Tag: cornwall

Will the Flame Still Burn Brightly?

A post by Jonathan Ortmans, president of the Public Forum Institute, at Entrepreneurship.org led me to reflect on the changes we are seeing being ushered in America.  Ortmans made the following observation:

“We have long been aware that American education is struggling to stay competitive. We also know that the development of entrepreneurial skills, such as opportunity recognition and prudent risk taking, are not prioritized in most U.S. educational institutions. Developing tomorrow’s talented, capable innovators is a challenge that will require entrepreneurially-driven improvements in education at all levels.

“Programs that introduce students to the possibilities of business creation are few, but they have proven that they can open up new horizons for talented kids and unleash an entrepreneurial drive would otherwise lay dormant.”

But just where does the American entrepreneurial drive that we take for granted come from?  What is the source of the entrepreneurial flame that burns so brightly in the students who come to programs like ours at Belmont?  The answer is our culture.

Since our founding, our culture was fostered by our freedoms.  We created an economy based on economic freedom that rewarded self-reliance and ingenuity, rather than family power and birthrights as had been so common in the histories of our founding fathers and mothers. 

Ours was this economic system that shaped our values over the generations.  We celebrated those who succeeded, holding them up as icons of what was possible for all of our citizens.

We have added the likes of Hewlett and Packard starting an industrial empire out of their garage into the stories that informed our culture.  Even more recently, the stories of technology companies like Dell that started in college dormitories have become part of our folklore.

But now our public policy is moving toward the next stage of a fundamental shift that threatens this part of our culture.  We are seeing self-reliance being replaced by entitlement.  We are seeing the creation of wealth and economic success being vilified.  Property and wealth are no longer things created out of nothing by entrepreneurial individuals seeking opportunity in the market, but public goods to be doled out by government and its armies of bureaucrats.

I fear that the current generation coming into the workforce — the so-called Entrepreneurial Generation — may be the beginning of the end. 

The children being born today will know an America where society and government are expected to provide for them and to solve their every problem.

I truly fear that the entrepreneurial flame that has burned so brightly in this country will begin to dim.

Those of us who teach entrepreneurship cannot ever teach the entrepreneurial drive and the spirit of free enterprise.  I am only successful because those who come to our program have that drive deep in their core values.

I can teach how to evaluate opportunities in the market, but I cannot instill the drive to do so.  I can teach how to assess and manage risk, but I cannot build a class to train students to have the entrepreneurial spirit that seeks the rewards that come from risk-taking.

Entrepreneurship will not go away, but it will not be the fundamental part of our culture and our economy that it has been in the past. 

There is still time to protect the entrepreneurial flame, but it is already beginning to flicker.

candle_flame_2.jpg

You Have Better Answers

Here is my final thought from the Economics Blogger Forum….

One of the economists in attendance here today said that while he respected the enthusiasm of people sounding their voices through the Tea Parties, “populists rarely have ideas for effective economic policy.”

After hearing the bickering about economic policy nuance throughout the day today, it is clear that economists have little understanding about the day-to-day hardships being faced by small business owners on Main Street. 

It it is time to listen to the economic wisdom of the populist entrepreneurs across America when they tell the government, “Let us keep our money and get out of our way!”

Its Technology, Stupid

We had a rather spirited discussion in a small group breakout late this morning session here at the Economics Bloggers Forum here in KC.  It centered on what really caused the recession.  The argument was made by Michael Mandel (formerly of Business Week) that we had very few real technological innovations introduced into our economy since 1998.  What is interesting to me is that this may partially explain why we are seeing no entrepreneurial job growth pulling us out of the recession.  In all past recessions it has been entrepreneurs who have kindled new growth.  The argument may be that there is no real base of new technology to build from to jump start a recovery.

The good news is that Bob Cringely asserts that there is a technology seedbed out there that may yet spur long-term growth.

Economists Talking at Each Other

I am blogging from the Economics Bloggers Forum today at the Kauffman Foundation in Kansas City.  As a non-economist what I have taken away from the discussion so far this morning is that the long term economic forecast is pretty bleak, and that few of the economists can agree on what has happened to us and what we need to do…..

The Missing Step in Planning

I have tried a different approach to business planning with my students this semester.

While I have defended business planning in the past, I also recognize that it is often not used effectively.  People rush into planning without making sure they are writing a detailed document about something that can actually make it in the market.  I also see that people who move into writing a business plan too quickly can get lost in the details.

It is this second issue that has led me to add a new step in business plan development for my students (and with the alumni I work with, as well).

I have integrated a step between the cursory opportunity assessment process and developing a full business plan.

The step is based in large part on the ground breaking work of Osterwalder and Pignuer on business modeling.  It has proven to help them see how the moving parts of the business fit together and work (or don’t!) before they dive into the details of planning. 

Here is the assignment (this can serve a s good outline for anyone planning a venture):

1- Mission Statement (25 words)
2- Business Concept (1 page max) – 5%

  • Additional description of the concept beyond 25 words in mission
  • Key values entrepreneur brings to the business
  • Key goals and objectives, including personal financial and non-financial goals

3- The Value Proposition (2 pages max)

  • Based on industry research, why is this an opportunity?
  • What are the macro trends that support this opportunity?
  • What are the more focused localized trends that tie into industry trends above?
  • What is the “pain” in the market does the business address?
  • Cite evidence to support

4- Target Market (1 page max)

  • Who are they?
  • Why are they your target?
  • What are the key attributes that drive their decision to purchase?
  • Who are your main competitors and how well do they address customer preferences above?

5- The communication and distribution channels (1 page max)

  • Where do your customers get their information to make a purchase decision?
  • What form do they prefer this information in?
  • How do they want you to get the product or service to them?

6- The relationships established with clients (1/2 page max)

  • How important is customer service in the business?
  • Do we need to deal with each customer on a personal basis?
  • Do they just want us to get them the product and leave them alone?

7- The key resources needed to make the business model possible (1 page max)

  • People – estimated cost for each
  • Equipment – estimated cost for each
  • Inventory – how much to start and how much on hand (if applicable)
  • Physical space
  • Operating cash on hand
  • Suppliers

8- Key Activities (1 page max)

  • What are the “must do’s” to get this ready to launch (Feasibility Plan)?
  • What are the “must do’s” to get the first customer (Feasibility Plan)?
  • What are the “must do’s” to keep customers coming in the door and to keep them from leaving us?
  • What are the “must do’s” to support growth?

9- Key Stakeholders (1 page max)

  • Who are your most critical stakeholders and what will get them to work with you?  (This included sources of outside funding, if needed!)

10- The revenue streams (1 page max)

  • What generates revenues for the business?
  • What will pricing strategies be?
  • What is our pricing structure?

11- The cost structure (1 page max)

  • What is the cost per unit?
  • What is the overhead cost to operate?

12- Breakeven  (One sentence max)

  • When will we breakeven based on these initial estimates?  (More precise figures will come in the business plan)

Still Hunkering Down, Still Bootstrapping

A new survey of small business owners by Brother International Corporation found that small business owners are still hunkering down. 

The survey revealed that more than half (53 percent) of small business owners believe stockpiling cash is the best strategy for surviving the current economic climate, as opposed to investing in their business. This is a wise and prudent strategy right now.  The economy is a long way from recovery and more shocks could be in our future.  Cash is the best cushion against uncertainty.

The same survey showed that the majority of small business owners (79 percent) will strive to make their company more efficient this year.  Bootstrapping is back in and is a great path to higher cash reserves.

Additional results from the survey include:

  • 15 percent say they would give up 10 percent of their company in exchange for a guarantee that they’d be protected from negative economic effects in 2010.
  • 51 percent of small business owners find that their stress level is at the highest it’s ever been, or higher than usual, as a result of the economic climate. In fact, close to half (48 percent) of small business owners think about their business while trying to fall asleep.
  • 65 percent of small business owners believe they put in more hours than if they worked for someone else.
  • 50 percent of small business owners enjoy the flexibility that comes with “being your own boss”
  • 35 percent enjoy being able to pursue their passion.

Entrepreneurship Students are Ready

With traditional employment looking so bleak a common question is this:
“Are you seeing more students interested in entrepreneurship given the
depths of this recession?”

This is a good question because historically we have seen a small
upswing in student interest in entrepreneurship when the economy and
job market soften. But this has become a much deeper recession and a
more worrisome long-term economic climate. How are students reacting
this time?

When
the bottom fell out of the economy, the initial reaction among my
students at Belmont University was one of shock. This generation is one
that has been protected from failure and insulated from risk. I tend to
have graduating seniors in the class that I teach, so those not already
in business did not know what to do next.

But
over the next few months, I saw a transformation. My students began to
accept the new state of the world and adjust their expectations. I
began to believe that this generation is ready to follow their
entrepreneurial spirit and help rebuild our economy.

The other day I received a piece of data about our program that affirmed my theory.

Many industries see interest

Each
year we usually see about 15 to 20 new businesses started by our
undergraduate students. Mind you, they do this in the midst of taking
classes and often while also working part time. This year we have seen
a tripling of new practicing student entrepreneurs.

We
went from 18 new undergraduate student businesses last year to 54 this
year. These students are coming from all across our campus from many
different majors.

The
businesses they are starting are in a variety of industries. As would
be expected in Nashville, a good number are in the entertainment
industry — including audio production, video production, artist
management, live performance and music promotion.

There
are several related to the food industry, too, including a couple of
different types of catering businesses, a manufacturer of food
flavorings, one that makes barbecue rubs and sauces and a food co-op.

Students
have set up online businesses that sell everything from golf clubs to
auto parts to high-end makeup. There are businesses that sell such
things as jewelry, lawn services, aprons and kitchen cabinets.

And
some students have created businesses that provide a variety of
services, including basketball training, online marketing, medical
waste disposal and even credit restoration.

Now
it is time to turn the newly minted “Entrepreneurial Generation” loose.
It is time to help give them the capital they need by cutting taxes. We
also need to provide the freedom they need to navigate a very
challenging marketplace by clearing the path to starting and growing
businesses by cutting regulatory red tape. The “Entrepreneurial
Generation” is willing to meet the challenges in our economy. This news
has certainly raised my spirits about our economic future.

(This post ran as my column in the Tennessean today).

New Microfund Launched

There is a new source of start-up capital in Nashville. 

Solidus Company announced today the formation of a microfund to support local entrepreneurs and to help accelerate the growth of start-ups in the Middle Tennessee area.  JumpStart Foundry will focus on very early-stage concepts. Over the next 12 months, the microfund intends to select 10-14 entrepreneurs for the program who will receive financial, business, and technological support to accelerate the growth of their businesses.

Each of the selected concepts will receive $15,000 in equity capital and special arrangements with participating partners for marketing, accounting, legal and technology services.  In addition, three members of the group will use their knowledge and experience to mentor the entrepreneur and accelerate the success of the project.  In return for this investment, JumpStart Foundry will receive a collective 10% ownership in the Common Stock of the company.

Townes Duncan, President of Solidus Company, explained why he believes this fund will make an impact on the local start-up environment.  “Traditional venture capital funds require investments to be at least $1-5 million in size.  This amount of capital is often much more than an entrepreneur can effectively utilize at the very early-stage of concept development.  Over the last few months, Solidus has assembled 18 experienced, successful entrepreneurs who want to solve this early-stage funding gap and share Solidus’ passion for helping promising start-ups.  Together, this founding group set out to craft a new way to provide support, both financial and operational, to innovative and promising entrepreneurs.”  

According to founding member Scott Kozicki, “the JumpStart Foundry name is meant to be symbolic of our two-fold mission. The fund intends to help launch or “jump-start” emerging new business concepts.  Further, we will also act as a foundry by leveraging our experienced group of founders to help mold the concept into an exciting, emerging business.  To complete our offering, Jumpstart Foundry will also establish partnerships with local organizations to offer important business services at either free or dramatically reduced pricing for the fund’s investments.  These partnerships will allow our entrepreneurs to focus their time and capital towards building value in their company.”

“Over the past few years, we have seen models like Y Combinator and Tech Stars mature and grow into significant economic development engines for their communities,” said Vic Gatto, Partner, Solidus.  “We believe JumpStart Foundry incorporates the best attributes of these predecessors but is also tailored to meet the unique needs of Nashville by leveraging our existing industries (i.e. healthcare, music, & transaction processing) to spur innovation.”

Belmont University Center for Entrepreneurship is providing meeting space and other support for this initiative.  However, because we set a “no investment, no consulting fee” policy for alumni and student ventures, I will not be participating financially in this fund.  We have already had students and alumni from Belmont express interest in this new program.

Microfunds are part of the changing landscape in new venture financing.

Assessment of Entrepreneurship Education Around the Globe

Education and training for entrepreneurs worldwide is inadequate, according to the Global Entrepreneurship Monitor (GEM) Special Report: A Global Perspective on Entrepreneurship Education and Training, released today at Babson College, lead sponsor and co-founder of the GEM project.

Entrepreneurship education is one of several key factors, along with access to finance, government policies, infrastructure, and others, that influence attitudes about entrepreneurship and people’s willingness to start businesses, according to GEM. Interviews with experts in 31 countries around the world found that in almost every country entrepreneurship education and training was inadequate, especially in primary and secondary schools.

In surveys with more than 100,000 individuals, GEM found that 80% of entrepreneurship education and training is provided through formal channels such as primary and secondary level schooling, and through university degree programs.  This is significant because most formal training is at the primary and secondary school levels.

“Training at a young age cultivates an entrepreneurial spirit early on, but college-level training is important too, because it validates entrepreneurship as a potential career path,” says report author and Babson Professor Donna Kelley, “Besides skill-building, training increases an individual’s awareness of entrepreneurship and their intent to start a business, and improves perceptions about their ability to do so,” says Kelley.

Sixty percent of individuals engaged in entrepreneurship training acquire it from informal sources, which GEM defines as non credit-bearing courses at a university, local business organization, or government agency, or self-study using books and Internet courses. “Access to informal programs is a good thing too, because entrepreneurs can obtain the specific skill sets they need to achieve their immediate goals,” says Alicia Coduras, from IE Business School in Spain and lead author of the report.

GEM also learned that entrepreneurship training is of most benefit to individuals in wealthier countries where the entrepreneurial environment is rich in conditions that allow new businesses to thrive. “For entrepreneurship training to be productive in low-income countries, it needs to be complemented by beneficial government policies, infrastructure, and other basic requirements,” says Kristie Seawright, GEM Executive Director.