Study Sheds Light on Women Entrepreneurs

A new study just released by Babson College offers some interesting insights into not only women entrepreneurs, which was the focus of the study, but entrepreneurs in general. The authors studied 215 woman-led firms in Massachusetts from 2000 – 2004. Here are some of the highlights:

– Women CEOs are ambitious and are primarily motivated by personal achievement (85%) and a desire for challenge (80%). Debunking the stereotype that women are driven to start businesses solely out of economic necessity, more than 54 percent stated that economic necessity was barely a motivator or none at all. Similarly, while nearly 32 percent cited the glass ceiling as a motivator, 48 percent said it was minimally a motivator or none at all.

One myth about entrepreneurs is that the growth in new business start-ups is from a growing number of people being displaced by their previous employers. This study reinforces what I see. The entrepreneurial economy we are in today is real and it is being driven by people who are highly motivated to be entrepreneurs, and not just being thrown into it by life’s circumstances.

– Establishing strong customer and employee relationships are considered the cornerstones to conducting business. The women CEOs cited customer satisfaction as the leading factor in doing business (97 percent), followed by key human resource issues: employee satisfaction (92 percent), company culture (81 percent) and work/life balance (67 percent). These areas were ranked higher as daily business priorities than rapid sales growth, high profitability, personal financial reward, high market share and personal autonomy and control.

These are interesting findings that support many other studies reporting that the meaning of “success” to entrepreneurs is very personal and much more complex than sales and profit growth. There are even deeper reasons people are driven to start new ventures.

– Of the 43 companies that consistently participated in the study over a five-year period from 2000-2004, the average company grew nearly 27 percent from revenues of $13.9 million in 2000 to revenues of $17.9 million in 2004. In the same timeframe, average employment increased by 9.5 percent, resulting in productivity gains of 15.9 percent.

– The woman-led firms are solidly focused on future growth. Ninety-two percent of the companies expect to grow over the next two years, and 59 percent are anticipating growth of five percent or more annually. The primary focus for growth is through new clients and customer accounts, followed by new products and new geographic markets. Most firms expect to finance growth through cash flow from operations, short-term debt and retained earnings reinvestment.

These businesses are part of the vast majority of entrepreneurs in this country. They are not financed by venture capital, but rather grow organically with minimal outside support. They are bootstrappers through and through.

-Women leaders have a long-term commitment to building their careers and their businesses. The typical CEO of woman-led companies has 27 years of work experience, and 13 years in her current position.

Real entrepreneurship is not a financial transaction, it is a commitment to build a business that “has legs” and builds real value.

– Seventy-seven percent of the woman-led businesses studied continue to be run by their founding entrepreneurs.

Entrepreneurs are not just starters, we are also builders. Another myth debunked.

Jason’s Coffee Shop Adventure Makes it into US News & World Report

Many of you have been following Jason as he works his way from Belmont student to coffee shop entrepreneur in Bozeman, Montana. It seems that US News & World Report has also been following Jason’s adventures!

It is one thing to suffer the trials and tribulations of starting a small business. But it takes a special kind of masochism to share those hassles and head-aches publicly with complete strangers. Yet that’s just what 23-year-old Jason Duncan is doing with A Thought Over Coffee, a blog devoted to documenting his attempt to start an artsy coffeehouse in Bozeman, Mont.–or, as he puts it, “my journey through the dreaming and planning of Cafe Evoke.”

Christmas Reading List

The National Dialogue on Entrepreneurship offers their annual Christmas Reading list (they don’t actually use the word Christmas, but I will). You can see all of their picks here.
These are a few that caught my eye:
Business Plan in a Day: Get It Done Right, Get It Done Fast!, Rhonda Abrams and Julie Vallone (Planning Shop, 2005).
I wish the world would stop being so obsessed with business plans. It is not the plan that is important, but the process of business planning. I hope that their recipe for a quick plan does not lead to superficial planning!! This one won’t be on my list to Santa.
How to Run Your Business Like a Girl: Successful Strategies from Entrepreneurial Women Who Made It Happen, Elizabeth Cogswell Baskin (Adams Media, 2005).
I have heard some good things about this book and its author.
The World According to Peter Drucker, Jack Beatty (Free Press, 1998).
A sentimental pick this year with the passing of Professor Drucker. I would package this book with Drucker’s Innovation and Entrepreneurship, which I still find myself referring to at least once a month. In fact, if any of you are looking for something for me this Christmas, I’d love an autographed first edition of this Drucker classic.
The Moral Consequences of Economic Growth, Benjamin Friedman (Knopf, 2005).
I read the review on this one and ordered it before I even finished this post! I’ll let you know what I think about it early in 2006.

Hurricanes’ Impact Ebbs

Families and small business owners in the Gulf states and Florida will continue to rebuild their lives in the wake of the fall hurricanes for months and years to come. And we should all continue to keep them in our thoughts and prayers.
But, our overall economy is showing just how resilient it is. And this will help all of us prosper in the year ahead.
Gas prices are now lower than they were last September according to AAA.
gas prices 12-05.jpg
And employment remains strong as seen in today’s report from the Bureau of Labor Statistics. Some highlights:
– Job growth returned to pre-hurricane levels as 215,000 new payroll jobs were created in November.
– It also appears that the impact of the hurricanes on the U.S. economy as a whole was more contained than previously thought as September’s hurricane-related losses of 8,000 jobs were revised to a gain of 17,000 new jobs. October job gains were revised slightly downward however, from 56,000 to 44,000.
– Regardless of the temporary effects of the hurricanes, over 4.5 million new payroll jobs have been created since the recession ended 30 months ago.
– The November unemployment rate (calculated from the household survey of employment) remained unchanged from October at 5.0%.
– In November, the BLS returned to standard data collecting procedures from the revised methods used following the hurricanes. From those revised methods is insight into the local employment impact of the hurricanes. According to the BLS, “The unemployment rate for persons identified as evacuees was 20.5 percent; it was much higher for those who had not returned home (27.8 percent) than for those who had returned (12.5 percent).”

Good Source of Industry Trends

Bill Hobbs passed along this great site that provides links to 117 blogs by industry analysts. It tends to be more tech-oriented, but offers a very rich source of information from a variety of sources. The search engine at this site is also useful.
Not only is industry data like this is critical for effective start-up planning, but also for managing the growth of a business. Business planning should be a process, not an event.
Too often entrepreneurs believe that the business plan that they developed prior to opening should be treated like a detailed blue print. It should be followed step-by-step. Once completed, the business will be like a well built house that will last for decades.
The problem is that the market you are entering is probably under going dynamic change. This change is what in most cases creates the opportunity you are pursuing. You are entering what Peter Vaill calls permanent white water.
Your plan is full of assumptions, not just facts. Assumptions need to be tested and refined. Sometimes they need to be abandoned if proven wrong. The plan is more like a general map of a river. It shows where you will be headed, but the key to your success in navigating this river is in your ability to adjust to all of the things that you could never have planned for. The large rocks in your way that do not show up on any map. The sudden rising of the water due to an unexpected deluge of rain. A tree that has fallen across the river.
All of these require dynamic, real-time adjustments in your planning. Managing with assumptions means knowing those things that you are unsure of, and knowing those things you don’t really know, none of which you can absolutely plan for. It is also knowing those things that will likely be changing, and keeping a watchful eye each step of the way.
Your industry is likely to be a volatile and sometimes unfriendly place to operate within. You best tool for this is to keep informed about what is happening so you can integrate these changes into your ongoing business planning.

The Ability to Execute is Key

Rob at BusinessPundit teases his readers with this post on opportunity recognition. He offers just a hint of some work that is being done at the University of Louisville.

It focuses on your unique skills and knowledge, and leads to ideas that are good for you as an individual. Remember all that talk about how ideas are worthless and execution is everything? Well this ties them together by giving you ideas that you are in the unique position to execute.

How true. That is why I always insist that our students and the entrepreneurs I work with take the time to engage in thoughtful and reflective self-assessment. I look forward to hearing more about this in the future.

“Hot” Opportunities

Entrepreneur magazine has its 2006 list of what they consider to be the “hot” opportunities. Food, security and kids are the business categories where they see the most opportunities. This type of list can be a great way to help brainstorm new business ideas.
The most common source of good business opportunities are products/services that have worked in another market. Look for businesses that have taken off in another city, but have not yet caught on where you live. Just because the business has not arrived in your town is not reason enough to start one up. Finding such an opportunity is just the first step.
You still need to do your homework. You need to understand your local market and the potential customers you want to attract. Here are some of the types of questions you need to research:
– What are the similarities and differences between your market and the market where the business has succeeded? Are they similar sizes? Do they have similar demographics? The business idea may require a certain sized city to make sense. It may also require a certain concentration of a specific group of customers to be feasible, for example a large population of retired citizens may make ideas like the retrofitting of seniors’ homes make sense.
– Does your market have a similar or different customer base? Are there regional cultural differences that make an idea work in one location, but not in another? Certain foods are popular in once city, but attempts to market these same foods in another may be a flop. Even mass merchandisers like Target and Wal-Mart stock products based on regional preferences.
– Are there other folks with the same good idea as you? Keep your eye open for potential competitors. Competition may or may not be a problem. Some products are so specialized or the customer base so small that there is only room for one or two players. On the other hand, if the potential customer base is big enough for multiple entrants into the market it is sometimes best to be second or even third into the market. This is one of the many pieces of wisdom that the late Peter Drucker left us. Let the other guys educate the market about the product. Let them spend the money to build a buzz about the product before you jump in and take advantage of the customer awareness they have created. Educating customers about a new product can be quite expensive. Also, the first to offer a new product or service often makes mistakes in a new market that you can learn from. See what they have done wrong and then offer a better option to customers.
Once you get excited about an idea it is critical to quickly become a skeptic. Try to prove to yourself that the idea cannot work. Have others poke holes in your idea. Try to find all of the flaws in the business model. Make sure that your great idea is a real business opportunity.
Taking this approach will help increase your odds of success as an entrepreneur. It will help you throw away seemingly good ideas that just can’t work. It will also make sure that you have planned ahead for many of the challenges that you will face during start-up and growth. You can never anticipate all of the things that can go wrong, but you should be able to identify and plan for enough of them to significantly increase your chances for success.