The Entrepreneurial Mind

Many collegiate entrepreneurs are taking advantage of the growing number of student business hatcheries popping up on college campuses. Hatcheries offer students access to space, technology, expertise, and experiential learning as they start and grow their businesses while in school. It allows them to take their businesses out of the dorms and run them with better resources, a more professional setting, and more support from mentors and peers.

One of the students who took full advantage of our hatchery here at Belmont was written up in Milt Capps' Venture Nashville Connections.

Reality pushed Jennings toward his dream. He explained yesterday that he realized during his third year at Belmont that his love of music (guitar, trumpet) was unlikely, by itself, to produce the income and standing he wanted as a songwriter and producer. An earlier venture with several other students -- MuziK Cellar Music -- didn't last. However, the lessons Jennings learned in that outing helped sharpen his judgment and his focus.

Determined to make a living in entertainment, he undertook double music-business and entrepreneurship majors and added a fifth year to his college career, which ends next month.

Cornwall's support and Belmont's Hatchery student-business incubator have been key success factors. Nearly 60 students use Belmont's Hatchery.

Posted by Jeff Cornwall at 05:26 AM | Permalink

The Brookings Institution has been busy pushing forward on an agenda for socialized entrepreneurship.

Two items from the National Dialogue on Entrepreneurship this week caught my eye (and raised the hair on the back of my neck).

First:

A new report from the Information Technology and Innovation Foundation and the Brookings Institution suggests that a new National Innovation Foundation could do a better job of structuring key Federal agencies to support innovation. The study recommends that a newly created National Innovation Foundation serve as the Federal government’s primary support mechanism and point of contact for issues related to innovation. The report proposes three possible structures for a new NIF: housed within the Commerce Department; a publicly-sponsored corporation similar to the Corporation for Public Broadcasting; and, as an independent federal agency like the National Science Foundation.

I must admit I would never have dreamed of modeling anything after the Corporation for Public Broadcasting.

Next. another report. I should note that both of these are from the same series, which they call Blueprint for American Prosperity: Unleashing the Potential of a Metropolitan Nation:

A new Brookings Institution study contends that current Federal policies do too little to promote cluster creation, i.e. agglomerations of businesses, service providers, and other partners who operate in a particular field or sector. As part of a wider set of programs to spur innovation, the report recommends that policymakers initiate a new set of programs to catalyze cluster activity across the US. This effort would contain two components. First, a Cluster Information Center would help map cluster initiatives across the US and provide research and evaluation about these programs. This effort is modeled on a successful European effort, the European Cluster Observatory. Second, a new Federal grant program (of about $360 million) to help fund state and regional cluster initiatives. This effort would help seed state and local innovations and also build closer connections between Federal, state and local partners.

And while we're at it, let's create another federal agency promoting rent seeking and model it after a European agency that tries to steer business activity to advance social agendas.

No thanks, Brookings! Keep your hands off American free enterprise! Markets work. Federal bureaucracies do not.

Posted by Jeff Cornwall at 05:24 AM | Permalink | Comments (1)

My column in this week's Tennessean looks at the ins and outs of niche markets.

Generally, a niche strategy is a good way to enter the market for a new business. It usually takes fewer resources for the startup because of lower marketing costs and the ability to start on a smaller scale.

Success rates tend to be higher for niche businesses since they have less direct competition.

Without much competition, niche businesses often can charge higher prices, which allows for quicker positive cash flow during startup and better margins once the company is profitable.

But, entrepreneurs also should be cautious when picking a niche. Here are some things to consider.

My column offers five key tips for finding success in a niche market.

Posted by Jeff Cornwall at 06:05 AM | Permalink | Comments (1)

Ideablob.com attracts a large number of ideas for social ventures. This one caught my attention as continue as guest advisor for this week. Seeding Labs reclaims and refurbishes laboratory equipment from universities, hospitals and biotechnology companies in order to equip talented scientists and clinicians living and working in the developing world.

Seeding Labs aims to transform the global map of scientific innovation hubs. By refurbishing laboratory equipment from universities and biotechnology companies in the United States, we equip talented scientists working in the developing world and reduce the environmental burden in the U.S. We believe that talent is everywhere, and that scientific research is the key to improvements in education, healthcare, environmental stewardship and a thriving modern economy. Our goal is to help our colleagues pursue the issues that matter most to them, at the same time connecting scientific communities across international borders. Visit us at www.seedinglabs.org.

My advice:

I would build partnerships with universities through their new interest in social entrepreneurship and service learning. Rather than just plug into their research labs, also tie into their academic programs dedicated to either social entrepreneurship and/or service learning.

Social entrepreneurship is popping up all over the country. Some schools have developed single courses, while others have developed full programs (for example, here at Belmont University we will be launching a Social Entrepreneurship major this coming fall).

Service learning is more established in academia. Using this pedagogy professors add service projects to classes that apply what students are learning to real situations that are tied to social issues in the community or around the world. Some schools have campus wide requirements for students to get involved in service learning (Duke just got millions of dollars for such an initiative).

Don't assume that the research labs on campus interact with social entrepreneurship and service learning programs on their campuses. Universities are notorious for creating academic silos. You may need to create the bridge for them. Once you do, you will not only have access to the laboratory equipment, but to a ready army of skilled and talented volunteers. There is a good chance that they also have access to funding to help with each project.

Posted by Jeff Cornwall at 07:48 AM | Permalink | Comments (1)

The average start-up in the US has about $10,000 in funding to get things rolling. A common myth is that if you start small you will stay small. Not true. Even the most cash tight bootstrappers can build a business that is scalable.

From Texasmonthly.com:

Founded Sweet Leaf Tea Company in 1998 with $10,000 and a recipe from his grandmother / Now markets ten flavors of bottled iced tea in all fifty states and has doubled sales each year for the past five years / Announced in April that he had raised $18 million in private equity.

This story is worth clicking through to hear about this success story from the entrepreneur's own words.

(Thanks to Bro' Steve for passing this along).

Posted by Jeff Cornwall at 07:33 AM | Permalink

I was at a meeting attended by several local entrepreneurs the other morning. They all agreed that everyone is worried that the economy is in bad shape, but none of them were really feeling recessionary pressures in their businesses. The only thing that worried them directly was inflation.

In economics, perception can very quickly become reality. With enough talk about a bad economy we can all start behaving like there is poor economic conditions.

Take the latest results from the OPEN survey from American Express Small Business Monitor as a case in point.

Optimism among small business owners is at the lowest point in the six-year history of the OPEN survey. The economy is cited by four in ten small business owners (44%) as the issue that will most sway their decision on the next president of the United States, followed at a distance by homeland security (cited by 16%).

HOWEVER, despite concerns over the economy, growth is still a priority for entrepreneurs as seven in ten business owners plan to grow their business over the next six months and 31% of entrepreneurs report plans to hire, up 7% from the fall.

That is the psychology of mass panic that can make a weak economy seem worse than it really is. The media loves bad news (as they used to say -- "It sells newspapers"), so they have an incentive to make even worrisome news about the economy sound much more dire than it actually is at the present time. It can also lead to behaviors that make the economy become worse than it otherwise might have.

Are we in a slow down? Yes. Is it across all sectors? No. Is it across all geographic regions? Definitely not. Are we in a recession? Not yet, and if small business has its way and pursues the growth plans they are talking about, I doubt we will actually experience a true recession.

However, I still remain very concerned about inflation. Very, very concerned.

Posted by Jeff Cornwall at 09:50 AM | Permalink | Comments (2)

The idea I picked to give advice to for ideablob.com Week at the Entrepreneurial Mind is one that offers an innovative product tied to wellness.

Individuals begin fitness programs each year, but set unrealistic goals or improperly structure their fitness programs and eventually lose interest. I'm developing a portable touch-screen device equipped with a heart rate monitor, acting as a personal trainer. The device uploads workouts from our website, where based off an individual’s fitness goals, they can build their own workout or use one of ours. The device displays progress charts, advice for future workouts, and can incorporate daily nutrition information. The website also functions as a social networking website centered around device results for exercise gurus, athletes, and anyone who enjoys living a healthy lifestyle.

While I think this is a cool idea, the entrepreneurs need to keep their eye on the big picture -- that is the future of healthcare policy in the US -- and not just their customers and competitors.

My advice:

Wellness might well become the "next big thing" in healthcare. The reason I say "might" is due to the uncertainty of the elective and what healthcare plan ends up being passed in the next president's term.

This is a great example of a good idea that may blossom or fade due to macro trends outside of the entrepreneur's control.

If healthcare stays a primarily private sector industry, products like yours has a bright future. Health plans will be trying to implement more programs and initiatives to help their population of covered lives get healthier. As a society we have become too sedentary and are eating too many calories. It is taking its toll on health care costs. Insurance plans are trying to find ways to incentivize people to get healthier and use fewer resources for healthcare. Your product would be a great tool for this.

If healthcare goes with a more public payment model in the next few years, we will likely have all attention focused on lobbying to keep coverage for certain illnesses. We will also see resources going to create healthcare entities that will be able to maximize their market share of federalized healthcare dollars (think economic rent seeking). Not as much money will be going to wellness.

When I was and entrepreneur in the healthcare industry we paid attention to the macro changes in the 1980s and 1990s. We saw a shift from insurance to managed care and positioned our business accordingly. We saw Medicaid being pushed down from the federal level to individual states -- again we shaped our strategy to meet this macro trend. We still paid attention to our customers and competition, but those really involved more short-term tactical decisions. Our strategy was shaped by the direction of those broader trends.

Don't just look at your competitive environment -- keep your eye on the macro trends that may shape your future. See which way the election takes our country as it will have a huge impact on healthcare and on the wellness sector you are operating in with your new product.

Posted by Jeff Cornwall at 09:06 AM | Permalink

As a professor, I could not let this idea at ideablob.com go by without offering some advice:

People would become members of the site, and sell the copy write of a term paper they have written. Not as to be copied as plagiarism but as a foundation for their own paper. The seller would provide a brief description of their paper including length, synopsis and assignment. Students would build a reputation depending on how good of an idea they had, as according to the purchasing student.

What will you do if you win $10,000 for this idea?

To establish the website, and promote it. I would make sure everyone knows it wouldn't be just a way for student to cheat out on writing a paper. Sometimes the hardest part of writing a paper is getting the ball rolling, by buying someones paper and using it as a foundation it would get the ball rolling and help students write more complete essays.

My advice:

As a college professor -- and one who has written on business ethics from time to time -- I could not let this opportunity pass me by.

One of the entrepreneurial virtues that my co-author Prof. Michael Naughton from the U of St. Thomas and I write about in our soon to be released book is prudence. To be a prudent entrepreneur one pursues good ends while being careful stewards of the limited resources that are available for the venture.

The entrepreneur who pursues morally good ends, but does not employ effective and efficient means given the resources they have is "well intentioned."

The entrepreneur who pursues "bad" ends, and does not employ effective and efficient means is "incompetent."

The entrepreneur who pursues "bad" ends, but is effective and efficient is "cunning."

Finally, the entrepreneur who pursues good ends with effective and efficient means is "prudent." That is the desirable state for those who strive to be morally good entrepreneurs.

Let's look at this idea using this framework.

It sounds like the people behind the idea have thought through many of the logistics. They are on their way to effective and efficient means.

However, I worry about the ends. While they do not encourage cheating or plagiarism, they sure will facilitate it. Rather than selling papers, could they not find a business model that creates a writing tool that helps students to "get the ball rolling" on writing without giving them an actual term paper?

If their ends are really to help students become better at writing papers, perhaps they should go back to the drawing board to find a new method that does not tempt their customers to be unethical and break all academic codes known to man.

Posted by Jeff Cornwall at 12:48 PM | Permalink | Comments (2)

Today is the mythical day known as Tax Freedom Day. For some this day actually occurs around Valentine's Day, while for others it is actually in the dog days of summer.

Here is a summary explanation from the Tax Foundation:

Tax Freedom Day will arrive on April 23 this year, the 113th day of 2008 (ignoring Leap Day). That means Americans will work nearly four months of the year, from January 1 to April 23, before they have earned enough money to pay this year's tax obligations at the federal, state and local levels.

Americans, as a whole, work a significant number of days each year to pay for things other than government, but nothing else is so expensive. Americans will work longer to pay for government (113 days) than they will for food, clothing and housing combined (108 days). In fact, Americans will work longer to afford federal taxes alone (74 days) than they will to afford housing (60 days). As a group, Americans will also work longer to pay state and local taxes than they will to pay for food.

Tax Freedom Day had arrived later for the four previous years, but due to an expected slowdown in the nation's economy and a massive one-time fiscal stimulus tax cut passed earlier this year, Tax Freedom Day is projected to arrive three days earlier this year compared to last year.

Here is a graphic of what we spend our income on in the US:

Or for a lighter version of the same story check out this YouTube music video of Tax Freedom Day.

If the three presidential candidates have their way, it could be much later in the year for all of us within a few years. In fact, it might even make the late 1990s (during the last Clinton administration) look good. Here is tax freedom day graphed over time:

Posted by Jeff Cornwall at 09:55 AM | Permalink

This morning's installment for ideablob.com Week at the Entrepreneurial Mind looks at an idea to develop sportswear for women:

Vintage Blue is a vintage inspired sportswear line for women. We hold the exclusive license to the All American Girls Professional Baseball League featured in the film A League of their Own. We create t-shirts with graphics from the 1940's and 50's. Our line is environmentally friendly using non-toxic dyes and 100% organic cotton tees. We also give back to the community with our internship program encouraging young women to be positive, motivated individuals while learning the ins and outs of the fashion industry. We will also donate 5% of our profit to the Achieving Independence Center Female Mentoring which helps young women achieve self-sufficiency through mentoring relationships.

They stated that their main concern is funding, so here is my advice:

Funding for this venture is probably limited to family and friends.

Your market is probably too limited and does not offer enough growth potential for traditional equity investment (angels and VCs). Not enough growth potential, especially using a movie that is several years old as your theme. Don't feel bad about this, as they actually only fund a fraction of a percent of deals in the US.

Banks will only loan you money on your personal credit for a start-up like this. If you have homes that you can borrow against you should be able to get some help from a bank.

So that leaves friends and family. Treat their money as a true outside investment. Set up terms and conditions. Be realistic with them about potential returns and all of the risks. Thanksgiving dinner comes every year, so let's avoid creating family problems that center around unrealized expectations of any investment. Families can be complicated enough as it is!

Posted by Jeff Cornwall at 05:37 AM | Permalink

Social entrepreneur Sam Davidson was offered the following advice from one of the founders of a fair trade coffee venture called Higher Ground located in Alabama:

It would be moronic to push an issue in the marketplace if you couldn't be competitive with it.

Even social ventures need to understand the fundamentals of good business opportunities. There needs to be a big enough market that will pay enough money to make the business financially viable.

Sam went on to make this observation on this advice at his blog:

No matter how well-meaning Higher Ground was, if it didn't make a great-tasting coffee that was competitively priced, no one would buy it, and moreover, no one would listen. But because they're able to offer a tasty brew, people take notice and happily support their efforts to improve the lives of coffee growers abroad and nonprofits at home.

That is why we call them social entrepreneurs -- they need to be effective entrepreneurs if they want to help their particular cause.

Posted by Jeff Cornwall at 06:24 AM | Permalink

Tune Your World = Music + Microfinance is the next idea I am offering advice as part of ideablob.com Week at the Entrepreneurial Mind. This one caught my attention as it addresses an issue that I hear about every day here in Nashville -- the radical changes happening in the music industry.

Here is their idea:

Every artist has the same problem of obtaining capital for their next recording. Tune Your World provides the solution of applying the principles of micro-financing to the music industry. Our groundbreaking approach is the creation of peer-to-peer micro-financing of new music projects - enabling fans to deliver start-up capital to aspiring musicians from developing countries around the world. Tune Your World operates on a people-to-people model. Musicians obtain funding for new recordings directly from their fans without giving up ownership or control. Our mission is to revitalize the music industry in places where the music industry has never worked very well. www.tuneyourworld.com

My advice:

I like this idea. It addresses a real need for struggling musicians in the digital age -- seed funding for recording.

The biggest challenge is going to be getting the musicians to repay their micro-investors. One of the things that makes the micro finance program Kiva.org so compelling is the high rate of repayment of the micro loans -- I believe it is about 97%. If you cannot achieve that kind of repayment, you are not likely to have repeat "investors." Without people coming back time and time again to reinvest in artists your Tune Your World will not be as likely to become a sustainable program. You need to help the musicians develop business models that will enable them to repay their micro investments.

Posted by Jeff Cornwall at 06:08 AM | Permalink | Comments (1)

In my third installment for ideablob.com Week at the Entrepreneurial Mind I chose to offer advice to the idea titled Helping Teachers PayOff Student Loans. Here is their idea:

I am currently working on starting a non-for-profit to help third-year teachers pay off student loans. Do you know that most teacher's loans are three times what they will make in one year as a first-year teacher? Do you know that teacher's annual increases do not even cover cost-of-living expenses? Do you know that most new teachers have to work a part-time job at night or on the weekends (and during the summer when they should be able to refresh and plan for the next year's class) just to make ends meet? That means many of them can't make the full commitment to the kids which is the reason they opted to get certified to and take a lower paying job to begin with.

Here is my advice:

You need to find start-up money from a foundation that supports education. Do some searches to see which foundations give money in that space. Foundations always have detailed information of specifically what they will and won't give to, and often include a list of previous grants that they have awarded. You can find all of this on their websites. I would suggest you use the $10,000 as seed money to develop a strong grant proposal that meets their criteria. Hire a grant writing specialist as a consultant to help attract the big money you will need for this program.

Also, think about setting up an endowment with the gifts you receive. Donors like a gift that keeps on giving. By setting up the donations in an endowment you only use the earnings from the gifts each year to pay out to teachers.

I would make a giving the awards to teachers a competitive process. Develop criteria, such as community service or their engagement with students beyond the classroom, as how you evaluate each teacher's application.

Posted by Jeff Cornwall at 05:45 AM | Permalink

The second idea that I am commenting on from ideablob.com is College Connection Website - One stop location for all college students to find entertainment, events, and employment in their region:

The proposed website would effectively connect college students in a particular region, in this first case the greater Harrisburg metro area, alerting them to the best entertainment, events, discounts, internships, job openings, things to do, and places to see in the region. Part of the initiative also includes a student comprised team in charge of facilitating monthly events that will allow students from all participating schools to interact, network, and get connected to the Harrisburg area. The initiative is specifically targeting the brain drain in the region, facilitating student engagement and personal connection to the area so that they'll be more inclined to stay after graduation.

My advice:

My question to you is this a simple one. Where is the revenue stream?

An opportunity needs not only a market need, which you have addressed, but the ability to generate cash flow to support the costs and earn a profit (or if it is a social venture, build a reserve fund).

I am not saying that there is no possible revenue stream. I just don't see that you have thought about that part of the idea.

The registration fees and money from student government suggested by the previous comment is possible, but I doubt that this would amount to much. Who would pay to support this site? Advertisers? Maybe, but they to see the likelihood of volume and the right people coming to the site.

Posted by Jeff Cornwall at 11:19 AM | Permalink

You might have thought this was Small Business Week -- however, it is really ideablob.com Week here at the Entrepreneurial Mind. They have asked me to be the guest advisor for the week. I will be posting some of the ideas from ideablob.com along with my advice.

Here is my first installment.

The idea:

My fiancee and I were in a national student organization event in Atlanta when we joined the Entrepreneurial Challenge. We came up with The Hummus House. Our slogan was 'Hummus where the heart is'. Essentially it would be a restaurant that produced and sold a large variety of hummus flavor, bread/pita, chips, and for non-hummus enthusiasts we could sell salsa, chips, sandwiches, and salads. We would also provide a list of wines or drinks that would compliment the flavors of the hummus. The restaurant would have graffiti on the walls, local artists paintings mounted on the walls, warm lighting and a welcoming atmosphere with local bands/musicians performing.

My Advice:

There is a reason that bankers run screaming from restaurants -- they have high failure rates.

That being said, it always amazes me how well certain niche restaurants can do in the market. Before launching this concept, make sure that the market is big enough and passionate enough to support this very specific niche.

You need to find a location that has enough people passionate enough about hummus -- sorry that ain't me -- so that you can sustain enough traffic to make this concept work.

Know that any niche restaurant may end up being a fad. Keep your debt low and your lease short-term so if the passion for hummus passes, you can ease out of the business with little residual financial burden.

Posted by Jeff Cornwall at 11:11 AM | Permalink | Comments (1)

Many who celebrate Earth Day are not the most capitalistic people I have ever met. But entrepreneurship -- capitalism at its purest -- has become a part of the environmental movement. There are now countless social and commercial entrepreneurs finding market solutions for their environmental concerns.

Just one example -- A Piece Of Cleveland.

What do they do? They take materials from old buildings being torn down in the aging city of Cleveland, Ohio and turn them into furniture and other products. From their website:

The products that we offer are made from materials carefully extracted from office buildings, residential homes, churches, schools and other historical structures in the city. Countless people, maybe some who were our ancestors, have walked on, sat in, and used the materials that we are rescuing to create our products. By using durable and beautiful wood, glass and metals found in these buildings, we allow legacies to live on.

(Thanks to Andy Tabar for passing this along).

Posted by Jeff Cornwall at 05:55 AM | Permalink

From the testimony of the Tax Foundation's Vice President for Economic Policy Robert J. Carroll before the Senate Finance Committee this week:

...[F]undamental tax reform has the potential to reduce the compliance burdens imposed on both households and businesses, and at the same time create an environment for greater economic growth in the long-term in a manner that is appropriately fair.

A fundamental issue...[is] the choice between income-based and consumption-based taxes. Consumption taxes generally reduce the tax on saving and investment, and... [will] boost economic performance and living standards in the longer term, in a way that retained the current progressivity of the tax system.

...[R]eforming the corporate income tax is becoming more urgent as our major trading partners around the world take the initiative.

Tax compliance (not taxes, just the paper work they create) costs small businesses more than $1,300 per employee per year. That is $26,000 for a small business with twenty employees that could have gone to adding another employee or expansion.

The corporate tax levied by most states in the US is higher than the corporate tax rate of country of France. Even socialist nations are finding the benefits of lower tax rates for their economies.

But, there is no relief in sight for those of us in the US. None of the three remaining Presidential candidates have real tax reform or tax cuts in their platforms. All three include policies that will significantly expand government, and in turn, will create the need for higher taxes to support their new initiatives.

Not only are jobs going overseas, but so are the entrepreneurs we need to help transform our economy. We have always benefited from the entrepreneurial spirit of our immigrants. More and more immigrant entrepreneurs are finding that they can find more opportunity in their home countries.

Bad news all around for the long-term outlook for this entrepreneurial economy.

Posted by Jeff Cornwall at 05:45 AM | Permalink | Comments (2)

Here are the two winners from Belmont of the Entrepreneurial Challenge -- Sally Munns and Kevin Jennings -- with Will Robinson from ideablob.com

Here is Belmont's 2008 Delta Epsilon Chi Team.

Posted by Jeff Cornwall at 05:50 AM | Permalink

I blogged about the Kiva business for business credit card project with Avanta yesterday. Here is a link to the blog that they have created to chronicle some of the stories from this project and the on-line community of entrepreneurs they are helping to create. Right now the bloggers are documenting the Kiva-funded Somoan seamstress' trip to the United States for the KivaB4B launch party. At the party she will meet one of her American supporters, a film maker from San Francisco.

Posted by Jeff Cornwall at 01:24 PM | Permalink | Comments (1)

Sixteen of our students traveled to Atlanta to participate in the International meeting of Delta Epsilon Chi, which is the collegiate division of DECA.

Over 1500 college students participate in various business competitions.

58 teams with over 100 students participated in the Entrepreneurial Challenge -- one of the featured events of this conference. It is a three day event in which students (in teams of 1-3) come up with a business idea for a specific industry or trend (this year it had to be a "green" business). They research the idea and make a pitch for a business proposal to a series of business executives who serve as judges. The finalists all had to present to a panel of five executives on Tuesday morning.

Belmont had 5 of the final 10 teams!

1st place -- Belmont -- Kevin Jennings (Entrepreneurship and Music Business
major -- from Nashville) and Sally Munns (Entrepreneurship major from
Brentwood) Winning Team members share $5,000 Don DeBolt Scholarship and up to $3,000 in travel awards to attend the International Franchise Association Annual Meeting to present their winning proposal. They also got $10,000 in seed money from ideablob.com.

2nd place -- Belmont -- Noah Curran (International Business/Entrepreneurship
concentration) and Julie Zaloba (Entrepreneurship major) -- $3,000 prize

In addition to being on the first place team in the Entrepreneurial Challenge, Kevin Jennings also took 1st place in the Business Plan Competition for his business soundAFX, which he currently runs in our hatchery program.

The advisers for the Belmont team in this competition included Becky Gann (program coordinator for our Center for Entrepreneurship), Robert Lambert (professor of Marketing), Jose Gonzalez (Instructor of Entrepreneurship), and me.

I will post a few pictures from the event as soon as I get them from our team members.

Go Belmont!!

Posted by Jeff Cornwall at 11:43 AM | Permalink | Comments (2)

I have written before about Kiva, "the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world. Kiva's mission is to connect people through lending for the sake of alleviating poverty."

Advanta Corp. (issuers of credit cards to small business owners) and Kiva have now launched the KivaB4B Project, a joint initiative announced today that encourages small business owners and entrepreneurs in the U.S. to support entrepreneurs in developing countries. Through the initiative, Advanta customers can make grants -- using an Advanta business credit card -- to Kiva for entrepreneurs of their choice, and Advanta will match each grant, dollar for dollar, up to $200 per month per account.

"In our years of working with small business owners, we’ve found that many of them remember the moment someone gave them inspiration, some good advice, or a little cash to get things going," said Ami Kassar, Advanta's Chief Innovation Officer (also behind their popular ideablob.com site). "Now, through KivaB4B, American small business owners can offer that same ray of hope to entrepreneurs in developing countries."

"This project presents an incredible opportunity for entrepreneurs in the developing world," said Premal Shah, President of Kiva.

This is a really cool project that deserves consideration. I will be filling out my own application for a Kiva Card this week!

Posted by Jeff Cornwall at 12:27 PM | Permalink | Comments (3)

Angel investors were busy, but a bit more cautious in 2007, according to the latest study from the Center for Venture Research of the University of New Hampshire. There was little growth over the previous year in their investment activity.

They stuck to familiar ground in terms of industry sectors that they favored.

• Software 27% of total angel investments
• - Healthcare Services/Medical Devices and Equipment 19%
• Biotech 12%.
• Industrial/Energy 8% (green technologies moved this up a bit)
• Retail 6%
• Media 5%

Their conservative stance also showed up on the stage of deals that they favored. While seed and start-up capital, long the domain of angels, was 39% of angel deals, they showed more interest in later stage deals with more proven track records. The survey found that 35% went to post start-up ventures and 21% was directed toward even later stage expansion investments.

Exit activity showed that in the post Sarbanes-Oxley world mergers and acquisitions still dominate exit events -- 65%. IPOs were an anemic 4% of exits. Bankruptcies accounted for 27% of the exits.

Rates of return continue to hover in the 20-40% range.

Posted by Jeff Cornwall at 05:34 AM | Permalink

I was sad to hear the news that Jeffry A. Timmons, the Franklin W. Olin Distinguished Professor in Entrepreneurship at Babson College, died unexpectedly on April 8, 2008, at his winter home in South Carolina. He was 66.

Timmons was one of the pioneers in the development of entrepreneurship education and research in America. He was internationally recognized as a leading authority for his research, innovative curriculum development, and teaching in entrepreneurship, new ventures, entrepreneurial finance and venture capital.

Inc. magazine called him "The Johnny Appleseed of Entrepreneurship Education" and his doctoral dissertation, "Entrepreneurial and Leadership Development in an Inner City Ghetto and a Rural Depressed Area (Harvard, 1971)" was the first use of the word "entrepreneurial" in a dissertation title. He created the first business plan competition at the college level in 1984 at Babson College.

In the early 1980s when I was a young professor trying to get an entrepreneurship program going, Jeff was always willing to offer advice and encouragement. I will always remember his kindness.

May he rest in peace.

Posted by Jeff Cornwall at 05:35 AM | Permalink | Comments (1)

In my column this week at the Tennessean I talk about the exit process:

The formal process of selling a business usually starts with a letter of inquiry. The first time you get one, the temptation is to start counting all the money you think you are about to get.

But this stage is about as serious as a smile and a wink at a singles bar. About 90 percent of the time these inquiries go nowhere.

Posted by Jeff Cornwall at 06:49 AM | Permalink

Entrepreneur.com predicts ten businesses that will go the way of buggy whip manufacturers:

- Record stores: My students would agree, They have already transitioned our campus-based business that was a record store into a "dorm store"

- Camera film manufacturing: there goes my Instamatic

- Crop dusters

- Gay bars

- Newspapers:Can blogs be next??

- Pay phones: When was the last time you actually saw one?

- Used bookstores: Does that mean that students will also stop reselling my textbooks?

- Piggy banks

- Telemarketing: Yeah, right....

- Coin-operated arcades

Can you think of any you want to add?

Posted by Jeff Cornwall at 05:14 AM | Permalink | Comments (6)

The House Committee on Small Business is talking about using the tax code to stimulate small businesses the economy. From their news release (via beSpacific and Ben Cunningham):

Times change and so should the tax code, but with tax day less than a week away millions of entrepreneurs are facing outdated IRS provisions that stifle their ability to boost the economy. Today, the House Committee on Small Business heard from a panel of business owners and tax experts at a hearing focused on modernizing sections of the code while making it more small business friendly. As part of the forum, the Committee also issued a report titled "Seven Ways to Stimulate the Economy by Updating the Internal Revenue Code," which provides specific recommendations on fixing provisions that impact small firms.

What they are proposing is what is euphemistically known as tax reform. However, note the following graph:

See the spike in the number of pages in the tax code after the early 1980s? That's what happened after the Reagan "tax reform". The tax code actually got much more complicated when they sold it as a "tax simplification."

Finding seven ways to tweak the current code will do nothing to help small businesses in the economy. Pulling the current tax code out by the roots and starting fresh with a sales-based federal tax that is protected from special interest meddling will. Small businesses spends over $1,300 per employee just on tax compliance under the current system.

Beware of the Trojan horse called "tax reform." It will only make things worse.

Posted by Jeff Cornwall at 01:24 PM | Permalink | Comments (2)

There is more talk these days from Washington and from those on the campaign trail that government needs to take an active role guiding the economy. With entrepreneurship the driving force in our economy, and for that matter in most economies around the globe, this is an alarming trend. Sen. Clinton is talking about the need for the federal government to set our economic priorities and strategies.

This is absolutely counter to all that we know about the appropriate role for government in entrepreneurially-based economies. The more government gets involved in managing economies, the more complex the tax code gets (they use this to shape our behaviors) and the more regulation inevitably follows. These are two of the major factors that stifle entrepreneurial activity.

But, the activist approach to economic policy (what I like to call socialized entrepreneurship) also creates lots of mischief that leads to even more regulation and government intervention at the micro level.

Case in point from governmentexecutive.com:

The chairman of the Senate Small Business and Entrepreneurship Committee is demanding an explanation from the State and Defense departments for how a wealthy 22-year-old arms dealer, under investigation for providing decades-old ammunition to Afghan security forces, was inappropriately classified as a small disadvantaged business on dozens of federal contracts.

Responding to an April 3 report from Government Executive, Sen. John Kerry, D-Mass., sent letters to Defense Secretary Robert Gates and Secretary of State Condoleezza Rice on Thursday requesting responses about AEY Inc. of Miami, and its owner, Efraim Diveroli.

Kerry is interested in how AEY obtained its SDB designation -- despite never requesting or garnering such a classification from the Small Business Administration -- and if the company received any preferential treatment as a result of the mistake.

Just as people seek to exploit opportunities in the market, they will seek to exploit artificial market opportunities created by government policies. That is why big government Republicans are quite happy with the status quo of the current 65,000 page tax code. Those who help shape the code through lobbying also get to exploit it economically.

But, not to worry. Sen. Kerry has it all under control. He has called for hearings, which will surely solve all of the problems created by the regulatory mess he and others in Washington helped to create in the first place. More rules, more regulation, more hearings..... it never ends.

(Thanks to Ben Cunningham for passing this along).

Posted by Jeff Cornwall at 07:37 AM | Permalink

Well I found her in a pawnshop
somewhere up in Ohio
where I guess some rounder came up short
and he had to let her go
It cost me ninety dollars
but it's worth much more by far
cause I never had a better friend
than that old beat up guitar
Jerry Jeff Walker

This old Jerry Jeff Walker song has always had a soft spot in my heart as it reminds me of my guitar. I have a 1961 Gibson J-45 acoustic guitar. Although I did not find her in a pawn shop, I did buy her used in the early 1970s from a used musical instrument store. (And it was not actually in Ohio, but Fond du Lac, Wisconsin). But, I digress...

It looks like this:

It is the only guitar I have ever owned. I have never wanted to replace her in large part because her sound has gotten richer and richer over the years. The older it gets, the better it sounds. A new product has been developed by a couple of entrepreneurs out of Florida that might change my thinking. I first heard about it when a colleague of mine attended a business plan competition in California with one of our students. The company is called ToneRite, and it rapidly speeds up the "aging" process of musical instruments to create an old sound out of relatively new instruments. Cool idea!

Posted by Jeff Cornwall at 09:30 AM | Permalink | Comments (1)

Milt Capps, a seasoned journalist, has launched a new blog called Venture Nashville. Capps says that "The purpose of The Venture Nashville Blog (VN) is to help increase the flow of accurate information about research, innovation, technological developments and investment activity in one of America's finest cities, Nashville, Tennessee."

Although the focus is on Nashville, he is building a blog that will be of interest to anyone dealing with technology entrepreneurship.

Posted by Jeff Cornwall at 09:38 AM | Permalink

Senator Sam Brownback and Representative Jim Saxton have released an updated version of Recent Economic Developments today, titled “Unprecedented Fed Actions, Recession Signs, Stagflation Fears.”

Highlights of the report are:

- The Fed agreed to take $29 billion of assets onto its balance sheet, retaining private asset management firm BlackRock Inc. to manage the portfolio which is, effectively, owned by U.S. taxpayers. This raises many public policy issues.

- The unemployment rate rose to 5.1% in March, from 4.8% in February.

- Non-farm payroll employment declined by 80,000 in March, the 3rd consecutive monthly decline. Higher unemployment and declining payrolls suggest that we may be in a recession.

- GDP growth was an anemic 0.6% in the 4th quarter. Fears of stagflation have arisen given: slowing growth; rising unemployment; employment declines; rapid increases in energy and food prices.

Posted by Jeff Cornwall at 03:43 PM | Permalink

Stressed about getting that "A" Round of funding closed? Have you heard "no" from one too many angel investors? Then maybe you want to let off a little steam and show up to a pitch wearing one of the shirts offered by Startup Wear.

Here is my personal favorite:

Posted by Jeff Cornwall at 09:29 AM | Permalink

My son sent me a link to a golfing blog site that talks about new bio-degradable golf balls for use on cruises:

The original balls were made of rawhide, but the material's hardness was caving in people's expensive drivers. Now, the balls are made mostly of polyvinyl alcohol, or PVA (think Elmer's Glue), which has some elasticity. [Company founder Todd] Baker says the balls are pretty lifelike when hit with wedges and other lofted irons, but admits they only travel a little more than half the distance of a person's typical driver shot. Hey, you can't have everything.

More importantly, when submerged in water, the balls break down in three to five days into non-toxic elements, carbon dioxide and water.

The company is Eco Golf Balls, located in Indianapolis.

The company website has a page dedicated to their golf balls being used in the Antarctic.

Posted by Jeff Cornwall at 09:14 AM | Permalink

Recession clouds appeared in the skies over Main Street, according to the most recent National Federation of Independent Business Small Business Economic Trends member survey. The NFIB Index of Small Business Optimism fell 3.3 points in March to 89.6 -- its lowest reading since the monthly surveys were started in 1986, and the lowest quarterly reading since the second quarter of 1980. The decline was driven by a sour outlook for business conditions and real sales growth, accounting for half the decline in the Index. Weaker plans to create new jobs accounted for 21 percent of the decline.

"We are seeing recession readings," said NFIB Chief Economist William Dunkelberg.

What is worse is that the labor market is still somewhat tight and price pressures continue to push costs up.

More signs that stagflation might be on the horizon.

Posted by Jeff Cornwall at 05:28 AM | Permalink

Roger Cohen offers a stark analysis in the International Herald Tribune:

The West's moment, I thought, is passing. Money and might are increasingly elsewhere. America's little dose of socialism from Ben Bernanke and Hank Paulson might stave off the worst but cannot halt the trend. Then I arrived in Hong Kong. The talk was all about how U.S. economic woes could impact Chinese growth. Might it tumble to 8 from over 11 percent? And what of India, powering along with growth of a mere 8 percent or so? The West should have such troubles! Even revised downward, these growth rates are at levels Europe and the United States can only dream of.

As the world moves toward capitalism, the US marches on in the other direction to socialism. France has lower corporate taxes than half of all US states. China is embracing capitalism at a break-neck pace. America is debating about how fast to federalize health care, energy, housing and how quickly we can increase our taxes to pay for it all.

I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. Winston Churchill

Posted by Jeff Cornwall at 01:50 PM | Permalink | Comments (1)

Congratulations to Belmont students Kevin Jennings, Andy Tabar and Emily Swinson who all competed as finalists at the annual business plan competition at the University of Evansville.

Kevin Jennings took third place, winning $2,500, for his business soundAFX. His business specializes in sonic branding for businesses. He has already worked for clients such as MTV and Dale Earnhardt, Inc.

Andy Tabar took second place, winning $5,000, for his business Bizooki. His business offers a web-based platform to help manage virtual teams.

The competition drew finalists from several universities, including Purdue University, Bradley University, and Indiana University.

Here is a link to the story from the Evansville Corier Press on the competition.

Posted by Jeff Cornwall at 07:57 AM | Permalink

Rhonda Abrams believes that small businesses should keep trying to grow even though the economy is slowing. She says this is exactly what has happened in past recessions:

In previous recessions, one of the things I'd observe is that many small businesses actually can grow by taking advantage of opportunities, such as weakened competition and big company cutbacks.

Small business owners' attitudes seem to back this up. A new survey from Intuit, which she cites in her column, finds that growth is on the mind of most entrepreneurs. From the Intuit survey:

In a considerable showing of solidarity, nine out of 10 U.S. small business owners reported seeing opportunities for their businesses in the current recession, and more than 75 percent expect growth. To make this growth a reality, small business owners say they'll rely on their experience and passion; nearly two-thirds have survived previous downturns. And to recession-proof their businesses, respondents plan to put their customers first, with 63 percent naming customer retention as their top priority, followed by focusing on their finances.

Abrams offers several ideas to help small businesses grow during the current downturn. You can see them here.

I add to her suggestions my recipe for success in the face of bad economic times -- strengthen your cash flow.

- Reduce debt

- Bootstrap more than ever with a focus on becoming more efficient and productive -- squeeze more out of your current staff, equipment and space before investing in adding more resources

- Focus all of your marketing on growing high margin transactions and the most profitable parts of your business -- your focus should be on growing the bottom line, not on growing sales.

Posted by Jeff Cornwall at 07:12 AM | Permalink | Comments (1)

Could you use $100,000 for your small business? Check out Forbes Boost Your Business contest. You can find the official rules for this competition here.

Posted by Jeff Cornwall at 05:49 AM | Permalink

Business Tennessee magazine has an interesting article on outsourcing by small businesses. One of the people interviewed is Belmont junior Andy Tabar, whose web development company Bizooki uses developers in India.

Andy Tabar runs a fledgling IT company, Bizooki, out of Nashville. Starting out with simple Web design, he's grown into developing software, but not without some help from afar. Tabar outsources programming to India, where the burgeoning IT industry has created plenty of companies eager to take on Bizooki's projects. Tabar was reluctant at first to trust strangers with important work. "I'd always heard horror stories about it," Tabar says, "but the trick is having a good relationship with the people you're outsourcing to." Tabar also suggests starting small with minor projects that can't be catastrophically ruined if you made the wrong choice. If the relationship works out, you can move on to bigger operations. Outsourcing frees up time and energy for Tabar, letting him focus on other aspects of his business rather than getting bogged down into micromanaging a project. "It helps having people working for you even while you're sleeping, so that I can wake up every morning and things are ready to go," Tabar says. With room to grow in other directions, outsourcing lets a growing business like Bizooki open up new jobs in other departments, and Tabar plans to grow his local employee base next year.

Posted by Jeff Cornwall at 05:43 AM | Permalink | Comments (2)

My co-author Mike Naughton likes to remind people in his talks around the world about faith and work that "If we don't get leisure right, we can't get work right."

The immediate conclusion that many people jump to at this point is that they need leisure time to recharge for work, or to rest so they can gain that competitive edge. Our leisure time from taking this view is simply instrumental to helping us build a business or advance in our careers. But, this is absolutely not what he means by his statement. Mike has argued that when we look to non-work and leisure time in terms of "balance" or in terms of "recharging", we are missing the point.

What Mike is saying is that we need to pursue an integrated life. One in which our work and leisure are both guided by the same faith and passion -- toward the same ends. How we pursue our leisure time and how we pursue our work both help create who we become -- in terms of our character and in terms of our virtuousness. Both leisure and work have a purpose and give meaning to our lives -- one does not simply support the other.

The Wall Street Journal today reports on a new study that seems to offer empirical support for Mike's point:

For the study, the five professors surveyed some 4,000 Americans, asking what they did the previous day and then quizzing them in detail about three randomly selected events from the day. Those surveyed were asked to rate the three episodes based on feelings such as pain, happiness, stress and sadness. All this was used to calculate what percentage of time people spent in an unpleasant state....

The standout cluster was what the authors label "engaging leisure and spiritual activities," things like visiting friends, exercising, attending church, listening to music, fishing, reading a book, sitting in a cafe or going to a party. When we spend time on our favorite of these activities, we're typically happy, engrossed and not especially stressed.

So don't view your weekend as a time to vegetate and to simply recharge for the week. Pursue meaning and purpose in all that you do in your life.

Posted by Jeff Cornwall at 05:42 AM | Permalink

One of the myths about entrepreneurship is that high growth, high potential ventures (some call them gazelles) are the main driver of economic growth. For example, consider this quote from National Dialogue on Entrepreneurship: "High-growth businesses -- sometimes known as gazelles -- -are the real drivers of innovation and economic growth in our economy."

High potential businesses are those that tend to attract venture capital. VCs need businesses that yield very high returns in a very short time -- some will tell you that they seek 100% annual returns with an exit within 3-5 years and others simply say they seek 5 times their initial investment within about the same time period. However, gazelle companies represent a tiny fraction of 1% of entrepreneurial ventures.

Do they have an impact? Of course. Are they the "main driver of our economy"? No.

Those boring little entrepreneurs who toil away with only their own investment -- maybe with a little help from their family and friends -- is what really drives today's entrepreneurial economy. It is these small businesses that now generate about 50% of the US economy and have created 77% of new jobs for the past twenty years. They do so with ingenuity, bootstrapping, passion, persistence, and as Monroe Carell told our students yesterday, patience.

Gazelles quickly get absorbed into corporate America within 3-5 years if they have any success. The average entrepreneur is not even considered successful unless the business lasts at least five years. They are in it for the long run.

Rather than measuring success in terms of mind-boggling returns to investors, the average entrepreneur measures success in terms of making a living for his/her family, by creating good jobs, by becoming able to contribute to building a better community.

Don't misunderstand my point. I like high growth. high potential businesses. We get a few coming through our program and they are challenging, interesting, and fun to watch. I hope we get more.

But, they are not the heroes of our entrepreneurial economy. That title belongs to the average entrepreneur who will never get a dollar from a venture capitalist -- who builds a successful business seemingly out of almost nothing.

Average entrepreneurs may not be "gazelles", but they are the work horses we need to move this economy steadily into future.

Posted by Jeff Cornwall at 05:45 AM | Permalink