Given the tenor of the comments here at the blog this week, I could not resist a second quote of the week before the long weekend:

“So let us begin anew – remembering on both sides that civility is not a sign of weakness, and sincerity is always subject to proof”  (John F. Kennedy). 

With a growing number of people seeking entrepreneurship as an alternative path in this rough economy, there is increasing competition for the key resources that can make or break the startup venture.

New entrepreneurs are competing for essential resources, such as the funding, the customers and the staff they need to build a successful business. Attracting these resources often relies on how well the entrepreneur can deliver “the pitch” for his new business.

An effective pitch starts with a hook — something that grabs the attention of the person one is talking to about a business. The most effective hook lays the groundwork to show the underlying need in the market for what the new business aims to offer.

A common mistake we see in pitches is that the entrepreneur waits much too long to tell what the business does. I had my students watch some examples of pitches the other night in class. You can find lots of good ones and bad ones on YouTube.

We were amazed that some of the people making a pitch waited more than halfway through their pitch to tell what their product or service is and what it does.
Answer key questions

Remember this: Early in a pitch the entrepreneur should present a clear mission statement. Who are you? What do you offer? Who is it for? What makes you unique?

The pitch must also show that there is “pain in the market” — that there are people who are in need of what you are offering and are willing to give you their hard-earned money to pay for it.

Who needs your product? Why do they need it? How many of them need it? What are you doing differently from your competitors?

The pitch needs to be presented clearly. It should be an unambiguous answer to some key questions that a skeptical listener is likely to have about the business. How will you make money?

The presentation of the pitch needs to be compelling. The entrepreneur should show his enthusiasm. Make it a personal message to those listening, and make eye contact. Never use note cards — this tells the world that you are not confident and that you don’t know what you are talking about.

While it is important to be enthusiastic, you still must be authentic. Putting on an act rarely gets an entrepreneur very far. Be yourself in how you talk, in how you dress and in how you interact with others.

Finally, a strong pitch always ends with a clear message. What is the one thing that you want them to remember? What do you need from them? What do you want your target audience to do for you?

In this economy, entrepreneurs face competition on every front as they launch a new business. An effective pitch can help distinguish you from all the others trying to grab the attention of investors and customers.

Those who side with Scott Shane’s view that entrepreneurship is generally an economically irrational act (i.e., why start a business when you could make more money working for someone else) really don’t understand what makes entrepreneurs tick.

One of my undergraduate students sent along this video that sheds some light on why entrepreneurs do what we do.  While profits matter, there is something much stronger that drives us to start new ventures….

Well, summer classes are over and August graduation has come and gone.  Time for a short break before the start of the fall semester.  I plan to spend the week getting caught up on some chores around the house and playing lots of golf.  See you next week!

Even the optimists are saying that we have at least two more years of economic stagnation. Other experts are warning of a possible double-dip recession.

There is even growing talk in some circles of America experiencing a “lost decade” in its economy. That refers to the 10-plus dismal years of economic doldrums suffered by Japan in the 1990s.

Recent employment and bank lending rate data seem to support a prolonged recession for small businesses.

So what does this “new normal” in our economy mean for entrepreneurs?

For startup entrepreneurs it means you need to be lean. There will still be new businesses forming, even if the economy takes a turn for the worse. Some of these new businesses will be opportunistic entrepreneurs who see ways to meet the needs created out of the dramatic changes taking place in our economy and society.

Others will be among the growing army of accidental entrepreneurs who are finding that starting something on their own has become the only viable way to make a living during these challenging times.

Whichever path leads you to start a new business, a successful launch will require bootstrapping.

There is very little money being invested in or lent to new small businesses right now, so be prepared to find creative ways to get your business off the ground without a lot of funding.

If you are already a business owner and have survived the past two years of economic turmoil, let me be the first to offer congratulations. Clearly you have found a way to continue to offer value to the market. You must have also been an effective manager.

Some businesses that have survived are hanging on by a thread. If that is the case for your business, continue to pay attention to the basics. Keep cutting overhead, pay down debts and take good care of the customers you have so you don’t lose any more of them to stronger competitors.

Every small-business owner should continue to run his or her business cautiously and prudently. There will be more tough times ahead.
Look for growth opportunity

Over the coming months, more of your competitors will probably fail, and that presents an opportunity to attract new customers to your shop.

This can be an excellent time to expand and take advantage of a larger market share. If you do expand, continue to bootstrap and try to keep your use of debt to a minimum.

This is no time for excessive leverage because of the uncertainty of the economic outlook.

Whether you are a new entrepreneur or a seasoned business owner, more than ever before remember, cash is king. Given the uncertainty of the economy, entrepreneurs should try to keep enough cash on hand to cover at least 30 days of monthly expenses — and up to 90 days of cash on hand is not a bad idea, either.

It’s also important to keep one eye on the future. Eventually things will improve. And those who survive the Great Recession have a good chance of emerging in a stronger position. The survivors of today will become the market leaders during the recovery.

(This post was my column in today’s Tennessean).

“There are six billion people in the world. Even if your market is hand-made spoke shaves for left-handed woodworkers, there are more people in your market than you can ever hope to track down.”  (from Seth Godin’s pithy post on competition). 

Thanks to all of you who passed this along!

Evidence of the spread of entrepreneurship in the global economy can be found in the latest Global Entrepreneurship Monitor report.

GEM 2009 ranked Tonga 10th overall, out of the 54 countries surveyed.

However, persistent cultural attitudes about an entrepreneurial career path are evident in these findings.  Tonga ranked 1st in terms of “Fear of Failure rate”, which is the measure of the percentage of the population with positive perceived opportunities who indicated that fear of failure would prevent them from setting up a business.

Even with the high fear of failure, Tonga ranked 4th; “early-stage entrepreneurship activity rate” – 10th; new business ownership rate- 15th; overall entrepreneurial activities rate- 16th. But in terms of “established business ownership”, Tonga ranked 49th indicating an inability to sustain growth and suggesting a lack of understanding of entrepreneurship at a later stage.

The GEM Report on Tonga also identified 17 National Policy areas concerning factors constraining entrepreneurial activity in Tonga and it goes to make specific recommendations on what can be done by Government and other support institutions to ease those constraints.

Under “Education and Training”, GEM Tonga states, “Lack of education and training represents a major concern. This situation is the result of insufficient understanding of business as a concept. It can also be attributed to: lack of business skill training; the absence of business studies from both primary and secondary school systems; and an ill-equipped work force.” It goes on to recommend amongst other things, the introduction of business studies and skills into the primary and secondary school curriculum.

From OregonLive.com:

It’s hardly unusual to hear small-business owners gripe about licensing requirements or complain that heavy-handed regulations are driving them into the red.

So when Multnomah County shut down an enterprise last week for operating without a license, you might just sigh and say, there they go again.

Except this entrepreneur was a 7-year-old named Julie Murphy. Her business was a lemonade stand at the Last Thursday monthly art fair in Northeast Portland. The government regulation she violated? Failing to get a $120 temporary restaurant license.

Not the best public policy to instill the entrepreneurial spirit in today’s youth!