This and that before I hit the road…

I will be hitting the road for a few days, but before I go I thought I’d clean out my “TO BE BLOGGED” file…..
I often tell entrepreneurs to go for the low hanging fruit. Or, if that metaphor doesn’t work for them, hit for average and not home runs. Or even, keep it simple, stupid! Start-up Skills has a great post on why it is so hard to come up with something really new.
Rob over at Business Pundit (one of my all time favorite sites) answers two questions that I am sure are ringing in the halls over across the street at Vanderbilt (sorry, I just could not resist):
What is Zenpreneurship, anyway?
and,
Aren’t all corporations just psychopaths?
By the way…my comments are indeed turned off due to a really bad spam attack by some folks that obviously don’t know that I work at a religious school. Looks like Loic’s Blog got hit, too.
This site is worth visiting if just for the name….Duct Tape Marketing. Some great bootstrapping ideas.
Small Business Trends has a thought provoking piece on finger print technology use in small restaurants. Call me paranoid, but this one kind of gave me the creeps.
Maybe this is something you never really wanted to know, but VentureBlog answers the question: What do venture capitalists do all day?
Visit Carnival of the Capitalists here. NOTE: Where “here” is changes Monday to a new “here”.
If that isn’t enough to keep you busy until I get back, go root around in some of my archives!

Entrepreneurial Activity Down Under

Even though there is an increasing interest in entrepreneurship in Australia, entrepreneurial activity still seems to be a bit sluggish. A report called Innovating Australia from the Committee for Economic Development in Australia (CEDA) was highlighted this week by the National Dialogue for Entrepreneurship that makes some recommendations on how to fix this perplexing problem.
“(T)he overall economy remains highly dependent on resource-based commodities, and performs poorly in key measures of innovation (R&D spending, patenting activity, etc.). So, what to do? CEDA recommends that government agencies support more aggressive public and private investment in leading sectors like biotechnology, nanotechnology, and IT. Creating a true Australian innovation system will complement the many competitive advantages that already exist for the nation?s economy. “
I hope that rather than take this central planning approach, Australians look to the most probable causes: too much government regulation and an overly socialistic political system. Both of these are major impediments to creating an entrepreneurial economy. To their credit, the Aussie’s have an outstanding record for educating entrepreneurs, so they do have that much already in place. The strength of organizations such as SEAANZ are helping in their educational efforts.

Educating Entrepreneurs

Educating entrepreneurs is one of the two most important tools we have to support our entrepreneurial economy (getting government out of the way is the other). Several examples have come across my desk and to me through the web over the past couple of weeks, and it got me thinking about what a rich array of programs that are already in place.
There are now hundreds of college-based programs for start-up entrepreneurs as seen in the ranking article at Entrepreneur.com. Twenty years ago there was only a handful. These programs work with every type of business venture from small start-ups to high-tech, high growth ventures. Universities have developed co-curricular programs to provide experience in the world of venture capital, such as the Venture Capital Investment Competition at the University of North Carolina.
There is also an explosion of community-based programs. One of the best know is the FastTrac program supported by the Kauffman Foundation. But there are also countless programs popping up like mushrooms after the rain all over the country. Many of these are supporting a critically important population of entrepreneurs: immigrants. For example, just here in Nashville there are two wonderful examples in Conexi

More evidence of economic growth in April

The Joint Economic Committee shows more growth in April in this report just issued.
Highlights from this report:
* GDP grew at a 4.2% annual pace in the 1st quarter. Private forecasters see growth of 4.6% in 2004, the highest in 20 years.
* Payroll employment increased by 288,000 in April, bringing job gains to 1.1 million over the last eight months. Unemployment fell to 5.6%.
* Consumer price inflation has risen. Excluding food and energy, core consumer price inflation accelerated in March to 1.6% from 1.2%.
* The Federal Reserve kept its short-term interest rate at 1%, a 45-year low, but hinted that rates will soon gradually rise.

partners 101

Barry Moltz describes partnerships as “marriage without the sex.” Partnerships in business can be one of the most difficult issues that entrepreneurs have to face, and yet very little is written about them, we usually just knowingly roll our eyes when we teach about them, and most entrepreneurs only worry about them when they have already become a complete disaster. I think that who is in or out of partnerships should have as much consideration in a business deals as what markets to enter into. Partnerships gone bad are a major source of business failure. They suck energy and time from doing business. They lead to the break-up of perfectly good businesses.
Rule One. Examine business partnerships (I am using the term loosely here as these can be common shareholders in any closely held business such as an S-Corp or LLC) like you would a marriage. I hesitate to use this analogy in today?s world of quicky marriages and quicky divorces. I mean a marriage that you really want to last a LONG time! Think it through very carefully. Talk with the potential partners about everything related and even unrelated to the business. Know their hopes and dreams, endearing characteristics and annoying habits, ethics and values, etc., etc., etc. You will spend more time with these folks that anyone else in your life and it will be a relationship that the law will make even more complicated to get out of than a marriage. So get it right in the first place! Entering into a business partnership on impulse or too casually is about as smart as entering into a marriage the same way. And it has about the same chances of success. No matter what, work with your attorney to create a shareholder agreement before you officially incorporate. Just as marriages can fall apart on the honeymoon, business partnerships can fall apart before the first sale is ever made.
Rule Two. If you are already in a partnership and it has problems, try to work it out openly and honestly. Do so with as little venom as possible. This requires that you remember three words: communication, communication, communication. And once you?ve got those three right, the next three words to remember are compromise, compromise, compromise. This is not a battle of the wills; it is your business and personal futures on the line. Check all egos at the door when dealing with troubled partnerships.
Rule Three. If the partnership is beyond hope of repair, get out as quickly as possible. The longer it takes, the more expensive it gets. And no matter what, it will be expensive. Shareholder agreements and essential and can create a potential path out of the morass, but it will still be a painful and expensive process. Count on that. As this article from Inc.com underscores, this is a tricky process even with a shareholder agreement.

Carnival of the Capitalists for 5/10/2004

Carnival of the Capitalists can be found at Clay Whittaker this week.
My favorites this week include Syergy Fest’s look at EBITDA (OK, so I’m really a numbers nerd at heart) and Goobage’s very provocative proposal of how to make our health care system capitalistic again (health care is my old stomping grounds from my entrepreneurial days, but his idea never came up in any of my industry meetings!!).
There are lots of other great posts again this week. Check it out!

Job Growth is looking robust

The Bureau of Labor Statistics released its data on the April employment this morning.
Highlights:
* Over 1.1 million payroll jobs have been created in the past 8 months.
* Manufacturing employment has increased for 3 consecutive months, adding 37,000 jobs over that period and reversing a trend of nearly 4 years of declines.
* Payroll employment was revised up by 29,000 jobs for March, reflecting an even stronger labor market than was earlier estimated.
* 867,000 jobs have been created this year alone.
* Initial jobless claims declined by 25,000 this week. Following more than a year of declines, weekly initial jobless claims are now at their lowest level since October 2000.
This link shows job creation, which has shown a net increase in jobs every month since last September.
This chart shows jobs are even stronger than many reports, as the household survey (which includes self-employed and start-up entrepreneurs) is also included. What is interesting in this chart is that both measures of employment are looking strong. Entrepreneurship is leading this economy, and it is now bringing more traditional jobs along with it.

So what’s my business worth?

People make the process of business valuation just too complex. It is really much simpler than most realize. The best way to think about the value of your business is to understand how a buyer will look at it. Simple idea, right? But in the days when we were looking at buying other people’s businesses I never ceased to be amazed by how convoluted some entrepreneur’s thinking was about the value of the business. One woman insisted to me that her business was worth $800,000 because that was how much more she needed to retire in the life style she had planned for herself. When I carefully explained to her that her business was only worth about $100,000 based on her cash flow. She became enraged, and said, “But I deserve that money!! I worked too hard to get anything less!!!”
Rodent Regatta offers a very clear picture of how a buyer thinks about valuation. Just as it is critical to “think like your customer” to be successful in growing a business and to think like an investor or banker when seeking funding, an entrepreneur must learn to think like a buyer when the time comes to exit the business through a sale. Unrealistic expectations lead to a dead end, not a successful exit.