The Entrepreneurial Mind

I am here in Tupelo, Mississippi today to speak as part of their celebration of Entrepreneurship Week. It is interesting that their economic news this week is being dominated by Toyota's announcement that they will be building a $1.3 billion factory to manufacture Highlanders here in Tupelo.

While I am happy for the workers down here who desperately need those jobs due to the many plant closings that have occurred in this part of the South, I hope that they also recognize that the best long-term economic growth plan will be one that focuses on entrepreneurial economic development. Such plant relocations do have a positive short-term effect, but their long-term impact has come under question in several recent studies.

Even though the announcement of the Toyota plant is surely overshadowing Entrepreneurship Week here in Tupelo, I hope that they continue to focus on entrepreneurial economic development.

Posted by Jeff Cornwall at 09:42 AM | Permalink

"Maybe it's time for you to get a Controller."

Entrepreneurs who experience significant growth in their business may eventually hear this advice. Financial management in a growing business can become strained, and eventually it can become time to upgrade your team. What exactly does a controller do in a business? And how much will one cost me?

The titles bookkeeper, controller and CFO can get tossed around rather loosely in small and growing ventures. But, these titles have specific meaning. And which type your business really needs can vary from situation to situation.

A bookkeeper performs basic financial record keeping and can create simple financial reports. A bookkeeper does the following basic tasks:

- Keeps accurate records of financial transactions and can create basic financial statements (Income Statement and Balance Sheet) using accounting software.

- Performs basic A/P management -- makes sure bills get paid and records these entries into the accounting system.

- Performs basic A/R management -- if the business has to send invoices to customers to get paid, sends out invoices usually once a month.

Moving up to a controller adds more power to your financial management. In fact, a good controller can often pay for herself in a growing company that needs more advanced systems by helping to keep costs under control and by helping to better manage cash flow. A controller does the following tasks:

- A controller will either perform all of the functions of a bookkeeper, or supervise the staff that does.

- They can create customized daily, weekly and monthly financial reports to meet the specific needs of your business.

- They have the knowledge to choose and maintain financial software.

- They can take over the basic cash flow management of the business. Major cash flow decisions will still be up to the entrepreneur, however.

Some businesses eventually need a Chief Financial Officer. But many very large organizations don't have one, so don't assume that your business will. We never had one in our business even though we got quite large and complex. A CFO does the following tasks:

- Performs all functions of a Controller.

- Is able to structure and negotiate complex financing, including debt and equity.

- Can create complex financial projections to aid in strategic decision making, and is an active player in the strategic management of the business.

- Manages banker and other financial relationships for the business.

A senior bookkeeper can cost between $30 - $50,000, depending on the local market and their work experience. A controller can cost at least twice that. And an experienced CFO can cost twice as much as a controller. Again, salaries can vary widely between various cities, and experience levels will also be a major contributor. So talk to other entrepreneurs in your area who have larger businesses than yours to get an idea of the local market salaries for these positions.

Use your CPA firm and your network of fellow entrepreneurs to find a pool of applicants. Placing a general ad should be your last resort, as it will be difficult for you to differentiate between the actual skills and competencies of the candidates.

Posted by Jeff Cornwall at 07:05 AM | Permalink | Comments (1)

The Carnival of the Capitalists has launched its "new 2.0" version of its weekly offerings of posts about all things to do with free enterprise. It is now much more selective in its links. Should prove to be a good read each week with this new format.

Posted by Jeff Cornwall at 01:30 PM | Permalink

Entrepreneurship Week is here. I look at this week with mixed emotions.

While I am pleased at the attention it draws to entrepreneurs in our economy, it saddens me that we relegate entrepreneurs to merely one week. After all, entrepreneurship is now 50% of the economy.

Having only our own week puts entrepreneurship right there in the mix with National Fresh Squeezed Juice Week, National Pancake Week, National Cleaning Week, National Condom Week (I am not making these up...), National Fig Week, National Backyard Games Week, and National Chestnut Week.

Why not give us a whole month? That would at least put us up there with National Hot Tea Month, National Bird Feeding Month, National Umbrella Month, National Kite Month, National Sweet Vidalia Month, National Bikini Month, National Horseradish Month, and last but not least, National Pomegranate Month.

Any way....Happy Entrepreneurship Week!

Posted by Jeff Cornwall at 07:33 AM | Permalink | Comments (3)

Jim Pethokoukis poses an interesting question. What would you do if you were appointed U.S. innovation czar?

He has posted some fascinating answers from Kevin Kelly, founding executive editor of Wired magazine, Mark Cuban, owner of the NBA's Dallas Mavericks and founder of HDNet cable channel, and Guy Kawasaki, Apple Computer legend and founder and managing director of the VC firm Garage Technology Ventures. You can read their responses at his post.

Here is mine....

1. Implement a politically neutral tax system, such as the much touted Fair Tax.

2. Create blanket exemptions for privately owned (by individuals) businesses with fewer than 500 employees for all federal regulations. If exceptions would be made for this policy for a specific regulation on business, it would only be on a case-by-case basis. This would in effect reverse the current practice set up by the Regulatory Flexibility Act. Put the burden on regulators to justify including small privately owned businesses, one regulation at a time.

3. Propose a constitutional amendment to reverse the Kelo Decision.

4. Finally, I would abolish the office of the U.S. Innovation Czar once Steps 1, 2, and 3 are completed.

Posted by Jeff Cornwall at 01:44 PM | Permalink

Some issues span the political spectrum. This is one of them. Don't let duplicity between the federal government and a handful of large public corporations end the Internet as we know it. Click on the play button in the image below to play the video (it may take a few moments to fully load....be patient).

Thanks to Bruce Schierstedt for passing this along.

Posted by Jeff Cornwall at 01:38 PM | Permalink | Comments (1)

The Alternative Minimum Tax was established to catch those very few wealthy individuals who slip through the cracks of the tax code. As American incomes grow, more and more people are getting snared by this complex and convoluted tax. The AMT has become a major concern for entrepreneurs as many are unknowingly getting snared in its web.

Last month I wrote about a possible change in the wind for the Alternative Minimum Tax. A report from the Tax Foundation found that some Congressional districts are being hit by the AMT harder than others -- and interestingly many of those districts are represented by Democrats. As a result, House Ways and Means Chairman Charles Rangel (D) made reforming the AMT a top priority for this year.

Now it seems that Democrats may be looking to traded the AMT for higher taxes on the upper income brackets. But as James Pethokoukis at U.S. News & World Report argues, that is just not necessary:

Then again, how about just repealing the AMT and then, well, that's it? As budget analyst Chris Edwards of the libertarian Cato Institute notes, government tax revenues in the first four months of this fiscal year are coming in at almost twice the predicted rate. If that keeps up, the government will take in an extra $108 billion this year, more than enough to pay for a $40 billion to $50 billion fix for this year.

The economy is improving -- let's not through cold water on it with higher taxes. Many in Washington have a misguided mental image of high income people -- they are mostly corporate fat cats or rich kids who inherited their wealth. The truth is that more an more wealth is being generated on Main Street by successful entrepreneurs -- the same entrepreneurs who now generate 50% of the GDP and 78% of all new jobs. Let's not continue to punish them for their efforts and successes with hidden land mines like the AMT.

Posted by Jeff Cornwall at 07:36 AM | Permalink

So what do I think about on this the 275th anniversary of George Washington's birth? His heroics as a general? His leadership of our new nation? His wooden teeth? Nope. It is Washington's success as an entrepreneur. If you've ever taken the tour of Mount Vernon, you already know the rest of this story. But for the rest of you, read this article at Opinion Journal by John Fund titled Moonshine Patriot: George Washington, whiskey entrepreneur.

"He thought like an American businessman," says Jim Rees, the executive director of Washington's Mount Vernon estate. "He was a true disciple of the free enterprise system, and he sensed that our new system of government would encourage people to think creatively, take chances and invest."

Here is a picture of the archaeological dig site of the distillery at Mount Vernon:

If you want an historic account of George Washington's pursuit of free enterprise read this paper from the Mount Vernon archives.

(Thanks to John Russell for suggesting this post).

Posted by Jeff Cornwall at 05:36 AM | Permalink | Comments (1)

During the growth of a business, you as the entrepreneur must face some basic questions about how to successfully build a team while at the same time redefining your role in the business. It is a transition from a business led by an entrepreneur to a business led by a professional team.

The first step in this process is to understand the difference between operational and strategic leadership. Many entrepreneurs start their businesses because they like the hands-on part of their business. Engineers like to engineer. Furniture makers like to build stuff. However, at some point in the growth of the business the entrepreneur begins to move away from the hands-on part of what they company does. This can be a painful and frustrating period. Keep this in mind when you decide how far you want to grow the business. It is alright to keep it at a size that allows you to stay involved in the hands-on. But if you intend to grow, be ready to move away from the operational part of the business and become a strategic leader. Lead and manage using your vision for the business, and create a team that can fulfill that vision at the operational level.

Just what this strategic role looks like will vary from company to company, and from entrepreneur to entrepreneur. For many entrepreneurs, this may be their first time as a CEO of a company of any size. That title means very little in the early days, but as the company grows it takes on more meaning. Defining your role and your style as the CEO of your company takes planning and specific effort on your part. It may even feel a bit awkward at some point, but you have to establish what your role will be as the CEO.

Carefully review your strengths and weaknesses vis-a-vis the needs of the growing business. Use your management team to bridge the gaps that are created by the role you define for yourself. Assess the potential of current employees to fill those gaps. But be ready to bring in outsiders, as it is rare that all the talent you will need is already on your staff. Create a plan to develop current staff and recruit new talent with clear priorities for their roles and objectives. Set specific milestones, most likely tied to sales growth, for when you will need to be ready to hire new members for the team.

With each person we hire, our culture can change just a little bit. And over time, this can lead to a business that does not look like we had intended or envisioned. One area that you must keep control of as a strategic leader is your culture. Your values shaped the culture of your business as it began, but to maintain that culture you must actively manage it during growth. You do this through who you hire, what you reward, what you celebrate, the structure you create for the business, and your communications to employees. Be deliberate about the culture you intend to build in the business and think about how each action you take over time can effect this culture.

Be ready to delegate key roles to your team. Letting go is tough for most of us. We have been with our business all the way through its growth -- through the good and the bad times. But at some point, if we want our business to grow successfully, we have to begin to delegate. At first it will seem that no one can do what you do as well as you can. But just like raising a teenager, at some point you have to begin to let go so they can learn and grow up. Your business will go through this same difficult transition. If you don't begin to let go your business may never successfully move into its next stage of development.

Finally, as you grow your business and your team remember that ultimately it is still your business. I remember how at some point in the growth of our business it seemed that I was chasing everyone else's goals. Our banker, our CPA, our attorney, fellow entrepreneurs, and our management team all seemed to have their own vision for what we could become and ideas for where we could take the business. While it is good to listen to such advice, the most fundamental aspect of becoming a strategic leader is to be ready to establish a clear and compelling vision and set a course to take the business toward that ultimate goal.

(Thanks to Eric Tam from McMaster University in Canada for suggesting this topic).

Posted by Jeff Cornwall at 02:46 PM | Permalink

A common debate that keeps popping up around entrepreneurship is the question of whether education really matters. I know, I know....I have a slight vested interest in this whole debate. But, a new study written by Zoltan Acs (a leading researcher in the field) reports that populations with higher education levels have more start-ups and more successful start-ups. (See p. 28 of this study).

Posted by Jeff Cornwall at 10:17 AM | Permalink | Comments (4)

The author Johan Norberg has gave a keynote speech to the Cato Institute this past year that just was published in Cato's Letter. The title of his address was "Entrepreneurs are the Heroes of the World."

In his address, Norberg credits the progress we have seen in our world over the past 200 years to entrepreneurs and the market economies they operate within.

The amazing fact is that entrepreneurs and innovators and businesses have turned luxuries that not even kings could afford into low-priced everyday items at you local store. That is the best defense of capitalism.

He argues that globalization has opened up new markets and fueled emerging economies, allowing entrepreneurs to create jobs and true economic growth -- he speaks of the "magic" that is being created every day by entrepreneurs around the globe.

It is a great essay that is well worth reading.

(Thanks to Larry Hall for passing this along).

Posted by Jeff Cornwall at 08:29 AM | Permalink | Comments (1)

When Arthur Laffer spoke on campus last week he made an interesting point about tax cuts. Three Presidents made the most significant tax cuts over the past half century. Your guesses on who they were?

OK, Reagan was the easy guess. And I'm sure many of you also guessed Kennedy, as the Republicans have used that bit of history in many of their own tax cut arguments. But the third one? According to Laffer, President Clinton gets third prize as a tax cutter and free trade advocate. Granted, this all happened after the Republicans took over Congress. But, the truth is that neither party has owned the pro-growth agenda over the long term.

Even now the Democrats are battling over whether they want to emerge with a pro-growth or with a redistribution-of-wealth agenda. James Pethokoukis writes about this battle in a column last week on "Wall Street Democrats."

However, the key to economic growth lies not on Wall Street, but on Main Street. Entrepreneurs are fueling our growth -- not the public corporations that dominated the previous century. Neither party seems to understand the economic transition going on in America today.

Posted by Jeff Cornwall at 05:34 AM | Permalink

Two young entrepreneurs came into our classes this week and talked about growth challenges they are currently facing in their businesses. Both focused quite a bit on the human resource challenges that come with growth.

Matthew Wilson and his father own Gateway Construction in Brentwood, TN. Gateway is a commercial real estate development company. They have seen significant growth in their business since they recovered from the huge hit that commercial real estate took after 9/11.

As they continue to grow, Matthew is finding the need to step back from the day-to-day aspects of construction management. That is, like many entrepreneurs he can no longer spend time "working in his business", but needs to shift to"working on his business." At the same time, his father is beginning to step away from the business -- not retire, but clearly backing off from his role in the day-to-day operations of the business. So Matthew has to take on more of a strategic leadership role in Gateway, while hiring people who can handle managing the operational level.

"People say real estate is location, location, location. At this point in our business growth, I would say that the key has become people, people, people," Matthew told our class.

They have tried to keep their overhead low -- a lesson learned over the years from riding out the ups and downs in their industry. And while their current growth creates the need for more people, they are trying to develop strategies that will keep all of the people they are adding busy and productive even when real estate takes its next downturn.

They are firm believers that the key is not just finding the best people, but finding the right people for the right job.

Matthew also is thinking about the need to some day expand his team to include more expertise in IT and financial management. They are not large enough now to support this this type of an addition to the team,, but may well get there some day soon.

Nicholas Holland, is Founder and CEO of a web design business in Nashville called CentreSource. Nicholas has also faced human resource challenges in his growth.

CentreSource has a business model that is driven primarily by billable hours. One challenge from the very beginning has been to have staff who have the skills to meet the latest technology need in the market. Finding the right people for his business can sometimes be a daunting task.

Nicholas said that managing key staff for a business like his when it grows can be difficult if it results in a power/dependency relationship. He recommends that all entrepreneurs have the mindset that no employee is irreplaceable, especially if you plan properly.

A challenge they faced as they grew was the expense hit that each of his early hires created had on the income statement. Expenses never grew in a straight line, but in significant steps as each new programmer was added. This created a major cash flow challenge. He met this by being very conservative in cash management. He never hired until he had the money already coming in to pay for the new employee. Also, he always keeps 90 days of cash reserves to cushion any unexpected downturn. During growth keeping this reserve took careful planning. Both of these tactics restricted his growth to some degree, but they also helped him to grow at a pace that he could afford to pay for.

Posted by Jeff Cornwall at 05:26 AM | Permalink

Ben Cunningham sent along a post to a science blog called Gene Expression, which has a post on the genetic nature of the entrepreneurial spirit. It seems that a bit of a debate is raging about a genetic predisposition to being capitalistic.

In a recent paper written by economist Greg Clark, he made the following argument:

Before 1800 all societies, including England, were Malthusian. The average man or woman had 2 surviving children. Such societies were also Darwinian. Some reproductively successful groups produced more than 2 surviving children, increasing their share of the population, while other groups produced less, so that their share declined. But unusually in England, this selection for men was based on economic success from at least 1250, not success in violence as in some other pre-industrial societies. The richest male testators left twice as many children as the poorest. Consequently the modern population of the English is largely descended from the economic upper classes of the middle ages. At the same time, from 1150 to 1800 in England there are clear signs of changes in average economic preferences towards more "capitalist" attitudes. The highly capitalistic nature of English society by 1800 -- individualism, low time preference rates, long work hours, high levels of human capital -- may thus stem from the nature of the Darwinian struggle in a very stable agrarian society in the long run up to the Industrial Revolution. The triumph of capitalism in the modern world thus may lie as much in our genes as in ideology or rationality.

Some have argued that Clark's evidence does not support hie conclusions, including Tyler Cowen at this post found at Marginal Revolution.

I come down strongly on the side of nurture on this one. I believe that there are cultural norms that support entrepreneurial behavior and a capitalistic attitude, and there are even stronger links to family history of entrepreneurship. This all comes from environmental experiences. To say this is encoded in our genome is a leap of logic I just don't see any evidence to support.

Posted by Jeff Cornwall at 10:35 AM | Permalink | Comments (2)

Thinking of taking your small business global? The Global Small Business Blog has 50 links that might help.

Posted by Jeff Cornwall at 07:34 AM | Permalink | Comments (1)

Dr. Arthur Laffer gave a speech last evening here at Belmont to a capacity crowd of over 300 people. Most in the audience were not even born when Dr. Laffer convinced President Reagan to try a bold new approach to tax policy. But his speech on the historical philosophical battle between "Redistribution-ists" and "Growth-ists" received a standing ovation. It seems that Laffer is more of a rock star today than he was back in the 1980s when his ideas were first being implemented as policy.

Students were lining up to get autographs on napkins, on diagrams of the Laffer Curve in their Economics text books, and even on a few Viva Reagan tee shirts. It seems that the entrepreneurial generation is full of supply-siders!

Posted by Jeff Cornwall at 08:54 AM | Permalink | Comments (1)

We are delighted that economist Dr. Arthur Laffer will be on campus today at Belmont. For those of you in the area, he will be speaking at 5:30 pm today in the Maddox Grand Atrium of the Curb Event Center.

Dr. Laffer has been called "The Father of Supply-Side Economics" for his work on economics and taxation study. He was noted in Time Magazine's 1999 Cover Story "The Century's Greatest Minds" for inventing the Laffer Curve, which Time called "one of the advances that powered this extraordinary century." He is a recipient of numerous awards to include two Graham and Dodd Awards from the Financial Analyst Federation; The Distinguished Service Award by the National Association of Investment Clubs; the Adam Smith Award for his insights in to the Wealth of Nations; and the Daniel Webster Award for pubic speaking.

Dr. Laffer was a member of President Reagan's Economic Policy Advisory Board for both of Reagan's two terms (1981-1989). He was a member of the Executive Committee of the Reagan/Bush Finance Committee in 1984 and was a founding member of the Reagan Executive Advisory Committee for the presidential race of 1980. He was involved in Proposition 13, a California initiative to drastically cut property taxes in 1978.

I will be writing a post tomorrow morning summarizing Dr. Laffer's remarks.

Posted by Jeff Cornwall at 09:41 AM | Permalink

For a brief time the Kelo decision from the Supreme Court got us thinking and talking about the importance of property rights in America. Property rights, along with taxes, regulations and education, are the cornerstones for a robust entrepreneurial economy. For those of us who care about these issues, some of the political talk out of Washington has sent a chill down our spines. Here is a quote from presidential candidate Hillary Clinton about Exxon's recent announcement of record profits:

"I want to take those profits and put them into an alternative energy fund that will begin to fund alternative smart energy alternatives that will actually begin to move us toward the direction of independence."

The fact that anyone in government believes the government has the right to take any private property, be it land in the Kelo decision or stockholders equity as is the case with Sen. Clinton's remarks about Exxon, gets to the root of a debate this country desperately needs to have.

Who ultimately "owns" property? Is it our citizens, as our Constitution and other founding documents clearly stated? Or does the government ultimately "own" all property, with the right to take it back if they can find a better use?

We see where the majority on the Supreme Court came down on this in the Kelo case. If a local government finds a better use for your property, they can seize it -- and often at nothing near its true intrinsic value. We also see where at least one of the leading politicians comes down on this debate, as well. Even the profits our investment, our labor, and our success in the market are not safe.

But, as James Pethokoukis at US News asks (tongue planted firmly in his cheek), "Why stop there?"

Why not confiscate a portion of Google's fat annual profits--the company's 2006 earnings were some $3 billion on revenue of $10.6 billion--and use it for some relevant national goal? The search-engine company is, after all, profiting from technological infrastructure it didn't even build, an "information superhighway" (to use a quaint term) that came out of a government defense project. It's time to pay Uncle Sam back....

So there you go. A portion of Google's profits, as well as those perhaps from Amazon, Yahoo!, and eBay could be funneled into a government-managed fund to pay for laying down fatter pipe. Heck, it's too bad that some candidate missed an opportunity back in 2004 to advocate the confiscation of home builders' profits to help low-income renters buy their own McMansions.

Indeed....Where will this erosion of our fundamental right to own property end?

Posted by Jeff Cornwall at 08:48 AM | Permalink | Comments (4)

In a well known old fable a scorpion asks a frog to take him across a river. At first, the frog is afraid that he will be stung if he gives him a ride on his back. But, the scorpion assures him that he would not sting him since they both would die if he stung the frog as they crossed the river. So the frog agrees.

Half way across the river the scorpion stings the frog.

"You fool!" cried the frog, "Now we will both die! Why did you do that?"

The scorpion shrugged, smiled, and said, "I could not help myself. I am a scorpion. It is my nature."

Then they both sank into the river and died.

Two years ago (almost to the day) I wrote a post on the NFIB's decision not to push for true tax reform while there seemed to be some promise due to the election of 2004. Rather than fight what they saw as an uphill battle, they, along with other major small business advocacy groups, decided to go along with the President's commission and focus their efforts on a much less ambitious agenda of "simplification" and tax reductions. It was thought that such a move would win bipartisan support in Congress.

Now there is news from last week that the Democrats in Congress view small business owners, especially sole proprietorships, as their best target to help reduce the federal deficit. They are focused on the "tax gap," which is the difference between what is estimated should be paid in taxes and what is actually collected.

From the New York Times:

"The tax gap is the logical place to go," said Representative Rahm Emanuel, Democrat of Illinois and chairman of the House Democratic Caucus. "It's also the fair thing to do. When you have a number as high as $300 billion in unreported and uncollected income taxes, that puts a burden on everybody."....

The I.R.S. estimated that it lost $109 billion on unreported business income, almost all of that from sole proprietors, like painters, plumbers, dry cleaners, florists, limousine drivers and restaurant owners.

The problem is not with florists and painters -- it is with the system. But sadly, when we had an opening to fundamentally change the tax system in this country, we chose not to pursue bold action.

We shouldn't be surprised by Congress's call for the IRS to increase tax enforcement. After all -- it is their nature.

Posted by Jeff Cornwall at 07:59 AM | Permalink

James Pethokoukis of US News & World Report has a post at his blog about an idea for a new tax that is being talked about in DC. Sen. Joseph Lieberman is suggesting that we should consider a new tax to fund what could be a long-term war on terror.

As Mr. Pethokoukis writes in his post:

What lawmakers might want to consider instead is what if anything they can do to keep economic productivity high --or even boost it to greater heights. Robust worker output is why the U.S. economy has been as strong as it has been in recent years. According to new data out this morning from the Labor Department, worker productivity rose 2.2 percent in 2006, continuing a string of strong annual gains starting in 1998. Yet the increases in 2005 and 2006, though solid, were more than a point below the increases seen from 2000 through 2004. Getting productivity back to those levels is a goal both Republicans and Democrats can agree on.

Indeed! And much of this growth is coming from small businesses, which benefit most from lower taxes and a simple and fair tax system. Let's not complicate things with more specific taxes or additional targeted tax cuts. 60,000 pages of tax code and 600 active tax forms is already stifling our growth potential -- let's not add more complexity on to our existing mess.

Posted by Jeff Cornwall at 08:56 AM | Permalink | Comments (1)

I have had some requests for a copy of my speech at the Forbes Enterprise Awards this past Monday in New York. Here is the text of my remarks:

We are here today to honor a group of entrepreneurial small business owners for their individual successes. I am here to talk briefly about the economic revolution that they, and those who will be following them, are leading in the American economy. We are in the early stages of an entrepreneurially-based transformation of our economy the likes of which we have not seen in this country in over 100 years.

Thank you.

Posted by Jeff Cornwall at 06:24 AM | Permalink | Comments (1)

First we heard that DuPont, Duke Power, General Electric and seven other major corporations have joined a coalition of environmental groups to issue a report called "A Call to Action", which lays out a plan to address global warming.

"The time has come for constructive action that draws strength equally from business, government, and non-governmental stakeholders," said Jeff Immelt, Chairman and CEO of General Electric. "These recommendations should catalyze legislative action that encourages innovation and fosters economic growth while enhancing energy security and balance of trade, ensuring U.S. leadership on an issue of significance to our country and the world."

That's correct. Some of our biggest corporations have joined with environmental groups to work with the government as the third leg of this duplicitous triangle to fix the climate. Never mind that we haven't even figured out how to predict the weather -- this group believes they can change the climate.

And right behind this news we now hear yesterday that Walmart, Intel Corp., AT&T and Kelly Services have joined with Service Employees International Union to call for "quality, affordable" health care for every American by 2012. And of course they called for this action in Washington, DC, which means that government will be the third partner in the alliance, as well.

Why does a small business and entrepreneurship blogger care about what these big corporations are up to? Because both movements will end up dragging small business owners into the regulatory and tax messes that these alliances will inevitably create. Even though America's largest corporations have lost much of their economic power, they have not lost their ability to exercise their political power. These efforts are simply ways for these corporations to cut their losses and reduce their uncertainty. With climate issues and health insurance looming as unknowns, their stock prices suffer. With a plan -- no matter how poor the public policy and dire the long-term consequences for our country -- they will calm stock analysts by reducing these two sources of uncertainty and stabilize their stock prices.

What is good for Wall Street is no longer what it good for Main Street. The outcomes of these alliances will hurt the entrepreneurial portion of the economy. But unfortunately, the voices of small businesses are still weak in the political realm.

Posted by Jeff Cornwall at 05:39 AM | Permalink | Comments (1)

The Tennessean (our local Nashville paper) ran a story today about our Entrepreneurship program here at Belmont. They included a side-bar with some quotes from student entrepreneurs. I thought I'd share these quotes so you can see why I enjoy my job!

Why own your own business?

"I have nothing against working for someone else. I just find the idea of owning a business exciting as well as challenging. I would get to know and be involved in all the different elements on the business. I also think it would give me more freedom and allow me to be more creative in my career."
Sally Munns, manager of Reverb Media

"Having my own business is more fulfilling and meaningful to me. I want to be able to call the shots. Even though it's tedious, I want to be involved in every aspect of the business."
Emily Swinson, co-manager of Feedback Clothing Company

What's the biggest lesson this program has taught you about business?

"I would say that this program has taught me the importance of self-confidence. Entrepreneurs are salespeople, we not only sell our ideas and products, but we sell ourselves. If people do not believe me, they will not believe in my product."
Michelle Wilkerson, co-manager of Feedback Clothing Company

"Risk cannot always be eliminated, though it can be reduced and prevented. We pay close attention to where and how others have failed so that we don't follow their footsteps. We are dissecting case studies and looking at current events and trends. I'm working with cash flow in the classroom, and in practice for my business. My experience has allowed me to gain knowledge in the classroom, and feed that growth to my business, on a day-to-day basis. All of this while learning about the entire growth process, starting with exit planning. I recently heard an entrepreneur state that you cannot be largely successful in business life and in family life. What I've learned is that you can, if you plan for it."
Andy Tabar, sophomore, his business is Nashville Creative

Posted by Jeff Cornwall at 10:57 AM | Permalink | Comments (3)

From the National Dialogue on Entrepreneurship:

Two new polls from the American Bankruptcy Institute (ABI) may portend bad news for American consumers and small business owners. ABI regularly posts on-line polls that ask its members and others to offer their views on future trends in the field. Recent polls asked respondents to comment on trends in consumer bankruptcies and bankruptcies among middle-market companies (i.e. family-owned firms, private companies and smaller publicly-traded firms). Sixty-one percent of respondents expected consumer bankruptcies to grow by at least 20% in 2007. Meanwhile, 71% expected middle-market bankruptcies to "substantially increase" in 2007. Both of these predictions run contrary to 2006's pattern when bankruptcy filings in both categories were at extremely low levels. Industry observers expect an increase in bankruptcies will result from tighter credit and an expected "shake-out" in key sectors such as real estate.

There is a lesson for all in these studies. While high use of debt may sound like an easy way to grow a business in booming times, it makes a business vulnerable when markets soften -- and they always will at some point. When making decisions to take on more debt, think about where it will leave your business if things get tough. Run some scenarios in your spreadsheets on what happens if your sales fall with a higher debt load before you make the decision to borrow more money. You may decide to grow a little more slowly with a lot less debt.

Remember, pigs get fat and hogs get slaughtered! Don't get greedy....

Posted by Jeff Cornwall at 06:10 AM | Permalink

There are a variety of tools readily available on the Internet that aspiring entrepreneurs can use in developing new business ideas. Here are a couple of ideas:

Want to find some cool technology gathering dust on a shelf at a university somewhere? Try out the iBridge site developed by the Kauffman Foundation.

University researchers, industry representatives, and entrepreneurs can use the iBridge website to search for innovations that, until now, have been lost and untapped behind university walls. With more than 700 research projects listed, the iBridge website is fast becoming a place for researchers and technology transfer officers to post research from their universities, as well as the place to go to find research occurring at other institutions. The website is designed to ease the transaction burden on university technology transfer offices, and encourage more open and efficient access to innovations of interest to entrepreneurs and industry representatives alike.

Have an idea for an Internet business, but finding it hard to know what your potential customer is thinking about? Try using one of the tools set up to optimize keyword searches. I heard about this creative use of a free tool on this morning's Wall Street Journal radio show. These tools are set up to help in Internet marketing by showing what key words are being used most often. (Here and here are a couple of examples).

Assume I was setting up an Internet golf equipment store. By typing in keywords like "putter" or "golf balls", I can find out what brands are getting the most searches on the Internet. Or assume I am thinking about selling laptop cases on the Internet. I see that in the month of December 1724 searched for laptop cases with the word "pink" in their search, while only 77 included the word purple. That gives me a clue on what color to carry in my inventory.

These tools can help me see the potential size of the market, what brands and related products are most popular in searches, and even what colors and features I should carry. It is a great tool to first get a feel for how much Internet traffic is possible and to learn more specifically what these potential customers are thinking about.

These tools are set up for web search optimization, but they can also be used to get the pulse of the market. For simple searches like this, most of these sites are free to use. While active web marketers are very familiar with these tools, they can be very helpful for any entrepreneur wanting to get more data about their potential market. If I can figure out how to use them with my limited technical skills and general fear of technology, anyone can!

Posted by Jeff Cornwall at 05:35 AM | Permalink | Comments (4)

I have cited many statistics on the growing role of small businesses in our national economy here in the US. A newly released study from the Office of Advocacy of the U.S. Small Business Administration reports that this same entrepreneurial economic engine is evident at the state level.

The study finds that small firm establishment births are the most important factor propelling growth in gross state product, state personal income, and total state employment.

"This study confirms the importance of small startups for the economic well-being of every state," said Office of Advocacy Chief Economist, Dr. Chad Moutray. "Now more than ever, state policymakers should be aware of how
their decisions affect small business. Creating an environment that values entrepreneurship and risk-taking is sure to increase economic growth, personal income, and employment."

That means reduced regulation and lower taxes should also be on the agenda of state policy makers. Don't follow the path we see in so many states that are trying to "help" entrepreneurs with programs designed to manage the entrepreneurial economy. That may work when attracting corporate relocations, but entrepreneurs just need government to get out of the way.

The study used data covering the years 1988 to 2002 and examined a wide variety of factors influencing state economic growth. After controlling for many determinants of growth, the authors conclude that in order to
increase gross state product, state personal income, and total state employment, "the most fruitful policy option available to state governments is to establish and maintain a fertile environment for new establishment formations."

Posted by Jeff Cornwall at 07:36 AM | Permalink

I had the honor of giving an address in New York yesterday at the luncheon for the Forbes Enterprise Awards. Seeing the energy of hundreds of entrepreneurs and their families in one room is always invigorating for me. I shared my thoughts on the entrepreneurial economy and the role that the Entrepreneurial Generation will play in shaping its future for years to come.

Hats off to all of the winners!

Posted by Jeff Cornwall at 06:02 AM | Permalink

I found an article that reminded me of a lecture from an Economics course I took about 30 some odd years ago. (I often can't remember where I put my cell phone, but somehow remember what this professor taught us that day....). His point was that new competitors are not always a bad thing for a business. They can actually create more attention for all competitors fighting for market share and possibly even a bigger market for all to share.

Office of Advocacy of the U.S. Small Business Administration released a working paper that examines how the entrance of new establishments within a 150-mile radius of young firms affects the existing firms' profitability. The findings? New entrants in local economies at first harm, then help, already existing firms.

"The benefits from a growing and dynamic local economy are clear," said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. "For local business, in the short term new entrants are competitive foes, but in a few short years they learn to cooperate with each other."

An entrepreneurial economy seems to lift all boats as it grows. What is interesting is how as businesses get larger, they often look to governments for protection from market competition. This study suggests that when left alone, entrepreneurial market places work well when governments keep their hands off.

Posted by Jeff Cornwall at 09:13 AM | Permalink | Comments (1)

A countryman between two lawyers is like a fish between two cats.
(Benjamin Franklin)

Many small business owners will tell you that there are actually three things that are inevitable -- death, taxes........and lawsuits.

Kauffman's eVenturing explores the topic of litigation -- how to try and avoid it and how to deal with it when it happens. Stolen intellectual property, partnerships gone bad, and employees gone mad are all part of this important, albeit painful, collection of stories, how-to's and tools. And, yes, they even talk about when you should think about litigation....

Posted by Jeff Cornwall at 03:18 PM | Permalink

River Rock Media Group was founded by Cameron Powell, who is a senior Music Business and Entrepreneurship major with a minor in photography at Belmont University. River Rock Media Group is a Nashville-based company that engages video production and photography that combines professionalism with artistic creativity to service the Nashville music industry.

Cameron started doing video production and photography back in middle school. He got his early exposure as the camera operator for his middle school's news show and by producing a sports highlight video for his school's athletic teams.

Cameron soon discovered that he could actually make money in video work when he began taping weddings.

"You have to start somewhere, and if you are trying to do video or photography, then weddings are a very good way to build a reputation and get start-up money."

However, since he didn't own much equipment, Cameron demonstrated his bootstrapping skills.

"I remember using a home video camera -- a loner from a family friend, a camera from the school, and the editing bay at my middle school to tape his first wedding."

During high school, in addition to recordiong more weddings, he began to tape dance recitals. Unlike the majority of teenagers with a few dollars to burn, Cameron invested the money back into his fledgling business, purchasing his own equipment.

Cameron came to Belmont University in the fall of 2003, and continued doing video production. However, he had to build a new client base, which proved to be a formidable task.

"I had to learn how to deal with my customers differently. When I was at home, [in Kentucky] everybody knew me. Yet, when I got to Nashville, I had to learn a whole new ballgame."

He started slow by taping simple senior recitals for music majors and promos for different student organizations on campus. Cameron basically was "looking for anybody with a need for a video."

During his time at Belmont, Cameron has expanded his services to include professional photography for the Nashville music industry.

Cameron's big break came when he was contracted by Word Entertainment to produce some promotional material. Word, a Christian music label, gave him an avenue to the music world. After a couple successful projects with Word, Provident Label Group (another Christian music label) contracted for his services.

River Rock Media Group currently does not have any full-time employees. So far, Cameron has contracted work out to other professions when he has needed additional help on a project. One of his goals is to see his company continue to grow to point that he will add on full-time employees. He projects this will happen by 2008. He also holds an aspiration for River Rock Media Group to become a full High-Definition production company, which will allow him to meet the needs created by this emerging trend in the market.

River Rock Media Group is currently doing final editing and mastering on a documentary film that will be aired on PBS nationally.

(Thanks to Jordan Drake for his help on this entry).

Posted by Jeff Cornwall at 05:40 AM | Permalink | Comments (2)