Summer Reading

The National Dialogue on Entrepreneurship has offered their choices for summer reading:
Thomas W. Malone, The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life. Cambridge: Harvard Business School Press, 2004
This is an interesting look at the new face of employment relationships. My take on this it that even if you are not planning to be an entrepreneur you better learn about it. Malone sees management become more a group of free agents that sell their expertise and services to many different companies. You basically better plan to treat your career like it is your own business if Malone is correct.
Nicholas Carr, Does IT Matter? Information Technology and the Corrosion of Competitive Advantage. Cambridge: Harvard Business School Press, 2004.
NDE has this take on this book:
“Carr argues that executives must now treat IT as simply another part of the business; it should no longer drive a company?s strategy. This also means that firms should spend less on IT, and that claim certainly doesn?t sit well with IT companies. Even if you disagree with Carr, this is a provocative book that will make you think about where IT fits in with your business or your local economy.”
David Bornstein, How to Change the World: Social Entrepreneurs and the Power of New Ideas. Cambridge: Oxford University Press, 2004.
Social entrepreneurs are those people who channel their entrepreneurial passions into the non-profit world. A growing area of interest with many potentially very positive social implications.
Sharon Whitely, Connie Duckworth, and Kathy Elliott, The Old Girl?s Network: Insider Advice for Women Building a Business in a Man?s World. New York: Perseus Books Group, 2003.
Lindy Woodhead, War Paint: Madame Helena Rubenstein and Miss Elizabeth Arden, Their Lives, their Times, and their Rivalry. New York: John Wiley and Sons, 2004.
My instincts tell me that the entrepreneurial world is becoming more gender blind. I think if you focus on your own small network, you limit your possibilities.
Stephen Spinelli, Robert M. Rosenberg, and Sue Birley, Franchising: Path to Wealth Creation. New York: Prentice Hall, 2003.
Steve Spinelli was involved with Jiffy Lube and now teaches at Babson. Should be a good book for any interested in franchising your business. I do caution any entrepreneurs thinking about franchising their businesses, however, as many attempts have failed due to poor business models. Corporate overhead has killed many of attempts at growing a business this way. Also, before you decide to franchise your business take a look at all of the attorneys who specialize in this area. That should tell you something about what lies ahead!

Plan ahead on staffing

The economy is growing and employment is up all across the country. Good news, indeed.
But, what this means for small business folks is that it is time to start engaging in more deliberate and longer-term staffing planning. During the last big economic boom, the single biggest impediment keeping the entrepreneurs I was working with from growing was staffing problems. They could not hire the right people when they needed them to take advantage of a growing market.
So here are a few things to keep in mind:
1. Keep Staffing Forecasts Current. Even if you are a small business, you need to think down the road for the next two or three years to anticipate what your hiring needs may be. Forecasts should be updated every few months to adjust for changing conditions and the changing state of your business.
2. Base Staffing Plans on Milestones, not on Time. Never tie your staffing plans to the calendar. The passing of six months is not what will require you to hire new employees. Know what the triggers are in your business that will necessitate more employees. For example, it could be things like a certain number of clients, sales levels, or production levels for employees. More managers and supervisors it should be based on the number of first line employees each can effectively supervise. And don’t forget the needs of support staff in areas like billing and sales.
3. Measure Your Employment Triggers. Work with your bookkeeper or controller to give you quantitative reports on your key employment milestone triggers, and insist that you get these reports regularly.
4. Never Just Hire Warm Bodies. Hiring someone just for the sake of hiring rarely works. Mediocre hires make mediocre employees. This will only postpone hiring the right people and force you to get rid of the dead wood you just hired first.
5. Know Your Hiring Lead Times. It takes time to get employees up to speed. Know how long it will take to recruit, hire, and train new employees for each position you are planning to hire so they can be ready to work when you really need them.
6. Don’t Forget to “Close the Bank Door”. The single best staffing tool you have is retaining the good employees you have right now. Create a culture that makes good employees want to stay with you. You may have to pay a little more that you’d like to, but it is much more cost effective that constant hiring and training. And staff shortages can be very costly in terms of lost revenues.

“But professor, this isn’t an English class…”

Writing counts. I have known bankers, venture capitalists, business people, etc. who have all told me stories of throwing away material they have received simply because it is poorly written. I have done it myself. I have thrown away letters, brochures, business plans, and proposals when I find obvious mistakes in their content. It usually has to be pretty bad, where to buy topamax weight loss since I don’t pick up on these things unless they are obvious. This article at StartupJournal has some great tips on business writing.
My biggest pet peeve? Please spell my name correctly!! It is Jeffrey, not Jeffery or Geoffrey. And it is Cornwall, not Cornwell, Cromwell, Cornwallis, Cornish, Cronwell, Corwall (just a few that I have received in business correspondence).

What motivates today’s young entrepreneurs?

What is driving so many young people to pursue careers as entrepreneurs? Why are my entrepreneurship classes getting so FULL?? StartupJournal.com provides some insights into these trends. The article opens with Duke University, where they are seeing a reverse in this trend. But this is not the reality most of us are seeing at our schools. Duke has only graduate studies in business. Most if the boom in entrepreneurship studies has been in undergraduate programs, where students are not looking for a ticket out of corporate America, but are looking to take a road in life that will never lead them into the corporate world.
What are they looking for? They want more freedom. They seek a greater upside potential. They love the rush. They insist on the flexibility they can create through their own business. They like working for their own goals and their own measures of success in life. I can tell you that these students create an incredible energy everyday that I walk into the classroom. Their optimism and enthusiasm make my job pure joy.

The Challenge of Pricing

Setting prices can be a frightening step in a start-up business. Most entrepreneurs tend to set prices too low assuming that they have to price below the market to get business. If that is really true in your market, you are in a commodity market. Not a good place to be, anyway.
BusinessPundit offers a good perspective on pricing which you can check out here.
“It is difficult to know the “market price” when you are making a new market. Charge too little and you leave profit on the table. Charge too much and you may not have the cash flow to sustain yourself. This is why I am a big fan of “soft openings.” I like a chance to feel things out with a small group of customers rather than explode with business from day one and not be ready to handle it. You only get one chance to make a first impression.”
Rob also links to a great article at CFO.com about pricing strategies.

Small Business Index for May

The NFIB has released its small business optimism index for May. While it is off slightly, the researchers at NFIB are not concerned that this is a change in direction for an index that has been fairly robust. Part of it is probably related to a little inflation jitters and some may just be the energy cost spike that acted like a splash of cold water.
The authors of this study are still seeing 2004 as the strongest economy in over two decades. This is bolstered by Greenspan, who is not overly worried about inflation (and that says a lot!), and the recent drop in energy prices due to expanded production in the Middle East. And just when the economy starts looking so strong, the media turns the other way as reported by Bill Hobbs….

Its up to “us”

A report on innovation in large companies issued earlier this year by Deloitte and Touche underscores that entrepreneurs are now in charge of our economic future. I have written and consulted about entrepreneurship in larger companies since the 1980’s. The longer I look at organizational entrepreneurship, the more I become convinced that its impact is, at best, incremental. This report seems to back up my observations.
“The latest findings, based on research gathered from nearly 650 leading manufacturers worldwide, reveal that:
* Manufacturers cite launching new products and services as the No. 1 driver of revenue growth, yet also view supporting product innovation as one of the least important priorities.
* 50 to 70 percent of all new product introductions fail.
* New product revenue will jump to 35 percent in 2006, up from just 21 percent in 1998.
* By 2010, products representing more than 70 percent of today?s sales will be obsolete due to changing customer demands and competitive offerings.
“‘Our research clearly shows that a significant profit barrier exists in the manufacturing industry and this barrier is directly related to the failure of most new products and services, as well as the lack of priority placed on successful innovation practices,’ says Doug Engel, director of Deloitte’s U.S. Manufacturing Industry practice.”
New research is showing that with education, independent entrepreneurs have success rates of almost 80 percent. Even with their miniscule budgets, they do a much better job of understanding their customers and perceiving the subtle, but dynamic forces of growing markets.
Why are larger companies so weak as entrepreneurial engines? My experience is that they cannot or will not make the changes it really takes to foster entrepreneurship in their companies. It takes fundamental changes in culture, structure, reward systems, and basic strategies to even have a chance at the transformations necessary to become entrepreneurial organizations.
When I have consulted with large companies in this area, they want me to “fix” the line managers. I am to make them more entrepreneurial. It is, after all, their fault that the company is not adapting to change. Most of these managers want to become more entrepreneurial, but it is the corporation itself that oppresses or undermines their efforts. When I have tried to get top management to look at the changes they would need to make to break down the organizational barriers impeding entrepreneurship, they have always balked.
The good news it that at the macro level this is not really a problem. We have had strong growth in new ventures over the past twenty years, now over 3.5 million new businesses a year. This is where innovation will blossom and how our economy will continue to expand.
Thanks to Bill Hobbs for passing this report along.

Even Europe is Experiencing Entrepreneurial Economic Growth

Now we know for certain that this entrepreneurial economic recovery has hit full steam ahead. Europe is even seeing significant growth!
The European Venture Capital Association reports that in 2003 there was over 29 billion euros invested in over 7400 companies. What is even more encouraging about this news is that European VCs tend to invest smaller amounts of money in earlier stage firms than is seen in the US. While the European economy tends to lag the US, this high level of investment in early stage ventures should be a better leading indicator for the global economy than US VCs, which focus on larger investments in later stage financing deals.