Dr Jeff Cornwall

Turning Passion into a Business Model

Healthy vegetables — Image by Jerzy Górecki from Pixabay

Many people are driven into entrepreneurship based on a desire to share a deeply held passion they have with the rest of the world. Passion is often the fuel that propels people to take the entrepreneurial leap.

Bootstrap!

Starting with your passion rather than with a compelling market need inherently increases the risk of your startup. There may or may not be enough people who share your passion. Until you test the market, you cannot be confident that there is a big enough market and that your customers will be willing to pay enough to make your business profitable. These are the key elements of a successful business model.

In her article about the five steps to turn a passion into profits, Caroline Castrillon explains how to mitigate the risk of building a business from a passion. She suggests that you start small, don’t quit your day job, set manageable goals, outsource whenever possible, and set a clear vision for the business. These steps help you prove there is really a market for your idea while limiting your financial commitment. These are all foundational elements of bootstrapping.

Pivot Your Passion to the Market

As you bootstrap your startup, you need to use the information you learn from the market to pivot your business model. Wes Moore, founder and CEO of BridgeEdU, says he succeeded turning his passion into a thriving business by learning what problems his potential customers have and using that information to strengthen his business model. This often requires the entrepreneur to pivot from their initial business model to one that better aligns with customers’ needs.

When the Market Doesn’t Exactly Share Your Passion

Getting entrepreneurs with a strong passion to pivot their business model is easier said than done. I have found that they may become defensive when they feel what they are passionate about is being challenged. However, it does not mean the entrepreneur needs to give up what motivated them to create a business based on their passion. They just may need to tweak what they offer. A pivot to the business model may be necessary to better align with what the market is seeking.

Ryan Reisdorf turned his passion for healthy food into a thriving business. However, he had to be willing to pivot his initial offering to make the business successful.

Ryan, a Type I diabetic, wanted to create a business that sold “healthy eating.” He founded his business, called Placemat, to sell healthy prepared meals in Nashville. He got some advice from a mentor at the Nashville Entrepreneur Center that fundamentally changed the value proposition of his new business.

“I pitched him on what I was doing. And he’s like, ‘You’ve got it wrong, man. You’re leading with something that 90% of the world doesn’t care about – health. You’re providing a seamless way for somebody to have a private chef come to their home. That’s it. Nothing more, nothing less. When you get into the home, that’s when you get to talk about health and the why of Placemat. When they take that first bite, that’s when you get to talk about health. That’s where your value is.’

“And sure enough, I took his advice and haven’t looked back. It’s changed the direction of the company.” (from “Ryan Reisdorf” in Entrepreneurial Voices)

Ryan pivoted his value proposition without compromising on what drives him as an entrepreneur — offering customers healthy food. He just needed to adjust how he sold it to his customers. He has found a business model that is fueled by his passion and meets a market need!

Organizing the Chaos of an Entrepreneur’s Life

Entrepreneur getting organized — Image by StartupStockPhotos from Pixabay

I often hear first-time entrepreneurs fret about structuring their workdays and organizing their work.

If they came from the corporate world, their employers had already structured their work. These entrepreneurs talk about being shocked by the chaos of starting a business. It is even more challenging for entrepreneurs who have never had a full-time job. Those fresh out-of-college entrepreneurs talk about feeling lost, lonely, and overwhelmed.

If you are a first-time entrepreneur, take a breath! There are many resources to help you organize your business and your job as founder and CEO.

Getting Organized

Entrepreneurs often use the excuse of, “I’m an entrepreneur. It’s not my nature to be organized.”

Without organization, your productivity suffers. Without productivity, your company’s performance suffers. Without company performance, your bank account suffers.

Peter Strack, Founder & CEO of The Strack Group, argues that organization is a habit, not a character trait. Stack recommends creating a habit of being organized by addressing all aspects of your everyday work. Map out your week, manage your days with to-do lists, and organize your digital work life, including emails, files, and passwords. It may take practice, but with a persistent and dedicated approach to work, even the most disorganized entrepreneur can control the chaos of a startup.

Neil Patel recommends batching your tasks into everyday activities to aid in productivity. He also says that the most successful, organized entrepreneurs focus only on the tasks that actually move their businesses ahead. Many entrepreneurs spend hours on things their business will not need for a long time or may never need. Your job in a startup is to find your market and ensure you give them what they want. Period. If you can’t build sales, nothing else matters!

Your calendar is a critical tool to help you get more organized. Jeanne Rossomme recommends finding a calendar tool that enables you to structure your time and organize your workflow. Here is a review of many popular calendar apps that work well for entrepreneurs. I am an Apple guy. My calendar of choice is BusyCal. It integrates my to-do list into my calendar and allows me to manage it across all my Apple devices. Ultimately, it is a personal choice as to which app works best. Don’t just look at the free options; spending a few dollars a month is worth getting a system that works well for you.

The Need for Speed

Kartik Mandaville, Founder & CEO of Springworks, says that the market conditions of many startups demand that they organize for speed. Mandaville says:

“Startups invariably face competitive pressures from both incumbents as well as other startups. To get ahead, they have to continuously crank up their speed of decision making, product development, distribution and iteration.”

Many startups have a narrow window of time to launch and establish market share. This adds even more urgency to the need to get organized and productive.

It’s All About Time

Our phones and computers are full of apps that are rabbit holes that eat up your valuable time. Jen Glantz, founder of Bridesmaid for Hire, describes it like this in her article at Business Insider:

“Whenever I felt anxious, overwhelmed, or became eager to procrastinate, I’d pick up my phone and scroll through social media. When I took inventory on how I spent my time during the day, I realized I was spending 90 minutes of my workday wasting time on social media.”

Glantz says she puts her phone out of reach during work time and only brings it out three to four times a day during the fifteen-minute breaks she builds into her day. She also has scheduled time during the day to read and reply to emails and limits each time to about twenty minutes.

David Lavenda, VP of product strategy at H armon.ie, suggests that entrepreneurs are well served by starting their days with “me time” in his article at Entrepreneur:

Hannah Rodriguez, Founder of Dream Daily LLC, describes her approach to creating “me time” as an entrepreneur in Entrepreneurial Voices:

“I like to have a start and end to my workday. I wake up, and before I start work and I journal. I have my coffee, read my Bible, and walk outside to get some sunlight before I’m in my apartment all day. And then, towards the end of the day, I’m ready to turn it off. I know a lot of entrepreneurs like work late into the night. I’m done by 5 or 6 p.m. Even though I love what I do, I’m ready to have my night routine and read, watch TV, talk to friends, or whatever. I’m trying to build those boundaries.” (“Hannah Rodriguez” from Entrepreneurial Voices)

Find Well Organized Mentors

Entrepreneurs always benefit from hanging out with other entrepreneurs. They provide both practical advice and moral support for each other. They also help mentor each other.

But be careful who you hang out with. Good habits and bad habits can picked up from your peers. I would make sure to hang out with some entrepreneurs who are already well organized and manage their time effectively. They can serve as role models as you build your business and offer a wealth of handy tips to help organize the chaos of your life as an entrepreneur.

We Must Move Forward

“No man ever steps in the same river twice.” (Heraclitus)

The ancient Greek philosopher Heraclitus may not have been an entrepreneur, but some of his teachings sure do capture the world of startups.

One of my former business partners liked to say that being an entrepreneur reminded him of being a shark. If you don’t keep swimming forward, you will die.

Businesses Must Move Forward

The entrepreneur’s world is like the river described by Heraclitus. Change is inevitable. And change is a constant. Entrepreneurs must never forget that the same changes and disruptions that helped create an opportunity for them at their launch will continue long after they open their doors. If they are not ready to adapt, the change that created the opportunity could eventually lead to their business’s demise. Change in the competitive and macro environments are continuous like the flowing river, creating the need for pivots to the business model throughout the life of most businesses.

Even being a first mover in a new market does not guarantee that you’ll control that market. New competitors will see the opportunity you discovered and come in to take market share from you. You will need to sharpen your business model to ensure you continue to meet the needs of your market and offer the value they seek.

Customers’ needs and preferences evolve and change. You must keep up with these changes and be ready for new expectations. We certainly saw significant changes in customer expectations after COVID.

Demographic changes also create the need for pivots in business models. For example, and one that is near and dear to my heart, Boomers are creating a boom in the construction of 55+ communities. For example, Pulte Homes identified the potential in this market more than a decade ago and now is building communities for aging boomers nationwide.

Entrepreneurs Must Move Forward

Business models are not the only aspect of entrepreneurship that demand change. Entrepreneurs themselves also cannot stand still.

The job description of the entrepreneur constantly evolves and expands to meet the needs of their growing business. Entrepreneurs need to learn and grow as leaders of their businesses.

Entrepreneurs and their teams are prone to boredom and burnout as the business becomes established and professionalized. Even a busy entrepreneur can become bored. Many of us who are drawn to entrepreneurship are drawn to the excitement of the startup. This includes the founders and their founding team members. Once the business is up and running and the founders now have to manage an established company, many entrepreneurs report feeling bored, stagnant, or stuck.

For other entrepreneurs, where the business ends up is inconsistent with their vision. Early on, we often do everything and anything that the market wants from us, sort of an “anything for a buck” strategy. Building a strong market presence eventually requires pruning the offering to the market and focusing on a more specific target customer.

For example, Susan and Jen faced this inflection point in their business, J’s BBQ. Susan describes it like this:

“We’ve always known this part (the brick and mortar) of our brand is not something we planned on doing long-term. We want a better balance for our family, while the brand continues to grow. Reconfiguring our balance is where we’re at right now.

“Our demand has once again exceeded our kitchen’s capacity, and our family’s needs continue to persist. In order to put our next plan into place, we need to shift gears. If you become stagnant or trapped as an entrepreneur, if your current business plan reaches a plateau…you’ve lost the momentum and everyone feels it.” (“Jen, Susan, and Jadon,” Entrepreneurial Voices).

Entrepreneurship is a journey of change and evolution.

“Nothing endures but change.” (Heraclitus)

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Hard Lessons Learned

What's next? — Image by Gerd Altmann from Pixabay

Not if, but when.

In every horror movie there comes a point when you know something is going to happen. You don’t always know what and are never quite sure when. That’s where I think we are right now.

It could be an economic crisis. It could be another pandemic. No one knows what, and no one knows when. But something will happen that disrupts the economy and puts many entrepreneurial ventures at risk. It could happen this year or it could happen sometime in the next several years.

We’ve seen this movie before. COVID. The Great Recession of 2008. The dotcom bubble bursting. As someone who entered the workforce in the 1970s, I’ve lost count of how many economic shocks I’ve witnessed firsthand.

Economic shocks can be devastating for small businesses, but they also can create amazing opportunities.

Prepare Ahead

Be ready to act decisively and quickly. When the next bad time comes, it may come with very little warning.

For startup entrepreneurs, you need to be lean from the get-go. New businesses will still be forming, even when 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 by the dramatic changes taking place in our economy and society.

Bootstrapping is always a good approach to entrepreneurship, but it becomes essential when times get tough.

There is less money being invested in, and lent to, new small businesses right now. Be prepared to find creative ways to get the resources your business needs. When things take a turn, the money flow may dry up almost completely.

Watch your overhead carefully, and know what you can cut quickly when the economy turns south. Pay down debt and take good care of the customers you have so you don’t lose them to stronger competitors.

Hire new staff prudently. I am not saying that you should not grow your staff, but make sure you have the cash reserves and/or cash flow to support each new hire.

Opportunities Await on the Other Side

Opportunities will present themselves if you are prepared for the next downturn and manage to muddle your way through it.

As the downturn unfolds, more of your competitors will probably fail, which presents an opportunity to attract new customers to your business.

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. Labor and real estate costs will likely come down, making expansion more affordable.

Don’t be afraid to use this time as an opportunity to innovate.

In 2018 and 2019, Ryan Pruitt’s business, Frothy Monkey, was getting ready to grow:

“We spent 2018 and 2019 learning how to operate what we have created for ourselves, beefing up our admin team, working on our processes, learning the beauty of systems, such as ops systems, and checklists. These are all bad words for entrepreneurs. You sit in meetings, and you start hearing, ‘This is going to make us too corporate.”’ People work here because they don’t want to work in corporate. And so we began that beautiful tension of having enough systems to set yourself up for success and some scale, but in a way that supports the creative and emotional leaders that we have in our company.” (“Ryan Pruitt,” from Entrepreneurial Voices)

Just as they were about to open a new location in East Nashville, a tornado struck the city on March 3rd, and then the world shut down due to COVID less than two weeks later. Like almost all small businesses, Frothy Monkey was forced to drastically downsize and try to find a way through the pandemic. By listening to their customers and taking quick action, Frothy Monkey made it through. Said Ryan about what came next:

“Our loyal customer base rewarded us. Quick decisions rewarded us. And we’re very happy to say that we’ve not only made it through, but we’re a company three times stronger than we were before. We’ve opened our first out-of-state location since then. We’re up to 342 employees, seven locations open, and the eighth one, Knoxville, getting close. We’ve also just announced location number nine for 2023, which will be the second one in Birmingham. This will be our first time opening three locations in a twelve-month period.” (“Ryan Pruitt,” from Entrepreneurial Voices)

Fresh Eyes See Opportunities for Innovation

Entrepreneur, creativity, innovation — Image by Tumisu from Pixabay

Sometimes, an outside perspective can shed light on new ways to run a business. Fresh eyes may even see opportunities for innovation in an industry.

Outsider Changes Live Show Lighting

Gordon Droitcour, CEO and co-founder of Cour Design, was trained as an audio engineer. Gordon tells about how he got into live show lighting in his interview in my new book, Entrepreneurial Voices:

At this time, I was getting a little bit worn out by audio and touring. This is where I kind of had a major, very clear “aha” moment. I said, I know I do audio, but I’m around these lighting people and know enough about it to be dangerous. I realized that there is a way to use the audio software almost all bands already use to trigger lighting and video cues. This can eliminate some of these expensive people. I think that can work.

Most bands have a piece of software that plays their backing tracks. It’s like having an extra band member on stage to play the instrumentation that you don’t have a person for. This might be a beat, a vocalist line, or a violin line. You put that into software called Ableton, which is a software that plays back the tracks. But everyone uses that for audio only. I realized that this software gave you the ability to lay out MIDI triggers, which are primarily made for audio. These MIDI triggers sent “go” messages to different pieces of software and hardware to make them react automatically. I also found out that the lighting software also accepts these triggers. Instead of it triggering musical notes, you can make it trigger a lighting console and say, “Kick, snare, flash, flash, flash” the lights. And so, we just connected those two things, and it removed such a highly skilled person out front triggering the lighting. Because at the end of the day, they’re just doing it to the music anyway. It is automated this way and it gets locked in. Honestly, some of this was used already at the arena level, but no one wanted to focus on a solution for these smaller bands.

Bringing Change from the Outside is Not Easy

Although they met some resistance to change, this rag-tag group of audio engineers broke into lighting and design for live shows with their fresh perspective and helped change how business was done. Gino Cattani and Simone Ferriani, who have been conducting studies on outsider-driven innovation for the past decade, state that often, the most challenging part of bringing innovation from the outside is selling the new idea to insiders. Disruption rocks the boat, and the truth is that most people prefer stability to change, even if it offers a clear improvement.

However, Cattani and Ferriani believe that persistence pays off:

“The very traits that make outsiders so disadvantaged within established occupational structures and professional categories are often precisely those required for the pursuit of exceptional entrepreneurial achievements in art, science, and business.”

Not All the Best Ideas Come From the Outside

Ben Jones, a professor of strategy and entrepreneurship at Kellogg School of Management, argues that not all good ideas come from outsiders and that insiders may, in fact, have a distinct advantage. He says:

“If you’re familiar with the ins and outs of an industry, having worked in it, and you have a strong professional network, your odds of success are greater.”

HR consultant Dr. Greg Willard has found that even if an innovation comes from the outside, it is often up to inside experts to bring the new idea to life.

Innovation Partners

My own experience suggests that most innovation requires that insiders and outsiders working together is what brings change and disruption. For example, companies like ours that brought significant innovation to healthcare in the early days of managed care, were most successful when we built a team that included open-minded industry insiders and outsiders with a fresh pair of eyes.

Catching a Wave Early

Panama City Beach after the storm — After the storm at Panama City Beach. Jeff Cornwall

Surfers often stress the benefits of catching a wave early.

David Allee, owner of Almond Surfboard and Design, puts it this way:

“My personal experience surfing, as well as watching other surfers in the water, seems to continually reaffirm the fact that the ability to consistently catch waves early in their formation results in far greater overall success.”

It is often advantageous for entrepreneurs to also catch a market wave early.

Escape Rooms Come to America

Brothers Jonathan and James and their co-founder Mark caught an entrepreneurial wave early in the escape room craze when they launched their business, The Escape Game. Jonathan shared how they caught that wave in my forthcoming book, Entrepreneurial Voices:

The TripAdvisor wave carried us through the first launch. We didn’t start the business with a grand scheme to grow. We started the business thinking this is really unique. There is no analog. There are no national brands. There are no global brands. There is no company that has more than two of these in the world right now. That’s where the world was in this industry at the time. We said, “Let’s do one; let’s do it really well. Let’s see what becomes of it.” TripAdvisor really helped launch that first store. And then three months in we said, “This is going so well. We have to do more of these.”

As Jonathan rightly points out, being a first mover into a new market can have significant advantages. The advantages of catching a wave early include helping set the standard for the new market and building brand loyalty before others move in.

After about ten years of growth, with the help of an infusion from a private equity group, they now are in 37 locations in 18 states and the District of Columbia, serving more than seven million players since their launch in 2014.

The Perils of Catching Waves Early

There are also disadvantages to being a first mover into a market. Several disadvantages center around the business model. Early entrants often miss the mark on who the market actually is, what that market really wants, and how to connect with them. They can squander precious resources trying to pivot their business model to what it actually needs to be.

And even if they get the business model right, they may not be prepared for the challenges that rapid growth may throw their way! Growth is the most perilous time for an entrepreneurial venture. As my late father often said, “The single biggest cause of business failure is success.”

Or, as SurferToday points out:

“When it breaks, a huge wave can break bones, keep someone underwater for a long time, and even slam a surfer against the ocean floor.”

Fortunately, Jonathan and his co-founders navigated the perils of catching their entrepreneurial wave early. But not all first movers make it to shore unscathed.

New Adventures

Sunrise on 30A over Gulf of Mexico — Sunrise over the Gulf of Mexico. Jeff Cornwall

Well, my retirement has looked nothing like I imagined.

During the first six months, I filled my time with as many projects as possible. I went from working full-time for the University to working full-time on various interesting projects. I enjoyed everything I was doing, but it looked nothing like retirement.

Then, in early 2023, I was diagnosed with non-Hodgkin’s lymphoma. Chemotherapy was not on my bucket list for retirement, but it is what dominated much of last year. The good news is that my treatment was successful, and I was told I was cancer-free after my last round of chemo. I am so grateful for all the prayers and support we received from friends and family.

Our New Adventure

Toward the end of treatment, I was sitting on our back porch feeling miserable. I wondered why we needed our big house. As Ann always said, we lived in only a small part of it. When Ann got home from pickleball that day, I asked her if she was really serious about downsizing. She assured me that she was.

So, we sold our house, got rid of eighty percent of the “stuff” we owned, and moved into a small apartment a few miles from our house. We then began the process of exploring what our next adventure would be. We knew we were ready for a warmer climate and ready to live in a community with people at our stage in life. We have always enjoyed Hilton Head, but it can get almost as cold there in the winter as it does in Nashville. So, we settled on Florida.

Specifically, we decided to move to the panhandle of Florida, along the area known as 30A. It offers a nice climate and is easy to get to from Nashville, where our kids and grandkids all live. We bought a lot and have begun the process of building our new home in Latitude Margaritaville Watersound.

Entrepreneurial Voices

Since I retired from the University, I have been working on my new book, Entrepreneurial Voices. My progress was slowed a bit during treatment, but I have been plugging away at it for the past eighteen months.

I’ve been talking about writing this book for decades. It is inspired by the book Working by Studs Terkel, in which he interviews more than a hundred and fifty people from all walks of life about their work. Most of his book contains direct quotes as people talk about “what they do all day and how they feel about what they do.” My wife and I have always believed it would be compelling to develop the same type of book about entrepreneurs and small business owners. When I retired, Ann said, “You now have the time to write this book!”

So, I spent much of the first year identifying dozens of interesting business owners and conducting long-form interviews about their journeys as entrepreneurs. Like Terkel, I wanted to capture not only what they have done as an entrepreneur but also the affective side of owning a business. The book presents the lessons and challenges of entrepreneurship from the business owners’ own voices. The world is full of books in which authors give their views about entrepreneurship, including several written by me. This book offers lessons and insights from the words of entrepreneurs.

Entrepreneurial Voices will be published sometime in 2024.

My next several blog posts will offer my reflections on the lessons from various stories in the book. Although the chapters in the book are in their voices, my upcoming posts will offer my reflections on these interviews. Conducting, transcribing, and editing these interviews not only inspired me but also taught me many important lessons about not only the process of entrepreneurship but on being an entrepreneur.

Cash is King, Queen, Master of the Universe, and Emperor for Life.

These are mantras I’ve been telling entrepreneurs for years. Nothing matters more to the life of a business than its cashflow, which is why a good cash forecast is so important to a growing venture. Derek Baker at Cashboard offers his five reasons cash forecasts are inaccurate. Great post, via CJ Cornell’s newsletter.

Co-founder of The Entrepreneurial Mind, serial entrepreneur and professor of entrepreneurship.