The entrepreneur should always be on the alert for potential opportunities.

For example, the news that Russia has recognised South Ossetia and Abkhazia as independent states may be of interest to few outside the Caucasus, but those few should include entrepreneurs.

Leave the politics aside for a moment and consider the economics. Anyone with a vested interest in turning what were nominally regions of Georgia into credible nations ought to bend over backwards to assist inward investors.

This means not only the local authorities but the Russian Federation. Any business in need of the goodwill of Mr Putin could do worse than do business in his new client states.

BP please note.

Moreover, a company registered in a place where the de facto government is not recognised internationally might have an ambiguous legal and tax status that could come in useful.

A new state would be well advised to make the appointment of a Registrar of Companies a priority.

Make no mistake: doing business in any part of Russia remains a high risk operation, but the dangers may actually be less in satellite states where the Kremlin needs to be seen to be building viable economies.

Some businesses are doomed from the start.

Even if the concept behind them is not inherently flawed, they never recover from decisions made – or decisions not made – before the first day of trading.

The annoying thing is that many of these mistakes are easily avoided, given just a little thought and preparation. They are, however, very hard to correct once operations have begun.

Here is a short checklist of foreseeable problems that can sink an otherwise sound business within months of start up:

1   Undercapitalising – the single greatest cause of business failure is underestimating the need for a secure cash reserve; 

2   Focussing on the product or service and not on how to sell it – possible the second greatest case of business failure;

3   Overspending on fripperies that can have no immediate impact on the success of the business in the crucial first few months;

4   Inadequate legal structures -  irrespective of how well you get on with your partners, clear boundaries are the only way to prevent the disputes that always develop as a business develops;

5   Inadequate financial controls – book keeping must be rigorous to the point of fanatical from Day One because there is little chance of catching up later if you let it lapse;

6   Nebulous management structures – employees will take advantage if it is not clear from the start who is in charge; and

7   Lack of definite purpose or strategic objectives – without a sense of direction, an enterprise will wander from one project to the next until it folds.

Researching again – honestly – your correspondent’s eye was caught by the story of a Cambridge graduate who has left her safe, well-paid employment to set up a belly dancing business.

...well, actually, your correspondent’s eye was caught by the picture of a pretty girl with a nice smile in a belly dancing outfit, but it turns out that there was also a business-related story attached to it.

Ignoring the exotic nature of the business for a second, here are many of the elements of the classic model of entrepreneurial success.

First, a talented person becomes frustrated by the routine of the nine-to-five and by being told what to do by the less talented.

Second, unlike most talented people, she also has the guts – no pun intended – to do something about that frustration.

Finally, she finds her passion.

It is one of the great paradoxes that if one is so passionate about something that one wants to do it even if one is not successful, the more likely one is to be successful. The passion keeps one going in the tough times. The passion drives one to keep practising until one gets good.

So, while there are no guarantees in business, this brave dancer has the most important ingredient for success: she has a fire in her belly – again, no pun intended – for what she is doing.

Of course, the passion of the true entrepreneur is for enterprise itself, so the actual business matters little, but without a passion for something, and the courage to follow that passion, one cannot succeed in business or anything else.  

Certainly, once one finds that passion, there is no going back to life as it was without it.

Researching the latest newsletter article on “Getting Rich” – yes, these things really are researched – prompts the reflection that the road to riches often lies through poverty.

Make no mistake: becoming an entrepreneur is at best the postponement of enjoyment. It is working while others rest, investing while others spend, and, above all, taking the initiative while others go with the flow.

It is giving up present happiness in the hope of greater happiness in future. This is gambling, pure and simple, and, as with all gambling, there is no guarantee of success.

So frugality on its own is unlikely to make anyone rich – especially since life has a habit of sending the unexpected to show the folly of relying on the assumptions behind detailed budgets.

While frugality – or, at least, relative frugality – remains an inescapable part of the life of the entrepreneur – at least in the early days – it should not be mistaken for the whole of it.

Indeed, an entrepreneur may be a better entrepreneur for stopping from time to time in order to enjoy some of the fruits of his labours and remind himself why he is doing what he is doing.

We have today launched the search for

THE WORST PR AGENT

Even relatively small entrepreneurs may need a public profile – at least on the internet.

So the marketing and public relations industry has grown with the world wide web, and the number of charlatans who call themselves PR consultants or agents has grown in proportion.

Make no mistake, someone who really understands PR can take a client to a whole new level. The problem is that it is often very hard to tell the good from the bad.

There are, however, clear warnings that you may be dealing with a flimflam artist and not a real professional. The former is far more likely

1   To demand to be paid by the hour rather than quote for a job

2   To not set specific objectives

3   To start doing his own thing rather than what you asked him to do

4   To boast about big-name contacts

5   To show a lack of urgency and  disrespect for deadlines

6   To make elementary spelling mistakes and grammatical errors in press releases and publications

7   To be vague

8   To spend time and effort on elaborate plans rather than making phone calls

9   To blame the client when things go wrong

Indeed, in one sense the client shares part of the blame. It is the client’s job to try to pin the consultant or agent down to clear and specific commitments. If the agent proves a slippery customer and avoids commitment, then the client should walk away.

Alas, it seems a lot of frogs have to be kissed before one finds a prince or princess! 

Last week, this blog recommended that all entrepreneurs pay attention to the world trade talks, and to the possible consequences of their collapse.

It might help to start with the questions relevant to the individual entrepreneur: “Are these problems likely to continue? What will they mean to my business? Is there anything I can do to improve my situation?”

The root of the problem – as ever with trade talks – is that farmers demand privileges which would be unacceptable in any other business.

The current crisis is due to the Indian government insisting on special measures to protect its agriculture. The Americans wanted to open up the market, despite having just passed what EU Commissioner Peter Mandelson called “one of the most reactionary farm bills in the history of the US”

...and, of course, the same EU is itself infamous for its agricultural policies...

...all this at a time when world food prices are going up as demand increases and supply is inadequate.

The bottom line is that the problem will remain so long as all the governments are hypocritically trying to give their own farmers an unfair advantage. A change in the US Presidency is unlikely to improve matters since it was a Democratic Congress that passed that reactionary farm bill.

So entrepreneurs are likely to suffer a growing restriction of world trade because of the privileges sought by farmers.

There are unlikely to be immediate changes, but we must plan on the basis that we can no longer take growing international business for granted.

Meanwhile, we need to make the most of the opportunities we have while we have them.

China’s government is said to have spent over two hundred million dollars on the opening ceremony of the Olympic games.

It was worth every cent.

Not even China could have afforded the advertising it got for free – page after page of full colour photographs in practically every newspaper in the world, and prime time television on every news programme. Every one of director Zhang Yimou’s brilliant images proclaimed that the horrific Maoist experiment had been replaced by a confident superpower, respectful of its past but looking to the future.

Complaints about China’s record on the environment, human rights, and religious freedom, or the lack thereof, were confined to a few token words which no one read or heard – everyone was looking at the pictures.

Even the news that a pretty child who seemed to sing so sweetly was in fact miming to a more homely child with a better voice was simply an excuse to show the pictures all over again.

There is a lesson here for all entrepreneurs, even those of us without two hundred million to burn: all problems can be overlooked if you put on a big enough show.

They say all publicity is good publicity.

They are wrong. A glance at the newspapers should give you a list of celebrities who would have done better to remain obscure.

The same is true of marketing in general. There are places where you do not want your company name.

There are forms of promotion which undoubtedly make an impact, but which are ultimately counter-productive. The impact is entirely negative.

This may be because the means of promotion is so intrusive that the customer is irritated, or because it is associated with businesses of bad repute – or both. Either way, the presence of your company name in such a context will actually put the customer off.

Here are some marketing tools that are usually counter-productive:-

1   Pop-ups on the internet;

2   Spam from unknown e-mail addresses;

3   Leaflets that fall out of your newspaper or magazine when you pick it up;

4   Telephone canvassing;

5   Cold calling door to door; and

6   Unsolicited faxes that use the paper you pay for.

Who buys from the people who do these things? Does anyone? One supposes someone must – anyway, but best not encourage them.

Entrepreneurs – most of whom, to be honest, had never heard of the Doha Round of negotiations on world trade – should be very worried by their collapse.

Most entrepreneurs have come to take global business for granted. Those who have not should make the effort. It is competitive common sense to use the internet to find the very best deals in the world. It is also foolish for anyone wanting to manufacture something not to have it done in a country without the regulatory compliance costs of employing people in the West.

It was not always so. World trade used to be a jungle of tariffs and restrictions. All the clever people knew that these stifled growth and tried to negotiate multilateral agreements to remove them.

However, a panic set in after the Wall Street Crash, and the commitment to multilateral agreements gave way to a policy of bilateral deals between individual states. In practice, these were few and far between. World trade collapsed. That, not the Wall Street Crash, was the real cause of the Great Depression.

Learning the lesson, most of the governments of the world committed themselves in 1947 to a process of the gradual expansion of free trade through multilateral negotiation.

That is the process we have all come to take for granted – and which collapsed with the Doha Round.

It is particularly worrying to hear whispers that a multilateral deal may be impossible and that a series of bilateral deals might be the best way to proceed.

That is just what they said in the 1930s.

All entrepreneurs should start following this story and planning accordingly.

At the very least, it may impact on how all of us do business now. At worst, if nothing is done, we may need to be preparing not just for a passing recession but for a full dress depression.

The price of oil has declined a little, a threatened banking crisis has not developed, the US Federal Reserve is keeping cool, and the Dow Jones has rallied.

Could it be that we have dodged the bullet on the recession?

No.

Structural problems in the world economy remain, combined with the cyclical need to revalue some overpriced assets.

The good news is that many of these problems will probably work themselves out over the next few months – so long as governments do not panic.

The bad news is that governments are showing every sign of panicking. The collapse of the world trade talks, and the worryingly protectionist tone in the US Presidential and Congressional elections, together represent a greater threat to world business than the “credit crunch”.

This is but the eye of the hurricane – the patch of fair weather in the middle of the whirlwind.

Entrepreneurs should not rush out of their storm shelters. Heads down. The worst is yet to come.