engaging, interesting people every day.

�� To participate in the economic trade-flows between China and USA, profiting while attaining a better understanding of Chinese languages and culture.

Your Vision statement describes the pot of gold at the end of the rainbow; it is the idea of greatness you possess; it is your creativity! The mission, operation and compliance elements describe the manner in which you will pursue your vision, what routes you’ll take, and what to do if you get lost, respectively.

Probably the most important consideration in creating a Vision Statement is your belief system, because creativity has no bounds and if your culture or heritage does not allow you to manifest with your full potential, then your vision

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statement will fall short of it’s true worth. So, even if it is “just for fun” at first, try to envision an endgame that would make you totally satisfied, regardless of whether you think it is logically possible at this point.

To paraphrase one of my most gracious business mentors Michael Doyle, author of best-selling book How To Make Meetings Work, the future is uncertain and ambiguous. Since we don’t have a good way of predicting the future, we might as well invent what we want to exist, as well as define how we will get there. We may have to go through some tough learning experiences and ovecome some obstacles, but that’s par for the course when you want to create something where before there was nothing:

“Visions are different from plans, as a vision is larger than any of an organization’s plans. It ennobles. It’s worth going for. Plans and strategies are often intellectual exercises and don’t excite and ennoble the way a vision can. A vision gives you a sense of higher purpose to fall back on should you become mired in the day-to-day operations. You know you have a clear vision when people say “That’s exciting!” When you would be willing to give your best efforts for a certain amount of time to achieve it.”1

Another way to approach creating a Vision is to think of what lifestyle you would lead if money was no object. How would you spend your days? Where would you be and with whom? Doing what? If you can start to answer these questions in a way that makes you genuinely excited then you have begun to define a Vision. Now you can do some research and fill in the blanks on what it would all cost to realize on a monthly/quarterly/annual basis. These figures become your targets that you organize your Operations and Compliance functions around actualizing.

If there is one concept that epitomizes American business, it is the truism that “whatever you believe, you can achieve.” This is a cornerstone concept for many classic business writers and, in some ways, it is synonymous with the American Dream itself. The key item here is what to believe in and how to access the power of beliefs. This is done by creating a mission statement!

1 Doyle, Michael. Organizational Visioning: An Old Art or a New Science? ©1989

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