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- The Entrepreneurial Pitfalls
- Other Reasons for failure
- Entrepreneurial Traits
- Home Business Essentials - Assignments & Case Studies
The Entrepreneurial Pitfalls
Many businesses start out extremely well and then suddenly are up to their ears in trouble. Are there typical mistakes entrepreneurs make?
Peter Drucker pointed out that there are four entrepreneurial pitfalls where the new and growing business typically gets into trouble. The first is that it is often entrepreneurs reject success. The majority of successful new product or service doesn’t succeed in the market the founder-entrepreneur thought it would be. But it succeeds in a totally different market. Many businesses fail because the founder-entrepreneur is so obsessed with his or her original plan and refuse to grab the opportunity in the unexpected market.
The second pitfall is that entrepreneurs do not pay enough attention to cash flow. Entrepreneurs believe that profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most. Many businesses are getting caught in a cash crunch because entrepreneurs are financially illiterate and have a hard time grasping the concept of cash flow.
The third pitfall is that the entrepreneur outgrows his management base when business grows rapidly beyond expectations. Starting out, the typical founder does everything himself. When business grows, the entrepreneur begins running around like the proverbial one-armed paperhanger. Unfortunately, the entrepreneur doesn’t realize he outgrows his management capabilities. He doesn’t get the management team in place quick enough. Then all the sudden, everything goes wrong. The quality falls out of bed. Customers don’t pay. Deliveries are missed. The business is eventually hid hard by manage crunch.
Cont The forth pitfall is the entrepreneur begins to put himself and his needs before his business when the business is a success. When the business is a success.) 2. Rapid growth puts an incredible strain on a business. . 4. You outgrow your production facilities. But it is difficult for him to face up the harsh reality and start asking “What doe the business need at this stage?” and “Do I have those qualities?” He doesn’t realize that it is time to bring in an outsider. the entrepreneur (who is perhaps bored) begins to put himself and his needs before the business. You outgrow your management capabilities. Drucker says. In short. He has worked eighteen hours a day for fourteen years. He ends up killing himself and the business. He doesn’t enjoy it anymore. (This. the person who founded it becomes incredibly busy. is much more common than you might imagine. the following are the Pitfalls: The entrepreneur doesn't realize that a new product or service is not successful where he or she thought it would be but it is instead successful in a totally different market. Entrepreneurs believe that profit is what matters most in a new enterprise. 3. He knows he’s not concentrating on the right things. As a business grows. Cash flow matters most.
You might end up inconveniencing a customer or client. it’s not just ok. which is a surefire dream killer. the honest answer is almost always yes. and other factors that are largely out of the entrepreneur’s control. For fear of failure. low self expectations and a slough of other possible reasons. While learning from mistakes is immensely valuable. Entrepreneurs and non-entrepreneurs alike suffer from this ailment. Procrastination. you’re hurting your business. and that’s what you’ll get. You don’t have to want to conquer the world. Aiming too low. while others succeed and thrive even though they were started during an economic downturn? Sure. Proof of that fact often comes in the form of hindsight. Either way. 2. and this habit is bound to catch up with you. or you might end up taking time away from another important task later. success or failure is in the hands of the entrepreneur. So here are some common pitfalls that can doom an entrepreneur to failure. It’s infinitely better to just miss a huge goal than to barely hit a mediocre goal. many people tend to limit themselves when thinking about what’s possible for their business. avoiding mistakes in the first place is always preferable. hard truth is that more often than not. Setting your goals too small can kill your business. and you’ll be on the path to success! 1. Countless businesses have failed due to disagreements and conflicts between partners. we can sometimes point to regional conditions. but it’s ok to dream big when planning and building your business. Plan for mediocrity. If you’re going to have partners at all. this is absolutely critical. industry trends. If you ask an entrepreneur who has had to close a business if there’s anything he or she would have done differently.Other Reasons for Failure Why is it that some businesses fail in the best of economic times. Putting off what needs to be done in your business opens up the possibility for a competitor to take advantage of your procrastination. In fact. it’s really important. because you’re likely to get what you aim for. but the cold. Bad partners. from simple . One of our favorite quotes on this topic is “Procrastination is the thief of fortune!” 3. Avoid them.
Lack of planning. entrepreneurs start a business expecting an immediate windfall. Entrepreneurship does have its financial rewards – no doubt about that. chances are very good you’ll quit before you see any significant return. if you’re over cautious. and how (in general terms) you plan to get from here to there. and avoid this pitfall for failure. cont 4. The thing is. At the other end of the spectrum from over-planning and overcautiousness is not planning enough. and then use your plan to guide your decisive action. But those rewards usually come after a lot of hard work. While you don’t want to get bogged down with planning paralysis. Being over-cautious. If you’re in it to get rich quick. Figure out your purpose. So often. Evaluating your options and taking decisive action – even in the face of fear – is an essential entrepreneurial skill. and never actually pull the trigger. you don’t end up protecting. or the ability to make a good living right off the bat. and the risks don’t end with the startup. and some who are up and running won’t expand or alter their course for fear of upsetting the apple cart. success does demand a certain amount of forethought and preparation. take the time to vet them well. Some would-be entrepreneurs plan and plan. your goals. and the big rewards usually take years of hard work. 5. this is generally not how business works. 6. . So if you must have a partner. Desire for instant gratification.differences in philosophies to power struggles and downright thievery. Starting a new business is a risk. but hurting your success. While there might be a few exceptions.
you’ll do what it takes to push through. And many will point to those moments when they persevered as the defining moments that made all the difference. and you’ve got to know that whatever comes. If you expect to succeed as an entrepreneur. So if you’re having challenges. take heart – you’re in good company! . and you’ll hear tales of adversity that they needed to overcome and setbacks they never saw coming. Lack of persistence. you’ve got to expect to run into challenges.cont 7. Talk with any successful business owner about his or her journey to success. The difference between success and failure so often comes down to persistence.
Einstein? Albert Einstein has become the benchmark by which everyone measures intellect. "Imagination is more important than knowledge. though few understand what made the man tick." One of the most important questions an entrepreneur can ask is How can I make it better? Whether you offer a product or a service. we would have been left with his thoughts on relativity instead of an entire theory. has it been in the spirit of sarcasm--Nice one.10 Traits Entrepreneurs and Einstein Share "You're no Einstein. "The important thing is not to stop questioning. Do you see a little of Einstein in you? Imagination. What makes Larry Page and Sergey Brin household names is the fact they imagined there was a better way to search the web." How many times have you heard that in your life? When people have compared you to the great thinker. While Phil Knight was marketing Nike to the top of the athletic-shoe sales heap. Bill Bowerman tinkered with the shoes' designs and made sure Nike footwear was on the cutting edge of innovation. (For more on that see Unleash Your Inner Einstein." The fellas over at Google had all the computer skills and knowledge they needed to have successful careers in some firm's IT department--along with tens of thousands of other techies. the creator of E=mc2 (and one of a handful of people to know what it really means) indicated what he saw as the path to success through his words and actions. and then they created it. Always questioning. improving it is the only way to attract new clients and retain existing ones. Many of the traits that led him to be named Time magazine's Person of the Century--kind of an elite club--drive people to create businesses. Einstein said. be better? If Einstein had stopped questioning.) Throughout his long life. . Bowerman wondered. Entrepreneurs have more in common with Einstein than they think. How can the new model.
" Einstein worked in theoretical physics. designed two new cards and printed them in time for Christmas. Nearly a century and countless new ideas later. a few weeks before Cupid's favorite holiday. "We can't solve problems by using the same kind of thinking we used when we created them. They borrowed money. to do just that. Hallmark Cards sets the industry standard. "Weakness of attitude becomes weakness of character. Ian Ballantine created Bantam Books Inc." In the 1940s and '50s. greeting cards were given for Christmas and Valentine's Day. purchased an engraving firm. he had to trust his intuition to move forward on anything. book publishers printed paperback books based solely on hardback titles that had lost momentum. He soon realized he was limiting his profit potential by sticking to the old way of thinking. Entrepreneurs do the same thing every day. "The only real valuable thing is intuition. a warehouse fire destroyed J. In 1915. Strong positive attitude. new ways of thinking. (Or was it the other way around?) Trusting one's gut led to many of the 20th century's greatest advances. Intuition told Hugh Hefner men would pay for a magazine filled with high-quality articles and fiction writing that was interspersed with photos of nude women.000 in debt. Intuition. both models still exist. and Rollie Hall's entire inventory of Valentine's Day cards and left them $17. Sixty years later. Intuition told Richard Branson the Sex Pistols were worth signing to a fledgling Virgin Records. cont ." In the early 20th century. Old problems. He decided--much to other publishers' and bookstores' chagrin--to produce original paperback titles for mass-market sales. And Ballantine likely would have jumped at the chance to offer books electronically.C.
I say boring--but know what you consider mundane and hire someone to take care of those tasks before they get neglected and drag the company down. . There may be a lesson there for up-and-coming entrepreneurs.Cont Naps. Other entrepreneurs have utilized naps in a different way: bringing napping equipment to the workplace. The definition of mundane details will vary from person to person--you say spreadsheets. Howard Hughes--before he lost the keys to his sanity vault--didn't like the administrative day-to-day duties of the company he inherited from his father. The other lesson there is "hire well." Just ask the people at Coca-Cola circa 1985.“ Willingness to try new things--and fail. The stories of Einstein having a closet full of the same suits are exaggerated. No lie. and that person turned Hughes' $1 million company into a $75 million empire. Einstein was supposed to be a big believer in midday siestas to recharge the brain. but many of their other forays into new flavors--cherry and vanilla to name two--have proved to be huge successes. "Anyone who has never made a mistake has never tried anything new. He hired someone to handle it. but the point of the story is made: He didn't want to spend intellectual and chronological capital wrestling with one of life's mundanities. to name two--have created nap-friendly guidelines for their employees. MetroNaps installs sleep pods in companies' buildings for employee use. The Coke folks realized the error of their ways and reinstated the traditional formula. Rise above the mundane details. Some companies--Google and Nike.
Stay on top of tech. He knew--and now so do you--the ingredients to success. and on what devices? The people who figure out the answers to those questions will be entrepreneurs at the forefront of their industries. . Whatever the ratio of x to y to z. "If A is a success in life. then A equals x plus y plus z." Notice Einstein didn't put absolute amounts on each of his variables.Cont Maintaining balance. I doubt that was accidental. y is play and z is keeping your mouth shut. What is the next internet? Where will communications be in 25 years? How will information be delivered. Early in his career at the Swiss Patent Office. Work is x. Einstein was passed over for a promotion until he mastered the technology of his day: machines. he also knew the formula was going to change from day to day. entrepreneurs cannot forget Y. The entrepreneurs who are remembered at the end of this century will be the people who maximize the use of technology.
My favorite P-word in entrepreneurship is planning.Interesting Traits that an entrepreneur should possess: There's a lot of talk about P-words: passion. like from short. and persistence. You have to have some variation on these traits. I just don't see people building businesses without believing in what they're doing. Listening carefully. Willingness to work hard. but you can have all three and still fail. Imagining a happy future. what they need. perseverance. customers. shoulder to shoulder with other people. Knowing what they don't know. A sense of fairness. but that's just me. but true: the harder I work. To me that's much more important than what you do know. Stubbornness is good too. Transferable values. as in understanding how other people think and feel about things. Vision for what they can build. Cliche. Dreaming. Shutting up. and employees. That's like dribbling.to long-term in an instant. Empathy. how they think. Empathy leads to understanding what the people you sell to want. It's hard to imagine somebody building a company without being able to put themselves in the buyer's state of mind. Making mistakes. . mixing those viewpoints together. For dealing with vendors. Keep pitching. and how to best reach them. You have to deal with failure. I mistrust all three. keeping your eyes up while managing the ball at your feet. You and I both know people who never made it and never stopped trying. the luckier I get. Jumping viewpoints. This is closely related to the sense of fairness. A lot of unsuccessful entrepreneurs have them just as much. even without starting with P.
Even if you don't have all of these characteristics. through strategic planning. you can see how you stack up. oddly enough. don't fret. there are. a great number of common characteristics that are shared by successful businesspeople. You can place a check beside each characteristic that you feel that you possess. Most can be learned with practice and by developing a winning attitude.Cont Regardless of your definition of success. especially if you set goals and apply yourself. . to reach those goals in incremental and measurable stages. This way.
stability and enjoyment will be the sum of what you put into your business. Far too many home business owners fail to take their own businesses seriously enough. . who rain on the home business owner's parade. To legally operate a vehicle on public roadways. financial gain. one must become an informed investor and actively invest for retirement. office park. and making very good annual incomes. chances are you won't succeed. has grown by leaps and bounds in recent years. Do what you enjoy. storefront. 2. operate and grow a profitable home business. There are certain musts that have to be fully developed. 1. So if you don't enjoy what you're doing. then the formula is no different. You cannot expect to be effective and successful in business unless you truly believe in your business and in the goods and services that you sell. one must have a driver's license. or factory. What you get out of your business in the form of personal satisfaction. one must train and practice. If your goal is success in business. know is that the number of people working from home. in all likelihood it's safe to assume that will be reflected in the success of your business--or subsequent lack of success. Little do these skeptics. there are certain musts that are required to be successful in a chosen activity. to retire comfortably.Home Business essentials Like any activity you pursue. Take what you do seriously. to excel in sports. They also fall prey to naysayers who don't take them seriously because they don't work from an office building. if you don't enjoy what you're doing. but this article contains I believe to be some of the more important musts that are required to start. implemented and managed for your business to succeed. There are many business musts. getting easily sidetracked and not staying motivated and keeping their noses to the grindstone. In fact.
The money you receive from clients in exchange for your goods and services you provide (income) The money you spend on inventory. but also builds habits that every home business owner should develop. on paper. You can use the plan that you create both as map to take you from point A to Z and as a yardstick to measure the success of each individual plan or segment within the plan. You need it to buy inventory. repair and replace tools and equipment. pay for services. and maintain. all home business owners must become wise money managers to ensure that the cash keeps flowing and the bills get paid. Business planning also serves a second function. which is having your goals and how you will achieve them.Cont 3. supplies. 4. and make conclusions based mainly on the facts as revealed through the research. (expenses) . Manage money wisely. The act of business planning is so important because it requires you to analyze each business situation. wages and other items required to keep your business operating. Therefore. Plan everything. and pay yourself so that you can continue to work. research and compile data. Planning every aspect of your home business is not only a must. There are two aspects to wise money management. The lifeblood of any business enterprise is cash flow. implement. promote and market your business.
unless one simple thing is accomplished--ask for the sale. payment options. your customers are the people that will ultimately decide if your business goes boom or bust. advertising copywriting whiz or a public relations specialist isn't a tremendous asset to your business. In addition. marketing tools that the . 6.Cont 5. This is not to say that being a great salesperson. Ask for the sale. you must know who your customers are inside out and upside down. 7. operating hours. One of the greatest myths about personal or business success is that eventually your business. or perfectly targeted they are. But how can this happen if no one knows who you are. regardless of how clever. advertising. products or services will get discovered and be embraced by the masses that will beat a path to your door to buy what you are selling. Everything you do in business must be customer focused. However. all of these skills will be for naught if you do not actively ask people to buy what you are selling. yet most underutilized. Your home business is not about the prices that you charge for your goods and services. A home business entrepreneur must always remember that marketing. period. what you sell and why they should be buying? Self-promotion is one of the most beneficial. expensive. including your policies. Remember it's all about the customer. presentations. advertising and promotional campaigns and website. After all. or clients. Your business is all about your customers. warranties. Become a shameless self-promoter (without becoming obnoxious). or promotional activities are completely worthless. Your home business is not about the products or services that you sell. personal abilities. Your home business is not about your competition and how to beat them.
Therefore. One of the biggest features and often the most significant competitive edge the home based entrepreneur has over the larger competitors is the he can offer personalized attention. 9. provide personal attention and win over repeat business by doing so. Home business owners must go out of their way and make a conscious effort to always project the most professional business image possible. the better off you will be in the long run and personalized attention is very much appreciated and remembered in the modern high tech world. get to know customers. The majority of home business owners do not have the advantage of elaborate offices or elegant storefronts and showrooms to wow prospects and impress customers.Cont 8. . creativity and attention to the smallest detail when creating and maintaining a professional image for their home business. but customers are sick and tired of hearing that their information is somewhere in the computer and must be retrieved. You have but a passing moment to make a positive and memorable impression on people with whom you intend to do business. Instead. or told to push a dozen digits to finally get to the right department only to end up with voice mail--from which they never receive a return phone call. they must rely on imagination. The home business owner can actually answer phone calls. Project a positive business image. It's a researched fact that most business (80 percent) will come from repeat customers rather than new customers. along with trying to draw newcomers. Get to know your customers. Call it high-tech backlash if you will. the more you can do to woo your regular customers.
12. 11. . Of course the most important team members will be your customers or clients. Any or all may have a say in how your business will function and a stake in your business future.. employees. you want the most accurate information and assistance that you can get. No one person can build a successful business alone. local government and the community. You should avoid getting overly caught up in the high-tech world. but you should also know how to take advantage of using it. sub-contractors. Build a top-notch business team. You call a plumber when the hot water tank leaks. a real estate agent when it's time to sell your home or a dentist when you have a toothache. Become known as an expert. One of the most amazing aspects of the internet is that a one or two person business operating from a basement can have a superior website to a $50 million company. do you seek just anyone's advice or do you seek an expert in the field to help solve your particular problem? Obviously. and nobody knows the difference. industry and business associations. When you have a problem that needs to be solved.Cont 10. Your business team may include family members. Make sure you're keeping up with the hightech world as it suits your needs. not that which impresses your neighbors. friends. suppliers. You naturally seek an expert to help solve your problem. It's a task that requires a team that is as committed as you to the business and its success. business alliances. Level the playing field with technology. The best technology is that which helps you.
In short. workshops and training courses. newsletters. top entrepreneurs never stop investing in the most powerful. personalized service. They join business associations and clubs. these people seek you out for your expertise. magazines. websites and industry publications. better return and exchange policies or a combination of several of these? 14. A home business must have a clearly defined unique selling proposition. just in reverse. knowing that these resources will improve their understanding of business and marketing functions and skills. journals. in less time. it only stands to reason that the more you become known for your expertise in your business. "Why will people choose to do business with you or purchase your product or service instead of doing business with a competitor and buying his product or service?" In other words. a longer warranty. even if they have already mastered the subject matter of the event. better customer service. becoming known as an expert is another style of prospecting for new business. Instead of finding new and qualified people to sell to. with less effort. They do this because they know that education is an ongoing process. better selection. Top entrepreneurs attend business and marketing seminars. 13. creating more selling and referral opportunities. and they network with other skilled business people to learn their secrets of success and help define their own goals and objectives. Invest in yourself. reports. There are usually ways to do things better. effective and best business and marketing tool at their immediate disposal-themselves. .Cont Therefore. Create a competitive advantage. In effect. longer business hours. This is nothing more than a fancy way of asking the vital question. Top entrepreneurs buy and read business and marketing books. more flexible payment options. lowest price. what one aspect or combination of aspects is going to separate your business from your competition? Will it be better service. the more people will seek you out to tap into your expertise.
16. you need to make good on your offer. You can't simply buy a good reputation. You must remain cognizant of the fact that few people will work hard. We're living in a time when we all expect our fast food lunch at the drive-thru window to be ready in mere minutes. The shoe is always on the other foot. A good reputation is unquestionably one of the home business owner's most tangible and marketable assets.Cont 15. . go out of their way. regardless of the home business you operate. they have no reason to trust you . If you offer to repair something. you won't have a good reputation. and without trust. it's something that you earn by honoring your promises. our money to be available at the cash machine and our pizza delivered in 30 minutes or it's free. . Be accessible. If you promise to have the merchandise in the customer's hands by Wednesday. You see the pattern developing--you must make it as easy as you can for people to do business with you. Consistency in what you offer is the other key factor. or be inconvenienced just for the privilege of giving you their hard-earned money. . our dry cleaning to be ready for pick-up on the same day. Build a rock-solid reputation. when they want it. If you cannot come through with the same level of service (and products) for clients on a regular basis. Making it easy for people to do business with you means that you must be accessible and knowledgeable about your products and services. You must be able to provide customers with what they want. you have no excuse not to have it there.
such as pitching in to help local charities or the food bank. Always go out of your way to get involved in the community that supports your business. money and energy on promotional activities aimed at building awareness solely through long-term. every promotional activity you engage in. Every time and every medium used to communicate with your target audience must always be selling the benefits associated with owning your product or using your service. sell more. becoming involved in organizing community events. and getting involved in local politics. website. 18. . You can join associations and clubs that concentrate on programs and policies designed to improve the local community. Small-business owners cannot waste time. If you do. like and respect. Sell benefits. newsletters. Grab attention. Pushing product features is for inexperienced or wannabe entrepreneurs.Cont 17. Selling the benefits associated with owning and using the products and services you carry is what sales professionals worldwide focus on to create buying excitement and to sell. Get involved. chances are you will go broke long before this goal is accomplished. Instead. printed marketing materials. and with people who do things to help them as members of the community. sales presentations. trade show exhibit and signage are vital. 19. It's a fact that people like to do business with people they know. You can do this in many ways. Your advertising. must put money back in your pocket so that you can continue to grab more attention and grow your business. and sell more frequently to their customers. repeated exposure. product packaging.
These win-win arrangements mean that everyone involved feels they have won. at least during prime business and revenue generating hours of the day. A den. 21. Ideally. Design Your workspace for success. Always remember that mastering the art of negotiation means that your skills are so finely tuned that you can always orchestrate a win-win situation. which is really the basis for building long-term and profitable business relationships.Cont 20. The key to staying organized is not about which type of file you have or whether you keep a stack or two of papers on your desk. The ability to negotiate effectively is unquestionably a skill that every home business owner must make every effort to master. If this is not possible. It's perhaps second in importance only to asking for the sale in terms of home business musts. spare bedroom. basement or converted garage are all ideal candidates for your new home office. Master the art of negotiations. you'll have to find a means of converting a room with a partition or simply find hours to do the bulk of your work when nobody else is home. It's about having systems in place to do things. . to project professionalism for visiting clients. Get and stay organized. you'll want a separate room with a door that closes to keep business activities in and family members out. if necessary. If at all possible. resist the temptation to turn a corner of the living room or your bedroom into your office. negotiation skills are used daily. Carefully plan and design your home office workspace to ensure maximum personal performance and productivity and. but it's about managing your business. In business. 22.
or for the week. After all. You should. not fill every possible hour in the day. Create the schedule as soon as you have made the commitment to start a home business. you wan to establish a routine by which you can accomplish as much as possible in a given workday. not multiple sets for individual tasks or jobs. Creating a single calendar to work from. you should develop systems and routines for just about every single business activity. plus some days off and scheduled vacations. will also ensure that jobs are completed on schedule and appointments kept. your schedule will have to be flexible. whether that's three hours for a part-time business or seven or nine hours as a full-timer. . Small things such as creating a to-do list at the end of each business day. Every person working from home must take time to establish a regular work schedule that includes time to stretch your legs and take lunch breaks. All work and no play makes you burn out very fast and grumpy customer service is not what people want. 23. therefore. Give yourself a backup hour or two. In fact. Incorporating family and personal activities into your work calendar is also critical so that you work and plan from a single calendar. The temptation to work around the clock is very real for some home business owners. you don't have a manager telling you it's time to go home because they can't afford the overtime pay. will help keep you on top of important tasks to tackle. Of course.Cont Therefore. Take time off.
Cont 24. . Limit the number of hats you wear. Follow-up is especially important with your existing customer base. 25. The ability to multitask. increase the value of each sale and buying frequency from existing customers. once in a while you have to stand back and look beyond today to determine what's in the best interest of your business and yourself over the long run. Follow-up constantly. they knew what they were good at and what tasks to delegate to others. and build stronger business relationships with suppliers and your core business team. It's easy to sell one product or service. and business alliances should be the mantra of every home business owner. They try to do as much as possible and tackle as many tasks as possible in their business. It's difficult for most business owners not to take a hands-on approach. and follow-through with customers. new or established. follow-up. but it takes work to retain customers and keep them coming back. in fact. is a common trait shared by successful entrepreneurs. Most highly successful entrepreneurs will tell you that from the time they started out. However. prospects. Constant contact. Constant and consistent follow-up enables you to turn prospects into customers. as the real work begins after the sale.
Cont Group Discussion on: 1) A) What is the greatest reason for an Entrepreneur’s failure? Not having adequate cash flow B) Not paying enough attention to Management needs C) Putting his needs first than the Business Needs 2) A) What is the most important & indispensible trait of an entrepreneur? Innovation B) Being Tech Savvy C) Mastering the skill of negotiation D) Effective planning .
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