The Entrepreneurial Mind

Monroe Carell, former CEO of Central Parking, talked to our students this morning about his journey of taking the eight parking lots his father owned and turning it into the largest parking company in the world.

It was interesting to hear him talk to our students about the importance of patience, especially given the impatience of GenY that I talked about in my recent interview with Inc magazine. He believes that patience is probably the most important trait of successful entrepreneurs. I agree. This will probably be the biggest lesson that the entrepreneurial Generation Y will need to learn if they hope to be success over the long-run.

Posted by Jeff Cornwall at 12:51 PM | Permalink

My column in this week's Tennessean looks at pricing strategies for start-ups.

When a business enters the market with prices well below the rest of the competitive landscape, which is common with many new entrepreneurs, they make a statement to potential customers. Setting a below market price creates a phenomenon that I call "apologizing to the market."

It's as if the entrepreneur is saying: "We are not as good as the rest, but hope our low price gets you to buy our product anyway."

Entrepreneurs need to set a price that puts their product squarely where they want to be in the minds of potential customers. "We are as good as the rest." Or "We are better than the rest."

Posted by Jeff Cornwall at 05:55 AM | Permalink | Comments (1)

Thanks to Donna Fenn for the nice comments about our program here at Belmont in her article published in Inc about the entrepreneurial --and impatient -- nature of GenY:

Now, says Jeff Cornwall, who runs the program at Belmont, "it's a whole new world." Fully 40% of undergrads come to Belmont with businesses already started -- an astounding number. "So we try to make learning so relevant to their businesses that they don’t want to leave," he says. "A lot of what drives them is impatience. They want fulfillment and success and they’re not willing to wait 10-15 years. They want it today." It’s a trait that may make GenY difficult to employ, but that could bode well for their future entrepreneurial success. What do you think? Is impatience an entrepreneurial virtue?

Posted by Jeff Cornwall at 03:14 PM | Permalink | Comments (2)

The music industry is facing an interesting puzzle these days How do you run a business where customers do not want to pay and they do not want advertising? From today's Tennessean:

Efforts to sell music by subscription have mainly failed.

Yahoo recently gave up on its Music Unlimited subscription service and sent its customers to Rhapsody, another struggling music provider.

But traditional radio's offer of free music surrounded by audio advertising also is being rejected by a generation that resents undesirable interruptions.

"They want to be the program director, and they insist that the program be free," says Jerry Del Colliano, a professor of music industry at the University of Southern California and a former executive at Top 40 WIBG in Philadelphia.

The big boys in the industry do what big boys do in any industry undergoing fundamental change -- they try to get the government to protect their interests. From TechCrunch (via Andy Tabar):

Warner Music, fully aware that the days of charging for recorded music are coming to an end, is now pushing for a music tax.

This isn’t the first time someone has called for a music tax. Peter Jenner argued for it in Europe in 2006. Trent Reznor said the same thing last year (as did the Songwriters Association of Canada)....

But Warner Music is doing more than just talking about a music tax. They’ve hired industry veteran Jim Griffin to create a new entity that would create a pool of money from user fees to be distributed to artists and copyright holders.

We may be witnessing the end of the structure of the music industry as we know it. The mass produced, mass marketed music is becoming a relic of the past. And what does the future hold?

The predictions from the Institutue for the Future about the future of small business might offer a glimpse into the future of music:

Today, there are 26 million small businesses in the U.S. that generate roughly $5 trillion in annual sales. If they were a country that would make them the 2nd largest economy in the world! Those numbers will continue to grow over the next decade as small businesses re-emerge as artisans with even more economic force.

Artisans, historically defined as skilled craftsmen who fashioned goods by hand, will re-emerge as an influential force in the coming decade. These next-gen artisans will craft their goods and shape the economy -- through upswings and downturns -- with an effect reaching far beyond their neighborhoods, or even their nations. They'll work differently than their medieval counterparts, combining brain with brawn as advances in technology and the reaches of globalization give them greater opportunities to succeed.

What would a musical artisan look like? Probably a lot like James Lee Stanley.

My wife and I first heard James Lee Stanley at a "coffee house" in the 1970s when we were attending the University of Wisconsin -- Stevens Point (WAY up north!!). James Lee was one of many songwriters who made the circuit performing on college campuses at coffee house events. (As a note of Entrepreneurial Mind trivia, I played in a couple of coffee house sessions myself). The songwriters/musicians got a small payment from the school and were allowed to sell their record albums (for the younger generation -- that is what we used to call "vinyl").

Fast forward to 2008. One of my winter projects was to convert many of our old vinyl albums into digital. When I got to our collection of records from our coffee house days, I decided to "Google" the songwriters to see what happened to them. Many had faded into obscurity before the Internet was able to immortalize them in digital splendor.

James Lee Stanley on the other hand was alive and well and still making the circuit. He had survived as an artisan in the music industry. He's got a website. And he has a blog offering "tips, hints, clues and info for the artist in us all." His blog chronicles the life of a musical artisan offering his thoughts on touring, performing, writing, studio work, contracts, stringing guitars, and so forth. He still writes music, still records and still tours.

Why does he continue to perform for well over thirty years? Not for possible fame and not for financial wealth.

What I know is that following your bliss is more rewarding than making a bunch of money at something you absolutely hate doing. I don’t feel that I’ve wasted my life or that I could have been more successful at something else. I love what I do and I love trying to get better at it and I love it that at my stage of life I still have so much passion for what I do and I love how vibrant and alive it keeps me.

So what is the future of the music industry? I hope it is not an industry propped up by government intervention as Warner Music would have it.

Instead, I hope that it is an industry sustained by talented artists -- and successful artisans -- who help us understand love, heart ache, happiness, sadness, joy, despair. I hope it is full of people like James Lee Stanley, whose view of success in his career is one we all can learn something from, be we musicians or be we entrepreneurs.

Posted by Jeff Cornwall at 10:12 AM | Permalink | Comments (1)

I've been preaching the need for entrepreneurs to practice fiscal prudence during these uncertain economic times. Keeping debt load to a minimum is one of the more important steps a business can take, due to the inevitability of rising interest rates if inflation continues to heat up. Also, banks will be coming under more pressure to clean up their loan portfolios -- this means that even if you have made all of your payments on time the bank may call your loan simply because your credit risk is too high to fit with tighter regulatory standards.

Helen Anderson at her blog called Bankaholic also worries about entrepreneurs who take on too much debt:

As an emerging entrepreneur, it is very easy to quickly accumulate debts that are substantial enough to kill your burgeoning business before it even gets off the ground. But it does not have to be that way. Take the time to examine your business workflow and you will likely discover a number of extraneous costs that can be eliminated to improve the health of your bottom line. Here are eight common practices that lead to common results; learn to avoid them and you will be uncommonly successful.

You can read her eight avoidable causes of unnecessary business debt here.

Posted by Jeff Cornwall at 08:18 AM | Permalink

One thing I think we can all agree on -- government efforts to help New Orleans in the post-Katrina recovery have resulted in minimal success.

Startup New Orleans is, instead, looking to free enterprise to rebuild the city one entrepreneur at a time.

To attract more of these types of individuals, Start Up New Orleans has been established by four of the city's young business leaders. A resource for entrepreneurs seeking information and connections to other entrepreneurs, Start Up New Orleans is designed to leverage the city's unique qualities (rich culture, low costs, economic incentives), which distinguish it from anywhere else in the United States.

According to Sean Cummings, a local developer and co-founder of Start Up New Orleans, "New Orleans has always been a beacon for people with imagination, daring, and alternative approaches to solving problems. Our mission is to attract these types of people to New Orleans, and provide them with the information and resources they need to start their businesses here."

"Silicon Valley became the nerve center for technology in the U.S. because of the investment businesses in the region made in attracting and retaining technology people," said Nic Perkin, also a co-founder of Start-Up New Orleans and partner in the New Orleans Exchange, a new technology start-up. "The same can be said for New York City with financial people. What we’re doing here in New Orleans is making this the city of choice for entrepreneurs. If you're smart, motivated and have a track record of success, we want you here."

Offering a mosaic of case studies of success and profiles of innovators whose ideas are changing the Greater New Orleans region for the better, the Start Up New Orleans website is a portal through which entrepreneurs can access information about establishing operations in New Orleans.

This project is yet another example of how social enterprise can create real social change through the free market.

Posted by Jeff Cornwall at 07:38 AM | Permalink

From James Pethokoukis at US News:

The Fed's brokering and backing of the JPMorgan-Bear Stearns deal may be just the start. Think about it: Uncle Sam might well be on the verge of doing one or more of the following: 1) refinancing a couple million mortgages and requiring lenders to write down the value of loans; 2) buying--via the Fed--billions in mortgage-backed securities; 3) creating a new government entity to nationalize troubled institutions.

Nationalizing part of the housing industry? Nationalizing health care? Sounds like we are marching down the trail to socialism. A scary outlook for our free market economy!

Posted by Jeff Cornwall at 08:40 AM | Permalink | Comments (2)

The Entrepreneurial Mind will be joining several others in the newly announced Forbes.com Business and Finance Blog Network, comprised of a community of pre-screened, influential business and financial blogs.

This is part of a growing trend among media companies to build networks of existing blogs.

The Forbes.com Blog Network's content will focus on senior business decision makers and high-net-worth investors. Topics will be relevant to the banking, trading, hedge fund management, affluent investing, and senior business decision-making communities. Participation in the network is by invitation only, and all blogs are vetted by Forbes.com editors for appropriate content, and to ensure that they are in keeping with the Forbes editorial brand.

The network will allow advertisers to target a highly engaged, exclusive niche audience of senior business decision makers and affluent investors easily and effectively. Four hundred-plus blogs have already joined the network, with many more expected to sign on before the official launch in the next few weeks.

"There is no denying the growing importance and influence of blogs within the media landscape," said Forbes.com President and Chief Executive Officer Jim Spanfeller. "Forbes.com can ensure advertisers are reaching a hard-to-find and very desirable audience within safe, well-lit environments by exclusively inviting 'best of breed' business and investing bloggers to our new Business and Finance Blog Network."

There will be a few cosmetic changes that you may notice over the next few weeks here at the Entrepreneurial Mind. Also, we will be changing the URL address of the blog to allow for the advertising that goes along with joining this network (we are currently on an "edu" address, which does not allow us to accept advertising).

But, the content will not change. I will continue to provide information and advice for entrepreneurs. I will also continue to offer my commentary on issues of public policy that impact small businesses and entrepreneurs.

Posted by Jeff Cornwall at 08:07 AM | Permalink | Comments (3)

A new Tax Foundation Fiscal Fact shows that nearly half of U.S. states tax job providers at a higher rate than any other country in the developed world. Counting the federal rate alone, the U.S. has the world's highest corporate tax rate, but including average sub-national rates (federal plus state in the U.S.), Japan edges out the U.S. for the highest-tax location.

This study breaks the tax down by state, adding each state's corporate tax rate to the federal corporate tax rate. The results show that 24 states impose, when combined with the federal rate, a higher corporate tax rate than in any other nation. In fact:

- 24 states have a combined corporate tax rate higher than top-ranked Japan.
- 32 states have a combined corporate tax rate higher than third-ranked Germany.
- 46 states have a combined corporate tax rate higher than fourth-ranked Canada.
- All 50 states have a combined corporate tax rate higher than fifth-ranked France.

Posted by Jeff Cornwall at 06:42 AM | Permalink

We're off to spend Easter Break in Miami with my parents. I'll be back some time next week.

If you get a chance, make sure to watch Belmont take on Duke in the first round of the NCAA tournament this Thursday at 7:10 p.m. EDT.

Go Bruins!!

Have a Happy Easter!

Posted by Jeff Cornwall at 05:41 AM | Permalink | Comments (1)

Congratulations to this year's Belmont business plan winners. Andy Tabar took home first place and the $5,000 Regions Bank award for our entrepreneur of the year for his web business Bizooki. Freshman Cassie Schreiner took the second place $2,000 award for CNS Photography. Emily Swinson took third for her concept plan for Riot! Clothing store.

Posted by Jeff Cornwall at 07:21 PM | Permalink

The single clenched fist lifted and ready,
Or the open hand held out and waiting.
Choose:
For we meet by one or the other.
(Carl Sandburg)

NicheGeek.com offers a wonderful example of the latter choice from the Middle East:

About five years ago, Stef Wertheimer came across Gamila Hiar, a Druze woman with no formal education who had learned the ancient art of making soap from wild herbs and olive oil as a child. At the time, Hiar was supplementing her family's income, producing about 500 soap bars a week, from a corner in a room underneath her house in Pqi'in, a village in the Galilee region of northern Israel.

Hiar, now 68, ended up at Tefen Industrial Park, a bold philanthropic enterprise located about eight miles from the Lebanese border. Wertheimer, the founder of Iscar Metalworking, established Tefen in 1985 in order to encourage entrepreneurship in one of Israel's most undeveloped and low-income regions, with a population split largely between Arabs and Jews.

(Thanks to Ben Cunningham for passing this along).

Posted by Jeff Cornwall at 05:13 AM | Permalink

Some new entrepreneurs give the name of their new business almost no thought. Others agonize over the best name to capture the true essence of their business. I always tended to fall into the latter category. With one new start up we brainstormed and debated for weeks over the best name for our new program. But then, it often takes my family days to even come up with the a name for a new dog.

The Wall Street Journal offers several factors to think about when picking a name.

There's so much riding on a company's name. It has to stand out, and be easy to remember and look up. And the pitfalls are many.... [A] bad name can fail to engage customers, or become outdated as the company grows and adds products and services.

Some of their tips:

- Be unique

- Don't be obscure

- Don't be mundane

- Make sure it hasn't been used and is open as a domain name

- And test it out on objective outsiders

Posted by Jeff Cornwall at 01:28 PM | Permalink | Comments (2)

Conventional wisdom is that having entrepreneurship in your family is an important determinant of the likelihood that you will also be an entrepreneur.

A new study finds that having friends and associates who are entrepreneurs is an even stronger force behind one's entrepreneurial aspirations.

I guess our mothers were right. It does matter who we choose to be friends with, after all.

(Thanks to Jeff Williams for passing this along).

Posted by Jeff Cornwall at 06:10 AM | Permalink

Michael Lee Stallard has just released a new e-book on the power of emotional ties in business -- he calls it the connection culture. Stallard's e-book is now available for downloading for free at changethis.com. Here is a brief description from the author:

I want to share something with you I've learned over the last decade of my life that I believe can be as helpful to you as it has been to me. In a nutshell, one of the most powerful and least understood aspects of business is how an emotional connection between management, employees and customers provides a competitive advantage. Unless the people who are part of a business feel a sense of connection -- an emotional bond that promotes trust, cooperation and esprit de corps -- they will never reach their potential as individuals, nor will the organization.

Posted by Jeff Cornwall at 06:02 AM | Permalink

My column in this week's Tennessean offers some tips on how small businesses can best prepare for the possible tough economic times ahead. This will be a new experience for most entrepreneurs in America thanks to the long economic expansion we have enjoyed for most of the past twenty years.

Unlike the last period of stagflation in the late 1970s, we are now in an entrepreneurial economy -- 50 cents of every dollar in the economy is generated by small businesses.

Small businesses are always tight on cash flow. And if their inputs of raw materials and other direct operating expenses go up, they may not be able to pass along these costs quickly enough to keep their cash flow positive. And they certainly don't have large cash reserves to ride out the recession that is part of stagflation.

Posted by Jeff Cornwall at 07:59 AM | Permalink | Comments (2)

Over twenty years ago, I participated in research that looked into factors that made some organizations more entrepreneurial than others. Of particular interest to me was why large organizations differed in their innovativeness and entrepreneurial activities.

We found that in general entrepreneurial organizations differed from what we termed "traditional" organizations in several ways:

- View of the external environment -- Entrepreneurial organizations seek to Identify opportunities. They tend to actively seek out change that can create new initiatives. Traditional organizations look at the external environment for threats to their core business, rather than for new opportunities.

- Strategy -- Entrepreneurial organizations have a more proactive strategic posture, while traditional organizations take a more defensive position focusing on protecting their core business.

- Control Systems -- Traditional organizations control primarily through expense-based budgets, while entrepreneurial organizations also look at longer-term business planning and forecasting to guide the business.

- Structure and Communication -- Traditional organizations tend to be hierarchical, centralized and formal, while entrepreneurial organizations are more decentralized and have informal communication flow.

In short, these organizations have fundamentally different cultures.

So the question then becomes can a business that has become "traditional" over time as it grows and matures become entrepreneurial again?

My experience in working with many large businesses on this is that very few are willing to take the concerted and long-term efforts necessary to truly change their culture. Most often, they simply asked me to "make their managers more entrepreneurial." But, without a supportive culture for innovation and entrepreneurship, these efforts are doomed to fail from the beginning. A few organizations have been able to change to a more entrepreneurial culture, but the larger the business the harder it becomes to make such a fundamental transformation.

My best advice is this -- if you have an entrepreneurial culture make every effort you can to preserve it. You do this by:

- hiring people with entrepreneurial orientations and who already practice "entrepreneurial thinking."

- reward innovative and creative actions independent of immediate success or outcomes.

- delegate, delegate, delegate.

- lead by example, making sure your words and actions speak loudly about your commitment to being an entrepreneurial business.

Posted by Jeff Cornwall at 06:43 AM | Permalink

I have been working with a graduate student on a project that is looking into government programs to encourage angel investment that he is conducting for a national angel network group. He sent along an article published last fall in the Economist that said the following:

First of all, stop spreading money around trying to clone lots of Silicon Valleys....

However, there is an even more important factor than money: culture. Nokia's success was not the result of far-sighted planning or subsidy by the government of Finland. One Nokia executive confides: "The biggest boost to our firm was the deregulation that followed the second world war and the government's avoidance of protectionism." One of the most innovative things Nokia did was to spot that the handset could also be a fashion accessory. And coming from such a small and open market, it was forced to think globally.

Secondly, governments keen to promote innovation need to look out for market distortions and over-regulation that can be stripped away. Entrepreneurs can face an uphill battle legally, and not just culturally, in many countries.

As the headline of this story reads, "The best thing that governments can do to encourage innovation is get out of the way."

This is one graduate student who has been paying attention to his professor!

(Thanks to Jeff Williams for passing this along).

Posted by Jeff Cornwall at 05:30 PM | Permalink

Some good news on the high growth venture financing front -- VC money is spreading out across the country.

From the New York Times (thanks to Ben Cunningham for passing this along):

Venture capital is on the move -- to New Mexico, Pittsburgh and points beyond.

A new survey shows that venture capital investment -- the stuff that fuels technology innovation -- is growing in parts of the country where it has been largely unapparent. The survey from the National Venture Capital Association, based on data provided by Thomson Financial, found that while Silicon Valley remains the hotbed of seed capital, other regions are seeing it grow more quickly.

Cities and states are pushing hard to get venture capital and angel money flowing into their economies. I am part of a planning group that is seeking to attract more high growth money to Nashville.

However, attracting venture capital is not the holy grail of entrepreneurial economic development that many people seem to assume. A few points to remember:

- Venture capital money funds only a tiny fraction of new business ventures. Most of the fuel of the entrepreneurial economy comes from small businesses that will never need nor attract venture capital. While high growth businesses are important, they are marginal players in economic growth.

- About 80-85% of start-up capital for new businesses comes from the entrepreneur and her friends and family. Most of the rest usually comes from loans.

- A typical venture capital firm receives hundreds of plans each year, considers only a handful, and usually funds only 3-5 deals a year.

- Most venture capital goes to businesses that promise very high growth, with the promise of high returns (70-100% annual return on their investment). They are looking for home-run deals.

- They tend to favor funding deals that are run by people they know from previous deals.

- Venture capital firms most often are looking for deals that need at least a $5 million investment, and most now look for $20 million deals or even larger.

Posted by Jeff Cornwall at 04:44 PM | Permalink

You get a call from someone who says that they are interested in buying your company. Your heart races and you get a tingle of excitement. Could this be it? Is it your time to finally cash in?

Slow down! You have a long road ahead (or maybe a very short road to nowhere in most cases).

BizScoops has a very clear summary of the many steps in a typical deal process. It is a great framework to help an entrepreneur understand the process of selling the business.

It is a rocky road, even at its best. When we got prepared to start the process of selling our health care business, I was lucky enough to have an attorney who gave me a strong dose of reality about how many deals fail along the way. It helped keep me grounded in what can be one of the most emotional rides of your life.

It all usually starts with a letter of inquiry. The first time you get one, the temptation is to start counting all the money you are about to get. But, hold on to your hats. This stage is about as serious as a smile and a wink at a singles bar. Any company in an acquisition mode will be spreading these around all over the place trying to get a bite. About 90% of the time these inquiries go nowhere.

If the flirtation process of the inquiry moves ahead, next will often come some sort of letter of intent. This is kind of like a promise to go steady. Both parties agree that they are seriously interested in seeing if this can move ahead. Often there is a promise of exclusivity required, but most sellers try to avoid this to keep the buyer honest and hopefully drive up the selling price with a little good old competition. More often than not, the buyer prevails in this and the seller has to promise not to entertain other offers, at least for a little while. Somewhere in this stage the basic form of the deal starts to take place. There are confidentiality agreements that allow the buyer to get enough information to float a trial offer. Remember, the deal almost never gets better for the seller past this point, so this is where you need to negotiate hard. About 50% of the deals that get to the inquiry and deal formation stage fail to make it any further. (If you are keeping score, we are now down to 5% of those initial inquiries still being active).

Next comes due diligence. This is like the stage when he or she gets to meet your parents, find out what you really keep in your sock drawer, learn what you actually make and what you spend your money on, and decide which family you are going to spend Thanksgiving with each year. The buyer will want the right to go through all of your contracts, all of your personnel records, all of your corporate minutes, and do anything else they can possible think of to dig stuff up about your business. It is an intrusive process to say the least. At this point you will likely have to share with your employees and customers that you are thinking of selling, if you haven't told them already. And the worst part is that your employees and customers may get all concerned over nothing, as about 50% of deals fail during due diligence. (We are now down to about 2.5% of the deals still being alive at this point).

Finally, if you make it through due diligence, comes the closing preparation. This is kind of like the final preparation before going to the alter, including negotiating a prenuptial agreement. Remember the old saying "the devil is in the details"? This has never been more true than in the closing process of selling a business. This is where the lawyers from both sides kick into overtime, fighting over the specific terms of the sale. Of course at this point you are ready to say, just get it over with! But, those details that your lawyer wants you to focus on and pay attention to really matter. Why? Because the deal is not really over at closing. There are hold-backs of money, warranties, and sometimes earn-outs that all can lead to major problems post sale if you are not careful during preparation of the closing documents. When your attorney says to pay attention, be patient and listen, you better pay attention, be patient and listen. If the sale of your business is not handled properly, the next stage is litigation, where all of that money you made selling the business can still be at risk. (Another large chunk of deals can fail during the closing process, leaving only about 1-2% that make if from initial inquiry to a final closing).

The moral of this tale is to be realistic, be informed, and be prepared when you enter into the exit stage of your business. And remember that while falling in love is great, it is a long way to the altar.

Posted by Jeff Cornwall at 07:30 AM | Permalink

The cynicism of publications like the New Yorker toward free markets and free enterprise never ceases to amaze me. The New Yorker published an article this month by James Surowiecki titled "What Microloans Miss" that states the following:

This vogue has translated into a flood of real dollars: institutional and individual investments in microfinance more than doubled between 2004 and 2006, to $4.4 billion, and the total volume of loans made has risen to $25 billion, according to Deutsche Bank. Unfortunately, it has also translated into a flood of hype. There's no doubt that microfinance does a tremendous amount of good, yet there are also real limits to what it can accomplish. Microloans make poor borrowers better off. But, on their own, they often don't do much to make poor countries richer.

Oh really?

We know that to build entrepreneurial economies we need to build a culture that supports and encourages entrepreneurs. Microloan programs are reshaping the culture of several third world countries by supporting thousands of new entrepreneurs who are building grassroot capitalism among populations who knew only desperate poverty. The only income that many in these societies ever received were handouts -- be they from government agencies or NGOs. Microloans have given them a path to economic freedom.

It takes time to build wealth. And real wealth comes from free enterprise. Are microloans the answer to transform an economy? Of course not. But they are a critical step in building long term transformations. Microloan programs are not just jobs programs, or worse yet, mechanisms for the redistribution of wealth from one country to another. Instead, they are creating a cultural seedbed for economic freedom and independence.

The "richness" of a country is not just measured in GDP. Microloans are making societies richer by creating hope, independence, and pride among thousands of "micro" entrepreneurs. And over the long run this will surely create monetary wealth in the countries that benefit from these efforts.

Thanks to Andy Tabar for passing this article along.

Posted by Jeff Cornwall at 09:28 AM | Permalink

Even though many have expressed frustration that we have not been able to move more quickly with regulatory reform to help small business, even the small steps taken so far are having an impact.

The SBA Office of Advocacy estimates that small businesses realized $2.6 billion in first-year cost savings and $285 million in annually recurring savings as a result of fiscal year 2007 efforts to help agencies comply with the Regulatory Flexibility Act (RFA). The law requires agencies to review the economic impacts of proposed regulations on small entities and consider less burdensome alternatives. The figures are reported in the 2007 edition of the Office of Advocacy’s annual Report on the Regulatory Flexibility Act.

Posted by Jeff Cornwall at 08:39 AM | Permalink

Mark Cuban has some wise advice for start-ups at his blog called Blog Maverick. His first three rules for start-ups all deal with the power of passion and commitment:

1. Don't start a company unless its an obsession and something you love.

2. If you have an exit strategy, its not an obsession.

3. Hire people who you think will love working there.

His commentary on exit strategies might stir a few feathers. I would say that to some degree he is right. If your only objective is a quick exit, you may end up being a unprepared if things don't go the way your plan predicts (Imagine that!!).

It also reminds me of the advice that I received early in my health care business start-up. Remember that when you run a race your goal is never the finish line. Good runners will tell you that you that to win you must give everything you have for the entire distance of the race. To accomplish this you should imagine that the finish is well past the finish line on the track.

Businesses rarely follow the script of the business plan, especially when it comes to exits. You may end up running a company for a lot longer than you had planned. Make sure it is a business that you are passionate about and that you can commit to for the indefinite future.

(Thanks to Jon Beckmann for passing this along).

Posted by Jeff Cornwall at 06:08 AM | Permalink

I started, but then deleted, several posts about Brett Favre's retirement. Brian Leaf sent along a post by Jacqui Banaszynski about Brett from a journalist's blog called Poynter Online. Although she takes a journalist/editor slant, the lessons she takes from Favre's career aptly apply to anyone in a position of leadership, including entrepreneurs.

Here is a sample of just one of the leadership lessons from Banaszynski's post:

Favre loved the job. He brought joy to work every day and let it show. He dared to grin on the field and whoop when whooping was called for and get knocked down and pop back up laughing. There was almost always a smile behind the bars of his helmet, even when he was losing.

This is what I call the "shock absorber roll" the entrepreneurial leader needs to take on. No matter how bad things get, the entrepreneur has to be the "keeper of the faith" for the venture. In an entrepreneurial venture, most of the employees know how bad things are. The business is too small to keep many secrets. They look to the entrepreneur to give them confidence that they can get through the tough times, no matter how dire things might seem.

At some point I hope to capture my own thoughts on what we can learn about leadership from Brett's career. Thanks to Banaszynski for sharing hers.

Go Pack!!!

Posted by Jeff Cornwall at 08:28 AM | Permalink

Rieva Lesonsky, Senior Vice President and Editorial Director of Entrepreneur magazine resigned this week. She told me that she is starting a new venture called SMB Connects. Its website askrieva.com should be live at the end of the month.

Posted by Jeff Cornwall at 04:34 PM | Permalink

Many home-based businesses are part of a life-style that can include home-schooling children. These "Mompreneurs" blend running a part-time home-based business with educating their children. The home-based business can be operated around the schooling schedule for the kids.

If a recent California state appellate court ruling holds up, those Mompreneurs might have to put their kids on a bus and ship them off to public school if they are not accredited teachers. From SignOnSanDiego.com:

"Parents do not have a constitutional right to home school their children," wrote Justice H. Walter Croskey in a Feb. 28 opinion signed by the two other members of the 2nd District Court of Appeal.

The ruling has rattled home-school families in San Diego County and throughout California. It is the subject of much speculation on the blogs, Web sites and networks that link thousands of home-schoolers statewide.

The purpose of a Constitution is to define what powers that government does have, not define or limit what rights citizens have under that government.

Posted by Jeff Cornwall at 06:39 AM | Permalink | Comments (3)

The flip side of the pricing post I wrote yesterday involves what I call apologizing to the market.

When we enter the market with prices well below the rest of the competitive landscape, we make a statement to the customer. "We are not as good as the rest, but hope our low price gets you to buy our product anyway." "Our quality is not up to the competitors' standards so we cannot ask the same price."

Set a price that puts you where you want to be in the customers' minds. "We are as good as the rest." Or, "We are better than the rest."

Once you position your product compared to the rest with your price, clearly offer them a temporary discount -- through a sale, coupons, etc. Make it clear that the discount is to introduce the product so they give you a try.

Posted by Jeff Cornwall at 07:04 AM | Permalink

Part of how we communicate about our products it through our pricing. A new study about placebos reinforces the psychological power of pricing. From Science Daily:

[Researchers] used a standard protocol for administering light electric shock to participants' wrists to measure their subjective rating of pain. The 82 study subjects were tested before getting the placebo and after. Half the participants were given a brochure describing the pill as a newly-approved pain-killer which cost $2.50 per dose and half were given a brochure describing it as marked down to 10 cents, without saying why.

In the full-price group, 85 percent of subjects experienced a reduction in pain after taking the placebo. In the low-price group, 61 percent said the pain was less.

Why the significant difference in the power of the placebo with the higher price?

Customers use pricing as a cue for the quality of the product or service.

There is a great example that comes from the story of a psychiatrist who tried to use pricing to phase out his practice. He was getting ready to move toward retirement. So he decided to double his rate for any new clients, assuming that nobody would pay that much for his services. But, the opposite occurred. Referrals and new patients came in at the highest rate he had ever experienced in his long career in practice. So he raised his rates again hoping this would do the trick and keep away any more new patients. However, you guessed it -- referrals increased even more.

It seems that when it is hard to objectively evaluate quality, such as the case with service businesses, consumers look to other ways to judge quality. And pricing can be one of the most powerful tools to communicate quality.

Posted by Jeff Cornwall at 06:01 AM | Permalink | Comments (1)

Jim Verdonik has an essay at The Business Journal on ten lessons for wise exit strategies that entrepreneurs can learn from this year's presidential race. A sample:

Campaigns and businesses can be bottomless pits. There's no sense throwing good money after bad. Funding a lost cause or even a decent business with limited upside potential usually doesn't make sense. Ask Mrs. Romney. Even multimillionaires have breaking points.

(Thanks to Bill Hobbs for passing this along).

Posted by Jeff Cornwall at 05:37 AM | Permalink

From the Wall Street Journal:

As Barack Obama and Hillary Clinton race around Ohio and Texas for tomorrow's primaries, they are telling a tale of economic woe. Yet the real story isn't how similar the two states are economically but how different. Texas has been prospering while Ohio lags, and the reasons are instructive about what works and what doesn't in economic policy.

And what works?

It is a stark comparison of a state that is stuck in the big government policies of the 1900s (Ohio) and one that has changed to reflect the global, entrepreneurial economic realities of today (Texas).

(Thanks to Andy Tabar, founder of Bizooki, for passing this along).

Posted by Jeff Cornwall at 05:24 AM | Permalink

Yet another Belmont student has put his idea in the mix for ideablob. This month's entrant is Lee Turley and his new business called TheSilverStreets.com:

TheSilverStreets.com is a social networking site that is aimed at providing a central, national location for automotive enthusiasts to host a personal page, meet other enthusiasts, and network at no cost. It aims to solve the huge communication and organizational barriers in the automotive community. All the while using its position to make changes in communities through local involvement and high ethical standards. It's more than a website!

Please go to ideablob.com and vote for Lee!!

Posted by Jeff Cornwall at 01:40 PM | Permalink

The Kauffman Foundation has issued a new report that reviews the most effective public policy to support entrepreneurial development. Their findings:

...[W]e find that the strongest consensus supports streamlining of local regulatory approvals and limits on progressive taxation at the state and local levels. Several other local policies also should facilitate entrepreneurial growth: congestion pricing to relieve traffic congestion; investments in local schools, amenities, and transportation infrastructure; and limited recognition by states of non-compete clauses in business contracts. There is as yet little evidence to support the targeted government support of research, particular industries, or firms.

Or in other words -- cut taxes and get government out of the way.

Hats off to the folks at Kauffman on this one. They have not always seen it this way, having favored a more socialistic approach to entrepreneurship policy (i.e., government picks and controls the winners through tax and other policies) in the past.

Here is a link to the complete report.

Here is a link to the summary.

Posted by Jeff Cornwall at 09:55 AM | Permalink

My column this week at the Tennessean is about the growing trend of social entrepreneurs in our culture:

There is a new breed of entrepreneur in America. Rather than using entrepreneurship as a path to wealth, they are using it as a means to create positive social change.

They are known as social entrepreneurs -- a trend that can encompass any organization, profit or nonprofit, that has a social mission.

Social entrepreneurs are increasingly approaching social change in a different way than we've seen in the past. Rather than rely on fundraising and grants from foundations to grow large nonprofits, these young social entrepreneurs attempt to blend free market capitalism with their favorite social causes.

Posted by Jeff Cornwall at 06:31 AM | Permalink | Comments (1)

Belmont's business program cracked the Top Undergraduate Business Programs in Business Week this year for the first time. We came in at 89th!

The reason for our emergence into this elite list of schools: "music and entrepreneurship programs win raves."

Posted by Jeff Cornwall at 07:39 AM |