Dr Jeff Cornwall

One of the highlights from the International Franchise Association meeting was the chance to hear Colin Powell give a keynote speech.
The part of his address that hit home most with me was when he talked about his personal transformation.
He described the feeling of going from one day being the Secretary of State, with his personal entourage and body guards, his own jet at his disposal, people calling him all day long hoping to get even the briefest bit of his time — to the next day simply being Colin Powell, average citizen, sitting at his kitchen table wondering what to do with the rest of his life.
Like many entrepreneurs who exit their businesses, he felt a real sense of emptiness.
He thought about jumping right back into public life, but his wife said ‘no’ to his thought of running for office. She made him take time to determine where he should next with his life. To think of other ways he could use his gifts and experience. My wife reacted the same way after we sold our business. I was ready to jump right back in and do another deal. But, The General and I were both put in “time out”.
Both of us benefited greatly from the wisdom of our wives. I found my way into teaching, and have found so much fulfillment. The General now is involved with a venture capital firm, leads various charities, writes books, and benefits from lucrative speaking engagements.
What I think I enjoyed most from General Powell’s address was seeing how genuinely happy and healthy he looked. He is having fun!
I am a firm believer in the importance of seeking wise counsel. Both General Powell and I are blessed with the wisest of counsel — our wives.
Thanks, Honey, and Happy Birthday!!

So why all the attention to entrepreneurship in the social sector? According to Harvard Business School professor Jane Wei-Skillern in an interview published in Working Knowledge it is because the more traditional approaches to solving social problems have been “falling short.” From Working Knowledge:

An entrepreneurial approach, they say, allows social organizations not only to maximize value from limited resources, but also to leverage resources beyond the organization’s direct control through a creation of networks.

This in depth interview by Sean Silverthorne is definitely worth a read.
(Thanks to Sam Davidson with CoolPeopleCare.org for passing this along).

I posted recently about the two Belmont students who are in the running for this month’s ideablob.com competition. Good news! They finished one and two.
Noah Curran’s idea finished in first in the preliminary heat and Jancie Dotti’s fair trade coffee idea came in second.
Both will be in the finals later this month!

I am blogging today from Orlando at the annual conference of the International Franchise Association.
It seems like an ideal opportunity to write about an article in the most recent issue of the Journal of Small Business Management that looks at franchising and business failure rates.
Professors Michael and Combs find that franchise restaurants have significantly higher success rates that stand-alone independent restaurants. This seems to be due to the structures they provide and the access to key resources.
So if you are going to start a new restaurant, a franchise may be your best bet to reduce risk.

Marginal Revolution has a post on a paper that suggests that Brazilian entrepreneurs. The authors of this paper report the following:

We find that family characteristics have the strongest influence on becoming an entrepreneur. In contrast, success as an entrepreneur is primarily determined by the individual’s smartness and higher education in the family. Entrepreneurs are not more self-confident than non-entrepreneurs; and overconfidence is bad for business success.

The paper also reports that social networks help determine who becomes an entrepreneur, but not how much success they will enjoy once they start their ventures.
These findings are certainly consistent with findings in other places around the globe. Culture and family background point you toward a career as an entrepreneur, but your wits and education are what lead to success.
Culture plays a major role in fostering entrepreneurship. Culture begins with the family and then extends to the community. This study suggests that family and social relationships are the strongest predictor for entrepreneurial activity. Note the lack of any findings on the importance comprehensive government planning in this paper!
Of course, there are those out there who seem to interpret these findings as evidence that entrepreneurship is only an avenue for the economic elites. The blog Stumbling and Mumbling sees it this way).:

In other words, what makes an entrepreneur is access to capital – the sort of access that comes from having a wealthy background.

We all know where this type of perspective often takes us.
It is a long stretch to conclude that since entrepreneurs often come from successful parents, it must be the capital they give to them that makes their children more likely to become entrepreneurs.
Access to capital does not correlate very highly with entrepreneurial outcomes. That is, more money at start-up does not predict more entrepreneurial success. If that were true I would suspect that venture captialists and angels would have much higher than the typcial 10% success rates that they often see in their rather sizable investments.
It is more likely that these economically successful parents have instilled ethics and values in their children that reinforce the importance of success, self-reliance, and education.
(Thanks to Nathan Ratcliff for pointing me toward this discussion).

The thought of adding executives can be overwhelming to entrepreneurs who own fast growing companies. In fact, even the thought that they need “executives” can be mind bending. Which position should I add first? How do I know what type of talent I need?
What can help with this is to create a Team Development Plan.
– Start with a self-assessment of your strengths, weaknesses, and skills. Keep doing what you are good at, and add folks who can pick up your weak areas. If you strength is marketing, build a team that complements this strength.
– Develop a plan that allows you to work on your business and not just in your business. This means you not only add people to your team, but you must work toward creating a whole new “job description” for your role.
– Before you run out and hire outsiders, assess the potential of current team/staff to take on more responsibility. It is almost always cheaper to grow your own talent. However, most of us overestimate the abilities of our employees to grow into these new roles quickly enough. And some just really won’t want the added responsibilities.
– Based on an inventory of all of your management needs over the next few years, create a plan to train current staff and bring on new talent with clear priorities and milestones. Timing is everything. Bring people in too soon, and it creates an overhead drain that can badly impact cash flow. Bring them on too late, and the company may not be able to handle the challenges of growth.
– A word of caution. Don’t just look for people with the right skills and experience. Make sure each new team member will fit with your culture. The right fit with your culture can be just as important as their technical abilities.

Belmont students have two ideas in this month’s ideablob.com competition. Both are ventures based on social entrepreneurship business model. As of this morning they hold the top two spots in the voting.
Noah Curran’s idea is called Turning Actions into Good, which is a web-based non-profit charity which revolves around the kindness of strangers. The concept allows anyone who feels compelled to participate in a charity, regardless of their financial status, a way in which to contribute. If people want to get involved, they can do it in a variety of ways. Whether it is through actions or through generosity, anyone can do an act of kindness. What makes all of this possible is the facilitation of the official TAG website.
Jancie Dotti summarizes her ideablob entry as follows:
“I want to create a completely fair trade, completely organic coffeehouse that sponsors social justice causes while taking care with the environment. In addition to serving fair trade coffee, we will also only use fair trade sugar, tea, and cocoa as we educate our consumers on how their buying habits affect the working poor in developing countries. Every month, this coffeehouse would sponsor a social justice cause–promoting awareness to customers about worldwide issues of injustice. This coffeehouse will also have free wifi, live music, local art–all with a community emphasis.”
Join in this month’s ideablob. And while you are there, vote for one of Belmont student ideas!

Bill Gates talks about the power of capitalism to use market forces to create real change in the world in this video clip from the Wall Street Journal.
(Thanks to Andy Tabar for passing this along).