The Entrepreneurial Mind

The Wall Street Journal has a story about an entrepreneur who took a government grant and tax breaks to help pay for a wind turbine for his ski resort. It was a typical attempt by a governmental agency to try and manage business owners' behavior within the free enterprise system to reach a specific social goal set by politicians. The results?

"If I'd known what I know now, I would have never had done it," says Mr. Fairbank, president and chief executive of Jiminy Peak Mountain Resort Inc. in Hancock, Mass.

Read the entire story here.

Posted by Jeff Cornwall at 05:51 AM | Permalink

Each year Inc.com runs a story on 30 entrepreneurs under the age of 30. In her story on this year's 30 under 30, Donna Fenn presents an impressive roster from the Entrepreneurial Generation. I had the pleasure of talking with her about the young entrepreneurs of today for this story.

No wonder that a recent study by The Global Entrepreneurship Monitor shows that 18- to 24-year-olds in the United States are starting businesses at a faster rate than 35- to 44-year-olds. The college campus is now a fertile breeding ground for company builders. "Forty percent or more of students who come into our undergraduate entrepreneurship program as freshmen already have a business," says Jeff Cornwall, the Massey Chair in Entrepreneurship at Belmont University in Nashville. "It's a whole new world...."

They're often so antsy, in fact, that it's not unusual for them to bail out of college to devote themselves to their businesses full time....[T]hat kind of defection may tell us something about entrepreneurship education. "The old model was, go off and study liberal arts and when you're a junior, we'll give you an entrepreneurship course," Cornwall says. "Now, if I wait until junior year, I'll loose them. They want fulfillment and success and they're not willing to wait 10 or 15 years. They want it today."

Posted by Jeff Cornwall at 08:30 AM | Permalink | Comments (1)

This story from the San Francisco Chronicle illustrates once again that you can raise too much money.

A year ago, Mark McDade, chief executive officer of PDL BioPharma in Fremont, was planning the move of his biotechnology company to a glamorous new office complex in Redwood City. PDL's operations were growing as it sought to expand its line of acute-care drugs, and it needed bigger quarters.

Now McDade, a Harvard MBA, is fending off critics who blast his real estate deal as just one example of his extravagant spending.

Too much funding in a new business can lead to over spending on overhead, wasteful spending on non-productive expenses, and even taking your eye off of what it takes to build a business. A hungry entrepreneur will out perform a fat and lazy one any day.

Given the choice of a start-up with much more money than they really need and a start-up that is slightly underfunded, I would pick the latter every time.

(Thanks to Dr. Jim Stefansic for passing this along).

Posted by Jeff Cornwall at 05:38 AM | Permalink

In my second of four columns for the Tennessean on bootstrapping, I look at how to think like a bootstrapper when developing a marketing plan for a new venture.

A local entrepreneur, Charles Hagood, co-founder of The Access Group and Healthcare Performance Partners, always tells my students that if he had just one dollar left to spend in his company he would spend it on marketing.

Even though money is tight for small businesses, getting the word out to potential customers is essential if the business is to grow and thrive. This leads to the second rule of bootstrapping a business -- probably nothing is more important to a new business than marketing, so know how to connect effectively with your customers within your limited budget.

Posted by Jeff Cornwall at 05:22 AM | Permalink

I am not big on birthdays. It is not that I have a crisis with each passing year. My last "crisis birthday" was when I turned 23 -- I guess I was worried that it was time for me to finally grow up.

Tomorrow I mark the half century of my entry into this world. At first I just wanted to let it pass quietly. But as I reflected on it, I decided that I have led a blessed life -- one that was worth a little celebration. It came to me when I was listening to a song titled "Trip Around the Sun." The best known version of this song has Jimmy Buffet performing it with Martina McBride. But, I was listening to a performance by one of my favorite Nashville song writers, Big Al Anderson, who actually co-wrote this song with Stephan Bruton and Sharon Vaughn.

This last verse goes like this:

Yes, I'll make a resolution

Then I'll never make another one

Just enjoy this ride on my trip around the sun

Just enjoy this ride ...

Until it's done

So this weekend will be filled with time with friends and family, as I look forward to what I hope will be the beginning of my next fifty trips around the sun.

Posted by Jeff Cornwall at 07:53 AM | Permalink | Comments (1)

Some of you may have seen this quote in the recent issue of Forbes, but it is worth repeating. It comes from a recent column by John Stossel in the New York Sun:

America became an economic power despite, not because of, Hamiltonian intervention. Hong Kong and much of East Asia went from abject poverty to affluence in a few decades not because their governments gave people "tools they need to compete" -- they didn't -- but because they exercised limited powers.

I wish Mr. [David] Brooks and other Hamiltonian conservatives understood that freedom and prosperity have nothing to do with bureaucrats managing society through schooling and tax manipulation.

Prosperity comes from leaving people free in a legal system that respects their persons and property so they can pursue their dreams while taking responsibility for their actions. Free people find their own tools if the state leaves them alone.

In the era of big government, the last thing we need are champions of the statist Hamilton.

What we need now are champions of the libertarian Jefferson, who said in a very un-Hamiltonian way: "I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it."

I was reminded of the difference between the more libertarian brand of conservatism and big government conservatism when Arthur Laffer came to campus. He stressed several times that one of the most important outcomes of the Reagan tax cuts was that they created more money for government. Hamilton would have been proud of that view.

To only advocate for lower taxes misses the most important part of the economic equation that American needs follow. To help foster our entrepreneurial economy we need to focus on creating less government and more freedom.

Posted by Jeff Cornwall at 07:15 AM | Permalink

When it comes to employee compensation and job tenure, size does matter, according to a study released today by the Office of Advocacy of the SBA. The study found that all other things being equal, employees of larger companies have longer job tenures than those working in smaller ones. Moreover, the study found that service and manufacturing occupations pay more in larger businesses.

The study determined that each additional year of tenure on a job reduces the probability of turnover by 81 percent. It also established that the offering of benefits reduces the probability of an employee leaving in a given year by slightly more than 26 percent.

Recent surveys by the NFIB have reported that finding qualified workers continues to be a challenge for most small businesses, although easing a bit due to the sluggish economy.

What this study tells us is that even though small firms may be able to offer creative and attractive non-financial benefits, such as more flexible work conditions, more interesting work, etc., in the end what matters most is the money.

Posted by Jeff Cornwall at 08:01 AM | Permalink

The Wall Street Journal has a piece on how credit card companies are targeting small businesses.

Credit-card use is soaring among small businesses. Many entrepreneurs find it's faster and simpler to sign up for a card than to apply for a bank loan. Others are turning to plastic because they don't qualify for bank loans. And they're using the cards, ones geared toward small business as well as consumer cards, to pay for just about everything -- including health insurance, energy bills, taxes and photographers.

Card spending by small businesses on tax payments and preparation alone jumped by 80% in the 12 months ended February 2007, according to a report by Visa USA, based on data about spending on Visa cards by 600 small businesses during that period.

To say that I am not a big fan of using plastic to fund small businesses is an understatement. I have seen too many small businesses forge ahead prematurely with a business idea using what seems to be easy credit to secure. It is expensive debt that is almost always personally guaranteed. So even if the business fails, the credit card debt remains for the entrepreneur. They also make spending just too easy. Most of us have experienced this at one time or other in our personal finances.

Again from the WSJ:

Experts say business owners need to remember that there is good debt and bad debt -- and to respect the difference. Good debt generates revenue; bad debt consumes it.

Furthermore, credit cards don't provide an impartial adviser on sound borrowing practices, so it's critical to build a relationship with a banker or other knowledgeable adviser outside a credit-card company.

Amen!! This is critical advice for any small business owner. If you can't get other credit for your business there is probably a good reason. Make sure you understand why they have concerns about your business.

Posted by Jeff Cornwall at 08:02 AM | Permalink | Comments (4)

There were a couple of interesting findings In a study released by the SBA Office of Advocacy.

Contrary to previous findings, this study did not find any evidence that having parents who were entrepreneurs increased start-up rates. If this is supported in future studies, it may signal a shift in the profile of entrepreneurs. Growing up in an entrepreneurial household used to be seen as a major predictor of who will become an entrepreneur. But, with the explosion of entrepreneurship in our economy it may be coming more of a mainstream career choice.

Also, the impact of the existing wealth of the entrepreneur on start-up rates was much more subtle than the researchers seemed to think going into the study. There was some impact of wealth when the data was scrutinized (as we used to say in my doctoral program, "torture the data long enough and it will talk"). So the old adage of "it takes money to make money," while somewhat supported in one slice of the data, is not as strong as is commonly thought. Another victory for bootstrapping!!

Posted by Jeff Cornwall at 05:49 AM | Permalink | Comments (1)

My column this week at the Tennessean looks at the first rule of bootstrapping: Keep your overhead to a minimum!

Recent studies find that the average business start-up has only $6,500 to $10,000 in initial capital. So, how do entrepreneurs get businesses off the ground with such meager means? They succeed by using a variety of tools and techniques that are known collectively as "bootstrapping."

Entrepreneurs can pull themselves up by their bootstraps by finding creative ways to launch and grow a business within the limited resources available to most new ventures. They find ways to achieve what needs to get accomplished for the business by creatively getting it done for a lower cost.

The first rule of bootstrapping a business is paying attention to overhead.

Posted by Jeff Cornwall at 05:48 AM | Permalink

There is a growing resentment toward business, according to a survey conducted by the Financial Times and Harris. From the Financial Times:

A popular backlash against globalisation and the leaders of the world's largest companies is sweeping all rich countries, an FT/Harris poll shows.

Large majorities of people in the US and in Europe want higher taxation for the rich and even pay caps for corporate executives to counter what they believe are unjustified rewards and the negative effects of globalisation.

Viewing globalisation as an overwhelmingly negative force, citizens of rich countries are looking to governments to cushion the blows they perceive have come from the liberalisation of their economies to trade with emerging countries.

What is most chilling about these findings, if they prove to translate into policy, is that they won't just hit big corporations and their executives. It never seems to work that way. Punitive taxes and attempts to redistribute the wealth will also hit entrepreneurs hard.

Say what you will about corporate greed, a solution that includes higher taxes will make the pie they are trying to redistribute much smaller. Entrepreneurial activity is much more vulnerable and reacts much more quickly to significant increases in tax rates, and entrepreneurship is the engine of the current global economic expansion.

Thanks to Jim Stefansic for passing this along).

Posted by Jeff Cornwall at 05:46 AM | Permalink | Comments (2)

I have pointed out for a long time that there is a growing level of overhang (excess liquidity) in private equity markets. This has led to speculatory behavior in certain "hot" sectors, such as healthcare, as discussed in this post by Bobby Guy at a new blog by Waller Lansden law firm.

Now, it seems money is available everywhere. Many specialty lenders focusing on the healthcare sector have been birthed in the last few years, and hedge funds and private equity funds focusing on the healthcare sector have exploded. Even with interest rates rising, money continues to be available at historical levels. It was recently reported that there is enough money in hedge funds to take the entire NASDAQ market private—twice. Credit derivatives contracts (agreements that divide up risk, either by using pools or through swaps) are worth more than nine times global gross domestic product. A month ago, I talked to a fund with almost $100 million to invest in the next three months, and if it did not meet its three month deadline, all money would have to be returned to investors to chase yield elsewhere.

This is getting to be a worrisome equity market in my opinion. And Mr. Guy agrees:

For the moment then, easy money is "hip" and cool. No one knows how long the current wave will last, but it is fresh wind in the sails of the healthcare market compared to the doldrums of 2001-03. Remember that inevitably, as with all financial cycles (and bubbles), this one too must turn (burst) . . . but maybe not yet.

Posted by Jeff Cornwall at 04:08 PM | Permalink | Comments (1)

Ryan Healy has an article at Web Worker Daily that offers more insight into Generation Y (aka Entrepreneurial Generation). Trust and entrepreneurial culture seems to be what he sees as key to providing these folks with jobs that they will stay with over time.

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

Posted by Jeff Cornwall at 06:58 AM | Permalink

In the 1960s there was a series of studies that tried to find the traits that created effective leaders -- things like height, hair, sex, etc. What they realized was that these traits were correlated with ALL leaders, because we had a bias on who we thought made good leaders. We soon realized that it was what leaders did and how they behaved that commanded true leadership.

In the 1980s we went through the same drill with entrepreneurs -- they just had to be born that way due to some sort of combination of traits. Again, this line of thinking led nowhere. Success in entrepreneurship is also based on how you act and behave.

USA Today ran a story that suggested that taller CEOs are more powerful.

Le Gourmet Gift Basket CEO Cynthia McKay wears 3-inch heels even though she's 5-foot-9 in bare feet.

Why? For the same reason that 6-foot-3 Don Peebles, CEO of The Peebles Corporation, the nation's largest African-American-owned real estate development company, puts his hand on the shoulder of shorter adversaries and crowds into their personal space when negotiating a key deal.

But again, this thinking is flawed. Just because they seem more powerful does not mean that over the long-term they will be any more effective as CEOs. They might be able to be better bullies, but not more effective at leading, inspiring others, and creating positive cultures in their companies.

(Thanks to Tahirah King for passing this along).

Posted by Jeff Cornwall at 06:43 AM | Permalink | Comments (1)

You can now cast your vote among the 10 semi-finalists for the Microsoft Home Office Makeover contest that I posted about a few weeks ago. One winner will receive a home office makeover from HGTV's Vern Yip and the latest home office technology from Microsoft and HP (valued at $25,000).

Entrants were required to submit an essay of 250 words or less describing how a Microsoft Home Office Makeover would create an overall positive change in entrant's personal and/or business life. Voting closes July 31, 2007 and finalists will be announced and posted online on or about August 1, 2007.

Here are the top 10 finalists:

1. Rebecka (Lincoln, Neb.) -- Rebecka (an accountant) and her video-producer husband squeeze into a crowded, cluttered, uninviting office space -- not ideal when the couple enjoys inviting family and friends into their home office to view his creations.

2. Brandon (Greenville, S.C.) -- Brandon works 10-hour days, five days a week from his home office "loft," (read: no doors!) where he oversees an e-commerce website and remotely manages a Microsoft network, all the while attempting to tune out the noisy washing machine, two energetic young boys running around the house and his wife's voice trying to control the chaos.

3. Nancy (Vista, Calif.) -- Nancy virtually manages a team of registered nurses from her home office bedroom. She is surrounded by her family, pets and photography, but every attempt she makes to bring order to this messy corner of her bedroom is unsuccessful.

4. Crile (Wheatland, Wyo.) -- His web design is edgy and sleek; his desk, a clunker. His Internet access is state-of-the-art; his filing system, Caveman 1.0. Crile seeks office supplies that will keep up with him so that he can avoid the four-hour round trip to town when something breaks down.

5. Kristine (San Antonio, Texas) -- It's Three's Company at Kristine's home office event-planning company: her fifth-grader surfs the web, her husband berates his slow computer while trying to start up his homebuilding company, and Kristine bemoans the office's odd layout made difficult by built-ins, a bar and a sliding glass door.

6. Christopher (Silver Spring, Md.) -- Christopher has a new, roomy home office -- with only one bookshelf, a card table that serves as a desk and a four-year-old archaic laptop. As an attorney, his billables will suffer if he keeps working from home in this environment.

7. KK (Round Rock, Texas) -- Markers, crafts and lesson plans are strewn about KK's home office. This special education teacher for elementary school children is looking to put some order to her creative processes.

8. Sandy (Morton, Ill.) -- While their schedules are organized -- Sandy's husband uses MS Office applications to track the kids' basketball, baseball and social activities -- the home office is not. It's a hodgepodge of new/used furniture in desperate need of some feng shui, as the family spends a lot of time in this room online and watching TV.

9. Robert M. (Albany, Calif.) -- Robert runs four enterprises (including a literacy non-profit) out of a home office that measures 12' by 13'. Every square foot is spoken for, and he has to be careful when he swivels at his desk so that he doesn't knock over a day's work.

10. William (Los Angeles, Calif.) -- Due to lack of space, William spends a great deal of time just keeping things organized in his home office. The result? He's less productive in the few hours he has at home -- hours he'd rather spend with his wife and two daughters.

To learn more about the contest and the semi-finalists click here.

Right now I am leaning toward Brandon and his loft (my home office is a loft) or Robert M. because he sounds like a deserving guy (and my Dad's name is Robert M. -- but please be assured that this Robert M. is no relation to me that I know of). But there are a few days to vote, so I may change my mind by the 31st.

Posted by Jeff Cornwall at 06:32 AM | Permalink | Comments (3)

How do you value a business that has nothing to value? That is the challenge for pre-revenue ventures. They have no sales, and therefore certainly no cash flow, so how do you agree on a value that can be used to give equity in the business to investors that is fair to all parties? How do you assess a value to "potential"?

A common approach has been to basically postpone any valuation and issue convertible notes that allow early investors to convert from debt to equity when later stage investors come in once revenues start to flow. But even this method has flaws and pitfalls.

The latest collection of articles, tools and profiles from Kauffman's eVenturing examines the issue of pre-revenue valuation. What is particularly valuable is that it looks at valuation from both the entrepreneur and investor side of the negotiation. Very good material for any high potential start up to review before entering into discussions with a VC or an angel.

Posted by Jeff Cornwall at 07:27 AM | Permalink

Rev. Sirico and the Acton Institute have a new project that is about to be released: a documentary film. It's title is The Call of the Entrepreneur. Even though this film will never get the attention of a Michael Moore's films, this one is a whole lot better -- trust me!

You can get more information on this film here at their web site, including premiere information and a trailer of the film. We are working on hosting a premiere here in Nashville -- more to follow if we can work it out.

Posted by Jeff Cornwall at 05:35 AM | Permalink

The National Dialogue on Entrepreneurship offers some interesting facts about the 20 million self-employed in the US recently reported by the Census Bureau:

- Each day, 2,356 Americans decide to go into business for themselves.

- Their companies account for 78% of all US businesses.

- They collectively obtain annual receipts of $951 billion.

- Georgia (up 7.6%) and Utah (up 7.2%) showed the highest annual increases. The national average increase was 4.4 percent.

- The fastest growing sector was Web search portals, where the number of self-employed jumped an astounding 41.2 percent in one year.

Posted by Jeff Cornwall at 05:23 AM | Permalink

There is a book that I have been meaning to read that I saw reviewed in our local paper here in Nashville. I have not had a chance to read this book yet, and usually I don't write about a book until I have read it. But, the concept behind this one caught my attention. The book's title is RUT Management: Discovering Adventure in the Routine of Life. It was written my local writer Mark Cornelius. Here is the abstract from Amazon:

The Answer's Been Right in Front of You the Whole Time! Most of us travel well-worn paths with the expressed mission of breaking out of the RUT. It seems to be the right thing to do on the surface; who wants to think of themselves as being in such a routine that they can not, should not, dare not veer off the trail? And You Thought "Escape" Was Your Only Option! Not another self-help book, RUT Management is a fun but truthful look at the very human tendency to pursue distraction rather than maintaining the focused pursuit of long-term goals and dreams. This work addresses the constant conflict between "convention" and "change" in our lives. It examines RUT development, RUT anatomy, RUT relationships, and RUT management as tools for navigating the path through RUTs, and for DISCOVERING ADVENTURE IN THE ROUTINE OF LIFE.

When I was a full-time entrepreneur, my life often seemed like constant chaos. One thing that stands out in my mind from this period was how precious certain routines in my life were to me.

The weekly trip to the riding stable with my daughter. My daughter and I sang or whistled the same silly songs every time we drove through the country on the way to her riding lesson. I stood at the same place along the same fence during every lesson, and marveled that such a little girl could control such a gigantic animal.

Going to church with my family. Our son was the one who made sure we went to church every week -- even when we were on vacation. Whether we were in the mountains in North Carolina, or in the middle of Florida, come the weekend, he would always ask the question -- Where are we going to go to church? I have to admit that it occasionally crossed my mind to skip church, especially on vacation, but I was always snapped back to the reality of the importance of this routine in our family life together.

Eating dinner at the table. This was the routine that my wife created for our family. We began every evening meal with a prayer -- the same prayer every time. And then the conversation would always begin with the same question from me -- What was fun today? The kids would then tell us about the little things and the big things that happened in their lives.

Friday pizza with my partners. Every Friday at lunch, my two partners and I closed the door to the conference room and shared pizza. The staff knew not to disturb us. Did we plot grand strategies for the future course of our business? Every once in a while we would. But mostly, we shared each others' company, traded funny stories, and talked about our families. It was the one time each week that the three of us always would share the fellowship of a meal.

I could not agree more with the premise of this book -- get in a rut!

Posted by Jeff Cornwall at 06:10 AM | Permalink | Comments (4)

James Pethokoukis from US News & World Report offers more evidence of the global entrepreneurial economic boom that has been underway now for almost a decade.

"This is far and away the strongest global economy I've seen in my business lifetime," is how U.S. Treasury Secretary Henry Paulson recently described the current global boom. Hyperbole? Actually, that dramatic declaration probably under states things. Let's refer back to this piece of analysis from Paulson's old firm, Goldman Sachs: "If we and the consensus are correct, then the period 2003-2008 will have been one of the most powerful periods of economic growth globally since accurate data [have] been collectible for much of the world."

Indeed, the global economy is growing at about a 5 percent annual pace, according to the International Monetary Fund, after growing 4.9 percent in 2005 and 5.4 percent last year. By contrast, the global economy grew at a 3 percent pace from 1980 to 2000 and at 4.7 percent from 1960 to 1980.

As support he links to an important and compelling report issued by the Federal Reserve Bank of Minneapolis and this "Fiscal Fact" from the Tax Foundation.

He rightly ties much of this growth to worldwide efforts to lower tax rates. There is a growing mountain of evidence for the impact that lowering marginal tax rates has on fueling entrepreneurial expansion in an economy.

This evidence only adds to my concern that many politicians in the US now want to return to higher marginal tax rates to pay for new government initiatives, such as universal health care.

Posted by Jeff Cornwall at 05:18 AM | Permalink

Every day was Christmas for Michael Clark, but now the holiday's over.

From the attic of his condo in Woodbridge, Va., the 38-year-old Web developer ran an Internet radio station that spun his beloved Christmas carols all year long. Then in March, a panel of federal judges sharply increased the royalty charges for playing music online.

Since then, it's been one long, silent night for Clark and his hundreds of listeners at christmasmusic247.com. His site and hundreds of other free Internet radio stations already have shut down. (Jim Puzzanghera, latimes.com)

This Sunday night an entrepreneurial seedbed that was part of the digital revolution will go silent. A federal court decided in March that web-based radio stations would now have to pay a higher royalty (a 100% increase) -- and for those still broadcasting after Sunday July 15th there would be a retroactive payment due covering the time back through 2006. There was a late appeal to the decision, but it failed this past Wednesday. The US House held hearings -- what they always do when they know they can really do nothing about something -- and as expected, did nothing.

So the countdown continues.

During time of change, those in the status quo fight change, while entrepreneurs embrace it. In the music business we have seen them suing 15-year-old girls over downloading music, and now we see them going after obscure webcasters.

Rather that embracing change and finding ways to turn it to their advantage, the status quo fights change at every turn. Eventually change always wins, but in the short run the preservers of the status quo fight on in quixotic fashion.

The entertainment industry is in a period of what my friend Peter Vaill calls permanent white water. If you fight the currents, eventually you will drown. The only way to make it to the bottom of the river is to follow where it takes you and try to avoid the obstacles and challenges that inevitably will pop up along the way.

Posted by Jeff Cornwall at 07:12 AM | Permalink

I wrote a post about the Intuit/IFTF report on small business and technology last month.

This week the International Office of the International Council for Small Business (ICSB) announced the results of a Global Technology Study conducted in collaboration with DELL Inc. The study included a 12 country survey of small business owners and decision makers and a targeted survey of international small business researchers, practitioners, and consultants conducted by ICSB. The study confirms that IT is extremely important in the growth of small businesses world-wide.

"The survey results reinforce the fact that small business owners and the experts both acknowledge the importance of IT on a global level," said Rob van der Horst, President of the ICSB. "Small businesses are using IT for multiple reasons, to better serve their customers and also to better compete in the marketplace."

According to the survey, covering Australia, Brazil, Canada, France, China, Germany, India, Japan Mexico, New Zealand, the UK, and the US, sixty-six percent (66%) of small business owners indicate that IT is extremely important to their business. At the same time, fifty-seven percent (57%) of small business experts, researchers and educators surveyed by ICSB state that IT plays an extremely important role in the growth of small businesses. The ICSB portion of the study also shows that eighty-eight percent (88%) of small business experts think that most small business owners could financially benefit from a greater awareness of IT options.

The No. 1 reason small businesses use technology is to better serve customers, followed by growth of their business and, finally, to enable them to better compete in the marketplace. Additionally, small business owners around the world indicate that when it comes to IT:

- They prefer simple service solutions because they do not have full-time dedicated IT staff and are, therefore, installing their most sophisticated IT products on their own.

- They do not have time to explore new IT products/possibilities.

- Their top IT Pain Points include: managing costs of technology, product complexity making them too dependent on an outside company for support, and issues with trial-ware installed on new computers.

Posted by Jeff Cornwall at 05:47 AM | Permalink | Comments (1)

As I have written many times, not every great idea is good business opportunity. That is why I believe that the single most important skill I can teach aspiring entrepreneurs is how to evaluate an idea and assess its promise as a viable business (most recently in a column I wrote for the Tennessean).

There is an article at Forbes by Wil Schroter that reinforces this point:

A while ago, you had an idea for a new company that would change the world. You stayed up all night feverishly sketching your plans for global domination.

Yet there you are, months later, still sitting in your cubicle, that brilliant flash a distant memory.

Wake up: Not every idea -- even a great one -- turns into a money machine. In fact, it's often just as useful to know when to dump a good idea as it is to pursue one -- if only so you can get to work on that next "great" idea.

He goes on to give advice that is consistent with my mantra on this: market, margin and me. All three have to work for an idea to really have a chance to make it as a business.

(Thanks to Matthew Nicholson for passing this along).

Posted by Jeff Cornwall at 07:50 AM | Permalink

A better regulatory environment is ahead for Tennessee's 513,000 small businesses, thanks to a new law signed by Governor Phil Bredesen. Tennessee's Regulatory Flexibility Act of 2007 will set the stage for a more transparent regulatory environment for small businesses in the state and encourage entrepreneurial success.

The Act requires state agencies to analyze the economic impact of a proposed rule on small businesses and to consider less burdensome alternatives that will accomplish the regulatory goal.

Thanks to the key business groups supporting the legislation, which included the National Federation of Independent Business (NFIB) and the Tennessee Jobs Coalition, which includes a number of leading member organizations.

Posted by Jeff Cornwall at 11:11 AM | Permalink

In the 1800s businesses set up operation along rivers to make distribution more convenient. Eventually the preference for location switched to tie in with the expanding railroad system. In the mid 1900s the preference for location again switched to either being near the new Interstate highway system or near an airport. It seems that in the age of instant gratification that we now find ourselves living in, more small businesses are setting up operations in Memphis to tie into Federal Express' main distribution center.

From the Wall Street Journal:

Many large companies have distribution centers in Memphis to maximize delivery time frames. But a growing number of smaller companies...are now moving to Memphis or adding a branch there to serve their customers faster. Small businesses are realizing that having a centralized distribution center in a city like Memphis can give them a competitive advantage. And it also provides a marketing opportunity, as companies pitch the logistical efficiency to potential clients.

Posted by Jeff Cornwall at 08:24 AM | Permalink

The latest survey from the NFIB finds small business owners losing confidence in the economy.

"Small-business owners have seen little to encourage them about growth," said NFIB Chief Economist William Dunkelberg, "but there are few signs that the economy is ready to slip into an actual recession."

Some highlights from this month's survey"

- Hiring plans among small firms faded some in June, but job openings are historically high and unemployment remains low. Seasonally adjusted, job growth was flat compared to May. However, unfilled positions were reported to actually be a bit higher in June and still a concern for business owners. Of concern for future growth is the finding that fewer small business owners have plans for new job creation.

- Capital spending and future plans for capital outlays have both weakened, indicating a more cautious stance. This seems to be tied to a view that conditions will likely not improve over the next six months.

- Small business owners are taking care to manage inventories, with only 5 percent of owners reporting a gain in inventory stocks.

- Sales seem to be flat, with about as many owners reporting increases in sales as those reporting decreases in sales. But inflation is still a worry as more report increasing prices (31%) than report decreasing prices (13%). Profits have also gotten weaker for most small businesses. Any increase in prices is being eaten up by increasing labor costs. Another factor that causes me concerns about inflation.

- Finally, borrowing is down, which is yet one more sign of caution among small business owners.

Posted by Jeff Cornwall at 06:00 AM | Permalink

The Council on Economic Competitiveness has a new report on how our economy can be more resilient in the face of economic, natural, and political crises. While the report is a very interesting read, I can offer the short version for entrepreneurial enterprises: cash is king. If you have a war chest of cash, you can weather almost any economic storm.

(via the National Dialogue on Entrepreneurship).

Posted by Jeff Cornwall at 06:56 AM | Permalink | Comments (1)

There seemed to be a lot of interest in the home office makeover I posted about a few weeks ago. Well here is another contest: a marketing makeover. Entrepreneur magazine has a $20,000 marketing makeover. All you have to do to win is tell them about your biggest on-line marketing challenge in a 100 word essay. you have until the end of August 2007 to enter.

Good luck! And feel free to share those essays with us by posting a comment on this post.

Posted by Jeff Cornwall at 06:45 AM | Permalink | Comments (1)

James Pethokoukis at US News writes that a new report from Goldman Sachs says that China is now probably the most powerful global economic engine and we all might be singing "Blame China" when the next recession hits our economy:

"So, what constitutes a recession in modern times, and when do they occur?...We suspect it would almost certainly involve a major economic slowdown in China. On almost any criteria (and topic), it is impossible to underestimate China's positive impact on the buoyancy of world growth this decade. That said, our China proprietary indicators show no sign of an imminent slowdown. In addition, our various proprietary indices suggest that the underlying global macro environment remains favorable...Moreover, if we and the consensus are correct, then the period 2003-2008 will have been one of the most powerful periods of economic growth globally since accurate data has been collectable for much of the world."

I would add the following to a list of countries to watch: Brazil, Russia and India.

Posted by Jeff Cornwall at 06:25 AM | Permalink

Although many in Generation Y (or those that many of us call the Entrepreneurial Generation) want to own a business, the odds are good that a number will never be entrepreneurs. They will need to find jobs.

But, the unique nature of this generation is proving make it quite challenging when it comes to recruiting and retaining them as employees.

Fortune on-line examines the unique nature of this new generation of workers:

"This is the most high-maintenance workforce in the history of the world," says Bruce Tulgan, the founder of leading generational-research firm RainmakerThinking. "The good news is they're also going to be the most high-performing workforce in the history of the world. They walk in with more information in their heads, more information at their fingertips - and, sure, they have high expectations, but they have the highest expectations first and foremost for themselves."

To call the change in management philosophy a true paradigm shift may be a bit strong, but it isn't that far from the truth.

Never mind that they often need an entire team - and a couple of cheerleaders - to do anything. For some of them the concept "work ethic" needs rethinking. "I had a conversation with the CFO of a big company in New York," says Tamara Erickson, co-author of the 2006 book "Workforce Crisis," "and he said, 'I can't find anyone to hire who's willing to work 60 hours a week. Can you talk to them?' And I said, "Why don't I start by talking to you? What they're really telling you is that they're sorry it takes you so long to get your work done.'"

If you have even just one position in your business to keep staffed, you need to learn about the generation coming to age and entering the workforce. They will be challenging much of what you think you know about managing workers. This article is a good start.

Thanks to Rob Hill for passing this along.

Posted by Jeff Cornwall at 05:41 PM | Permalink | Comments (2)

Entrepreneur magazine has an interesting profile of three entrepreneurs who successfully navigated the path to VC funding. Finding the right VC fit -- if your business is really VC fundable -- can build a working relationship that can benefit all involved in the deal. VCs are never simply sources of money -- they almost always become an active player in the strategic growth of the business.

Posted by Jeff Cornwall at 07:39 AM | Permalink | Comments (2)

Posted by Jeff Cornwall at 05:29 AM | Permalink | Comments (1)

Business Week recently called me to make my pitch for people who should be on the Top 30 Entrepreneurs of all time. Here is a link to their final list and here is a link to the complete slide show.

I urged them to look beyond just the amount of wealth that an entrepreneur created, and to examine how they create and what they do with that wealth:

Some founders won recognition not just for their companies' success, but for what they did with the wealth they accumulated. For Jeff Cornwall, director of the Center for Entrepreneurship at Belmont University, entrepreneurs-turned-philanthropists like Andrew Carnegie and Bill Gates made the top of his list.

"Look at entrepreneurs who had a profound impact that goes beyond just raw business success, as we often define it on Wall Street," says Cornwall, whose book on the subject, The Good Entrepreneur (Regal), will be published next year. "The great ones to me are the ones that understood they were building more than just that wealth."

Many of the pioneers we chose also created businesses that in turn encouraged others to start their own enterprises. Microloans from Muhammad Yunus' Grameen Bank have helped thousands of poor Bangladeshi women lift themselves from destitution (see BusinessWeek.com, 10/13/06, "What the Nobel Means for Microcredit"). And how many businesses has Pierre Omidyar's eBay (EBAY) made possible? "He wants to encourage free enterprise around the world," Cornwall said.

Who would your picks be for this list? Why would you choose to include them?

Posted by Jeff Cornwall at 03:30 PM | Permalink | Comments (4)

Business owners like to think that their employees are honest and care about the business almost as much as the owners do. Employee theft and dishonesty is only a problem for big business. However, the fact is that employee theft is a real issue for businesses of all sizes.

I learned this lesson at a young age in one of the businesses my father owned. For example, while in high school I worked in the marina that my dad and two other partners owned. I managed the retail part of the business, the pier as we called it, where we sold bait to fishermen, gasoline for boats, snacks, and a various other small items for people enjoying the lake. I hired some of my friends to work for me on the pier. I thought that it would be fun to work with some of my buddies. But, I soon discovered that they were stealing food and gas, and were cheating on time cards. I had to fire some kids that I thought were good friends -- a tough lesson for a sixteen-year-old.

Some instances of employee theft can be small like the ones I experienced, but some can be quite significant even for a small business.

An article in the Arizona R