Exit Plan Helps Prevent Seller’s Remorse

From my column in this week’s Tennesean:

When we were in the process of selling our health- care business back in the 1990s, our attorney did a wonderful job of preparing us for much of what was ahead of us. One of the things he mentioned more than once was that we should be prepared for seller’s remorse.

Seller’s remorse is a feeling of second thoughts about selling a business. It can strike the entrepreneur at any time during the selling process — before the sale, during the sale and especially after the sale.

Continue reading Exit Plan Helps Prevent Seller’s Remorse

New Life for Rust Belt

When I was up in Cleveland conducting a workshop at John Carroll University I heard a word running throughout the city that I did not expect — entrepreneurship. 

Cleveland and other rust belt cities are looking to bolster their entrepreneurial economies.

More and more are looking to non-profit incubators to help.  From Philanthropy News Digest:

One such nonprofit is five-year-old Jumpstart, Inc., which provides seed money to entrepreneurs with promising businesses in the Cleveland area. Like a venture capital firm, Jumpstart identifies companies to invest in and advises them on their next steps. But in a departure from the traditional venture capital model, Jumpstart relies on charitable donations, many of them from the private sector, for its financing and does not return a share of profits to those who provide the investment dollars. Instead, returns come in the form of satisfaction derived from boosting the region’s economic standing and future.

This is a much more prudent strategy than throwing money at corporate relocations that rarely offer the economic return they promise.

(Thanks to Jose Gonzalez for passing this along).

 

Where Would We be Right Now Without Small Business??

The ADP National Employment Report and ADP Small Business Report released today show that small businesses are continuing to be the only reliable engine for new jobs in our economy.  During the month of July small businesses – defined as businesses with fewer than 50 workers – added 50,000.  During the same month, medium businesses (50-499 employees) lost 9,000 jobs and large businesses (500 employees and larger) lost 32,000 jobs.

As I said yesterday, we need to understand the changing nature of this economy and take steps to help support the real engine of job creation.  For the past twenty years small business has created about 78% of all new jobs every year.  And yet we still have not changed our approach to public policy to reflect the new economic reality.

The Importance of Real Market Research

While the Internet is full of useful information that can help in doing basic research about the market feasibility of a new business idea, it is still important to gather information the old fashioned way — observing and talking.

Get out and observe the market.  Experience those businesses that will be your direct competitors the way customers do.  Don’t just look for what they do poorly, but also learn what they do well. 

Observe similar businesses that may not be a direct competitor — typically a business in a different, but similar market.  Bob Bernstein, founder of Bongo Java Coffee, told our grad students that his prospective investors made him go sit out in front of a coffee shop and do a physical count of customers going into the shop to help validate his revenue forecasts.  Although it may have been boring, it was very good advice!

Talk to potential customers.  Learn how they think, how they make decisions, what they like about competitors, and what needs are not being met by those already in the market.  Don’t seek information to rationalize your desire to start the new business.  Use their insights to help understand the challenges you will face and the keys to attracting them to you rather than to those they already are doing business with right now.

Talk to people already in the market.  Talk to suppliers.  Talk to people who work in the industry. Talk to people who operate the same business in different markets.  In many cases, even competitors in your market will be willing to talk.  Seek their advice and opinion; never shift into the sales mode.  You have nothing to sell yet, and they will not be as open and honest if they sense you are just trying to “sell” them.

Google and other search engines are great tools to get started in your research, but nothing beats getting out and getting first hand data from your potential marketplace.

Our New Home

Welcome to the new home of the Entrepreneurial Mind.  Nothing has changed other than our address.  After almost five years of blogging we had started to outfgrow our old digs.  So we decided it was time to make a move.  It is the same blog — just a new location.  Thanks to all the folks at Belmont University for their continued support.  Please bookmark our new address. 

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VCs Have Regional Flavors

When first entering into the world of VC funding entrepreneurs often overlook in the importance of understand the local “flavor” of VCs.

VCs tend to be more geographic in their investing — they tend to favor deals closer to home.  It reduces their risk, as they know more of the players in their area and it is easier to keep an eye on things.

And VCs in each region or even each city will often focus on just a few industries or even a couple of segments within those industries that they know well.  Again, it is a way of reducing risk, since they can understand, evaluate, value and forecast a deal better if they have experience and knowledge in a specific industry segment.

A case in point can be seen here in Nashville.  Much of the wealth in this area came out of health care — and specifically health care services and management.  the health care giant HCA created a lot of wealth here in Nashville and spawned many deals formed and/or funded by its former executives.  Wander too far from health care services or management and the money gets harder to come by.  Even medical devices are harder to fund here because the money does not have experience in that segment.

And move too far away from health care and it even gets tougher.  There is a great example seen in an article from Business Tennessee magazine:

Four months ago, Tim Estes stood at a podium and lamented how much further up his company–Brentwood-based Digital Reasoning Systems — would have been on the high-tech food chain had it just been located on either of the country’s coasts. The 28-year-old entrepreneur declared that the 15 or so Midstate venture capital firms are too timid or unimaginative to risk anything beyond recycling the same old health care services model over and over again. “Why not link evidence-based medicine and informatics?” he asked. “[Health care] data is essentially the crude oil. Refining data is seven times more profitable than pushing it around. This is inexcusable. We should be leading this.”

So this entrepreneur is planning to pick up and move where the money is for his Web 3.0 business deal.

(Thanks to Jim Stefansic for passing this along).

Entrepreneurship as Tool to End World Poverty

The Social Equity Venture Fund (SEVEN), just launched a competition to develop new indicators and models for investment in emerging market small and medium-sized enterprises.  The competition is open to everyone, and is offering ,000 in funds awarded for the best ideas.  Entrepreneurs in developing markets often cite a lack of financial capital as the biggest barrier to growing their business.  This competition, and its results, are one concrete step in demonstrating the power of entrepreneurship, and business, as a sustainable solution to world poverty. 

To participate, contributors may submit their ideas until November 15. Here is a link to the submission site.  The second phase of wiki-based collaboration takes place between November 16 and December 15. The online VINE community will select finalists and a jury of experts will award the grand prize.

This competition was funded through a grant from the John Templeton Foundation.

Here is a link to get additional information about the S.E.VEN Fund.

Small Business Owners Are Hunkering Down

I have been writing my advice to entrepreneurs on what they need to do to weather the current and near future economic storms.  But just what are they all actually doing?  A new poll from NFIB offers some insight.

Here are a few of the findings:

  • 20 percent of small employers have reduced, postponed or cancelled a planned investment or reinvestment in the last six months; the slowing economy is the primary reason in more than half of these cases.  They are becoming much more prudent in their resource commitments for expansion.
  • Increased marketing and sales buy topamax 25 mg activity is a common strategy to combat an economic downturn. However, this is one of the least frequent approaches a small business owner uses.  This is a big concern to me.  Now is not the time to reduce marketing efforts!
  • 44 percent of small business owners are spending more time at their businesses today than six months ago. 
  • Over the past six months, small business owners are highly likely to have become more attentive to their cash flow and inventory status.  This is key, and should also include cutting overhead and debt.

Your Business Should Match Your Lifestyle

My column in this week’s Tennessean:

When people use the term “lifestyle business,” they usually are referring to something small and even part time. I would argue that every business should be viewed as a lifestyle business.

If you choose a business deliberately based on your aspirations and values, you can create a business that is an intentional reflection of the lifestyle you would like to live.

Continue reading Your Business Should Match Your Lifestyle

The Two V’s of the Good Entrepreneur

Many of you know about the Four P’s that make up a marketing strategy  — product, price, promotion, and place. 

Those of you who read this blog regularly or have had me in class also know about the Three M’s used in assessing opportunities in entrepreneurship — market, margin, and me (or mission for social and corporate ventures).

In our new book, Bringing Your Business to Life, Mike Naughton and I introduce the Two V’s that together help make a “good entrepreneur” — vocation and virtue.

Entrepreneurs who understand their work as vocation seek to not only serve themselves through their venture, but to also serve a greater purpose.

The entrepreneur has to define the success of his business beyond financial, technical and market achievements to moral and spiritual principles that reveal the business as a gift to others.  This may initially sound a bit too moralistic and idealistic.  We have found, however, that when entrepreneurs describe their success and satisfaction of their company with a broader criteria than merely financial gain, they are on the way to setting a foundation to building a company that is faithful to their deeper commitments.  Some of the criteria include

–  creating jobs in which employees can find security;
–  generating and distributing wealth for their investors and their employees;
–  developing a highly positive culture that attracts workers who see the business as a good place to work;
–  maintaining low rates of employee turnover and high employee satisfaction;
–  providing needed services and products with great quality, and so forth.

No matter what path leads us to become entrepreneurs, the only way we can be fully human in our work is if we see our work as an opportunity to give our talents to others in service to the good of society and to God.   

Virtue includes those good habits that define how we approach our work as entrepreneurs.

When a person works, he affects the inner landscape of his character. The issue is not whether he changes himself, but how he changes himself. And the key to understanding the significant revealing of his personhood is not found in the amount of revenues he has generated, or levels of promotions, or the percentage of market share he has captured. Rather, the moral and spiritual character of an entrepreneur or businessperson will be captured in the responsible relationships he has forged with others in the actions of running his business. More specifically, this can be shaped by the opportunities he pursues, who he chooses to do business with, who he hires, decisions he makes about products and markets, decisions about whether and how fast to grow, the corporate culture he builds, and his engagement with the community as a leader and/or citizen.