To Compete or Not to Compete

I was sent a post about business buy topamax in canada plan competitions written by Lora Kolodny from the You’re The Boss blog at the New York Times over the Holidays.

It poses a question that we really know very little about — are business plan competitions a good or a bad thing?

Kolodny offers a variety of opinions on the topic from various academic-types, but does not draw a firm conclusion.

Here is my take.

I think business plan competitions serve some useful purposes:

  1. They force entrepreneurs to carefully think through their plans.  Knowing experts will scrutinize their business models and financials forces entrepreneurs to take a few more important steps to validate their business plans assumptions.
  2. They give entrepreneurs experience in selling.  Whether it is to a panel of judges, a group of investors, or that first customer, business plan competitions put the entrepreneur in the position of having to see their product or service to a skeptical audience.  The more practice at selling the better!
  3. They expose the entrepreneurs and their ideas to a wider world.  I have seen many an entrepreneur connect with people who eventually help them with money or a wider network through participation on plan competitions.
  4. They can put some badly needed cash in the bank accounts of start-up ventures.  Joe Keeley, one of my former students, funded much of his start-up period of College Nannies and Tutors through the prizes he won in various business plan competitions. 

There are some downsides to business plan competitions, however:

  1. Some entrepreneurs get so wrapped up in competitions that they take their attention away from what needs to be done to create a successful launch.  In some it is as if they see winning competitions as the purpose of the business.  It is not unlike entrepreneurs who get too fixated on raising money and not building cash flow through sales.
  2. Business plan competitions can also create too much emphasis on the plan itself.  While I am not one who thinks business plans are unimportant, I do think that we worry about the finished plan all nicely bound with a pretty logo on the cover more than planning process, which in the long run is what really matters.  By only working toward a really killer plan, we can create a static document.  New ventures are dynamic and so should the process of planning that supports their creation and the management of their growth.
  3. Competitions can also create a short-term mentality tied simply to winning the competition, rather than the long-term focus on building successful businesses that create jobs and wealth.

Are business plan competitions overemphasized?  Yes.  But, I will continue to encourage my students to compete in business plan events. 

However, for our students business plan competitions are only one small part of a much more comprehensive set of activities and experiences that will better prepare them as entrepreneurs.

(Thanks to Tom Swartwood for passing this along).

New Year, New Decade, New Look

When I first started blogging over six years ago we had to come up with a name and a look for the blog.  I have never been particularly creative when it comes to coming up with names and such, so left this to the support people here at Belmont.

The golfing theme they thought touched on my personal side — after all, blogging is supposed to be a more personal medium.

While I love to golf, the theme became to seem rather old and not so relevant.  So I decided to let my students take a crack at a new design.

We had several really great submissions from across our campus, but this one by John Price was voted the winner by a panel of faculty, staff and blog readers. 

Hope all of you like the new look.

Entrepreneurial Career Path Sounds Better and Better

I have been writing about how so many of our students when after assessing the current economy decide that they want to go it on their own rather that search in vain for a traditional job. 

Matt Nicholson passed along an article by Toddi Gutner in the Wall Street Journal that addresses this trend:

Andrew Levine knew he wouldn’t find a job in investment banking when he
graduated with an M.B.A. from the University of Miami in 2008. Wall Street was
in the midst of a financial collapse. So instead the 24-year-old focused his
efforts on launching a start-up. “I figured that starting my own company was the
best use of my time while I waited for the market to thaw,” says Mr. Levine.

Young adults ages 20-24 are facing unemployment rates of 16%.  No wonder those with initiative and motivation are bypassing the traditional job market and creating their own employment.

A New Year Resolution

In my column for the Tennessean I offer the following suggestion for the new year:

With the new year upon us, I’d like to offer a resolution.

Support small-business owners with your business.

History shows us that it’s small-business owners who have led us out of our past recessions. Entrepreneurs are the job-creating engines that generate sustainable economic growth.

But, they can’t do it alone. They need us to give them a chance to earn — and I do mean earn — our business.

Here are just a few of the small businesses that have earned my business, and how they won my loyalty.

I get my hair cut every month at Genie’s Barber Shop in Franklin. Genie offers quality haircuts for men at a great price. She is able to offer her customers a value haircut in large part by keeping her overhead low.

She has a simple little shop, no fancy décor, no plasma televisions and thankfully no ear-popping stereo systems. Genie earned my business through great quality at a value price.

When it is time to get service done on our cars, we go to Moody’s Tire and Auto on Columbia Avenue in Franklin (www.moodystire.com). When we first moved to town we heard from several neighbors that if you need service on your car, go to Moody’s.

Businesses that have customers willing to recommend their service to others through word of mouth are not all that common. It didn’t take long to see why customers are eager to talk about Moody’s, though. It comes as a result of its honesty and integrity.

Just as one example of its integrity — on many occasions I have seen Moody’s employees talk customers out of getting new tires because the tires on their cars still had plenty of life left in them.

We recently wanted to put in some new tile floors in our home, and replace carpet with hardwood. I asked people whom I trust in the construction business where to call, and the name Wilkerson Tile and Stone came up.

Communication is key

Beyond great quality at a fair price, Jim Wilkerson knows the importance of communicating with his customers. While this may not seem like a big deal, it’s always a source of frustration for me when service providers don’t communicate well or at all.

Running behind on the project before ours? Just let us know. Can’t make it out today because of a scheduling conflict? Give me a call.

Wilkerson keeps us informed every step of the way — a small thing that goes a long way with most customers.

There are many other small businesses that have earned my loyalty, such as Bongo Java Coffee, where I hold court several times a week; Evans Glass, which will be installing new shower doors in our home; and Lee Company for the quality of its service on heating and cooling systems.

I’m sure you have your own favorites.

I hope you join me in supporting entrepreneurs by making a new year’s resolution to give more small businesses a chance.

Merry Christmas

nativity4.jpg

A CHRISTMAS PRAYER
by Marty Robbins

Dear Lord I want to thank you
for what You’ve done for me
For all these many blessings
In a world that’s caught in grief and misery
No matter where I wander
I ‘m always in Your site
and so my thanks to You, My Lord
upon this Christmas Night

If all my prayers aren’t answered
then Lord, I understand
There’s others more deserving
Others Lord who need a helping hand
I pray you’ll guide and keep me
Ever near the light
And so My Deepest Thanks My Lord
Upon this Christmas Night.

I will be spending the next week with family as we celebrate Christmas. 

Have a blessed and Merry Christmas.

Another Entrepreneurial Myth Busted

There is another entrepreneurial myth that needs busting.  It is this one:

“Entrepreneurs are good at starting things, but cannot manage them once they begin to grow.”

I have been arguing that the problem is that we don’t consistently teach entrepreneurs how to manage growth.  My experience has been that once we do, their success improves considerably.  Most have never run a growing, successful business before.  They just need the knowledge and tools.  I have done this type of training with both our students and entrepreneurs in the community ever since I got back into teaching.

Now their is some empirical evidence that entrepreneurs ain’t so shabby when it comes to managing larger, successful businesses.

New research from Babson College by Prof. Joel Shulman finds that publicly traded stocks led by entrepreneurs, consistently outperform non-entrepreneurs by a wide margin. Stocks of entrepreneur-led companies significantly outperform non entrepreneurs.

Shulman suggests that because entrepreneurs try to keep costs low while vigorously growing the business — you just got to love that Bootstrapping spirit — entrepreneurial companies are well positioned to perform better than ever in a sluggish, recovering economy.

Shulman’s recent update on stocks for calendar 2009, show:

  • Stocks of entrepreneur-led companies significantly outperform non entrepreneurs (YTD through 12/1/09,  650+ global entrepreneurs are up 93%).
  • Stocks of “bureaucrat” companies underperform non-bureaucrats and entrepreneurs by a wide margin (these are stocks that individuals would sell or sell short).
  • Stocks of Entrepreneur-led companies continue to outperform non-entrepreneurs even after adjusting by market cap size, sector, geography, or time period.

Sharpening the Saw for 2010

There are two resources that I would like to recommend that provide some insight on how to prepare for what looks like another difficult year in 2010.  One has an unconventional title and the other is unconventional in almost every way you can think of, but both offer important ways to help entrepreneurs sharpen their saws. 

Due to the worries and challenges of the prolonged recession, consumers are looking things that create better value for their spending.  The first resource is a book looks at how to create better value through customer service. 

Barry Moltz and Mary Jane Grinstead’s book B-A-M!: Delivering Customer Service in a Self-Service World may have an unconventional title, but it presents recipe for customer service that can help entrepreneurs differentiate their businesses.

Moltz and Grinstead fill the book with clear, concise lessons that can help entrepreneurs truly add value to their offerings through excellence in customer service.

The second resource is both a book and a blog that were developed in an unconventional way and is presented in an unconventional format. Getting business models right has never been more important than during this long and difficult recession. 

Business Model Generation is the book version of a project that helps capture the very best thinking on developing a business model that has a better chance of entering the market and staying relevant during the turbulent and dynamic times ahead.  It was co-authored collaboratively by 470 (that’s right, 470) strategy practitioners from around the globe.  From their website:

Business Model Generation will teach you powerful and practical innovation techniques used today by leading companies worldwide. You will learn how to systematically understand, design, and implement a new business model — or analyze and renovate an old one.

The book is visually different than most traditional books — it if full of colorful graphics that help use visual learners see the processes that these experts from around the globe agreed upon as a set of processes that can help any business — from start-up to large corporation —  develop more effective business models.

The original book is already out of stock, but their will be a new edition that will be available soon through Amazon.  You can get on their waiting list at the website.

In the meantime, one of the leaders of the project, Alexander Osterwalder, offers a lot of the pertinent information from the project at his blog called the Business Model Alchemist.   There is more than enough information there to get started in defining or redefining your business model.  But, I would still suggest you order the book when it becomes available through Amazon.