The Entrepreneurial Mind

An article in the Economist examines the softening of demand for MBA degrees. It argues that MBA's curricula must be kept current and relevant. I can testify first hand the wheels of academia spin a little too slowly sometimes. The economy has been in a fundamental transformation that has take many twists and turns over the past 10-15 years, but what is clear is that this is now an entrepreneurial economy in terms of expansion and growth. Most MBA programs are just starting to reflect these changes.

What we have done for years here at Belmont is to require a course on Entrepreneurship in our MBA core courses. We don't teach them how to be entrepreneurs--that is for another course. Instead, we teach them about entrepreneurship so they can better understand the driver of the current economic expansion. They will buy from entrepreneurs, sell to entrepreneurs, compete with entrepreneurs, and many will work for entrepreneurial companies, so they need to understand that these companies are different than the corporate giants that most typical graduate classes tend to focus on. Happily, I have found that many of my colleagues here do talk about entrepreneurial businesses in many of the classes they teach to MBA's. Graduate programs need to focus even more on this perspective if they want to remain relevant.

Rob over at BusinessPundit gives an interesting reflection on his experience at the University of Kentucky. That is where I got my MBA, but my degree is about a quarter century old now...I sure hope things have changed in the UK MBA program since then!

Posted by Jeff Cornwall at 12:29 PM | Permalink

First Quarter growth was even stronger than first reported.

Here are some of the highlights:

* "First quarter GDP growth was revised up to a 4.4 percent annualized rate, from the earlier reported 4.2 percent rate. Investment, exports, and state and local spending turned out higher than initially estimated.

* "Growth was broad based across industrial sectors in the first quarter of this year, though there was slight weakness in business structures, state and local spending, and durables.

* "Corporate profits continued to show gains. Profits with inventory valuation adjustments and adjustments to account for depreciation were up 31.6 percent over the year.

The full report can be found here.

Posted by Jeff Cornwall at 10:50 PM | Permalink

John Wamsley passionately believes in two things: the need to preserve native species in his homeland of Australia and the power of free enterprise. I stumbled across his story one day while I was reading a National Geographic story about him and the company he founded called Earth Sanctuaries, LTD.

Wamsley did not believe that government and charitable conservation was working. So he raised money in a public offering to create a company that would make a profit in the process of securing areas that would be free of non-native species, such as feral cats, rabbits, and so forth. He also created various means of revenue generation to create his business, including a ecotourism, lodging, a snack bar, selling non-threatened plants and animals, and so forth.

The start-up was tough, as many are, and Wamsley got some real life lessons about the power of markets to make or break your dreams as seen in the 2002 interview from abc.net:

?The Government conservation doesn't work, and charitable conservation doesn't work, and in fact, I still believe that it is the only hope our wildlife has, the only hope our environment has, is to commercialise it but there's a long way to go and Earth Sanctuaries is the first experiment of this type and it hasn't failed yet.

?I mean, I don't give up that easy.

?But it's hard and it's going to be harder before we get there.?

By 2003 it became clear that changes had to be made if Earth Sanctuaries was to survive. Wamsley was a better conservationist than business person, so he hired professional management. The company is projected to breakeven in 2004, while still expanding its conservations efforts by buying more land to set up protected preserves.

The examples of non-profits trying to pretend to be entrepreneurs is everywhere, but this is one of the only examples I have even seen of a man with a vision that is usually assumed to be the domain of the subsidized non-profits trying to make it in the market of free enterprise.

I found examples on the web of media writers being critical of his efforts, ready to count him out at every stumble. But entrepreneurs do, and always will stumble. But, Wamsley already has succeeded. He has created many new areas that will conserve Australian species, created many new jobs, and shown that capitalism can be an effective mechanism to achieve conservation. In spite of his many early setbacks, he has been an effective entrepreneur and may yet also succeed in terms of his financial goals.

Posted by Jeff Cornwall at 01:28 PM | Permalink

The National Dialogue on Entrepreneurship has a report on a new bank program that could be a model for many communities:

"Traditionally, banks have been somewhat stingy about backing start-ups. But, a new program from Kalamazoo, Michigan may begin to change this perception. Southwest Michigan First, an economic development organization based in Kalamazoo has organized the Kalamazoo Bank Consortium for Innovation. Eleven banks have joined the Consortium, and they have all agreed to work more cooperatively with local start-ups, especially those focused on the life sciences. The banks will work with these firms to provide financing, to review business plans and marketing strategies, and to link new start-ups with business leads and other partnering opportunities. While this effort is quite new, it may offer a model for other communities seeking to expand financing options for entrepreneurial businesses."

The web site for this program can be found here. This program is a very targeted initiative for the life sciences, but it could be applied to other settings and local economic environments.

Posted by Jeff Cornwall at 02:18 PM | Permalink

National Dialogue on Entrepreneurship also has an update on state initiatives to reform regulations to make them more small business friendly:

"Last week, South Carolina Governor Mark Sanford signed into a law a new proposal, the Small Business Regulatory Relief Act that will require state agencies to assess the impact of any proposed new rules and regulations on the state?s small business. The law is good news for South Carolina?s entrepreneurs, and it?s also part of a wider national movement to increase small business input in regulatory decision-making. Beginning in 2002, the Small Business Administration?s (SBA) Office of Advocacy developed model draft legislation to enhance regulatory flexibility. This draft plan was ultimately endorsed by the American Legislative Exchange Council (www.alec.org) and promoted as a means to give small businesses a voice in the regulatory process. While South Carolina is the latest convert, similar proposals (as both laws and executive orders) have been enacted in South Dakota, Wisconsin, North Dakota, Nevada, Oklahoma, Michigan, New York, Connecticut, and Arizona."

Posted by Jeff Cornwall at 02:07 PM | Permalink

I'm back from Boston and the Carnival of the Capitalists is up and running for the week. It is at start-up skills.com this week.

Posted by Jeff Cornwall at 02:01 PM | Permalink

The NFIB has released a very bullish report on small business trends for May 2004. The employment outlook, capital expenditures, and general optimism about the near future are all continuing to increase with small business owners. This is more support for the robustness of this entrepreneurially driven economic expansion.

Posted by Jeff Cornwall at 07:18 PM | Permalink

A question I often ask entrepreneurs about ideas they present to me is, "But, does it have legs?" It is too much risk and pain to start up a business that will only last a short period of time. I also believe that there are some serious ethical issues with get rich quick business ideas. Many of those who help you get rich don't get much benefit out of the deal, such as employees, the local community, and sometimes even investors. This article from Entrepreneur.com examines what makes something a trend versus simply a fad. If you are going to go through all the trouble of starting a business, pick something that can be around for a while making you and those who support your efforts some decent returns.

Posted by Jeff Cornwall at 07:11 PM | Permalink

The SBA recently launched a web site that is aimed toward educating teens about entrepreneurship and free enterprise. It serves as a gateway to many good sites that educate young people about managing money and starting up businesses.

Posted by Jeff Cornwall at 07:01 PM | Permalink

Deciding on a name for a new venture can be more difficult than one might think. Here is an article that discusses this challenge in today's world of branding.

Posted by Jeff Cornwall at 09:17 PM | Permalink

A report on State and Regional employment data for April has just been released.

Some of the highlights:

Highlights:

* "Over the past year, the unemployment rate has fallen in 47 states.

"The latest state-by-state data are consistent with recent job growth nationwide. In the past 8 months, over 1.1 million new payroll jobs have been created. Over 800,000 new jobs have been created in 2004 alone. If the current pace of job growth for 2004 continues, over 2.6 million jobs will be created this year. In addition, the current unemployment rate is 5.6 percent, well below its recent peak of 6.3 percent and below the average unemployment rates of the 1970?s, 1980?s, and 1990?s."

Posted by Jeff Cornwall at 03:35 PM | Permalink

While it is rarely in the headlines today, health care costs are still a major concern. And if inflation heats up, hold on to your hats, as health care costs may really explode. The republicans seem to offer a fairly reasoned approach to deal with this issue. A democratic proposal would use tax policy to encourage small businesses to insure their workers. Presidents Ford and Carter are part of an effort to rally the uninsured to raise the issue without offering any specific solutions (read between the lines--then it must be our government's responsibility).

However, even the best of these proposals are still just incremental, short-term fixes. More fundamental change will be required sometime in the not so distant future. I fear that our drift toward more government involvement in every aspect of our lives will lead to a "governmental solution" to the storm brewing on our horizon that is unbridled health care costs.

Much of the problem as it exists has its roots in well-intentioned government policy, such as the deductibility of employee health insurance costs. When government gets involved, markets lose their power. Most of these policies have resulted in a reduction in competition and more regulation. What is most worrisome is the recent experience with education reform. Even the Republicans chose the path of more federal government involvement and regulation with the education crisis. I fear the same future faces us with health care. As one commentator recently put it, the Democrats want to sprint to socialism, while the Republicans are taking us there on a more leisurely stroll.

Posted by Jeff Cornwall at 01:11 PM | Permalink

More and more students across the country are starting businesses while attending college. Many of these are much more than simple side businesses. This article illustrates how wide spread this phenomenon is becoming. We recognized nineteen such students here at Belmont this past spring.

Posted by Jeff Cornwall at 12:58 PM | Permalink | Comments (1)

I will be hitting the road for a few days, but before I go I thought I'd clean out my "TO BE BLOGGED" file.....

I often tell entrepreneurs to go for the low hanging fruit. Or, if that metaphor doesn't work for them, hit for average and not home runs. Or even, keep it simple, stupid! Start-up Skills has a great post on why it is so hard to come up with something really new.

Rob over at Business Pundit (one of my all time favorite sites) answers two questions that I am sure are ringing in the halls over across the street at Vanderbilt (sorry, I just could not resist):

What is Zenpreneurship, anyway?

and,

Aren't all corporations just psychopaths?

By the way...my comments are indeed turned off due to a really bad spam attack by some folks that obviously don't know that I work at a religious school. Looks like Loic's Blog got hit, too.

This site is worth visiting if just for the name....Duct Tape Marketing. Some great bootstrapping ideas.

Small Business Trends has a thought provoking piece on finger print technology use in small restaurants. Call me paranoid, but this one kind of gave me the creeps.

Maybe this is something you never really wanted to know, but VentureBlog answers the question: What do venture capitalists do all day?

Visit Carnival of the Capitalists here. NOTE: Where "here" is changes Monday to a new "here".

If that isn't enough to keep you busy until I get back, go root around in some of my archives!

Posted by Jeff Cornwall at 11:14 PM | Permalink

Even though there is an increasing interest in entrepreneurship in Australia, entrepreneurial activity still seems to be a bit sluggish. A report called Innovating Australia from the Committee for Economic Development in Australia (CEDA) was highlighted this week by the National Dialogue for Entrepreneurship that makes some recommendations on how to fix this perplexing problem.

"(T)he overall economy remains highly dependent on resource-based commodities, and performs poorly in key measures of innovation (R&D spending, patenting activity, etc.). So, what to do? CEDA recommends that government agencies support more aggressive public and private investment in leading sectors like biotechnology, nanotechnology, and IT. Creating a true Australian innovation system will complement the many competitive advantages that already exist for the nation?s economy. "

I hope that rather than take this central planning approach, Australians look to the most probable causes: too much government regulation and an overly socialistic political system. Both of these are major impediments to creating an entrepreneurial economy. To their credit, the Aussie's have an outstanding record for educating entrepreneurs, so they do have that much already in place. The strength of organizations such as SEAANZ are helping in their educational efforts.

Posted by Jeff Cornwall at 08:15 PM | Permalink

The Inc.com blog site has a great post on tips for start-up financing. Check it out here.

Posted by Jeff Cornwall at 02:36 PM | Permalink

Educating entrepreneurs is one of the two most important tools we have to support our entrepreneurial economy (getting government out of the way is the other). Several examples have come across my desk and to me through the web over the past couple of weeks, and it got me thinking about what a rich array of programs that are already in place.

There are now hundreds of college-based programs for start-up entrepreneurs as seen in the ranking article at Entrepreneur.com. Twenty years ago there was only a handful. These programs work with every type of business venture from small start-ups to high-tech, high growth ventures. Universities have developed co-curricular programs to provide experience in the world of venture capital, such as the Venture Capital Investment Competition at the University of North Carolina.

There is also an explosion of community-based programs. One of the best know is the FastTrac program supported by the Kauffman Foundation. But there are also countless programs popping up like mushrooms after the rain all over the country. Many of these are supporting a critically important population of entrepreneurs: immigrants. For example, just here in Nashville there are two wonderful examples in Conexi󮠁m鲩cas (supports Hispanic entrepreneurs with at least two programs) and our local office of World Relief (programs to support refugee entrepreneurs). Others educate high school students about entrepreneurship and free enterprise, senior citizens, women, minorities, etc., etc., etc.

When I advocate for supporting entrepreneurship education, it is this full array of programs that I have in mind. No one program or focus will suffice. It must be broad based, targeting all types of entrepreneurs with all levels of aspirations. Education has proven to improve the success rates of these entrepreneurs dramatically. We must continue to prepare our future business leaders for the new economic times we are transitioning into: the entrepreneurial economic era.

Posted by Jeff Cornwall at 02:22 PM | Permalink

The Joint Economic Committee shows more growth in April in this report just issued.

Highlights from this report:

* GDP grew at a 4.2% annual pace in the 1st quarter. Private forecasters see growth of 4.6% in 2004, the highest in 20 years.

* The Federal Reserve kept its short-term interest rate at 1%, a 45-year low, but hinted that rates will soon gradually rise.

Posted by Jeff Cornwall at 07:17 PM | Permalink

Barry Moltz describes partnerships as "marriage without the sex." Partnerships in business can be one of the most difficult issues that entrepreneurs have to face, and yet very little is written about them, we usually just knowingly roll our eyes when we teach about them, and most entrepreneurs only worry about them when they have already become a complete disaster. I think that who is in or out of partnerships should have as much consideration in a business deals as what markets to enter into. Partnerships gone bad are a major source of business failure. They suck energy and time from doing business. They lead to the break-up of perfectly good businesses.

Rule One. Examine business partnerships (I am using the term loosely here as these can be common shareholders in any closely held business such as an S-Corp or LLC) like you would a marriage. I hesitate to use this analogy in today?s world of quicky marriages and quicky divorces. I mean a marriage that you really want to last a LONG time! Think it through very carefully. Talk with the potential partners about everything related and even unrelated to the business. Know their hopes and dreams, endearing characteristics and annoying habits, ethics and values, etc., etc., etc. You will spend more time with these folks that anyone else in your life and it will be a relationship that the law will make even more complicated to get out of than a marriage. So get it right in the first place! Entering into a business partnership on impulse or too casually is about as smart as entering into a marriage the same way. And it has about the same chances of success. No matter what, work with your attorney to create a shareholder agreement before you officially incorporate. Just as marriages can fall apart on the honeymoon, business partnerships can fall apart before the first sale is ever made.

Rule Two. If you are already in a partnership and it has problems, try to work it out openly and honestly. Do so with as little venom as possible. This requires that you remember three words: communication, communication, communication. And once you?ve got those three right, the next three words to remember are compromise, compromise, compromise. This is not a battle of the wills; it is your business and personal futures on the line. Check all egos at the door when dealing with troubled partnerships.

Rule Three. If the partnership is beyond hope of repair, get out as quickly as possible. The longer it takes, the more expensive it gets. And no matter what, it will be expensive. Shareholder agreements and essential and can create a potential path out of the morass, but it will still be a painful and expensive process. Count on that. As this article from Inc.com underscores, this is a tricky process even with a shareholder agreement.

Posted by Jeff Cornwall at 01:31 PM | Permalink

Carnival of the Capitalists can be found at Clay Whittaker this week.

My favorites this week include Syergy Fest's look at EBITDA (OK, so I'm really a numbers nerd at heart) and Goobage's very provocative proposal of how to make our health care system capitalistic again (health care is my old stomping grounds from my entrepreneurial days, but his idea never came up in any of my industry meetings!!).

There are lots of other great posts again this week. Check it out!

Posted by Jeff Cornwall at 12:05 PM | Permalink

The Bureau of Labor Statistics released its data on the April employment this morning.

Highlights:

* Over 1.1 million payroll jobs have been created in the past 8 months.
* Manufacturing employment has increased for 3 consecutive months, adding 37,000 jobs over that period and reversing a trend of nearly 4 years of declines.
* Payroll employment was revised up by 29,000 jobs for March, reflecting an even stronger labor market than was earlier estimated.
* 867,000 jobs have been created this year alone.
* Initial jobless claims declined by 25,000 this week. Following more than a year of declines, weekly initial jobless claims are now at their lowest level since October 2000.

This link shows job creation, which has shown a net increase in jobs every month since last September.

This chart shows jobs are even stronger than many reports, as the household survey (which includes self-employed and start-up entrepreneurs) is also included. What is interesting in this chart is that both measures of employment are looking strong. Entrepreneurship is leading this economy, and it is now bringing more traditional jobs along with it.

Posted by Jeff Cornwall at 03:11 PM | Permalink

A news release
posted at the NFIB web site reports that an important expansion of the Regulatory Flexibility Act is being considered. We last talked about this important legislative reform at the end of last year at this site. The expansion being considered would now cover IRS paperwork and recordkeeping requirements.

From this news release:

"'America's small employers face a heavy regulatory burden which harms their bottom line and makes it much more difficult for them to compete in the world marketplace,' (Committee Chairman Don) Manzullo (the bill's author) said. 'This legislation simply requires federal agencies to take a closer look at proposed regulations to make sure they are not burdening small employers.'

"Thomas Sullivan, chief counsel for the Small Business Administration Office of Advocacy, testified yesterday on behalf of Manzullo's bill.

"'HR 2345 will improve the Regulatory Flexibility Act to allow for a more thorough analysis, foster the consideration of alternatives that will reduce the regulatory burden on small entities, and improve the transparency in the rulemaking process,' he said."

This is part of the general push to get government out of the way of entrepreneurs, who have historically been burdened by unrealistic application of regulations intended for large corporations. This movement at the federal level combined with the introduction of the National Governors Association agenda on entrepreneurship discussed earlier on this site and the international agenda supported by the Kauffman Foundation (see earlier post on this report here) is good news, as such reform combined with educating entrepreneurs are the most effective tools we have available to support our entrepreneurial economy.

Posted by Jeff Cornwall at 01:10 PM | Permalink

Allow me to toot our own horn for just a moment. I am very proud to announce that Belmont University's Entrepreneurship Program made Entrepreneur Magazine's Top 10 listing for universities with an entrepreneurship emphasis (a category for smaller programs and universities like ours). This is quite an accomplishment for a first year program like ours!!

Check out the entire set of rankings here.

GO BRUINS!!!!!!!!!!!!!

Posted by Jeff Cornwall at 02:38 PM | Permalink

People make the process of business valuation just too complex. It is really much simpler than most realize. The best way to think about the value of your business is to understand how a buyer will look at it. Simple idea, right? But in the days when we were looking at buying other people's businesses I never ceased to be amazed by how convoluted some entrepreneur's thinking was about the value of the business. One woman insisted to me that her business was worth $800,000 because that was how much more she needed to retire in the life style she had planned for herself. When I carefully explained to her that her business was only worth about $100,000 based on her cash flow. She became enraged, and said, "But I deserve that money!! I worked too hard to get anything less!!!"

Rodent Regatta offers a very clear picture of how a buyer thinks about valuation. Just as it is critical to "think like your customer" to be successful in growing a business and to think like an investor or banker when seeking funding, an entrepreneur must learn to think like a buyer when the time comes to exit the business through a sale. Unrealistic expectations lead to a dead end, not a successful exit.

Posted by Jeff Cornwall at 03:00 PM | Permalink | Comments (4)

An Entrepreneur's Life offers up a great lesson in marketing fundamentals that all entrepreneurs, whether a rookie or a veteran, should reflect upon. It is from a story he tells about Michael Dell's first business experience as a paper boy. Out of the mouths of babes......

Posted by Jeff Cornwall at 02:41 PM | Permalink

There continues to be quite a bit of good economic news. There is a report out today indicating that manufacturing activity has rebounded considerably, angel investment returns are improving, and small business optimism is getting stronger by the month. All of these are good signs that the recovery, and in particular the entrepreneurial supported part of this recovery, and moving ahead.

Posted by Jeff Cornwall at 05:58 PM | Permalink

Carnival of the Capitalists is full of good stuff again this week. Check it out at Brain Brew Radio. A couple of my personal favorites this week are at Small Business Trends where we see that the Internet is having a phoenix-like rebirth and Accidental Verbosity which examines how to really use e-mail as a business tool.

Posted by Jeff Cornwall at 01:54 PM | Permalink

Education is one of the most important public policy tools we have to foster the entrepreneurial economy. An article in today's Tennessean provides a great example of how education can support immigrant entrepreneurs succeed in private enterprise.

Posted by Jeff Cornwall at 01:59 PM | Permalink