Don’t Fear Failure

Rob at BusinessPundit suggested a post at The Occupational Adventure about failure. It is worth a look. Failure, or the fear of failure, is what has kept many a potential entrepreneur on the sidelines. Failure is something we all have learned from along the way if we let ourselves take some risks. It reminds me of the first time I really got tackled hard in Junior High football. I was really afraid of how it would feel, and although it really did hurt (the guy was the star line backer of the eighth grade team), I learned from it (stay away from his side the rest of the game and go out for cross country next fall).
We can all learn from our own failures. That is an important part of entrepreneurial learning. We can also learn from the failures and mistakes of others (I picked that up and a young age being the youngest of four boys–thanks for all the lessons on what not to do Tom, Scot and Steve). Some of my best lectures center around mistakes and failures I had in business and how I tried to learn from them going forward.

Technology and Growth

Anita over at Small Business Trends posted a summary of a survey conducted by Yahoo Small Business. It looks like technology is on small business people’s minds these days. Although the survey is sponsored by Yahoo, it was conducted by Harris. It still could be slanted by Yahoo’s involvement, but is interesting even with this possible bias.
“In a survey of over 1,000 small business owners, the following activities were listed as the most beneficial to the growth of their company, in order of importance:
Having or establishing an online presence (35%)
Having or obtaining dedicated business email (30%)
Increasing online advertising (30%)
Hiring more employees (19%)”
Technology can certainly level the playing field a bit, and can create opportunities that could not exist without its support. However, just as I used to tell small businesses that not all of them needed to be in the Yellow Pages (most usually thought they did), not all businesses today need to have a web presence.
Think like your customer.
If your customers look for your type of business in the Yellow Pages then be there with your advertising (restaurants still get much of their business from this source of information). If they look for your type of business on the web, then that is where you should be.
This is a transition time, however. Many businesses are finding that they have to cover multiple media for their message as customers are not all using the same source for product/service information. Some customers within the same target market are more technologically inclined while others still are not.
In this case, think like your customers.
NOTE: If you found the relatively low priority for hiring interesting, as I did, make sure to read my post from yesterday.

Economic Foot Soldiers

During the last economic expansion entrepreneurs constantly battled to find workers. Staffing shortages were the major challenge that the entrepreneurs who I was working with complained about. This recovery has created a new challenge: supply shortages.
Why are inventories so low? Businesses have been slow to ramp up production during the current expansion even though the economy was clearly picking up. Just this past weekend, I was talking with small businessman who said that even though their revenues had increased dramatically this past year they still had not really expanded their work force since their post 9/11 layoffs. They were falling behind on some orders, but he was still not sure they should add staff or inventory.
The current expansion has seen an unusually slow employment recovery. Why? In large part it is because we are still waiting for the other shoe to drop. Entrepreneurs remember that after the 9/11 attack, those businesses that were already running lean and tight were the most likely to survive the dramatic shock on the economy that followed. There is a general, yet usually unspoken fear that there will be another ?event?. So they are being very cautious. They don?t want to be caught with large inventories and bloated payrolls if the terrorists strike again. Entrepreneurs have a general sense of confidence in the economy, but they just don’t trust that events will allow it to continue.
This caution has led to the current shortages in supply. As the economy has gotten red hot, the capacity is just not there to meet the growing demand. Russell Sheldon, a senior economist at BMO Nesbitt Burns in Toronto, states in a commentary published in the Nashville Business Journal that these shortages are widespread. ?Inventories at all stages of production plunged relative to sales in the initial months of this year. All three levels – manufacturing, wholesalers and retailers – are very short on inventories.? I see it in my neighborhood where construction has slowed due to material shortages, while demand for new houses is stronger than it has been in years.
Sheldon and other economists warn of what these shortages can create. It is demand-pull inflation. Many entrepreneurs had not experienced an economic downturn before the recession that began in early 2001. Even more of them have not known of the challenges that inflation can create for business leaders. The last serious period of such inflation was 1979, when we saw prices grow at a double-digit rate. I remember, as I had just finished by MBA in finance from Kentucky and very few of us in that graduating class could find meaningful work.
Hopefully the Fed can keep inflation in check this time. We learned from the inflationary periods of the 1960s and 1970s that panic over rising prices only made inflation worse. So we all must do our parts to keep inflation under control. Knowing why we are facing this challenge may help toward this end.
But, things are no longer as predictable and simple as they once were. The attacks of 9/11 were aimed directly at our economic system. And they got a direct hit. We are at war. The war has come to our shores, and the enemy intends on attacking the very foundations of free enterprise and our way of life. In many ways, entrepreneurs are the economic foot soldiers of this part of the war. And much more is at stake than simply their businesses.

Even well connected start-up can find financing a challenge

This story in the Tennessean tells the tale of experienced entertainment industry executives trying to launch a start-up. As evident from this stroy, connections and name reconition alone are not enough to bring money to the table.
“(Carl) Kornmeyer, who was heavily involved with The Nashville Network and CMT during his Gaylord tenure, has decided to build a company from scratch in a big way, one seeking somewhere in the neighborhood of 0 million. The venture, called New Shoes Media, is exploring digital cable network and programming opportunities.”
They are hoping to raise the money though local sources here in Nashville, but may end up chasing venture capital as well.
One piece of advice from this humble blogger: think about your “story”. This is especially important as one moves away from the locals who know you. Why do I raise this issue with this start-up? Well, here is how they say they got the name for their new company:
“The company’s name came before Kornmeyer, however. It reflects the gamble they are taking. ‘Come on, baby needs a new pair of shoes.’ And the dice go rolling across the table.”
Not a part of the story that most experienced investors want to hear. Prudent risk taking is what they are seeking in deals. Rolling the dice is normally not the business they are in with their financing deals.

Home/Work

Home offices are certainly nothing new. I have had one on and off for most of my career. But with the boom in business formation, more and more new entrepreneurs are following this age old bootstrapper?s tradition of starting their business out of their home. According to the Wall Street Journal’s on-line StartupJournal.com, “The number of full-time home-based businesses has risen 3.1% during the past five years to 9.9 million in 2004.”
It can be the only way that many new businesses can save enough on the costs of start-up to make it during those dicey early months of operation. It takes many forms: the garage, the kitchen table, the basement, the bedroom, the dining room table, or some combination of these.
Even from the beginning it can create some real boundary issues. At this very moment I am violating one of the rules of our household. I have tried to agree to keep my working at home to my home office over the years. It forces me to set up some boundaries between work and home, even though some days they are the same place. But with the wonder of wireless, I sit here in my living room with the Golf Channel on in the background writing about the challenges of working at home.
As a business grows, it can very quickly take over one’s home. I met yesterday with a couple of music industry entrepreneurs who just graduated from Belmont. While they have found that running their start-up out of their homes has saved money at a time when they had very little, it is getting very old very quickly. Josh, who does audio production for a new venture called Submerge Media, told me that his part of the business has now taken over two rooms in his home. Others talk about how uncomfortable it can be as they hire employees and they have to “report to work” around their dining room table. Privacy is certainly a casualty of this type of business arrangement, especially for the entrepreneur’s family.
Eventually many of these businesses will “leave home”. But, the transition can be difficult. The entrepreneur goes from no rent, to having to pay a fairly large chunk of money each month even for a small amount of office space. The commute time increases from the few seconds it takes to walk up stairs, to however long it takes to get to affordable and convenient space for the business. Certainly the up-side is that the garage is no longer full of inventory, the basement full of machinery, or the kitchen full of computers.
There are stepping stones for many businesses. Incubators are always on option, especially for high potential ventures. More and more entrepreneurs find transitionary space with businesses set up to offer just that, such as HQ Business Centers or countless local office cooperatives. Other entrepreneurs take advantage of excess space that other businesses have through sub-leasing some of their space. As we expanded our health care business we often had to take more space than we needed at the moment and used sub-leasing as a temporary solution for our unused offices. Entrepreneurs coming out of university settings are finding that many schools, like we do here at Belmont, have created business hatcheries for aspiring entrepreneurs.
Although some businesses stay home-based businesses for years and years, many out grow their welcome. As Josh said about their growing pains at Submerge Media, “It gets a little weird meeting with clients in my bedroom!”

We will not go quietly…

Just when you thought we baby boomers were fading off into the sunset….WE’RE BACK!
High Tech is going to revolutionize the senior years for those of us born in the 1940s to 1950s according to an article in Red Herring (you will have to register to get to this site if you haven’t done so previously).
“In the future, everything from cell phones to computers will be redesigned for users with limited manual dexterity, poorer eyesight, and hearing….Intel, MIT, and other research centers are working on sensor-rich environments that can monitor their inhabitants, helping people remember to complete tasks and watching for sudden behavioral or physical changes. “
My generation has built sizable wealth, and we are not afraid to spend it to make our lives more comfortable. Combine this with the trend to postpone or transition into retirement and you have a large group of aging people with tremendous disposable income.
Much of entrepreneurial opportunity comes from major changes in demographics, society and technology. In this case, we have a confluence of all three. A major demographic group is moving into a significantly different stage in life. We have created a society in which we expect to have our problems taken care of for us. And, the technological revolution is just waiting for more problems to chase with already developed solutions.
?Aging people may also become be a target market for home robots. In Japan, companies like NEC are hoping to create “nursebots” that can provide basic physical and medical assistance to elderly users?.(I)n their desire to stay healthy, elders will view almost all of their consumption choices through the lens of health. Health considerations won’t be confined to diet or medical regimens: they’ll influence choices in everything from clothing to housing. But because emerging technologies like sensors and smart dust will make it possible to build intelligence and monitoring capabilities into just about everything, it’ll be possible for nearly everything to have a health monitoring or maintenance function. Indeed, this is such an important trend, culture historian and author Theodore Roszak predicts that “by the middle of the 21st century, every highly developed industrial society in the world will be a health care economy.”
What does all this create? Another huge growth opportunity for entrepreneurs in high tech, software and life sciences. At one time there was a concern that the aging of my generation would drag on the economy. After all, the conventional wisdom was that our early parenthood years were our big spending years. As we aged, we spent less, and since we are such a big demographic bulge this was going to create a long term economic decline. Not true, it now appears.
Given the mammoth size of my generation and increasing longevity, this could be a huge entrepreneurial pot of gold for the next forty years. God willing and the creek don’t rise, that is.
Thanks to Bill Hobbs for passing this article along.

Out of Chaos comes Opportunity in Entertainment

I have argued since arriving in Nashville that the entertainment industry is ripe for an entrepreneurial boom. Although the big companies in the industry are hurting, entertainment (especially music) is being made and being consumed. The manner it gets from the source to the consumer is forever changing. The latest figures on venture capital investment support this view. Entrepreneur magazine reports that entertainment is emerging as one of the hot sectors for VC’s. Hang on to your (cowboy) hats…its going to be a wild time here in Music City!