Friday, January 12, 2007

Originality Really Doesn't Matter

I keep a list of ideas that might make worthwhile businesses. Right now there are fifty-eight ideas on the list. I added two in the last 24 hours.

I think a lot of entrepreneurs are looking for that one great idea, and often think that it has to be completely unique. In my list, only about 12 are completely original. Two may have been original at one point, but I think someone beat me to market. About twenty are not original at all. The rest are simply improvements on existing businesses.

Point is: don’t wait for a unique idea.


Point also is: don’t worry about other people stealing your idea. As Howard Aiken said, “don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats.” The idea doesn’t matter nearly as much as the execution. Google wasn’t the first or only search engine, it just worked the best.

Lucky Entrepreneur's Foot

“Q: What is the most overrated skill for an entrepreneur?


A: The most overrated skill is skill. Luck is more important. The entrepreneur gets credit for being this genius, when really he was just at the right place at the right time.”

Entrepreneurs always talk about luck. I’m pretty sure this is the key to their humility. They don’t take credit for their own success, and prefer to attribute it to outside factors.

Some of us, though, need a bit more help. Here are a few words on the science behind four-leaf clovers.

Thursday, January 11, 2007

Finding Sample Business Plans

The other day I suggested that the best way to write an excellent business plan is to read other people's business plans. One can't write a play if one hasn't read Shakespeare. Here are a few resources for sample business plans.
  • The Business Plan: This website, sponsored by the University of Maryland, is a treasure trove of business documents. It claims to possess over 3,500 documents. More importantly, these are not just generic sample plans, but documents used by actual businesses - some successful, some not.
  • BPlans.com: This website, provided by the Palo Alto Software and Business Plan Pro, provides 60 different sample business plans. These are a sample of the plans provided with the software, but also a decent starting place.
  • Entrepreneur Magazine: Entrepreneur Magazine is a reliable source for e-ship information. They also provide 50 different sample plans across a variety of industries to review.

Wednesday, January 10, 2007

Entrepreneurship Education

The Marines train with a simple notion. It takes 2,000 repetitions to make a reaction natural. Earl Nightengale takes a different approach to the same general idea: If you read for an hour a day on any subject, in three years you will have mastered the field. Both cases illustrate the simple truth that practice makes perfect. One needs to consistently apply oneself towards one’s education in order to assimilate it.

Now, I grapple with applying these concepts to e-ship. I want to be an extraordinary entrepreneur. However, I do not think anyone really knows how to go about educating entrepreneurs and training them to be successful. The best seem to work their way through it. Yet, I suspect that a methodology can be discovered to improve entrepreneur’s abilities.

So, in the end, this blog serves a simple function. It is an excuse for me to think about e-ship every day. I hope that the intense focus provides me an opportunity to figure out how to be successful. I also hope that this provides you all with the opportunity to think about e-ship and ultimately leads to your successful business ventures as well.

Tuesday, January 09, 2007

iPod Edification


I finally joined the legion of people who own an iPod. It took me a long time to cave in to the urge. I see a hundred people zoning out every morning on the train downtown. I felt rather proud of resisting the herd mentality.

One thing provoked me to cave in: podcasts. I figured that I wasted my morning commute and gym time when I could be learning new things.

By far, my favorite podcast is produced by the Sloan Brothers at StartupNation.com. The quality of their podcasts impresses me. I think I learn a new thing every time I listen to it.

Overall, the iPod and assorted podcasts gives me an excuse to think about entrepreneurship at least an hour a day. This hour a day keeps me thinking about my business. It keeps me motivated, and adds to my cumulative knowledge.

Monday, January 08, 2007

Entrepreneurial Self-help

When I read some entrepreneurship books, I find that they are actually thinly disguised self-help books. This relationship between the entrepreneurship movement and the self-help movement is peculiar. When I look for books on e-ship, I’m looking for something with substance – I want to be able to sink my teeth into these ideas. Self-help turns many books into puff-balls – empty calories.

Yet, I think this trend highlights some interesting e-ship issues. First, starting a new business is both empowering and requires empowerment. The self-help movement’s favorite theme is “empowerment.” So the relationship should not be too surprising. Nor is it surprising that many would-be entrepreneurs demand these texts, and many e-ship enablers tend to meet that demand.

Second, in many cases, the entrepreneur is the business. Then, logically, if you improve the entrepreneur you improve the business. Many entrepreneurs view personal growth as the best path towards business growth.

I find this close relationship between the two distasteful.

First, entrepreneurs need to focus on the right part of empowerment. We’ve all seen very motivated, very inspired people jump into their own business only to hit their first business obstacle and collapse like a house of cards.

Motivation is important. We all need a pep-talk. We all have our doubts. It is just as important for entrepreneurs to possess the tools for success. Self-help provides motivation, but leaves would-be entrepreneurs without the tools. Self-help is popular because motivation is easy, learning is hard. I think this tendency sets up too many people to fail.

On the other hand, if one possesses the tools, one will become empowered, and in fact stay empowered in the face of obstacles. Entrepreneurs should focus on learning applicable skills.

The second reason self-help and e-ship should not necessarily go hand in hand is that we should not encourage entrepreneurs to expand their business through personal development. If the business is to grow, we need to separate the entrepreneur from the business psychologically. If they are in fact the same thing, the business is capable of only so much growth. A human and grow only so far, a business can grow so much further. If we conflate the two, we in fact limit the business.

More importantly, we risk damaging the entrepreneur. A business setback is not the same as a personal setback, but entrepreneurs walk the fine line and tend to take things far too personally. A mantra growing in popularity expresses the true goal of entrepreneurs: “work on you business, not in it.” This speaks from the separation between the entrepreneur and the business.

So, when you’re reading up on entrepreneurship, make sure to take it all with a grain of salt. I encourage you to read more on the subject. However, make sure what you’re reading is of true value, and not just pumping you up on empty calories.

When I read some entrepreneurship books, I find that they are actually thinly disguised self-help books. This relationship between the entrepreneurship movement and the self-help movement is peculiar. When I look for books on e-ship, I’m looking for something with substance – I want to be able to sink my teeth into these ideas. Self-help turns many books into puff-balls – empty calories.

Yet, I think this trend highlights some interesting e-ship issues. First, starting a new business is both empowering and requires empowerment. The self-help movement’s favorite theme is “empowerment.” So the relationship should not be too surprising. Nor is it surprising that many would-be entrepreneurs demand these texts, and many e-ship enablers tend to meet that demand.

Second, in many cases, the entrepreneur is the business. Then, logically, if you improve the entrepreneur you improve the business. Many entrepreneurs view personal growth as the best path towards business growth.

I find this close relationship between the two distasteful.

First, entrepreneurs need to focus on the right part of empowerment. We’ve all seen very motivated, very inspired people jump into their own business only to hit their first business obstacle and collapse like a house of cards.

Motivation is important. We all need a pep-talk. We all have our doubts. It is just as important for entrepreneurs to possess the tools for success. Self-help provides motivation, but leaves would-be entrepreneurs without the tools. Self-help is popular because motivation is easy, learning is hard. I think this tendency sets up too many people to fail.

On the other hand, if one possesses the tools, one will become empowered, and in fact stay empowered in the face of obstacles. Entrepreneurs should focus on learning applicable skills.

The second reason self-help and e-ship should not necessarily go hand in hand is that we should not encourage entrepreneurs to expand their business through personal development. If the business is to grow, we need to separate the entrepreneur from the business psychologically. If they are in fact the same thing, the business is capable of only so much growth. A human and grow only so far, a business can grow so much further. If we conflate the two, we in fact limit the business.

More importantly, we risk damaging the entrepreneur. A business setback is not the same as a personal setback, but entrepreneurs walk the fine line and tend to take things far too personally. A mantra growing in popularity expresses the true goal of entrepreneurs: “work on you business, not in it.” This speaks from the separation between the entrepreneur and the business.

So, when you’re reading up on entrepreneurship, make sure to take it all with a grain of salt. I encourage you to read more on the subject. However, make sure what you’re reading is of true value, and not just pumping you up on empty calories.

Friday, January 05, 2007

Practice Makes Perfect

Many entrepreneurship programs target business plan writing classes at people who already have an idea for the business they want to start. Unfortunately this creates an inertia barrier for many would-be entrepreneurs. They find themselves in the perpetual limbo of not knowing what kind of business they want to start and paralyzed into inaction.

Instead, write business plans for a company you have no intention of starting.

  • It will relieve the pressure of writing a great business plan off of the bat.
  • It is important to be able to distinguish between a bad idea and a bad business plan. When you are less enamored with your business idea, you will be able to look at your plan more critically.
  • If you write a plan for an industry you are unfamiliar with, it will give you the opportunity to learn new things and uncover opportunities you did not think about.
  • You will focus on learning more about business plans, and less about problems associated with business idea.
  • Once you finish the plan, you are under no psychological obligation to pursue the business, you can move on to other projects.

Thursday, January 04, 2007

Write an Awesome Business Plan

The first thing they teach you in any entrepreneurship class is “yes, you too can be an entrepreneur.” The second thing they teach you is that you’ve got to have a business plan. After that, they try to teach you how to write one.

I have taken two university level business plan classes and a handful of business plan seminars. Yet, by the end of the class, I did not know much more than I did going in. Until I started reading other entrepreneur’s business plans, I could not have recognized a good one even if it bit me. Not until I wrote my own, did I realize the value of going through the entire process.

Therefore, the absolute best way to learn how to write a business plan is a simple three step process.
  1. Familiarize yourself with the logic and structure of business plans. Inc., Entrepreneur, BPlans.com, and the Small Business Administration all publish business plan writing guides. This will provide you with a conceptual framework before you take the next two steps.
  2. Read every single business plan that you can get your hand on. How can one learn how to write a play if one does not read plays? How can one learn how to figure skate if you’ve never seen a skater in action before? Venture Capitals are generally experts at business plans because their job is to read hundreds and hundreds of business plans in order to separate well developed business ideas from pipe-dreams. Figure out what works, and what doesn’t work. Learn from other’s mistakes, and find good role models.
  3. Write a business plan. Rewrite your business plan. Learn by doing. The idea is to practice and to improve with each attempt. Most entrepreneurs try to sit down and write a single-silver-bullet business plan. Those plans are uniformly awful. One of the virtues of being a serial entrepreneur is the practice you get from previous companies. Apply this same idea by writing several different plans.

Wednesday, January 03, 2007

Angel-preneurs

I love statistics that claim entrepreneurs generate the vast majority of new jobs. Some figures claim that a group of entrepreneurs nicknamed Gazelles generate 80-90% of all new jobs. Yesterday, I pointed to a site that says that small businesses create 60-80% of all new non-governmental jobs. Whatever way you cut it, those numbers are amazing.

Yet, people often neglect the social value of entrepreneurship. Some extol the virtue of the Captains of Industry that forged industrial America. However, these men were also the Robber Barons, and thus leave us with a mixed legacy. Economists, such as Joseph Schumpeter, went a long way towards rehabilitating the image of the entrepreneur, but academics speak to a narrow audience.

Thus, it is great when entrepreneurs such as Ken Hendricks of Beloit, Wisconsin are recognized. Hendricks is using his fortune to rehabilitate the rust-belt and hard-on-its-luck Beloit through socially aware investment. This year, he’s Inc. Magazine’s Entrepreneur of the Year. He is certainly a role model for entrepreneurs in other ailing cities. (I’m looking at you Detroit).

My favorite example socially beneficial entrepreneurs is Richard Zuschlag. Zuschlag’s Acadian Ambulance Services rescued over 7,000 people from New Orleans, post-Katrina, earning the nickname “the Anti-FEMA.” He was a runner up in 2005 for Entrepreneur of the Year. This is the archetypical story of the ingenuity and dedication of entrepreneurs and their staffs out serving a governmental agency in providing for the public good.

Tuesday, January 02, 2007

Small Businesses Run America

If you grow up in Detroit, you may be forgiven if you thought the only businesses in town were Ford, GM, and Chrysler. From time to time, you needed to reminded of the extent to which small businesses run the American economy.
  • Small businesses make up 99.7 percent of all U.S. employers, meaning that only 17,000 companies, or 0.3 percent of all employers, have 500 or more employees;
  • Small businesses create 60 to 80 percent of net new (nongovernmental) jobs annually;
  • Small businesses employ 39 percent of high-tech workers such as scientists, engineers, and information technology workers, generating the majority of innovations that come from U.S. companies;
  • Small businesses bring economic activity to distressed areas: about 800,000 companies (90 percent of them microenterprises) are located in the poorest areas of the 100 largest U.S. cities.

Here are even more facts about America's small businesses.

Monday, January 01, 2007

The Myth of Economic Development

Eds:
I made this presentation nearly three years ago. Nevertheless, it goes a long way towards explaining the philosophy behind the whole Scholarian project.

Today I am going to tell you a myth. It’s a story about hunting pink wooly mammoths and growing gardens. But like all myths, it’s not really about that at all.

Long ago, in a time before the rise of the great civilizations, there was a tribe of people in the land of Mesopotamia. They hunted the legendary pink wooly mammoths, ancestor of today’s pink elephants.

Their entire existence revolved around the hunt for these mammoths. The hunt required the involvement of the entire tribe. First, they would make a wooly mammoth call to attract the animal’s attention. Then they used bait to lure the beast into their village, where they entire tribe would pounce, and bring the mammoth down. This was an exhaustive process, and in the post hunt euphoria, they would devour the entire mammoth. The next day, they would begin the process all over again.

Yet these mammoths were also nomadic, and prone to wandering away. When the mammoth herd left the area, the tribe would starve, and many people would move away in search for more food. Thus, the people of the tribe lived a day to day existence, focuses only on the day’s meal. They never had time for art, culture, or education – the things that make civilizations great.

Mesopotamians, however, worshiped a god named Enki, who took pity on the people. He showed them how to sow the earth with seeds, and grow their own food, which too much less effort than their daily hunts. He showed them how seeds, sunlight, water, tools, and dirt combine to build a garden that would perpetually feed the tribe. So the gardens of the people grew, and so did their wealth and civilization. But this story is not really about pink woolly mammoths at all

You see, many communities still rely on hunting for survival. They do not hunt mammoths anymore – they are much too sophisticated for that. They hunt factories, which are big and slow moving and seem like easy targets. While it is not as silly as it may sound, the process for hunting a factory is largely the same as the process for hunting a mammoth.

It starts with a hunter: an economic developer hired to bring new businesses to town. First, the economic developer will use a call to attract a company’s attention. He fires up a marketing campaign, and puts out ads in trade magazines. He may print up brochures, and send them to every company that he can.

Once he has a company’s attention, he uses bait to lure them in. He creates tax incentives, gives away land, and sells buildings on the cheap. He may even offer an employee training program to update the community’s skill set.

Even if this strategy succeeds, there is an often forgotten dark side. First, it is expensive. It takes money to hire an economic developer, run a media campaign, and solicit new business. Capital improvement projects and employee training costs money. Furthermore, the baits and lures are lost revenue for the city. Often tax breaks are so deep that the town earns almost no tax revenue from their new business.

Furthermore, for every successful corporate hunt, there are hundreds if not thousands that fail. Here a company will spend money on marketing and incentives, but receive no new revenue to offset the costs. Every company that relocates to a new town is playing off many different communities, looking for the best deal. Often, those deals are beneficial for the company, but not for the community.

Now, what about those jobs? Just about any new job growth is good job growth. But, how stable are these new jobs?

The businesses most susceptible to recruitment are those which compete through low prices. Towns with cheap land, free buildings, tax breaks, and low labor costs win these businesses because they increase the bottom line. These businesses tend to stick around only so long as local costs remain low. Woe to a town that raises taxes or the cost of living. These towns often find that their businesses later relocate to even cheaper towns.

Economic developers are now improving their methodologies for economic development. The old ways are being replaced with a more organic and entrepreneur friendly theory of economics. Communities grow their economies much as they might grow a garden.

Chris Gibbons developed Economic Gardening theory in Littleton, Colorado. After nearly twenty years of practice, the ideas are gathering international attention, and there are now economic gardening programs across the world. Its acceptance, however, is not yet universal.

The shift between economic hunting and economic gardening is really a shift in the understanding of the nature of new jobs. While relocating businesses & Fortune 500 companies get all of the press for economic growth, big companies are responsible for only one-third of all new jobs. On the other hand, fast growing entrepreneurial companies account for two-thirds of all new jobs. When communities understand this premise, they start to focus on developing these types of businesses. Economic Gardening is a methodology for doing just that. As the local companies grow, so will the local economy.

Just as a plant garden requires seeds, sunlight, water, dirt, tools, and a healthy ecosphere, an economic garden requires local entrepreneurs, information, capital, culture, infrastructure & networks.

Local entrepreneurs are the seeds from which the economic garden springs. Everyone has the potential to become an entrepreneur. Entrepreneurs do not have a special trait born into them, bur rather a mindset and set of skills they learned over time.

Your sunlight is information. Think about the term enlightenment. Entrepreneurs need information to shed light on the business landscape. There are two basic ways to enlighten: first, teach, second, inform. Entrepreneurs need to develop entrepreneurial skills, such as business plan writing, marketing, cash management, and employee relationships. These are skills that economic gardeners can teach them. Gardeners can inform entrepreneurs with data that facilitates good decision making. Examples include industry analysis, competitive intelligence, market reports, and trend spotting. Many gardeners help businesses find new customers and target new markets.

Water flows, and so does cash. Entrepreneurs need startup cash and capital for growth. It’s important for economic gardeners and political leaders to create a climate where funds are readily available. While interest rates and monetary supply are largely out of local control, other options are available. Some communities float loans to growing businesses. Some economic gardeners organize angel investor networks for local entrepreneurs.

Physical tools shape the environment in which economies and plants grow. High speed internet access and access to transportation hubs are just as important to economic gardens as rakes and shoves are to organic ones. Intellectual centers, such as business incubators and universities are greenhouses that foster fledgling businesses.

Dirt is ubiquitous, it gets all over you. Culture is everywhere too. Gardens are rooted in both. Communities with entrepreneurial cultures – those that link risk with reward and idolize the pursuit of opportunity – tend to outperform communities without these traits. America has an entrepreneurial culture – founded by entrepreneurs. Cities and towns also possess entrepreneurial cultures. Research links communities with a vibrant night life and entertainment culture with economic growth. So cities are beginning to build entertainment distracts just as they used to build roads – as vital infrastructure.

Gardens also exist within ecosystems – robust interconnected networks of vitality. Entrepreneurs need to exist within communities of likeminded individuals. An entrepreneur needs to be involved in a network of other entrepreneurs. These systems are the most efficient support mechanism for growing businesses. As businesses shift from the startup stage to the growth oriented second stage, business problems become immensely more complex. Each new employee and customer compounds the difficulties of growing a business. Soon entrepreneurs need help from outside sources to address their growth oriented problems.

But there is not a great deal of resources an entrepreneur can turn to. Most don’t have an MBA and very few have the time for regular classes. Outside consultants are expensive. Furthermore, the leadership responsibility of businesses often isolates entrepreneurs from employees and investors making it difficult to seek their counsel.

Organized networks of entrepreneurs, instead, become expert advisors to guide their peers through their problems. Entrepreneurs trust their peer’s counsel because they too are experts in running their own businesses.

When using this range of tools to build local economies, communities face few of economic hunting’s flaws. In terms of costs, there is no need for a large scale marketing campaign and costly concessions to relocating businesses. Growth is largely funded from money already existing in the local economy, and not government expenditures. Furthermore, in terms of job security, local entrepreneurs creating local companies are much more invested in local communities, and are thus less prone to move on to other communities. With economic booms and busts, companies may come and go, but very few will move away.

Now, the remarkable part about Economic Gardening is the extent that individuals participate in the process. Economic hunting is the domain of government, but individuals continuously participate in gardening. It occurs when a local college features classes on entrepreneurship. It occurs when an executive mentors a young entrepreneur. It occurs when one’s uncle lends him the money for a startup. What remains for governmental gardeners, then, is to promote this activity in the community wherever they can. Individuals will largely take care of the rest.

Welcome to the Year of the Entrepreneur!