Dr Jeff Cornwall

My column from this week’s Tennessean:

Gathering accurate information about potential customers is essential for developing an effective business plan.

Learn how your customers make the decision on whether or not to buy your product.

Determine the key decision-making criteria they will use to choose your product over your competitors’. It does not matter what you think they should consider in the decision — all that matters is what the customers think and how they actually make their choice.

So how do you gather information about what your potential customers prefer? You need to get out and talk to them, observe them, or whatever it takes to learn how to think like they do.

Also, gather information about how well your competitors are satisfying these customers. You can gather this information by talking to customers, visiting your competitors’ businesses, interviewing suppliers and meeting with others in the industry.

Entrepreneurs typically rely heavily on their business plans when the time comes to launch their new venture. It is a plan that they may have agonized over for weeks, months or years. They have done their research, creating a carefully thought-out business that justifies their financial forecasts. But then a funny thing happens. They assumed in their business plan that the market wanted “A.” But if they listen carefully to the customer, they often find out that the customer really wants “B.”

Switch; don’t fight

One of my former students, Matt Meents, is a case in point.

His Minneapolis-based company, Reside LLC, originally was set up to build high-end Web sites for the real estate industry. They had conducted extensive research and thought they understood the right market for their services.

Although they did land some real estate firms as clients, the market soon began to tell them that there was a wider market for what they offered beyond real estate.

Other types of business contacted them to see if they could do similar services for their businesses. They listened to this information from the market and significantly broadened their target market. As a result of this change, Reside LLC has seen significant growth every year.

If Matt had rigidly followed his original plans, his company would never have grown the way it has. The market wanted to help Reside LLC grow, but Matt had to be willing to listen to what it really wanted and shift his plans.

I call this learning to “dance with the market.” And you should be ready to let your customers lead in this dance.

The need to listen to the market never really ends. Markets are dynamic, so you need to be ready to follow where they lead.

So now that 2009 is underway, what is the best way to strategically position an entrepreneurial venture?

Kristin Wehner writes at Entrepreneur.com about the need to move away from exploiting specific opportunities, what she calls a “hunter”, and become more of an “explorer.”

As the new year unfolds, try donning your explorer’s cap. View the upcoming year with the curiosity and excitement of an adventurer embarking on new terrain. Is your business where you want it to be? Do your daily practices for cultivating your health support your professional goals? How about your personal goals?

How are you supporting or sabotaging your ability to achieve those goals? What untapped potential is within you? The answers lie in an assessment of your company’s health capital.

Bootstrapping will be key to survival in 2009, according to Mike Stull at the dailybulletin.com:

While economic chaos brings great opportunity for savvy entrepreneurs, how can one launch and grow a business in times when credit is crunched?

One possible approach is bootstrapping – starting a business where the primary funding comes from the cash flow generated by selling your product or service. A bootstrapped business starts with investment from the founder (and possibly close friends and family).

In addition to paying close attention to cash flow and collections, Tom Taulli at Blogging Stocks thinks now is time to find a good advisor to help navigate the troubled waters ahead.

It’s critical that you get an outside perspective — especially from someone who has experienced tough economic periods. To this end, you can go to a local SCORE (Counselors to America’s Small Business) office. The organization consists of thousands of former executives — and, importantly, the resource is free.

If you are what I call a reluctant entrepreneur, someone who suddenly is thrust into self-employment due to corporate downsizing, this article at the New York Times offers advice on both positioning and tactics you will want to follow this year.

It’s likely that as in past recessions, many new small businesses will be created in the coming year as laid off workers rethink their careers. How will these businesses survive, along with all the other small businesses already struggling out there? Only by being cunning and cost smart say experts in business and entrepreneurship.

Finally, if you have been sitting on the fence about becoming an entrepreneur, Marc Kramer at TheStreet.com thinks it is less risky to start a business than to put your trust in a traditional corporate job.

When I graduated from college in 1982, interest rates were in the high teens and companies were beginning to treat employees not as family, but as disposable parts. I watched friends’ fathers lose longtime jobs and wonder how they were going to support their families. They felt betrayed, as if their wife had left them for another man.

Even out of college, at the tail end of the paternal corporate employer, the real risk-takers, at least from my perspective, were the people who worked for one company. It was like buying one stock and believing that stock was going to grow and support you in retirement. There’s little worse, especially for a man, than losing your job, if your self-worth is tied up in your work. Your identity is based on who you work for and your position.

Being an entrepreneur means no one can fire you.

 

I am heading off to Anaheim, CA to the annual meeting of the United States Association for Small Business and Entrepreneurship (USASBE), which is the leading organization for those of us who teach entrepreneurship.  This year I will be installed as President-elect of USASBE.  These are, to say the least, interesting times for the world of entrepreneurship.

Over the past year I have written about the challenges entrepreneurs face in these difficult times.  While there are still many opportunities that can be exploited in the marketplace, it will require entrepreneurs to be nimble and prudent, patient and humble.

So how should those of us in education approach the task of preparing today and tomorrow’s entrepreneurs?

Realism.  There is a trend in teaching entrepreneurship to interject more experiential learning.  This is a very unforgiving economy right now.  In the past, we saw countless entrepreneurs who seemed to be able to succeed in spite of themselves.  In a recession like this one, there is little room for error and not as much luck floating around.  We need to prepare our students well to hit the ground running.  The more we can build experience into what we do in our entrepreneurship programs the better.  Our students must have a high degree of competence the day they walk across the stage at graduation and become alumni.

Ethics.  There is a growing backlash against the arrogance and gluttony of business leaders.  In preparing the business leaders who will most likely lead us out of this mess, we need to help them understand their responsibility as stewards of the resources they have been given to work within their ventures.  But, I believe that they have an even bigger responsibility.  We need them to become stewards of the free market system.  Market capitalism as we know it is under intense scrutiny due to the foibles of so many business leaders.   We have to regain the people’s trust in free markets.  We must train not only competent entrepreneurs, but good entrepreneurs.

Inspire.  If past patterns hold true, we can expect more students looking to entrepreneurship as a career path.  They look at the job market and see very little opportunity, so they turn to us to find their own way in the economy.  We will no longer have only self-motivated, highly driven aspiring entrepreneurs in our classrooms.  We will have many more who are reluctant entrepreneurs.  More than in the past we will have to inspire our students that there are opportunities and that they do have what it takes to be successful.

I look forward to reconnecting this week with my USASBE friends and colleagues as we tackle the challenges we face in preparing our students to help lead us out of these difficult times.