How YOU SHOULD Make the LEAP to Entrepreneurship | Ask Mr. Wonderful #3 Kevin O'Leary

I love the show! So much fun to make because every deal is different. And after all, you only need one good idea; it changes your life forever. Welcome to another episode of Ask Mr. Wonderful, and I mean ask me anything! You ask the questions, and I give you the answers. Bring them on!

Hi Mr. Wonderful, my name is Paul. I wanted to be an entrepreneur my entire life, and yet here I find myself at the age of 38, working a nine-to-five job and never having taken the plunge and started my own company. I'm married, I have two wonderful kids, I'm the primary breadwinner for my family. We've got a mortgage to pay, health insurance is due, my company... it now seems like it's too late. It seems selfish and an unnecessary risk to put the livelihood that my family has come to depend on at risk in order to chase my dream. Do you think that I should give it up, or do you think I should continue? And if so, how? How do I justify taking that chance and risking what we have for something that might not work out?

Thank you, Paul. It's a really, really interesting question, and when I get all the time in basically in your situation... no, just kidding. Let me tell you what I really think: you should not risk your family's well-being. What you should do is work at night and on weekends on something you're passionate about to find out whether or not it's going to work before you take the leap. If you can actually prove what product or service has demand, and people start buying it from you, you can do it like everybody else does—it's a side hustle until it has enough critical mass for you to jump ship. That way, you don't take a huge risk.

I would not risk my family's income, but if you know something that you really like, you can pursue it at nights and on weekends. Yeah, it becomes tough to go to soccer games and picnics, but that's okay because you're pursuing that dream. At 38, you're not that old. You can definitely take a risk, but you're not going to give up your primary income until you have enough proof of concept, proof of customer, proof of sales, proof of cash flow, and all those things can be done over a couple year period of doing it as a side hustle. That's how entrepreneurs in your situation get started. Good luck, my friend!

Hello Mr. Wonderful, my name is Greg Smith. I live in Rosebud, Alberta. My question to you is, we've recently purchased a cafe, and it seems to be going quite well. Although, we would like to bring more people to our town. So what I have started to do is I built a market, so we have 60 vendors that come on Saturdays. Then I've also created a ghost walk where people get to walk through the town, and we have a very talented man that sort of shows them around the town. And of course, then they get to see a ghost! We're trying to find other ways we can bring more people to this small town. What ideas would you have that would really grab people? Rosebud, Alberta is very famous for its theatres and clay.

Hey Greg, in Rosebud, Alberta, you know you have to tell a story! If you want more people to come to Rosebud, you have to tell them why it's an interesting drive, why it's an interesting day, and why lunch or dinner at your cafe is the peak of the whole thing. I mean, there must be some attributes of that town that are interesting that people should see.

But anything like this has everything to do with social media and building up a base of followers that you become sort of the highlight of explaining to people: "Let's make a day in Rosebud something romantic for you and your significant other." This happens all the time successfully using Facebook, Instagram, and even Twitter. Anything on social media that compels people to see something that they want to actually experience in person really matters.

And you don't do it out of town or special; do something about coming to the cafe, meeting you, talking about Rosebud, giving them a Blue Ribbon award for showing up there. Be one of the few people on earth that have actually seen Rosebud and signed the book. Get a big registry, get them to sign it, and then post the registry and celebrate those people. Thanks for coming to Rosebud; you'll be remembered forever!

Here's a picture of the guy that showed up. You know there's a place in Amarillo, Texas, called the Big Texan where they serve a steak that's 87 ounces, and you can eat the whole thing by yourself within an hour. It's free! Yeah, that's pretty brutal, and they have pictures of everybody that's gone to Amarillo, Texas to do it. Same kind of idea, my friend! You make it a destination, you put a book up, you post the pictures, and people want to be part of that community—the Rosebud memorial book. There, you have no extra charge for this advice, Mr. Wonderful. Thank you!

Hey Cooper, great question! I've been investing in wine my whole life; my whole investing life anyways, and drinking it too, I might add. The best way, the most liquid way, the most strategic way to invest in wine is to buy French Bordeaux futures. This is where you buy a case of a fine French wine long before it ships so that you have almost an option to purchase the case. Generally done about eighteen months before the wine is made available; sometimes twelve months. You could find all of this stuff online.

And then the idea is that you take delivery of it, but if you're going to take delivery of a case of wine, you have to have a place to store it. And that's where wine collecting becomes important. You have to build a cellar, keep it at 58 degrees at the right humidity. I have five cellars around the world. I invest in a lot of wine futures, but it's not a very liquid business. In other words, it's expensive to resell wine; using an auctioneer is involved for 15%. But I have to admit over time I have made money buying French Bordeauxs and Burgundys—sometimes extraordinary returns. But most of the stuff I buy I want to enjoy with my family or friends or whatever, so it's not the greatest thing to invest in as a pure investment because you end up drinking it. That's the problem.

Hi Mr. Wonderful, how are you? Thank you very much for this opportunity! Mr. Wonderful, I have a problem. I just received an order from a major store, and I don't have the working capital to finance it. I don't have the cash or inventory to fully afford it, but I do have a good amount in receivables, which I expect to get after 60 days—six zero.

Two things that I tried to solve this. The first one is that to get a loan from regional banks and friends, but I didn't have much luck. The second is, I found some of the summary receivables, but they weren't a huge, huge, huge discount. If I sell to them, then I would make zero profit for my receivables since my margins are on right below! I'm in the manufacturing business.

Two solutions from my point of view: one is to tell the store that I could only afford to fulfill less than one third of the order, but I'm afraid that I may lose them. The other is the...Celebrity. So, Mr. Wonderful, which one do you think is the best option? And thank you very much for your time!

Robert, your situation is both good and bad. First of all, you have demand, which is always good. The fact that you can't fulfill it is bad. Factoring receivables is a delicate business. Factoring rates are now between 9 and 17 percent; you're probably experiencing that.

Maybe the compromise situation is to fulfill some portion of this and ask the vendor to pay you maybe 30% upfront to help you. I mean, very often being honest with your customer, explaining the dilemma you're in and how much you want to help them is the best way to do it. Instead of using a factor that's going to cost you 17%, go to the customer and say, "Look, if you could front me 30 or 40 percent of this order, I'll fulfill all of it because I want to service you."

I wanted to do everything in my power—I’d start there. Factoring is very expensive. All of my Shark Tank companies go through this dilemma all the time. Factoring is expensive, there's no question. It's generally all of your profit to get cash flow to keep the business moving and scale it up and be more productive. But the customer can be your first line of defense, and they may want to help you the way I've just suggested. Ask for 30 to 50 percent upfront on that order. If they trust you, they may consider it. Thank you!