The Bureau of Labor Statistics released data on May’s employment situation today.
Highlights of today’s employment situation report:
* 78,000 new payroll jobs were created in May, following a much larger gain of 274,000 in April.
* The unemployment rate (calculated from the household survey of employment) edged down to 5.1% in May, from 5.2% in April. Last May, they unemployment rate was 5.6%.
* The unemployment rate remains below the averages of each of the past 3 decades.
(Source: Congressional Joint Economic Committee).
I have written before about the risk of jumping too quickly into writing a full-blown business plan or even impulsively launching a business. A key skill that successful entrepreneurs learn is to more efficiently and quickly assess possible opportunities before they make extensive commitment of time and money. It allows them to weed out ideas that don’t have a good chance or working. In effect, it gives the entrepreneur a chance to fail on paper.
I have entrepreneurs examine three basic questions to assess opportunities:
1. Is there a MARKET? Examine the size of the market to make certain that you only need a small portion of the market as customers to make your business work. Make sure that they are interested in, and more importantly want and need your product or service. You don’t have time or money as an entrepreneur to educate them. Begin to get an idea of how much they will be willing to pay. Too many times this becomes a last minute guess by the entrepreneur.
2. Is there a MARGIN? Figure out the basic economics of the business. How much will the product or service sell for and how much will it cost to produce the product or offer the service? At this stage you should really look for opportunities that offer at least a 50% margin. Generally, when all is said and done this will typically result in actual profits of about 15-20% once the business plan is developed and all of the true costs are determined.
3. Is this for ME? There are many periods during the growth of the business when the entrepreneur needs a true passion to carry them through. This is not just a simple financial investment. It becomes much more personal and emotional than that. Many entrepreneurs tell us that the profit part of the business opportunity is only one of many reasons for launching their businesses. It also helps to build a business that takes advantage of your experiences, knowledge and skills.
These three basic questions should become the first thing you do when you look at an idea for a new business. If the idea passes this test, it offers real potential as a true business opportunity and should be pursued further toward a possible launch. Using opportunity assessment will help increase your success rates with business start-ups. It will also help you deal with an idea and move on if it does not seem to offer a good chance of success. That is, it helps you clean up the mental clutter of too many business ideas floating around in your head.
Entrepreneurs face a global marketplace that includes many options for outsourcing manufacturing of products. But, there are significant risks when entering the world market including protecting intellectual property, finding reliable suppliers, and understanding currency fluctuations. Entrepreneur.com offers suggestions on navigating the complexities and risks of a global strategy:
– “Hire a source that’s not a competitor.” This is your best chance of protecting your intellectual property. However, there are no guarantees in the international arena so be prepared for knock-offs even if you have a US patent.
– “Determine a source’s turnaround time.” Talk to other US companies that have used the source. And understand the time and cost of your various shipping options, as both can vary widely.
– “Give your source an exact model of what you want produced.” This will cost some money, but prototypes are your best chance of communicating exactly what you want them to do.
– Keep in close communication with source. This may help minimize surprises. They will probably not initiate communication if there are any problems.
The article also offers several places to go for assistance.
The NFIB released a report that shows overall optimism remains strong among small businesses. The report found that 61% of small businesses expect growth over the next three months. Stronger consumer spending is identified as a major contributor of this growth.
Red Herring has an interesting interview with Randy Haykin, who heads up Outlook Ventures, an early-stage venture capital firm. Haykin identifies what he considers to be the “hot” market spaces in technology these days. On his list:
-Digital Security (although it may be peaking right now)
-Virtual Patches for Microsoft systems (temporary fixes until Microsoft sends out the offical patch)
-Products that help manage permission and access control for IT systems in larger companies
He is not very excited about offshoring firms, however, which used to be a hot sector in technology. It does not seem to deliver the cost savings that everyone thought it would when it first became the rage.
VC activity in technology firms should continue to increase as valuations are up significantly over the past three years. What is interesting is that it is attributed in large part to better bootstrapping. Seems that VCs like to see their money spent on producing and selling rather than administrative overhead.
I take a few days off and what happens? Donald Trump has launched an on-line university dedicated to teaching entrepreneurship.
While on-line universities are showing significant growth, entrepreneurship is an area of study that has proven to be a little more difficult to move on-line. Some of the skills are teachable via the Internet, but a good part of what is done in traditional programs is highly experiential, personalized for each student, and based on mentoring relationships. While the Internet can supplement what we do, and already is doing so, it cannot replicate all that students experience with traditional programs.
Speaking from the programs I have been involved with in recent years (here at Belmont and at the University of St. Thomas) I know we also have one other competitive advantage with “The Donald U.” We believe that ethics, morals and values matter, and while making money is important and a good thing, it is not the only thing. I am afraid that Mr. Trump is going to create a bunch of “entrepreneurs on steroids” only pursuing the next transaction. Entrepreneurship can and should be so much more than what Trump U will teach.
I know, I know. Dr. Cornwall–You’re fired!!
From the SBA Office of Advocacy:
Details of the best practices in state initiatives spurring entrepreneurship and demonstrating market-based results are now available in the conference proceedings from Putting It Together: The Role of Entrepreneurship in Economic Development. The conference held in March featured nineteen state entrepreneurship and economic topiramate to buy development finalists whose presentations focused on how to create environments where entrepreneurship and economic development can flourish.
“We are excited about making the details of the best practices in state economic development available to policy makers and the public,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. “These presentations provide a blueprint for others to follow and can help all regions of the country jump-start their local economic development.”
Entrepreneurship majors, like ours here at Belmont, attract only a small percentage of students interested in business ownership. In fact, an annual survey by the Chronicle of Higher Education finds that about 40% of today’s students cite owning their own business as one of the major motivations for going to college. And yet, even the most successful entrepreneurship major will attract at most 1% of the student body. This is somewhat of a concern given the importance of education in improving the success rates of entrepreneurs starting new ventures. So how do we help the rest of them?
Many schools are beginning to implement programs to reach the rest of these students where they learn. In Art, Music, Theater, English, Political Science, Biology, or whatever program they are pursuing. This is being done by offering them minors in entrepreneurship and by creating a wide array of co-curricular programs that get integrated into their education experiences.
One of the major pushes for this type of initiative is being made by the Coleman Foundation. Belmont University’s Center for Entrepreneurshiphas just been awarded a $150,000 grant from the Coleman Foundation to expand our program called “Entrepreneurship Across Belmont.”