The Entrepreneurial Mind

GDP is up again this quarter and jobless claims continue a downward trend in the first quarter of 2004. No wonder Kerry now wants to talk about the war.

Posted by Jeff Cornwall at 09:40 PM | Permalink

A great example of in importance of keeping focused and grounded during growth can be found in this article in the StartupJournal. During growth entrepreneurs face a multiple of decisions, each of which has the potential to make or break the business. Also, the entrepreneur must struggle to build a company that has the systems and infrastucture to support growth without at the same time eating up all of its scarce cash.

When facing growth, remember that ultimately there is only one type of growth that matters: profits. Never just chase sales for the sake of more sales. Only grow your sales if they also grow your profits. Profits will not "just happen" as you get bigger and sell more. They must be planned for and engineered into your business.

Posted by Jeff Cornwall at 12:25 PM | Permalink

Venture capitalists actually are making money again! This is another good sign of the entrepreneurial expansion fueling this economy. Read more in this article from Inc.com.

Posted by Jeff Cornwall at 12:58 PM | Permalink

Why is America so much more entrepreneurial than many other parts of the world? I would like to think it is our economic and political systems, but given the drastic change we've witnessed over the past fifty years that is not a big a factor as it once was. We continue to move toward a more socialistic system. What keeps us entrepreneurial is our culture. Sadly, the changes we have seen on our political and economic systems will, over time, influence this culture. What is interesting to me is to see how the Europeans, who the more socialistic leaning in this country seem to fawn over, are desperately trying to figure out how to create a more entrepreneurial culture. The 2004 European Commission Report titled "Helping to Create and Entrepreneurial Culture: A Guide on Good Practices in Promoting Entrepreneurial Skills and Attitudes through Education" is a good example of their attempt to foster more new enterprise. But the fact is that culture is so very hard to change. That is good for us, as it may buy us time in this country, but not so for the Europeans as they struggle to be the relevant economic super power they dreamed of becoming through their economic unification.

Thanks to the National Dialogue on Entrepreneurship for providing this link.

Posted by Jeff Cornwall at 02:20 PM | Permalink

This week Carnival of the Capitalists visits Venturpreneur, so check it out!

Posted by Jeff Cornwall at 04:52 PM | Permalink

I was rummaging through my virtual attic again this weekend and came across a fascinating study published by the National Commission on Entrepreneurship. The study, from August 2001, looks at the origins of the Fortune 200 companies in 1917 and 1997 to see how these leading companies were formed.

?Of the 1997 Fortune 200 companies, 197 of them were traced back to one or more entrepreneurial founders. Many of the 1997 Fortune 200 were also among the largest corporations in 1917.?

This is an amazing statistic. Although almost all of the Fortune 200 companies have entrepreneurial roots, many were already large companies sixty years earlier. That is why the current entrepreneurial economy needs to be encouraged and supported. Our economy has ridden a wave of entrepreneurial activity that has its roots in the late 1800?s! These companies are no longer creating new jobs for America. They are a noble bunch, but their time is passing.

So how do we recreate the era that spawned such an entrepreneurial revolution? First, we need to celebrate, not demonize free enterprise. We are brainwashing our children into thinking that business is bad. Our children are inundated with the message that business pollutes, oppresses the poor, and hoards scarce resources. While businesses do need to be accountable, the vast majority of economic activity is good.

Second, we need to help train and educate today?s entrepreneurs. Study after study is showing that this drastically improves a new venture?s chances for success.

Finally, get government out of the way. Ever increasing governmental intervention in the economy preserves the old, often in spite of markets that tell us these companies have seen there better days, and inhibits the new. ?It has become more difficult for an entrepreneur to lead a new company into the Fortune 200,? reports this study. While some still believe that the government can guide and direct economic development, only three companies, Fannie Mae, Freddie Mac, and Union Pacific trace their roots as being governmentally founded.

I know that I have said much of this before, but this is the only way that we can assure that out of the activity of our entrepreneurial economy today, the new pack of leading companies for our future can be allowed to develop.

We are in a period that has the potential to rival the entrepreneurial economic expansion of the pre-1900?s. Politicians need to remember that entrepreneurial economic activity is like a golf swing. The more you try to force it, the worse the result. Swing easy and freely and the ball will go forever.

Posted by Jeff Cornwall at 02:39 PM | Permalink

The Joint Economic Committee has released more employment data that supports the fact that our economy is indeed expanding:

Highlights:

* From February to March, total non-farm payroll employment increased in 37 states, decreased in 12 states, and remained unchanged in 1 state.

* Compared with February, manufacturing employment increased in 22 states, decreased in 17 states, and remained unchanged in 11 states.

* Since this point last year, unemployment rates have decreased in 44 states, increased in 5 states, and remained unchanged in 1 state.

You can see the complete report here.

Posted by Jeff Cornwall at 08:48 PM | Permalink

An important aspect of bootstrap marketing is to choose a media where you are not competing with too many other businesses for customers' attention. Small Business Trends offers some interesting thoughts on the current challenge small businesses face with Internet search engines. They offer several options that can make the use of the Internet work for your venture.

But remember, think like your customer. Not every business needs a web site (I must be getting old, as I remember giving the same advice about yellow pages advertising years ago). Know how your customer makes decisions about you versus your competition and choose a marketing media that makes sense for that behavior. The cost of a web presence can add up quickly, so make sure it is an investment that will bring you customers.

Posted by Jeff Cornwall at 03:04 PM | Permalink

Thanks to Dane Carlson for leading me to his blog Business Opportunities. His blog provides many great links to the creatively-challenged but doggedly determined would be entrepreneurs to explore as possible ideas for businesses to start. Dental equipment repairs, wine bars, and elder care are just a few of the opportunities he links you to at this site.

Of course, like with any idea, even already developed ones like these, you still need to go through a very thorough opportunity assessment and develop your own business plan for your specific market. Also, make sure it is something that really interests you and that you can be passionate about. There are too many ups and downs to pursue some idea just because it makes financial sense. Starting a business is more like a marriage than simply finding a roommate to share an apartment. It becomes part of every waking moment of your life (and often many of your sleepless ones as well), so make sure you find an idea that you can stay emotionally committed to over the long haul.

Posted by Jeff Cornwall at 02:51 PM | Permalink

Suzi Bonk offers five great tips for aspiring entrepreneurs over at barrymoltz.com.

1. Success is based on people. Find the right team and find the right customers are you are well on your way. I like the way Barry Moltz describes it in his book: network should be viewed as a noun, not a verb. Networking as a process is way over rated. The key is to build a solid network of people, particularly customers, who will support you as your business grows.

2. A business plan is a living entity. As I like to describe this idea, business planning is a process not an event.

3. Understand how money works. Accounting is the language of business. So you better get fluent if you want to live in this world.

4. Entrepreneurship should be understood as a vocation and a way of life. It is not for dabblers or the faint of heart.

5. Find a rainmaker. You need advocates outside your inner team that can sell you to the rest of the world.

Posted by Jeff Cornwall at 01:06 PM | Permalink

If you haven't done so already, make sure to check out a great blog site for small business called Small Business Trends. Anita Campbell and David Patterson offer more evidence of our emerging entrepreneurial economy. One great feature they offer is specific information about industry segments that are showing growth.

Posted by Jeff Cornwall at 11:56 AM | Permalink

Entrepreneurs are beginning to face a new structure for potential equity financing. The traditional roles of venture capitalists and angels are evolving, and entrepreneurs need to understand who is best to approach for their funding and what these potential investors now have as objectives for their investments.

The average size of a venture capital investment is now well over $12 million. VC?s have become even more selective than ever before, preferring deals that have a clear path to an IPO. They have also become more specialized by industry and geographic markets. They are looking for more later-stage investments with known and market-proven entrepreneurs.

An even more significant change is underway in the angel investor realm. Whereas angels used to be highly independent, some angels are now forming investment groups. This has basically created two distinct types of angel investors: "organized" and "informal". Even more interesting is the formation of associations of angel investment groups. ?Organized angels? are beginning to fill the investment role that venture capitalists performed in the economy just a few years ago. They are funding early-stage companies with higher risk, and often doing so in groups to spread out their risk. In groups, they are also able to fund much larger deals than typcially seen in the past.

?Informal angels? still exist and play a vital role in our entrepreneurial economy. They do smaller deals, and invest through social and business networks. There is still angel investment money available for the smaller deal, but many entrepreneurs err by assuming that they should look to these newer ?organized angels? for such investments.

Equity investors now exist in these three categories rather than the two that most of us have been familiar with in the past.

Posted by Jeff Cornwall at 02:46 PM | Permalink

Check out the latest Carnival of the Capitalists here!

Posted by Jeff Cornwall at 06:54 PM | Permalink

There is an explosion of programs for young people to expose them to entrepreneurship. Here is one example sent to me by RM Cornwall from Miami. Exposing young people to the option of self-employment and entrepreneurship is already helping to expand our current entrepreneurial economic boom. It also helps to counter the anti-capitalistic bias that so many of their teachers expose them to every day in our schools.

Posted by Jeff Cornwall at 12:47 PM | Permalink

HobbsOnline offered a link to U.S. Rep Linder's FairTax proposal in response to my post about the "tax industry" yesterday. Check it out!

Posted by Jeff Cornwall at 12:52 PM | Permalink

Taxing is a system that was intended, long, long ago, to be a fair means to collect funding for common goods. What the system has become in the world today is a means of amassing power and implementing social policy.

The tax system has become a huge industry. In the state of Tennessee there will be 943,679 tax returns prepared by professionals in 2004. Assuming each return costs the tax payer $100 (a figure that is very conservative), and that Tennessee is an average sized state (which is about the case), that results in a $5 billion industry just for the preparation of individual returns. Add to that the billions of dollars spent on corporate tax work and compliance, to say nothing about tax audits, and you have one very large, very powerful industry.

This is not a static market for these tax entrepreneurs. It is a growth industry, if there ever was one. Here are a few facts from the National Taxpayers Union:

1. "It now takes the average American 28 hours and 30 minutes to prepare the 1040 "long" form?an increase of 34% since 1995. The 1040A, or "short" form?takes nearly as long to prepare (11 hours, 32 minutes) as the long form did just nine years ago."

2. "Today's short form, at 48 lines, has double the number of lines on the 1945 version of the standard 1040 tax return."

3. "The increase in the tax law's complexity alone has added roughly 1 billion hours in annual paperwork burdens over the last 10 years -- part of the overall IRS-induced paperwork burden that is currently estimated at a staggering 6.7 billion hours per year."

4. "Today, taxpayers must wade through 131 pages of instructions for the standard 1040 form, which is more than triple the number in 1975 and over double the number in 1985, the year before taxes were ?simplified?."

5. "The growth rate of returns prepared by tax professionals reached a record 62.1%... Counting computer-prepared returns, that figure would rise to 88.4%."

The tax industry is quite duplicitous with the source of all of their business: the government. Whenever "tax reform" or "tax simplification" legislation is proposed, hold on to your wallets. Most of this legislation is written by the very professions, accountants and lawyers, who run the tax industry. Tax law is purposely vague. Audits, and the tax law they create through IRS court cases, creates billions of dollars more for this industry. We pay this industry to create new tax law by defending us when faced with audits that are the result of ambiguous tax code they helped to draft.

We scream bloody murder when the defense industry charges us $250 for a toilet seat. But, we rejoice when we pay at least that much to a tax preparer who gets us a few hundred dollars of our own money back from the government.

This is an industry that produces no goods that we consume, and no services that we can enjoy. I teach entrepreneurs that one of the best sources of opportunity is an inefficient market. If ever there was an inefficient market it is the flow of cash from citizens to government. And the tax industry entrepreneurs, which actually helped to create most of these inefficiencies in the first place, have taken full advantage of this market. And of the taxpayers.

Posted by Jeff Cornwall at 12:37 PM | Permalink

One of the criticisms we keep hearing about the current economic expansion is that it is ?jobless?. This report
from NFIB (you need to scroll down a bit in this link to see the article) shows that any jobless growth due to excess capacity is about over, and this economy is heating up. This includes new jobs in the most important sector for job formation in this entrepreneurial economy: small and medium enterprises.

Posted by Jeff Cornwall at 10:23 PM | Permalink

From time to time I have examined some of the common myths people have (including entrepreneurs themselves) about entrepreneurship. I ran across this report published in 2001 by the National Commission on Entrepreneurship in my archives that has an interesting discussion about common myths about entrepreneurship they found in their study.

This report identifies five common myths:

1. Entrepreneurs are bet-it-all risk takers. I have called this the entrepreneurs are gamblers myth. This has generally proven not to be true, particularly with successful entrepreneurs!

2. The High-Tech Invention Myth. This is also known as the home run myth. This is the notion that every entrepreneur is trying to invent or come up with the next great invention. Very few entrepreneurs, including those in the Inc. 500, have in mind that their business is some great breakthrough. Hit for average, not for home runs!

3. The Expert Myth. This states that there is an assumption that you have to be the expert in your field to make it as an entrepreneur. This is sort of a corollary to my discussion on the Experience Myth.

4. The Strategic Vision Myth. This discussion dispels the common myth that business planning is a calculated event. In a recent post I discussed the difference between business plans and business planning, which gets at the same idea.

5. The Venture Capital Myth. The fact is venture capital funds a tiny fraction of businesses in the country. True, some are really big winners, but their numbers and overall economic impact are really quite modest. And very few of the venture capital deals actually have the kind of IPO hit that so many entrepreneurs naively dream about.

Posted by Jeff Cornwall at 10:53 PM | Permalink

Barry Moltz (his book visited here on a recent blog book tour) talks about the struggles of ethical decision making for small businesses in this on-line article he published at his web site. Barry is always honest, and this piece gives a realistic picture of the struggles entrepreneurs face in their day-to-day work. Often without others to bounce situations off of or corporate codes of conduct to guide you, entrepreneurs must muddle along through what can be very difficult situations. The best I can suggest is to first have a clear set of standards. Write them down and think about how they apply in daily situations. Once that is developed (it should never be considered "done", but a work in progress), reflect on it often and use it to not only evaluate decisions you are currently facing, but decisions you have already made. Remember that each ethical situation you face shapes your character in some small but significant way. Virtue is a habit that is developed over many of such decisions and actions.

Posted by Jeff Cornwall at 01:06 PM | Permalink

Check out this week's edition of Carnival of the Capitalists!

Posted by Jeff Cornwall at 02:21 PM | Permalink

This article from AARP shows that even old dogs can learn new tricks. The number of entrepreneurs over 50 is significant and expanding. AARP is yet the latest group to highlight the lack of attention that is being paid to this portion of our economy (see prvious posts at this site and at HobbsOnline for more on this topic). This link will take you to the full report from the AARP and RAND.

Posted by Jeff Cornwall at 02:40 PM | Permalink

The students over at reverb tell the inside story of their opening night in this post. Congratulations!

The day had finally come. It was March 19, 2004. This was it, the Grand Opening day of Reverbmedia. After getting little sleep the night before, I woke up early to study for my Middle Ages class. I got very little worthwhile studying done though since I was thinking about what we needed to do to get ready for the opening that night. I made it through that class, and then I went down to the store to look things over. Then I went to Becky Gann?s office to talk about what else she could think of that we would need to get done. Next, I had to attend my microeconomics class. As soon as that class ended at 2, I had to finish a paper. I had forgotten that I was supposed to meet my mom at 2 instead of 3 to pick up the truck that I needed to move some equipment that night. After finishing my paper I went to call mom to see where she was at. I turned on my phone to see that she had left a voicemail saying that she was looking for me since 2. I finally met her around 3 to pick up the key to the truck. I said that I was sorry, but I had to get going to Staples to pick up a business card stand and some more color coded labels that we used to temporarily price the cds. I also had to pick up a couple of extension cords from Home Depot.

On my way back to campus, Geoff called me to say that he was ready to move the audio equipment for the opening concert that was co-sponsored by Belmont?s Undergraduate School of Business Student Advisory Board. The concert was going to feature the bands Stringblind and Tubb and Chubb?s Fat Funk Fiesta. The audio equipment completely filled the bed of the F150 plus a sound board was riding shotgun. We then unloaded the equipment at the store and Geoff and a couple of his friends set up the show including a stage, sound, and lights. Heather then helped me put a couple of cd racks together to hold the soundboard for Geoff and to have a place to put the pizzas that we ordered for the crowd.

By this time, it was already 5 o?clock and we had officially opened. The cash register refused to open automatically like it was supposed to. I had tried checking all the connections and restarting everything, but nothing would make it work. So that night we had to manually open it with the key. The next Monday, I was looking at it again and finally figured out the problem. A paper jam had stopped up the printer just enough to not interfere with printing receipts, but just enough that it would not send a signal to the cash drawer to open.

Joe Drake

To read all of the postings from the reverb gang use this link.

Posted by Jeff Cornwall at 02:09 PM | Permalink

You've got to check out this link to Bill Hobbs web site!! And just remember this old story about the young entrepreneur when you read it.....

"Everyone knew I was going to be an entrepreneur from the time I was a little boy," said the successful businessman while being interviewed by a newspaper reporter.

"How did they know?", asked the reporter.

"Well, one year back on the farm where I grew up, all I wanted for Christmas was a pony. When I didn't find one under the tree I disappeared into the back yard. When the family found me, I was digging in a big pile of manure. When they asked what I was doing I replied, 'I just know there is a pony in this pile of manure if I dig deep enough!'"

Posted by Jeff Cornwall at 01:53 PM | Permalink

The United Nations has finally noticed that entrepreneurial economic activity is sweeping the globe. UN?s Commission on the Private Sector and Development issued its report, Unleashing Entrepreneurship: Making Business Work for the Poor, in which the primary recommendation is, you guessed it, break down barriers created by governmental bureaucracy and get out of the way.

The report states that "the private sector can alleviate poverty by contributing to economic growth, job creation and poor people?s income?Small and medium enterprises can be engines of job creation.? The agenda put forth in this report is consistent with most of the others dealing with both domestic and international economic development.

In the public arena, the study advocates the reform of laws and regulations that inhibit entrepreneurial economic activity. Barriers are created by laws that are designed with large corporations in mind. These laws often place much higher costs per employee for smaller ventures. Also, they are often found to be unnecessary or at least easy to simplify to better address the situation of small and medium enterprises. Barriers are also created from attempts to protect entrepreneurs from their own actions. This report, like so many others, recommends that entrepreneurs be supported with education, but once that is provided, let markets work. If a business begins to fail due to poor execution, changing conditions, or whatever the cause, let it fail. No one is helped by government interference in this process.

Public policy should be directed toward the creation of a support system for entrepreneurs that includes financing, education and training, and basic services. Anything beyond this will hurt the entrepreneurial development in an economic system.

The report suggests that the private sector, and not the public sector, should take the lead in supporting the development of promising markets within an economy. The private sector can be an effective and efficient means of moving resources into promising market segments. Governmental attempts to plan economic development at this micro level rarely succeed, and never work as well as when the private sector is allowed to do what it does best: recognize and exploit opportunities in the market.

There is indeed hope when a body with the history of favoring much more socialistic economic planning, such as the United Nations, begins to recognize the power of free enterprise. It will be interesting to watch and see if this report is embraced by the United Nations and put into practice. My fear is that there are too many in power who stand to lose too much of their power through the implementation of such an agenda to let it be implemented as it has been proposed by this Commission.

Thanks to the National Dialogue for Entrepreneurship for highlighting this report.

Posted by Jeff Cornwall at 07:07 PM | Permalink

The expansion of entrepreneurship education is a national phenomenon. This story from the Associated Press spotlights a few of these programs, including ours here at Belmont University.

Posted by Jeff Cornwall at 04:49 PM | Permalink

Here is the students' account of the pre-opening activities over at reverb.

So finally we had almost everything in; now we just had to straighten it all out and make it presentable. We also had an entire computer system to figure out and yet more painting to do and the CDs from the supplier that we were waiting to come in so we could put them into the system. In addition, we had to plan the opening, which had been delayed earlier due to construction of the building; still, we had a lot of work to do and not much time to do it in.

We contacted the theatre department?s scene workshop about building a countertop and listening station. The deal turned out better than we thought. In exchange for promoting the theater?s performances in our store and purchasing materials, Paul (who oversaw the construction of scenery for all performances) agreed to build both pieces at no charge. Of course, this made the cost of the pieces quite a bit less than what we had budgeted for them. A fraction of the E-Club got together of the course three days to gather materials, haul them down to the store, prep them, and secure the pieces into a workable business instrument. Joe Drake and Dan Logan carried the pieces from the theatre and loaded them onto the truck, while I played supervisor and made sure their path was clear. A day or two later, after the racks had been put together in the store, Joe, Heather, Dan, finished sanding and prepping the countertop. Dr. Cornwall stopped by and helped sand the table. Geoff was putting up the wall mounts for the speakers that came with the equipment, while I finished some last minute trimming on paint and cleaned the racks and DVD bins. To celebrate our hard work we bought pizza and sodas and listened to our ?soundtrack? which consisted of Joe?s Pat Green and Chris Cagle records.

Jessica Phillips

To see the entire reverb "off the wall" story, click here.

Posted by Jeff Cornwall at 02:44 PM | Permalink

This week's Carnival of the Capitalists is up. Another fascinating romp through free enterprise! Check it out here!

Posted by Jeff Cornwall at 01:40 PM | Permalink

Well, its time for the entrepreneurs at reverb to move in to there new space.

Seeing that the painting was accomplished and that the countertop and listening station were well on their way to being completed, we decided to go ahead and bring the equipment into the store. Joe Drake, Geoff Browning, and I piled into Joe?s huge truck (complete with red trailer) and headed to Charlotte Ave. to retrieve it. Most of us could not get out of class until around 2 or 2:30, and I had to be at work at the Ryman Auditorium at 5, so we scheduled three hours to get the stuff piled in, hauled back to the store, and deposited in. We also hoped we could get this done in time because it looked like rain. We got there and planned how we would put the stuff in the trailer; first we piled in all the shelves and actual CD holders. Then we put in all the metal stands and put the security system and computer system into the back of the truck. Finally, we had everything loaded up and ready to go. As Joe started the truck, we realized that the lights on the trailer were not turning on. Yeah, that would be a problem.

Joe tried messing with the wiring on near the lights and then near the hitch. No lights. I went in to ask if the manager of the place had an odometer we could borrow, but they had none. So finally we decided that we would unhook the trailer, put it in the storage space, and go get an odometer. By this time it was beginning to get close to my call time for work, so I was starting to get nervous. I called work to tell my boss the situation and that I might be late, but no one answered so I left a voicemail. As we tried pushing the trailer into the storage space, we quickly realized that it would not be a feasible solution; there was a small hump where the road ended and the floor of the storage room began, and the weight of the trailer would not let us get over it. Joe tried to weigh down one side of the trailer and push while Geoff and I tried to steer it in. Each time the trailer would roll back before getting over the hump. I tried steering while both of them pushed the trailer; still no avail. As a last resort, we unloaded much of the metal bars and tried again, with Joe pushing, Geoff steering, and me weighing down one end of the trailer. We realized this didn?t quite work, either, when we heard a small crash.

The trailer had gone a bit too far to one side, and the left taillight hit the side of the storage, breaking the taillight cover. The trailer once again lurched backwards, and we rolled it to a stop. I couldn?t believe we broke the taillight of Joe?s truck! Luckily he was good natured about it and we all started laughing. Finally, with the five o?clock deadline looming dangerously close, I realized I probably wouldn?t make it to work on time, and that this was going to take much longer than expected.
We decided to load the stuff back into the trailer; Joe would take me back to Belmont so I could get to work and would get his flashlight (since it would be dark soon) and go buy a odometer. Geoff would stay behind and keep an eye on the trailer. I didn?t like this idea at first because it was definitely going to rain soon, and I didn?t want anyone getting sick from being in the rain, but Geoff said he?d be fine ?til Joe returned. After being dropped off, I got my work clothes and drove to work, and it started raining pretty steadily. I was thankful that there were such dedicated workers in E-Club?what troopers!! They ended up getting the equipment (wet but not soaked) into the store about seven or eight that night. I felt bad that Joe?s taillight had been smashed, and offered a couple of times to help pay for it, but he said not to worry about it.

Jessican Phillips

Posted by Jeff Cornwall at 12:06 PM | Permalink

There are many misconceptions about venture capitalists. Here is an interesting interview that sheds some interesting light on how at least on of these firms operates and makes decisions.

Posted by Jeff Cornwall at 12:03 PM | Permalink