The Entrepreneurial Mind

I keep telling you that venture funds have raised too much money.....From MediaWeek.com:

John Byrne, BusinessWeek's executive editor and the acting editor-in-chief for Businessweek.com, said that company is looking to create a "business YouTube" essentially an online video hub for wannabe moguls to post short pitch videos for a new ventures or companies.

The site is also exploring the launch of an online-video-based contest that would invite anyone with a idea for a new business to submit a plan on the site with the chance to land $500,000 in venture capital funding.

(Thanks to Natalie Wozniak up in Minne-so-cold for passing this along).

Posted by Jeff Cornwall at 02:00 PM | Permalink | Comments (2)

Many argue, and many whom I've heard argue this are women, that in the world of entrepreneurship we should not segment men and women. Entrepreneurs are entrepreneurs. A new study on venture funding suggests that this may not always be the case in high growth, high potential ventures.

Jeffrey Sohl addressed the recent NC Council for Entrepreneurial Development on angel investing trends about the results of a study he co-authored with and John Becker-Blease to be published in the July 2007 issue of the Journal of Business Venturing titled, "Do women-owned businesses have equal access to angel capital?"

From TechJournal South:

The results suggest that women seek angel financing at rates substantially lower than that of men, but have an equal probability of receiving investment. The authors also found that women are more likely to seek, and to a lesser extent receive, financing from women angels.

Why does this difference exist? The authors speculate, but there is no compelling evidence as to why these differences were observed. It may be inherent bias in the private equity markets, it may be social behaviors, or it may just be the nature of the choices women entrepreneurs make in terms of deals to pursue. Most likely, evidence for all of these explanations can be observed, depending on the specific situation. I have noticed that any angel investment or venture capital gathering I have been to tends to be made up mostly of male entrepreneurs and male investors. While this study confirms my observation it begs the more interesting question: Why?

(Thanks to Jim Stefansic for passing this along).

Posted by Jeff Cornwall at 01:40 PM | Permalink | Comments (2)

In this, the global age of small business, sometimes it is the little things that cause the biggest headaches. Start-up Journal looks at the challenges of that going global can have on one of the most basic aspects of commerce -- exchanging cash for goods or services.

Question: We are a small manufacturer and want to purchase some component parts overseas. The overseas entity doesn't want to ship without payment. Yet we don't want to pay before we are sure that the goods will come and they will be of the quality represented. What are our options?

Answer: You're asking one of the age-old questions of international trade: How do a buyer and seller handle payment so neither gets burned?

Banks generally offer several ways to reduce the financial risks of trade, but the payment procedure ultimately depends on how much trust the parties have developed, which company has more leverage and the types of goods ordered.

In other words, while banks can help (often for a sizable fee) there is still some relative degree of risk taken by both sides of the transaction. Understand the risks that you are taking while trying to bring down your costs. There is almost always a trade-off in these things. And when thinking about the savings from outsourcing, make sure to be clear on all of the costs, including bank fees for the transaction.

Posted by Jeff Cornwall at 05:37 AM | Permalink

I will be leading an on-line chat today on growth with Charles Hagood, co-founder of The Access Group and Healthcare Performance Partners. It is being hosted by the Tennessean, but is open to anyone across the country and around the globe! Charles, an alum of our MBA program, has a fascinating story and can provide some useful insight into managing a growing business.

To join in the chat, just go to the Tennessean's website. There will be a link in the left column of the front page. The chat will start today at 1:00 p.m. CDT. Please join in the discussion!!

Posted by Jeff Cornwall at 09:32 AM | Permalink

Here are a few books that have come across my desk over the past couple of months that may be of interest for your summer reading list:

Careers

Penelope Trunk, a columnist at the Boston Globe, has written an intriguing book for those of you still early in your careers called the Brazen Careerist. It captures the true nature of those who are what some call the Entrepreneurial Generation. If you are one of them, this book gives some interesting career strategies. If you are one of those wracking your brains on how to hire and retain young workers today, you really better read this one!

Stuart Skorman shares what he has learned through his career in Confessions of a Serial Entrepreneur.

Entrepreneur Stuart Skorman--the founder of Elephant Pharmacy, Hungryminds.com, Reel.com, and Empire Video--grew up in a retailing family in Ohio. He worked every kind of job, from cab driver to professional poker player to CEO. In this entertaining, personal account of his coming-of- age in the business world, Skorman gives an insider's view of what it takes to start a business from the ground up.

Marketing

John Bradley Jackson has put together an interesting little reference book on niche marketing titled First, Best, or Different. This book packs over one hundred short chapters into a two hundred page book. For those of you who are math challenged, that makes each chapter about two pages long. But, each chapter is targeted to offer concise and useful ideas on a variety of critical topics for any entrepreneur striving to create a niche market for their business.

Berenbaum and Larkin offer their thoughts on How to Talk to Customers.

Filled with case studies and anecdotes, How to Talk to Customers demystifies the most critical aspect of customer service: conversations employees have every day with customers.... Diane Berenbaum and Tom Larkin outline a proven system based on their MAGIC customer service training program. MAGIC, which stands for Make A Great Impression on the Customer, can help anyone become the type of communicator that makes their customers feel special.

Leadership and Innovation

Justin Menkes looks at leadership in Executive Intelligence. While not written specifically for entrepreneurs, this book offers insight into a skill that every executive should have -- whether they work for a Fortune 500 or are the owner of a small business.

Finally, if you want to transform and grow your business through innovation, Erich Joachimsthaler's Hidden in Plain Sight is a good read.

Posted by Jeff Cornwall at 05:34 AM | Permalink

eVenturing has another great collection of materials for entrepreneurs. This one has a similar theme to their recent collection on Bootstrapping. This one deals specifically with Virtual Teams.

The phrase "work smarter and not harder" rings clear in the mind of every entrepreneur leading a growth company. But how can you really get there? Will streamlining operations and outsourcing niche functions help? Entrepreneurs in this Collection affirm that technology helps. Whether it's finding a vendor to manage an e-newsletter, using Web-based collaboration tools, securing online backup services, training associates through free online computer tutorials, or creating a logo via a do-it-yourself Web site, entrepreneurs can increase their manpower--virtually.

Posted by Jeff Cornwall at 11:45 AM | Permalink

It now looks like the SEC is willing to reconsider their decision not to extend the deadline for small public firm compliance with section 404 of the Sarbanes-Oxley Act. The Office of Advocacy of the SBA wrote to the commissioners in the wake of the SEC's decision not to grant postponement of deadlines for public firms with less than $75 million in market value. You can read the contents of the Office of Advocacy's letter here.

Keep in mind that this is merely an attempt to postpone the deadline. At some point compliance will probably be required of all public companies -- even the small ones. The estimated $500,000 in compliance costs per year is unfathomable for many of these smaller firms. And even worse is the fact that these rules will creep into the accounting standards for non-public firms, as well.

Posted by Jeff Cornwall at 10:14 AM | Permalink

My column this past Sunday in the Tennessean was on the best approach to evaluating ideas to see if they are true business opportunities.

A key skill that successful entrepreneurs learn is to assess possible opportunities more efficiently and quickly before they make an extensive commitment of time and money to launch the business or even to develop a full business plan.

This process allows entrepreneurs to weed out ideas that are doomed to fail before they even begin.

You can read the column here.

Posted by Jeff Cornwall at 09:56 AM | Permalink

From the National Dialogue on Entrepreneurship:

The latest assessment of entrepreneurial activity by the Ewing Marion Kauffman Foundation provides startling numbers for yet another year. The new report shows that an average of 465,000 people creating new businesses each month in 2006. Besides year-to-year changes in entrepreneurship activity, the Kauffman Index -- defined as the percent of the adult U.S. population of non-business owners who start a business as their main job each month -- captures long-term trends. The 2006 figure is up slightly from the previous year, it is equal to the average rate for the past ten years. Other highlights from the past year include: Asians, Latinos and immigrants far outpaced native-born Americans in entrepreneurial activity; African Americans experienced a decline; entrepreneurial activity for men did not change between 2005-2006, ending a downward trend that began in 2003; and, the rate of entrepreneurial activity for women declined slightly. The report also contains data on activity at the state level. The five states with the highest rates of entrepreneurial activity were Montana, Mississippi, Georgia, Oklahoma and Maine. The five states with the lowest rates of entrepreneurial activity were Michigan, Pennsylvania, South Carolina, Illinois and Delaware.

Posted by Jeff Cornwall at 05:49 AM | Permalink

One other interesting finding from the American Express study I blogged about on Friday.

It found that four-in-ten (38%) respondents said the biggest influence in becoming an entrepreneur is passion. As an influence, passion. I tell aspiring entrepreneurs the importance of this all of the time. It is too hard and too much work being an entrepreneur to look for anything else as your main motivation.

Passion was followed distantly by natural entrepreneurial inclination (20%) and being "born into it" (18%).
Business owners are most passionate about building their customer base (34%).

Turning a profit (27%) and closing the deal (15%) were of less importance. This is also consistent with much of the research on entrepreneurial motivation. It ain't all about getting rich!

Posted by Jeff Cornwall at 05:57 AM | Permalink | Comments (1)

According to the latest release of the results from OPEN from American Express Small Business Monitor, which is a semi-annual survey of small business owners, entrepreneurs are struggling with finding balance in their lives.

- While business owners recognize the importance of "down-time" in their lives and most are satisfied with the amount of leisure time they have (81%), most report that carving out this time does not come without stress. Two-thirds of business owners (64%) find it stressful balancing their personal life and their business. Women business owners are more stressed by work/life balance than their male counterparts (71% vs. 62%).

- Two-thirds of business owners (67%) report they find themselves making sacrifices in order to be an entrepreneur. Among those who feel they are making sacrifices, family (52%) and friends (42%) are areas where they make the most sacrifices, followed by personal finances (36%) and health (35%). Male business owners are more likely to find themselves making sacrifices in their personal lives in order to be an entrepreneur when compared to women (73% vs. 65%).

- As business owners find themselves trying to achieve balance, they identify flexibility as the most essential entrepreneurial attribute. One-third of business owners (34%) identify flexibility as the most essential aspect of being an entrepreneur. Following at a distance is working well under pressure (24%) and knowing the market (18%).

- Taking their own advice on the importance of flexibility, two-thirds of business owners (64%) report making personal time for themselves during the business day. Men are slightly more likely than women to make personal time for themselves (66% vs. 60%). Although entrepreneurs realize the importance of taking time for themselves during the business day, nearly half (45%) consider taking time off from work to pursue a leisure activity a 'guilty
pleasure'. Female business owners are more than four times more likely than their male counterparts (18% vs. 4%) to consider ignoring an email as a "guilty pleasure".

- There may indeed be a connection between exercise and business success. Fifty-nine percent of small business owners report exercising several times a week with nearly one-quarter (24%) exercising every day. Nearly three-in-ten (29%) business owners with companies over $1 million in revenues say they exercise every day.

- The vast majority of entrepreneurs have the support of their significant other. Most entrepreneurs (89%) report a happy marriage or relationship with their spouse or significant other. Of those who report having a happy marriage, a similar number (81%) believe being an entrepreneur contributes to their happy marriage/relationship.

- Entrepreneurs are not only concerned with their own well-being. When making business decisions, eight-in-ten business owners (80%) take into consideration how their decision will affect their employees and their livelihood. In terms of offering employee benefits, nearly seven-in-ten employers (69%) believe it is important to offer healthcare coverage to their employees.

- Growth is a priority for a large majority of business owners. Over the next six months, seven in ten (71%) small business owners report planning to grow their businesses in a variety of ways. While most in this group (50%) plan to grow by selling more of the same product or service, one in five (22%) will introduce new products or services, and 14% will branch out into new markets or increase investments in their business (11%).

- For many, business is a family affair, and six in ten entrepreneurs (61%) who are parents would like their children to join their business. It will be interesting to see how many of these children agree!

Posted by Jeff Cornwall at 05:34 AM | Permalink | Comments (2)

More and more attention is being paid to the state of VC funds and Angel money these days. A story in the Nashville local paper the Tennessean just this morning talks about the flow of cash into local VC funds has slowed way down.

Some Nashville-area venture capital funds trying to raise money are facing a tougher time as investors chase promises of quicker and larger returns from a hot private equity market.

A year after setting out to raise its latest fund, Massey Burch Capital Corp. decided this week to do away with those plans after getting commitments for only a quarter of the $125 million it had sought. And Salix Ventures of Nashville is yet to announce a closing a year and a half after it said it planned to raise a $150 million fund.

Even thought the media makes this sound horrible, it is really OK. Not to worry! As long as the politicians and bureaucrats stay out of this arena, and that is sounding like a big if right now, things will be alright.

Capital markets -- if left alone -- are very efficient. There has been way too much money going into the VC markets, so what is happening is an adjustment of supply to meet demand. The money that was going into VC funds is now flowing to funds seeking to take public companies private. That is where the supply of deals is right now.

Posted by Jeff Cornwall at 08:02 AM | Permalink

Angel networks have been growing in their level of sophistication. They also have been moving up the food chain, looking for more later stage deals. From the Boston Business Journal via MSNBC:

As the market grows, angels -- especially angel investor groups -- are moving upstream, looking to dole out more money and take fewer risks. Meanwhile venture capital firms anchored by huge funds are increasingly looking to invest larger rounds of cash. Entrepreneurs say that combination has made tapping into angel capital, once fertile ground for early-stage funding, trickier in recent years.

That is what I am seeing with the entrepreneurs we work with. There is plenty of cash, but it is getting farther out of reach from the early stage entrepreneur. An additional trend is the mass of private equity money going to fund buyout deals like Chrysler. This will put additional pressures on finding seed monies.

(Thanks to Dr. Jim Stefansic, an entrepreneur in search of early stage money himself, for passing this along).

Posted by Jeff Cornwall at 10:54 AM | Permalink

After my post last week on small businesses and lawsuits, Ryan Zempel, Managing Editor of InstituteforLegalReform.com sent along a couple of interesting links.

The first is to a study called Tort Liability Costs for Small Business. This study shows that small businesses (those with $10 million or less in annual revenue) bear 69 percent of the total cost of the tort system to all U.S. businesses. That's $98 billion a year, or $200,000 per year for a business with $10 million in revenue, on average.

The second link is to a survey titled Small Businesses: How the Threat of Lawsuits Impacts Their Operations. This survey shows that, of those who expressed some concern about frivolous lawsuits, six in ten say the fear of lawsuits makes them feel more constrained in making business decision.

Posted by Jeff Cornwall at 01:53 PM | Permalink

I told you that the Entrepreneurial Generation was different than the rest of us. Read story on a boy named Anshul Samar from Gizmag.com:

Thought YOU were ambitious? How's this from a 13-year-old: "Our goal is to achieve 1 million dollars in revenue by the end of middle school, which is next year." The surprise hit of this year's TiECON, the Elementeo chief has already booked 450 sales of his upcoming first product.

(Thanks to Ben Cunningham for passing this along).

Posted by Jeff Cornwall at 12:42 PM | Permalink

This week it can be read at 800-CEO-READ blog.

Posted by Jeff Cornwall at 12:39 PM | Permalink

When John Paul II was Pope, many misunderstood his position on capitalism. It was not that he was against free enterprise -- quite the contrary. He saw the liberating aspects of property ownership. What he did do was to challenge us to use this freedom in ways that promoted a better society and a better world. He reminded us that we are stewards of the gifts we have at our disposal in our businesses.

It seems that the same confusion is now happening with Pope Benedict. But as Fr. Sirico points out in this essay from the Wall Street Journal Europe, this Pope is giving the same message as his predecessor. Free enterprise and entrepreneurship yields liberty for societies. How we conduct ourselves in our businesses and how we manage the fruits of our success are issues related to our ultimate salvation.

Posted by Jeff Cornwall at 07:33 AM | Permalink | Comments (1)

Eric, a regular at this site, sent me this question via e-mail over the weekend:

I recently saw a presentation by Vinod Khosla who left an interesting quote of "other companies hired what they could easily and left every other thing as weak links..." (in reference to Sun's founding executive team). What "links" do you think a good company needs to fill?

This quote hits at one of the key aspects of sustaining growth -- building a strong team.

Who any given entrepreneur needs to add to their team depends on several issues:

- The entrepreneur should always build a team that complements his or her strengths. I was strong on the strategic aspects of marketing and in financial strategies, and my partners were strong in healthcare program development. That meant we needed to fill in the gaps in areas that we were weak as a founding team.

- The very next person you need to add to your team is always the area that is causing the most pain for your business as it grows. This can differ greatly from company to company. Rarely do you have the money to add everyone on the team at once. So be strategic. What is the area that is most critical to grow your business the next 10-20%? Or, what is the "link" that if you do not fill it, you may not survive the stresses and strains caused by your current growth? That is the position you need to fill first.

- Consideration must also be given to competitive criteria. For example, we sought to have our healthcare facilities accredited at the very highest level. We knew it would give us a huge competitive advantage. So we hired someone who could help us achieve that goal. We could not afford to pay him the actual salary that he was worth, so we crafted an equity and bonus package that made it possible.

- Different industries require different talent in teams. For some, IT is critical -- so that may be your key "link." For others it may be a controller that can keep costs in line and allow them to be more competitive on bidding.

Posted by Jeff Cornwall at 07:15 AM | Permalink | Comments (1)

This afternoon the NFIB released a major new study on small business and health care. Here are the key findings from this survey of small business owners:

- Cost is Most Important to Business Owners. When asked the single most important problem facing the health care system today, 74 percent of NFIB members identify cost. Expanding coverage ranks third at 9 percent. Given a second choice, an additional 20 percent identify cost (94 percent a first OR second choice); 28 percent note expanding coverage (37 percent a first or second choice).

- Information on Costs Helps. Seventy (70) percent of NFIB members think that making consumers more sensitive to health care and health insurance costs will encourage consumers to use less health care; 28 percent do not think it will. Increasing consumer price sensitivity can reduce health care prices. Steps to increase consumer sensitivity to and awareness of health-care (insurance) prices are a good thing.

- Premiums Should be Individualized. Seventy-six (76) percent think individual behavior that influences health outcomes should be included in the calculation of health-insurance premiums. Two obvious examples are smoking (89 percent in favor) and body mass/weight (72 percent in favor). They are less certain about other specific behaviors such as driving record (44 percent) and frequency/intensity of medical use in the last five years (51 percent). They also hold mixed views on factors such age (51 percent -- fair), location (39 percent -- fair), family medical history (35 percent -- fair), and credit score (16 percent -- fair). However, small-business owners do NOT think any of these factors should be grounds for insurance denial by a 69 percent – 30 percent margin.

- Healthcare Coverage Should be Voluntary. Fifty-eight (58) percent of NFIB members think the employer's role should be confined to voluntary provision of employee health insurance. Another 7 percent think provision of employee health insurance should be mandatory. Still, another 3 percent favor a payroll tax of some type to finance employee health insurance. Thus, 68 percent favor employers continuing to play a role in health-care financing. Thirty (30) percent disagree; they think the employer should have NO role in financing health insurance. The larger portion of this group (23 percent) think individuals should be responsible for themselves (employers excluded), while the smaller portion (7 percent) think government should be responsible for them (employers excluded).

- Keep Government Subsidies Out of the System. Fifty-seven (57) percent think the government, i.e., taxpayers, should NOT financially assist those without private health insurance or Medicaid. 42 percent think it should.

Posted by Jeff Cornwall at 03:27 AM | Permalink | Comments (1)

Last evening the Massey Graduate School of Business here at Belmont, in conjunction with the Massey Alumni Association and Alumni Board, presented the first annual Distinguished Alumni Award. The occasion marks the 20th anniversary of the Jack C. Massey Graduate School of Business.

The first recipient is Dr. Richard Treadway, who earned his MBA from Belmont. Dr Treadway was involved in the founding of three companies, Psychiatric Solutions, Medical Properties of America, and Treadway Enterprises.

Posted by Jeff Cornwall at 08:02 AM | Permalink

We hear so much about the health insurance crisis faced by small business owners, which is a real problem. However, liability insurance is at least as major an issue for small business owners.

Today in testimony before the U.S. House Committee on Small Business, NFIB Legal Foundation Executive Director Karen Harned laid out a strong case for liability reform. Specifically, she argued for legal reform that makes Rule 11 sanctions (which includes sanctions on lawyers and law firms that are party to frivolous law suites) mandatory for frivolous lawsuit filers.

Harned rightly pointed out that for the small business with five employees or less, the problem is the $5,000 and $10,000 settlements, not the million dollar verdicts. She said that when you consider that many small businesses gross $350,000 or less a year, which does not include the additional expenses of running a business, such as payroll, rent, cost of goods sold, or regulatory costs, $5,000 - $10,000 can significantly impact a small-business owner's bottom line.

Harned provided examples of small-business stories of lawsuit abuse including the now famous Washington, D.C. dry cleaner's pants suit case, where the plaintiff, Administrative Law Judge Roy Pearson, is suing the family-owned dry cleaner shop for $65 million over a lost-and-found pair of pants.

What is most frustrating is that so little attention is given to liability reform in the media, while we hear a constant drum beat for health care reform. The media continues to have a bias that obscures the fact that both issues are serious threats to the future of our entrepreneurial economy. In a recent survey conducted by the NFIB, small business owners ranked the Cost and Availability of Liability Insurance as the second-most important problem facing small business today, just behind health-care costs.

Posted by Jeff Cornwall at 02:05 PM | Permalink

When I talk with folks about the phenomenon called the Entre-Boomers, people usually assume that these are either, 1) baby boomers who got laid off and are unemployable at their age, or 2) baby boomers who did not plan for retirement and have to find ways to continue to earn income into the future. While this may explain some Entre-Boomers motivation, we are seeing more and more from this generation who are making a conscious choice to enter the world of entrepreneurship.

From StartupJournal we see a profile of one baby boomer who made a clear decision to make a change:

Bill Rumford was driving down Highway 101 in the San Francisco Bay area one afternoon at a clip of 65 miles per hour when a car behind him started honking and flashing its lights for him to speed up.

"That was the very moment I knew I needed to get out of the rat race," he recalls.

Mr. Rumford went home that day in 2004 and dropped a bomb on his wife, Maggie. Remembering a bed-and-breakfast they had visited recently on Pender Island, a tranquil setting with 2,500 residents located between Vancouver on the Canadian mainland and Victoria Island, Mr. Rumford told his wife: "I think we should go up there and offer to buy it."

Posted by Jeff Cornwall at 07:34 AM | Permalink | Comments (2)

Meetings. Most of us really don't like them, and many entrepreneurs hold off using them in the day-to-day management of their business as long as they can. But at some point, your business will grow large enough where meetings become a key tool to facilitate coordination and communication between a growing staff of managers.

So how do you make your meetings productive? Opinion Research USA has just issued an "Ouch Point" study that examines what makes meetings painful to participants. The top things that make meetings painful:

27 percent -- disorganized, rambling meetings

17 percent -- peers who interrupt and try to dominate meetings

16 percent -- cell phone interruptions

9 percent -- co-workers falling asleep

8 percent -- no bathroom breaks (older respondents)

6 percent -- no refreshments (younger respondents)

5 percent -- people arriving late or leaving early

5 percent -- others checking e-mail on Blackberry

4 percent -- meetings that start late and those that end without distributing a written recap

So if you are at the point of needing meetings in your business remember to be organized with a clear agenda, set some basic rules and expectations about behavior, and if you have any folks my age, for goodness sake offer frequent bathroom breaks!

Posted by Jeff Cornwall at 09:46 AM | Permalink | Comments (3)

One of my favorite writers and thinkers on the importance of freedom is Fr. Robert Sirico with the Acton Institute. I encourage you to read the text of a recent speech he gave a Hillsdale College, in which he argues that capitalism and its inherent freedom offers the most hope for the common good. Here is an excerpt:

We are all entitled to call ourselves socialist, if by the term we mean that we are devoted to the early socialist goal of the well-being of all members of society. Reason and experience make clear that the means to achieve this is not through central planning by the state, but through political and economic freedom. Thomas Aquinas had an axiom: bonum est diffusivum sui. "The good pours itself out." The good of freedom has indeed poured itself out to the benefit of humanity.

Posted by Jeff Cornwall at 09:14 AM | Permalink | Comments (1)

Regulation hurts entrepreneurial economic development. That has been shown in study after study. Still not convinced? Well, take a look at West Virginia. These pictures are from a new study that shows a stark picture of how too many regulations hurts the economy in West Virginia. They show major economic activity right across the border in states with friendlier economic climates.

A video of a local news report of this study can be viewed at Tax Tennessee's website.

Posted by Jeff Cornwall at 05:37 AM | Permalink

Bill Hobbs wrote a great analysis of the impact of the most recent tax cuts on our economy. His essay can be found at the website called Elephant Biz.

Posted by Jeff Cornwall at 02:02 PM | Permalink

A couple of new reports out give some insight into the hot regions for entrepreneurs and the hot markets that VCs are beginning to bet on for the future.

Knowledge@Wharton looks at some of the hot markets of the future. Energy, water, personalized healthcare, and biotech are all on the watch list.

For hot cities, check out the newest ranking of 2007 Entrepreneurial Boomtowns from Inc. St. George (UT), Yuma (AZ), Prescott (AZ), Fort Myers (FL), McAllen (TX), Naples (FL), Las Vegas (NV), Sarasota (FL), Morgantown (WV), and Bend (OR) top their list this year.

(from National Dialogue on Entrepreneurship).

Posted by Jeff Cornwall at 01:28 PM | Permalink

The COTC for this week can be found at Gyaan Sutra.

Posted by Jeff Cornwall at 01:11 PM | Permalink

Both of our kids graduate from Belmont University this weekend. Congratulations to Russ, Maggie, and all of you in the class of 2007 across the country!

Posted by Jeff Cornwall at 07:35 AM | Permalink | Comments (4)

The best sources of ideas for businesses comes from your experiences and interests. Many great businesses have been built out of hobbies and other passions. Often these businesses start very small, as what some call "lifestyle" businesses that eventually create a little income. Over time, the entrepreneur is able to transition from a few evenings and weekends to a full-time business.

But now our friends at the IRS are throwing a kink in this cool way to become economically independent. From StartupJournal:

The Internal Revenue Service is stepping up efforts to prevent taxpayers from deducting losses on activities that aren't genuine businesses run to make a profit. The problem: It's not so easy to tell a budding business from a hobby.

Officials say new research shows taxpayer errors in this area are costing the government billions of dollars a year in unpaid taxes. Thus, auditors are "on the lookout" for people trying to deduct losses from hobbies, an IRS spokesman says. To underscore the agency's concern, the IRS recently issued a fact sheet the spokesman says is aimed at "making sure that taxpayers know and abide by the rules."

Sure.... We should all expect some poor person turning their craft or hobby into a business to know the over 60,000 pages of "rules" that are the IRS code.

The story goes on to illustrates this point:

But how are you supposed to figure out whether your activity qualifies as a genuine for-profit business? That can be exceptionally tricky. The IRS says you should consider several factors, such as: Does the time and effort put into the activity indicate you intend to make a profit? Do you and your advisers have the knowledge needed to carry on the activity as a successful business?

Another factor is whether you have made a profit in the past. The IRS says it "presumes" an activity is indeed carried on for profit if you have made a profit during at least three of the past five tax years, including the current year. (The rule is different -- at least two of the past seven years -- for activities that consist primarily of breeding, showing, training or racing horses.)

The IRS has some handy "tips" at their website and there is more information at WorldWideWeb Tax.

Since a part-time business rarely can afford strong outside tax advice, the key is to be cautions and realistic on how you approach your business and make sure to keep very good records. Don't mix expenses and revenues that may create red flags. And keep good records, including a separate checking account for your fledgling business venture.

Posted by Jeff Cornwall at 05:57 AM | Permalink | Comments (1)

A recently developed site called TheFunded has created quite a stir in the VC community. The site is for entrepreneurs -- and only entrepreneurs -- seeking information on possible VC investors. Entrepreneurs share their experiences with various VC firms they encounter on their journey for funding. From the web site:

The Founding Member experienced a bad funding situation and wanted to help others avoid a similar fate. As the idea grew, the Original Members saw real potential for TheFunded to bring some transparency to the venture funding world, which is largely governed by secrecy.

In a post on TheFunded, TechCrunch reports that the site now lets VCs "set the record straight" by posting their profile. But, this is a separate part of the site and does not allow VCs to directly respond.

This type of site gives me some concern. While I am not always a fan of how VCs do their business, this type of forum may easily stray from its objective of providing information about VCs, and instead, also spread misinformation with no chance for direct rebuttal.

Posted by Jeff Cornwall at 05:45 AM | Permalink

We are just beginning to see what intriguing opportunities may be around the corner thanks to Web 2.0. I have seen many of them popping up at business plan competitions. A couple of new examples of collaborative services, which are a big part of Web 2.0 activity, have recently come across my desk.

One is called Huddle, which came to me thanks to Natalie Wozniak (an alumna from my University of St. Thomas days) via PSFK:

Huddle has been targeting freelancers, small marketing and creative agencies as well as law firms.

A really interesting fact is that they did not built the app inhouse but managed to bond with a partner and have it developed within four months which is quite unusual for a Web 2.0 startup. But we learned that it works rather well for them and they even managed to receive funding from an angel investor. Huddle now has around 1,500 users from 250 companies.

Huddle is an application that seems to fit perfectly into a business world were constantly changing teams and long-distance collaborations are getting more and more common.

The other is called PartnerUp, was just launched within the last few weeks. From Mike Anderson, Senior Information Architect:

PartnerUp is a free online service which helps entrepreneurs, small businesses, and people who have an idea or are interested in starting a business find business partners, advisors, board members, executives, and skilled professionals. And, the web site helps those who are interested in getting involved in businesses find opportunities to get involved in the above capacities.

Basically, our goal is to help people who have ideas but need people with certain skills or experience find the people they need to make their idea a success.

What excites me about start-ups in the Web 2.0 space is that many of them have the promise to have both good revenues and healthy cash flows. Plus, they require much less start-up capital than most of their Internet ancestors.

Posted by Jeff Cornwall at 06:30 AM | Permalink

Once again entrepreneurs seem to be getting a bit grumpy about the economy according to the latest poll just released by the NFIB.

Capital spending activity by small firms remained lethargic. The frequency of reported capital outlays over the past six months was flat at 60 percent of all firms. Forty-three percent reported spending on new equipment, 23 percent acquired vehicles, and 13 percent improved or expanded their facilities. Seven percent acquired new buildings or land for expansion and 13 percent spent money for new fixtures and furniture.

Just 29 percent of owners plan to make capital expenditures over the next few months -- down four points from March, reflecting pessimism among of owners about the prospects for economic growth.

Twelve percent of the owners expressed the view that the current period is a good time to expand facilities, unchanged from March and a rather weak showing. A net-negative 8 percent expect business conditions to improve over the next six months, down a point from March but typical for the later stages of an expansion. A net 14 percent expect higher real sales, unchanged from March and eight points below January.

Other signs of their pessimism can be seen in inventories, which are down in this survey, and a general avoidance of taking on any new debt.

What makes matters worse is that the pesky demon known as inflation just won't go away either. This is what has given me the most heartburn about our economy over the past year.

Also, the SBA Office of Advocacy released the updated Quarterly Indicators: The Economy and Small Business today, which indicated that overall economic growth slowed in the first quarter of 2007.

Posted by Jeff Cornwall at 06:30 AM | Permalink

Small business lending may not be such a bad deal for banks after all. A new study released by the SBA Office of Advocacy investigates the contribution of relationship lending to the value of banks by estimating the market premium placed on the small business loan portfolios of banks. Small business lending was found to be a profitable market niche, especially, for small publicly traded banking organizations in the United States. This evidence suggests that at least for small banks, the added revenue associated with relationship lending exceeds the added information costs associated with evaluating and monitoring small business commercial and industrial loans.

Posted by Jeff Cornwall at 09:45 AM | Permalink

Forbes has released its latest tax misery index. See the details of their report here. Europe continues to be well represented on the list of heavy tax burdens.

Posted by Jeff Cornwall at 06:46 AM | Permalink | Comments (1)

I had the pleasure of hearing a talk by Erik Peterson of the Center for Strategic and International Studies. If you ever have the opportunity to hear him speak, by all means take advantage of it. His talk was on the world as his organization sees it in 2025. It is called Seven Futures (this web link as a great deal of detail on his analysis and presentation). The seven futures refers to the seven parts of the world outside of North America. Even if you are running a small business in the middle of Kansas, the world economy is, and increasingly will be, having an impact on your business.

A quick summary of the world in 2025 and beyond:

- The world is not positioning itself well for the growing entrepreneurial economy. Regulation, property rights and instability are all great concerns.

- Brazil, Russia, Indian, and China are key countries to follow (in addition to the US)

- By 2025 the developing world will account for over 50% of the total economic output

- Latin America does not have a good long-term outlook, due to over-regulation, governance "fatigue", and political alienation. Although becoming a major force, Brazil will most likely fall short of its potential to become a world economic power.

- Europe will never see true integration via the EU (which in my opinion is a good thing). Social welfare systems will be pushed to the brink with falling worker to retiree ratios. Although immigration may be necessary to sustain the workforce, anti-immigration attitudes are growing.

- Middle East and Africa has a rather worrisome mix of rapid population growth, modest economic growth, political instability and conflict, all mixed together with religious extremism.

- Sub-Saharan Africa has a long term AIDS crisis and increasing undernourishment. The glimmer of hope lies in untapped fossil fuels to boost the economy if they can be properly managed and governed.

- Russia and Eurasia has a weak economy with a population that could decline by a third by 2050. Aging population and health crises from environmental disasters put further strain on this region. Governance is key with massive reform, but the outlook of this seems bleak.

- South Asia has the potential to be an economic powerhouse, especially India. India is on track to be the most populous country by 2050. The relationship (or lack there of) between India and Pakistan is the only wild card.

- East Asia is the other potential economic dynamo, but interestingly China has only about a twenty year window to get it right. Their one-child policy is going to lead to a rapidly aging population with a dramatic shortage of females in China. Economic liberalization is unlikely.

Posted by Jeff Cornwall at 09:49 AM | Permalink | Comments (1)

My wife and I, two people squarely in the middle of the Baby Boomer Generation, have two great soon-to-be-college-graduate children who are squarely in the middle of the Entrepreneurial Generation (or as it is also called, Generation Y). Several recent studies seem to indicate that these two generations are leading the charge in the entrepreneurial economy today. So I read with great interest a new study released this week by OPEN from American Express about these two entrepreneurial demographic groups.

Here are a few highlights from this latest study:

- 36% of Generation Y small-business owners would jump right back into the entrepreneurial game even if their businesses fail, and surprisingly, 24% of Baby Boomers would do the same.

- Belief by both generations that America is worse off now than when they were kids

- More Baby Boomers say they are naturally energized than their Gen Y counterparts (50% GenY vs. 60% BB) but BB drink, on average, 1 extra caffeinated drink/day (2 GenY vs. 3 BB).

- On average, both groups work 10 hours/day and get 7 hours of sleep at night.

- Both groups agree free trade is a benefit to American entrepreneurs (72% for Gen Y and 69% for Boomers).

- 66% of GenY say they are tech savvy vs. less than half of BB (47%); 88% for both GenY and BB believe experience is more important than tech savvy.

- Both groups agree BB have the edge (59% GenY vs. 66% BB) because of experience.

Posted by Jeff Cornwall at 03:50 PM | Permalink | Comments (1)

There are three small business and entrepreneurship events coming up in Tennessee this month that are worth taking a look at.

The Small Business Chamber (a fairly new organization based out of Tennessee) is hosting two events.

The first is the Memphis Business Fair on May 15th at the Memphis Marriott. This event includes a "luncheon, Seminar, Business Expo and heavy networking opportunities all at one time -- one place -- and scheduled into a few jam packed hours."

The second is a quarterly membership meeting in Nashville on May 17.

Interested small business owners are welcome. I will be speaking on the challenges of growth at both of these events.

I also want to make folks aware of an event that will be held on the Belmont campus on May 14th. Nationally recognized social entrepreneur John Sage, founder of Pura Vida Coffee, will be speaking at 6:30 that evening. His for-profit venture is used to fund non-profits around the world. This event is free and open to the public and will be held in the Massey Board Room.

Posted by Jeff Cornwall at 07:21 AM | Permalink

From the Albany Times Union (via Ben Cunningham):

The former head of a publicly-funded program meant to help jump-start businesses admitted Monday to finagling a fraudulent $95,000 pay raise, using his corporate credit card for a trip to Disney World and insisting his father be included on two business junkets to China.

Posted by Jeff Cornwall at 07:17 AM | Permalink | Comments (2)

For months now I have warned that politicians just can't keep their hands off the emerging entrepreneurial economy. They have finally noticed the economic transformation this country is in and are responding by finding ways to gain control and offer favors.

From the National Dialogue on Entrepreneurship:

Congressional Democrats have taken the first step forward in their Innovation Agenda, passing the Small Business Lending Improvements Act of 2007. Aimed at lowering the cost of financing, the legislation would create four new loan programs: a Rural Lending Outreach program; a Community Express program; a Medical Professionals in Designated Shortage Areas program; and, an Increased Veteran Participation program. While passed by the House, the legislation faces opposition from the Administration over the inclusion of subsidies to reduce fees for lenders and borrowers in the 7(a) program.

Rather than empower the free enterprise system that fuels entrepreneurial actions, these policy makers want to take control and pick winners and losers. What we really need is much less intervention, control and regulation if we want to spur entrepreneurship, and not create more bureaucracy as this legislation would do.

Posted by Jeff Cornwall at 07:26 AM | Permalink