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.

Bank Mergers and Small Business

Bank merger mania is back. Generally, this is not good for their small business customers. Mergers are pursued for efficiency, and efficiency often leads to less personal service. A recent survey of small business owners reported over at Inc.com found the following:
“According to a recent survey by Greenwich Associates, 30 percent of small businesses (those with annual revenues between $1 and $10 million) and 23 percent of midsize businesses (annual revenues of $10 to $500 million) said that merger rumors concerning the banks where they do business would cause them to consider reducing future levels of banking business with them. The reason generally given was an expected decline in service quality.
“Among their quality concerns, 53 percent of the small businesses surveyed believed a merger would have a negative impact on their established relationship manager performance, making it the most cited area.
“The area midsize companies felt would be most affected was their banks’ responsiveness to information requests, with 50 percent saying they felt this area of performance would be hurt.”
The good news, which we recently discussed here at this site, is that there are many new community banks starting up in the wake of the bigger banks merging.
Not all mergers have bad outcomes for small business. When smaller community banks merge or banks with a more regional presence come together the outcome can be a stronger bank that can better serve the needs of a growing company. This happened when a regional bank we had moved our business to merged with another regional bank. We saw no change in service and a better ability to meet our expanding needs as their customer.
Changing banks can be disruptive for a small business, so take time to see what changes occur over the first six to twelve months post merger. If things start to change for the worse, remember what a former partner of mine once liked to say: “There’s a bank on every corner. One of ’em will be smart enough to work with us.”

From Great to Good

On the eve of the US Open golf tournament, I am struck by the consistent questioning of Tiger Woods? performance of late. Tiger is not winning as many major tournaments as he did a few years ago. In fact, he just isn?t winning as much as he used to.
The theories about this decline in golfing success are numerous. Among the most common theories are those that focus on changes in his life. He has gotten engaged. He is more and more active in outside activities such as his charity work. There are too many things that now take away from his golf.
What is most interesting to me is that there is always the implication that it is somehow bad that Tiger?s life has become more than golf tournaments. That he is somehow no longer great.
I remember an interview with his father years ago where he predicted that Tiger would not always be “only” a golfer. In fact, he predicted that Tiger would leave golf at a fairly early age. He saw in his son much more interest, passion and potential than golf alone could fulfill.
It is my hope that maybe Tiger is working on his goodness as a person these days. He is building a relationship with his fianc?that will be the foundation of a good family. He is working to make our communities better places to live in through his involvement in various charities. Tiger Woods may be willing to sacrifice his professional successes, his professional greatness, to strive for goodness as a person.
Imagine that, someone actually working on moving their lives ?from great to good?. If that is what is going on with Tiger, it should be a role model for all of us. I think we sell ourselves short when we only celebrate the great among us. It is much more important for humanity to spend more time celebrating the good.

Reagan and Small Business

Anita Campbell looks at President Reagan’s recognition of the courage and importance of small business over at Small Business Trends.
“Even today, two decades later, President Reagan’s description of small businesses and entrepreneurs remains as accurate as ever: (1) No guaranteed income. (2) Must anticipate their customers’ needs. (3) Must deliver before they reap the rewards. (4) Drivers of the economy.”

Time to clean the bathrooms

Along the same lines as President Reagan’s take on small business, Rob over at BusinessPundit offers his view of the drudgery that many entrepreneurs face each day.
“They cold call. They clean bathrooms and mop floors. They make copies and fix computer problems. They answer phones. They fill out paperwork. They work weekends, and holidays. They have to, because their employees just want to work 40 hours and leave, and they can’t afford to hire any more help.”
And most of us wouldn’t trade this life for the world!