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September 29, 2003 |
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One souce of opportunity lies in finding Mom and Pop industries that are ripe for consolidation or a more sophisticated business model. Forbes tells the tale of Brook Mays Music which is finding success in musical instrument rentals.
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September 26, 2003 |
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Elizabeth Wasserman has a provocative prescription for the SBA. While I think that many of her ideas to improve the financing mechanisms have merit, I am perplexed by her proposal to rename the SBA the U.S. Department of Small Business and thus create (yet another) cabinet level position.
Beyond my allergic reaction to more government bureaucracy, I am concerned that this will only further marginalize the entrepreneurial engine that is really driving this economy. Let's do this instead: force the Dept of Commerce to finally make as its main priority the support of entrepreneurship and free enterprise. The federal government gives only passing attention to entrepreneurship when we look at the grand scheme of things. And yet, entrepreneurs and their small businesses "contribute 75% of net new jobs; account for more than 50% of the gross domestic product; and receive as many as 14 times more patents per employee than large firms, according to government figures" (Wasserman, 2003). Sure, this sector is hurting since 9/11, but it is beginning to rebound and will continue to be the hope for this economy during the coming decades.
The federal government still favors and supports the large corporations that create few, if any, new jobs and have become less than half of our GDP. Don't just tinker with SBA at the margins. Let its agenda and programs become our Dept of Commerce and move the focus to where it really needs to be. Let's not keep marginalized something so fundamentally important to our future.
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September 25, 2003 |
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Here is a fairly well-reasoned ranking of the 50 states and DC regarding small business friendliness. And the top 10 are:
10. Mississippi (great beaches, too)
9. Michigan (somewhat of a surprise)
8. Washington (but, what about the traffic in Seattle??)
7. Tennessee (that's why I'm here!)
6. Texas ("W" was, after all, an entrepreneur himself)
5. Florida (The Bush's did it again)
4. New Hampshire (but, too COLD)
3. Wyoming (just be ready for the wind)
2. Nevada (business friendliness goes beyond stuff in this ranking)
1. South Dakota (just what Minnesota needed...one more reason for
businesses to cross the border)
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I bought my first copy of this book when our business was going through our insane period of growth. It was called something on the order of Making Transitioning from an Entrepreneurship to a Professionally Managed Firm in its first edition. Thank goodness the marketing folks helped rename it Growing Pains in later editions. My copy became quite "dog-eared", and I ran into more than one other entrepreneur carrying this book along on a flight to somewhere. It is a must read and a great reference book for any growing company!
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Blogging may prove to be good for many small businesses as a method of promotion. Here is an article from Entrepreneur magazine that addresses this topic. "The elements of interactivity, community and collaboration will be key as growing businesses adopt blogs for customer relations, advertising, promotion and even internal communications."
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September 24, 2003 |
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It is often assumed that the primary reason for becoming an entrepreneur is money. Profit is the only measure of success. But, this is really another myth about entrepreneurship.
Entrepreneurs evaluate success in many and often unique ways. For some it is measured by the jobs they create. For others success is measured by the satisfaction of their customers. Reell Precision Manufacturing measures success in terms of creating "an environment that fosters human development and provides for the common good". Clearly for all of these entrepreneurs financial success is fundamentally important. But, it is often viewed as a natural outcome of pursuing what each of these entrepreneurs view as their real success.
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Every once in a while my golf swing comes back. It is a feeling that reminds me of periods of consistent positive cash flow in business. Life gets a little calmer and everything seems to flow a little easier....But, never take it for granted!
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September 23, 2003 |
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This program at Millikin University is an innovative blend of art education and business education. It is a model for others to look at as such interdisciplinary programs evolve.
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All signs point to renewed growth among small businesses, according to a new report issued by the National Federation of Independent Businesses. Our last period of small business expansion illustrated to many entrepreneurs the double edged sword of growth. Although growth is generally considered a good thing for any business, entrepreneurs are often ill-prepared for the challenges that growth brings. Most business failures occur during periods of rapid growth.
Here are some of the key challenges that entrepreneurs face during growth:
1. The role of the business founder fundamentally changes during growth. They become less hands-on, and must focus instead on leadership, vision and managing the culture of the business.
2. The entrepreneur must build effective systems for their growing organization, including more sophisticated operating systems to replace knowledge that is simply walking around in people's heads.
3. Management must be developed and recruited.
4. Communication can no longer simply flow through the entrepreneur. Communication systems need to be carefully developed over time.
5. Human resource practices must quickly evolve to assure the proper staff are hired for the right place and the right time. Care must be paid to employment law, as this is the most vulnerable area for litigation.
6. Forecasting cash needs and funding growth become critical. Mistakes in this area can be fatal for the business as it grows.
7. Financial reports must be developed that can help navigate the road ahead, and not just the road already passed.
8. Most entrepreneurs will one day exit their businesses. Decisions made during growth can affect exits that occur even many years in the future.
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Gladys Edmunds has written an interesting column that challenges those who teach entrepreneurship to remember what it is that we are really teaching about. Most entrepreneurial activity is not about venture capital deals with locked in exit strategies. It is not about a quick Initial Public Offering of stock to make millions. It is not the "gazelle" organization that so many academics love to fawn over.
One of the myths about entrepreneurship is that its goal is to build a business, any business that can be quickly taken public to make millions of dollars for the founders, who then make a hasty exit to the hills.
Real entrepreneurship for the vast majority of entrepreneurs involves hard work and taking a risk to pursue a very basic dream. These entrepreneurs have a passion to start a particular business that they believe in their hearts can make them a living doing what they love to do, and doing it on their own. The job of those of us who teach entrepreneurship is to help give them the skills and knowledge they will need to succeed in this career path. It is not to convince them that if their dream is not going to make them wealthy in three to five years it is not a deal worth doing. This is utter nonsense! Wealth can be gained through entrepreneurship, but for most it takes many years of hard work to build a business with real value, and not succumbing to the IPO myth that created the DOT.com disaster.
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September 22, 2003 |
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Entrepreneurs must begin to take a more active role in shaping public policy. As the SBA celebrates its 50th anniversary it is still apparent that most politicians, at best, pay only lip service to issues that face entrepreneurs. Government and public policy is an arena of power, and those with the most power are large public corporations, large unions, and government agencies. There is a good example in San Francisco of what small business owners can do if they come together and create their own power base. Unless entrepreneurs come together and speak with a clear and unified voice, their message will continue to be drowned out by the traditional bases of power in American politics.
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September 18, 2003 |
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The debate is still raging about how to improve the ethical climate in American business. Now that the shock of Enron, etc., etc., has passed the debate is still framed as one of two choices. Choice one, let the markets regulate ethics as honesty will pay off in the long run. Choice two, only government can force ethical behaviors on the market. A recent article in Entrepreneur magazine captures this age old debate. However, there is a third force that seems to get put further and further onto the back-burner: culture.
Culture is based in large part on religious and moral foundations. These foundations are what should guide our ethical decisions in any context including our work. Rather than examine what is morally right and wrong, good and bad, we fall back on the simplistic trade-off of government regulation versus free-markets.
I will argue for free-markets with my last breath, but only if leaders make the commitment to address decisions based on more than profit-maximization. We must first and foremost examine the morality of what we do at work. Even beyond that, we must address the ultimate purpose for our work and the gifts we have been given that allow us to succeed at what we do.
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Entrepreneurship can be a powerful tool to help improve economic conditions within disadvantaged communities. This web site offers a wealth of information on programs and research related to this important topic.
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Here is a really innovative program to support newly educated accountants wanting to build their own practice.
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September 17, 2003 |
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As entrepreneurs exit their businesses through sale or merger, they are often faced with a period of employment with the new owner of their company. This may sound simple, but many find such transitions to be very difficult. They are no longer in charge, and often become frustrated with the "new direction" that the new owners take with their businesses.
Other entrepreneurs decide to work for someone else either as a consultant or employee after they sell their businesses. As can be seen in a recent article in the Miami Herald, even this transition can be difficult. I did some consulting after we sold out business, and although the work was interesting, my inability to actually make decisions became very frustrating to me.
Exit planning and life planning are critically important considerations that many entrepreneurs ignore. They are just too busy managing their businesses to pay attention to managing their own lives. This article published by Wells Fargo offers some excellent advice about planning a successful exit.
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September 16, 2003 |
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An often overlooked place for new business opportunities is within mature industries.
Banking is a great example of this. Many communities have seen bank after bank merge into fewer and fewer large bank holding companies. But these banks do not address the specific needs of local communities or demographic groups. For example, a group of bankers are creating a new bank in the Middle Tennessee area to address the unmet banking needs of Hispanic and African American communities in the region. It will create small banks that are built around the specific needs of those communities, making use of state of the art banking technology.
The music industry is ripe for such innovation and opportunity. It is now dominated by large companies, and yet is faced by a sea of change caused by technological revolution, legal fights, and demographic shifts. All of this creates market space for entrepreneurs to enter this industry with innovations that embrace all of this change. Even though it seems like another dying industry, it is really an industry that is ready for rebirth, like a forest after a large fire.
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September 10, 2003 |
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There is a profile of the "Future 50" in today's Tennessean that captures what the term entrepreneurship really means. Too often today entrepreneurship has become a word that is used to describe a lack of planning or impulsive decision making by managers, or worse is used as a term to protect one's own nest (as in, "leave me alone, I'm being entrepreneurial").
These 50 are the real entrepreneurs. They saw an opportunity, secured the resources, planned the business, and took the risk to launch their new ventures. Entrepreneurship, real entrepreneurship, is the engine of this economy now and into the future. The corporate era of the mid-twentieth century is over, and our future depends on educating, supporting and fostering today and tomorrow's entrepreneurs.
