Tag Archives: startup

Entrepreneurs: Optimists or Realists?

There’s no doubt that you’ve heard that most businesses fail.  When you look at the statistics, it’s very easy to believe that entrepreneurs are dreamers that either ignore the statistics or are just plain naïve.  If you knew 96% of companies fail within ten years, would you still do it?  We know entrepreneurs are smart and willing to take calculated risks, despite these overwhelming odds.  Do they even consider the realities of the entrepreneurial journey?

The first thing to realize about the odds of failure is that they are directly related to the amount of cash in the company.  Bill Camody stated in his article “Why 96 Percent of Businesses Fail Within 10 Years” that “cash is a fact.”  Once you don’t have any more cash, you can’t pay your bills.  This is a reality and certainly hits home very hard.  Now consider that the most significant source of funding for all business startups is the founder’s personal savings, which is roughly four times greater than any other source, according to the Kaufman Institute.  Venture capitalists and angel investors don’t engage heavily in startups.  If you’ve seen ABC’s TV show, Shark Tank, you know the sharks don’t like to invest in an unknown.  They want to see a cash flow before risking their money.  So, if you’re going to get money from others, either do it very early in the launch or you’ll have to grow the business before you can get a cash injection.

Most startups fail.  Most founders use their own money.  What can they be thinking? Do entrepreneurs overlook the realities of startups?  In a survey by Kauffman, many founders shared their thoughts on the factors that prevent others from creating their own startup.  These factors just might be the realities that one needs to consider (and constantly measure) when engaging in their own startup.

  • Risk – over 98% of respondents ranked an inability or lack of willingness to take risk as an important barrier to entrepreneurship.
  • Time and effort – 93% feel that entrepreneurs often underestimate the time and effort requirement to get their startup off the ground.
  • Capital – 91% identify the difficulty in obtaining capital as a major inhibitor, which may explain why most use their own money to start their new company.
  • Management skills – 89% cite management skills and the ability to start a company as critical to success.
  • Family pressure – 83% believe that family pressures to get a steady job and paycheck are real and challenging.

Other challenges mentioned in the survey include stress, maintaining a work-life balance, developing products and services for changing markets, government regulations, taxes, and the costs of employee benefits.

While it’s very hard to identify the right combination of the aforementioned factors that will lead to business success, there are some factors that will certainly lead to failure.  In a study by the University College London, it was found that businesses with entrepreneurs who held no real business experience did not increase profits.  The premise here is that nascent entrepreneurs don’t apply the appropriate weight to opportunities and threats.  In other words, their alertness to identifying threats and use of cognitive skills to recognize opportunities are not in balance.

Optimism has been shown to have a positive impact on entrepreneurial success, in terms of both actual firm growth and financial performance.    Realism, which also affects financial performance positively, is defined as the consistency between growth expectations and actual growth.  As with most entrepreneurs, and as verified by this study, optimism dominates over the impact of realism.

With regards to a balance of both optimism and realism, a dose of realism has the effect of modifying the overconfident cognitive bias of optimism.  For example, watching more cash flow out of your company than in for a long period of time has a propensity to dampen high expectations of future success, forcing one to reevaluate the current situation and cognitive strategy.  A lack of business experience can lead to a late recognition of this imbalance, resulting in failure.

In my experience, most entrepreneurs do a fairly good job of identifying threats and opportunities.  The things they incorrectly assess about them are the magnitude and timing, such as running out of money.   An important thing to remember is that most businesses are not creating something that hasn’t been done before.  There is a lot of literature, experience and information in the world.  Entrepreneurs should always seek it out and ensure they are correctly and constantly assessing their expectations, measuring performance factors (for a dose of reality) and maintaining just enough optimism to keep striving for their aspirations.  Additionally, before you begin to establish any expectations for your business, ensure you have fully applied your cognitive abilities to the factors mentioned above; that is, risk taking, funding, time and effort, management skills and family.

Business Startup: What skills do you need?

When you are unemployed and begin searching jobs listed in Job banks, like LinkedIn, Indeed, Monster and so on, you seek out job descriptions that match your skills and experience.  But when you start your own business, the job description might look like a book full of blank pages.  The skills, knowledge and abilities needed will be many.  They will be hard to define in the beginning.  In fact, the requirements will reveal themselves every day.  If you want to get a sense of what you’ll need, take time to talk to entrepreneurs who’ve failed and who have succeeded.  You’ll want to know every lesson you can.  Here are some lessons I’ve picked up along my own journey.

Before we look at skills, you need to understand a few other required characteristics of startup entrepreneurs.

  1. You need to be self-motivated. There’s no one around to push you to do things you need to do or tell you what you need to do.
  2. You need to very passionate about the business. Things will be difficult in the beginning but you need to keep pushing for success.
  3. You’ve got to be able to handle stress (and lots of it). It could take 2 years for your company to get off the ground. I’ve started companies with a family. When times are tough and no money is coming in, everyone will pressure you to fix it. (I’ve got a great post for this coming soon).
  4. You need to have a clear vision of your business, that is, a good business plan. My blog tells you how to do that (The Blitz Blog – The Source of Inspiration for High Achievers ).
  5. You need to know how to take a small success and create more success. This is the process for building your business.
  6. You need to be a quick learner. This includes learning from others because you won’t know everything you need to know.
  7. You must be customer friendly.   People will buy the service or product because of you.  If they like you, they’ll buy.
  8. You need to be the expert.  Whatever you sell, you need to be the expert on it.  You want people to seek you out.
  9. You need to be organized.  Startups need planning and focus.  You should have enough information to operate on autopilot (but drive it yourself).
  10. You need to be decisive.  Startups need money fast.  You can’t afford to overanalyze situations.  Make decisions and move on.

The typical skills needed for the startup entrepreneur are:

  1. Legal sense – you’ll have to create the business and operate within legal guidelines for your location and the industry.
  2. Accounting – how will you track your expenses and revenue? You will need a CPA but it helps to understand what they do because it could be you doing the accounting in the initial phase.
  3. Business development – You’ll have to decide what customers to market to and how they do business.
  4. Finance – How will you fund the initial phase of your business? You’ll have to establish the original budget and put the money in place.
  5. Marketing – You’ll need to create the social media and marketing materials for the business.
  6. Customer Relationship Management – You’ll need to be a salesman. People won’t buy products or services. They buy into YOU.
  7. Conflict resolution – Hopefully, you don’t make too many mistakes in the beginning but you need to fix them quickly.
  8. Collaboration – You might need to partner with other companies to sell your products or services. What kinds of arrangements can you have? You’ll have to figure that out too.
  9. Contracts – You’ll need to develop contracts, statements of work, proposals and other documents to support winning business for your company. Guess who gets to do that?
  10. Hiring – Once you bring people on board, there are a lot of government regulations that are required to hire people. You’ve got to know those too!
  11. Budgeting – You’ve got to be able to assess your costs to ensure you make a profit. Estimating labor and materials can be difficult, especially when your service is long term or customized.
  12. Writing – You’ll need to be able to create processes and policies that your company will use, such as privacy, nondiscrimination, quality, reporting, business plans, and so on. You’ll need documentation for your customer, the government and your company.
  13. Presentation skills – You need to be articulate as you’ll have to hold meetings and provide direction for your people. It must be clear and actionable. Otherwise, you waste time and money.
  14. Innovation – You have to keep your products growing and developing with the needs of your customer. Everyone usually talks about the APPLE model. It’s not a bad one to follow, if you can find out what they did in the beginning.
  15. Willing to learn – I can’t tell you how much I had to learn to get my business off the ground. Opportunities to learn are everywhere you turn.
  16. Adaptability – Very little will work the way you think it will. You’ve got to learn to adapt.
  17. Creativity – There will be many times where you will need something that doesn’t exist.  You’ll have to create it.
  18. Negotiation – Business is all about the deal and you must learn to master it to grow your business.
  19. Emotional Intelligence – You must be emotionally stable and able to handle the emotional swings of success and failure.  They are only bumps in the road to success and you have to hit some to get there.
  20. Focus – Businesses are built by defining a plan and implementing it.  Things change but you can’t let that happen so often that nothing gets done.

These are just a few of pieces to the puzzle of success.  Entrepreneurship is one of the greatest learning experiences you’ll ever have and it will also be one of the most challenging.  It isn’t for everyone.  When you’re in the middle of your startup, you’ll easily identify those who like the idea of entrepreneurship and those that don’t.  It’s a completely different mindset.  So, get out there and fill in the pages of your book with all the things it took for you to build your dream.

Startup Advice: Who/What/Where/When/How

I take advice from everyone.  It doesn’t mean I’ll use it.  I listen because I’m always interested to hear other people’s perspective on starting and running a business.  You never know what ideas people will give you (for free).  But when it really comes to advice that I plan to use, I’m very critical of the source I use.  And you should be too.

whoWHO DO I LISTEN TO?  It depends on what I want to know.  I always read what many experts have written on the particular subject before I go talk to people.  Being informed on the topic will help me filter out the “BS” people have a tendency to share sometimes.  Plus, it communicates to the expert that I’m serious about the situation and have done my homework, so I won’t be wasting their time.  Most experts want to be consulted, so they are happy to cull out a bushel of advice to help demonstrate their comfort with the subject.

Remember, you need advice you can use. It must be tried and true.  It must be applicable to your situation and spit out in terms that can be easily translated into action.  As for the people I pursue, they must have a few credentials that I can validate before I consider contacting them to ask for advice.  Here are some from my general list of traits.

  • Shares their experience (not too many years in the past).
  • Provides references to resources and people.
  • Offers actionable advice.
  • Respected in their field or industry.
  • Proven successful.
  • Share in a few fundamental beliefs: Faith, Family and Friends.

Don’t be afraid to ask anyone for advice, no matter how successful.  Recently, I had lunch with an alumni from my MBA school, Indiana Wesleyan University.  Evan is a financial advisor who just moved to Georgia and into my neck of the woods.  It never hurts to have such a fine, upstanding advisor in my corner.  Will I use his expertise?  You bet I will.  As you branch out to connect with the rich and powerful, realize it might take time.  The highly successful will just take a lot longer to connect with.  But keep trying.  My record is 18 months of continuous nagging. I think they felt sorry for me and gave me an hour of a billionaire’s time.  Wonder what that was worth?

whatWHAT DO I ASK ABOUT?  For me, this could be anything from the legal obligations of ADA, OSHA and E-verify to building the best marketing strategy.  I seek support as I need it.   Unlike the many executives I’ve served under over the years, I think it is very important to seek advice and get answers on anything that you don’t know about.  I’ve watched executives tank their company because they failed to reach out to experts to understand a part of the business that they didn’t.  Maybe it was pride or ego or just plain laziness, but a company’s existence depends heavily on its leadership’s knowledge base….and you never know enough!

For example, maybe you want to know how to distinguish your business from all of your competition, especially since you all seem to do the same thing.  I would say to you, “read the “Blue Ocean Strategy” by Chan Kim and Renee Mauborgne.”   In fact, I’ll send a copy of this book to the first two people who send me an email showing me that you promoted this post.  Running a great business is about finding the right answers and you must chase them vigorously. Your future depends on it.

whereWHERE DO I GET THE ADVICE I NEED?  I’ve found that the best advice comes from other business owners.  If you’re a startup, you probably don’t have a lot of connections to business owners.  Well, maybe you do.  My kids have been playing sports for years and now that I’m engaging in my own startup, I’ve just finally begun talking shop with the other kids’ parents.  I’m amazed how many are running their own business.  I never asked before because I didn’t have a real interest in their experiences, but I do now.  Business owners are great advisors because they can share real experience, not theoretical notions that you have to figure out how to apply.  Even better, they can connect you with other professionals they have worked with in the past, saving you considerable time in finding the support you need, such as legal, accounting, marketing, branding, strategy and funding.  You’re support is likely all around you and you don’t even know.  Take time to let people know what you are doing and what kind of help you need.  Many will be happy to help you succeed.

whenWHEN SHOULD I ASK FOR ADVICE?  This question is easy.  You ask for advice before you need it.  It takes time to really understand your issue in enough detail to ask a question.  You also want to ensure you do a little research to generate some potential answers to your question before you propose the question to an expert.  Then, you’re not really asking a question, you’re seeking validation of your ideas.  Professionals are more likely to respond positively to this scenario than an “out of nowhere” question from a stranger.  It also takes time for experts to respond to the question.  So you need to give yourself sufficient time for a response.  To improve your success in getting that valuable advice, choose times of the day where professionals are more likely to share information.  This includes early morning, the end of the day or after exercise when we are tired, as these are times when our defenses are down and we’re more likely not to think you might be a risk or threat.  Additionally, shared times of relaxation and enjoyment, such as during a golf game or a networking event, are great times to secretly tap into the minds of the experts.

howHOW DO I ASK FOR ADVICE?  There are several ways to approach this.  First, you can use mutual connections to make the initial pitch for you and setup the question for you.  Start with people you already know to identify potential experts who experienced what you’re preparing for.  Second, you can reach out to experts directly but you may want to hone a simple elevator pitch about your business that ends with the question that you so desperately need an answer. Third, you can invest in the experts you seek guidance from.  Most experts get tons of requests for information from people who want it for free.  We are all in the business to make money.  Show your expert that you have invested in them by purchasing their book, going to their seminar or promoted their work in some way.  Then, they’ll feel somewhat compelled to invest in you.  I would suggest that investing in the experts first is by far the best way to get the answers you seek.  It provokes feelings of reciprocity and will likely build a much stronger relationship that you can tap into for years to come.

My Entrepreneurial Journey: My Startup’s Brand

When starting out a new company, it’s important that you establish the purpose of the business in the customer’s mind.  Surely the purpose is to make money and no one will argue with that.  But what does your customer think?  Do they understand what your business is trying to do for them?  Not only does your brand tell your customer what you do, it also helps communicate direction and focus for your efforts.

When I began creating my business plan for the company, I added a section for the brand.  This section wasn’t heavily detailed but it was critical for providing some initial direction and focus.  It begins with a simple identification of what we are trying to do.  When it comes to companies, here are a few reasons they exist:

  1. A better way to do it.  We know people (and companies) are creatures of habit.  Once a process is put in place, it stays that way until it fails.  This leaves opportunity to create something better, especially as technology is developed.  Most often, a better way usually reduces operating costs or provides some other unique benefits to the company.

My potential customers:  There is a process in place for the service I provide.  My customers either don’t do it or do it poorly.  My service will replace the customer’s need to use their inefficient process with additional benefits that reduce cost.

  1. Something completely novel. In this case, a company provides a product or service that didn’t exist.

My potential customers: Since a process already exists, I’m not really creating something new to the market but I am creating a new solution for the customer that has financial benefits.

  1. A solution to a problem. Your business should always be solving a problem or filling a need.

My potential customers:  They don’t know they have a problem, which could be challenging for me.  I’ll need to educate them first and then sell them on the benefits of the service.  This will need a strategy all by itself.

While there are other business purposes, these three represent the majority of my purpose.  Some companies will use “transparency” as a purpose.  However, I consider that to just be a part of business.  I know there are proprietary things in the business but the way I conduct my business should be very clear.

With my purpose identified, I can use this information to identify my target customer.  I know they may or may not already do the service I’m offering.  I also know, through research, that they are not very good at it.  I have also found that many of these customers have financial problems, which makes the benefits of my service all the more desirable.  The key factors that define my customer:

  • Do perform the service I offer but aren’t doing it efficiently
  • Do not perform the services I offer
  • May be unaware of the problem
  • May have financial issues
  • May desire to create change in their current processes

Now that I have some idea of my customer, I can begin a little research by contacting potential customers by asking probing questions that can clarify my above assumptions.  After gathering a little information, I can prepare marketing information that speaks directly to this customer.

While this isn’t a complete development of a brand, it does provide considerable direction for me while defining the purpose of my company to the customer.

Disclaimer:  These posts are general ramblings from me concerning my own startup experience.

RISK VERSUS COMMITMENT

Starting your own business is fun and challenging in ways you never imagined.  I get a lot of questions about these challenges.  Most budding entrepreneurs are trying to estimate the barriers they’ll run into.  This assessment helps them understand the amount of risk they might face, which is a good thing to do.  But, I think they have the concept backwards.  In my experience, it’s your level of commitment that defines the amount risk you’ll encounter.  If you don’t invest much, you don’t have much at risk.

My kids love the TV show “Shark Tank.”  For me, it’s entertaining.  The Sharks have a lot of money, so the risk they take is small, considering it is only a fraction of the value they possess.  But for most of the small business owners on their show, the risk is much greater.  Well, most of them.  I do remember a recent episode when the Sharks asked the business owner how much she had invested in the company so far and she said not much because she was still working her day job.  I think Mark Cuban jumped out of his chair in shock and gave her the “I’m out” response after chastising her for her lack of commitment to the company.  Apparently, the Sharks believe you have to be “ALL in” to really achieve the success you desire.  Why? It shows everyone your level of commitment to your business and dream.  Sure, we can work in a job we don’t like but would someone really build a business that didn’t encompass their passions?

Napoleon Hill once said “Great achievement is usually born of great sacrifice, and is never the result of selfishness.”    For most entrepreneurs I work with, great success is their quest; more specifically, financial independence.  They seek the freedom such success affords.  After all, we only have so much energy to put into building dreams.  If we spend a lot of energy building someone else’s dream, we have little energy to build our own.  This is why Mark Cuban didn’t appreciate the young entrepreneur’s efforts in building her company.  This approach is attempted by so many professionals; that is, working for someone else while starting a company on the side.  We already know investors aren’t crazy about that idea, but what else could this approach be missing?

Just as an investor doesn’t think you can put all of your energy in a side business, an employer doesn’t think you can do your best in your job if you have a business on the side.  Employers will worry that each day you’ll be focusing on your company and not theirs.  It will threaten your job security, which might make your side business your only business.  If you have a business on the side, don’t share that with your employer.  Managers don’t have entrepreneurial mindsets and won’t understand that you can separate the two activities.

According to Forbes, 90% of startups fail.  Even when you start out under the best conditions, you’re likely to fail.  Yes, there are outliers that prove you can build a business on the side and then jump into it full time once it takes off.  But considering that 10% are successful, I would suspect that a small fraction of these started as sideline businesses.  While I’m not a big fan of side businesses, there is one reason you might try it.  Forbes identified the main reason startups fail.  Essentially, half of startups create a product no one wants.  However, starting your business on the side might give you sufficient time to assess the market for your product, especially if you don’t have the money to contract someone to do a market study for you and you have to do it yourself.  Taking the time to study the market will greatly improve your odds of success or help you keep from becoming another startup failure statistic.

Another challenge for part-time startups is the ability to truly focus your energies on figuring out how to reach your market and build a business.  Without employees, you’re forced to wear all hats of a business.  That can be overwhelming, especially when you realize that you are not an expert at many of them.  It takes time to learn about legal requirements, accounting, marketing, sales, and planning.  Now, consider that your day job may require travel and times of intense efforts requiring long work days, and you can begin to see how your startup could remain in startup mode for many years.  Eventually, it becomes easy to push off making decisions about your company because of other responsibilities.  Without sufficient consideration of issues, you run the risk of failing to consider everything you should consider which can result in poor decision-making.  For example, if your company began to grow to the point that you needed to contemplate going all in but were afraid to make that step because you didn’t have enough funding to pay your salary for a year or so, then you might not decide to get funding to grow the business.  So, you remain in your safe job and keep the business at a level of work that you can manage while you’re working your main job.  This is the risk versus reward scenario.  Little risk with earn you little reward.

As a sideline business owner, your risks aren’t too bad.  You already know most knowledgeable business people, especially investors, may not take you seriously, much less invest in your business.  Your startup time is likely to be very long (e.g. multiple years).  If time to market is important, you’ll likely miss it.  Also, the longer it takes to start, the more risk you have in your day job.  It gets hard to hide your real passion from everyone at work and telling the wrong person could bring your employment to an abrupt end.

As an “all in” entrepreneur, the challenges are much greater.  When I started that business, I forfeited my job.  I sold my house.  Moved my family and rented a house.  As I began, I felt I could earn business and move out of the startup phase in less than a year.  This sounds easy, right?  Its okay for first few months but when it begins to take longer, around months 7 through 9, your family and friends begin to wonder if you’re going to make it.  I began to wonder too.  But you can’t lose faith. The slightest crack will set off those around you and spin your world into a huge panic. Relationships can be easily strained, mounding more pressure on top of you. With no customers, will I need to tap into my own personal funds if I pass the first year mark without success? If I do, then all future plans could be at risk; vacations, cars for the kids, college, retirement and all of those luxuries we all enjoy.  But….if it does work as planned, the reward is much more than I can get working for anyone else in any given year.  No more 1 to 3% annual increases each year or that tasty spiral cut ham for Christmas.  I’m working for myself, pushing a business I built. With significant income flowing in, I can start building my own Shark Tank and diversifying my investments.  It’s chasing financial independence and as an entrepreneur, I can get there much faster.  And when I’m tired, I let my kids run it.  Yes, the risk is much greater, but so is the reward.

I’ve tried starting businesses both ways; part-time and full-time.  Full-time certainly has considerably more risk than the “playing it safe” part-time approach.  I think the decisions you make and the effort you put into your business are considerably different between the methods…and the results typically reflect that.  It’s amazing the energy you’ll put into a business when your next meal or rent depends on it.  You will become bolder, especially in the face of any adversity.  There are many things to learn and procrastination has a price that as a full-time, “all in” entrepreneur, you can’t afford to pay.  Success becomes your only option.  You strive very hard to gain that first customer so that you can call yourself a legitimate business.  Then, you have to learn how to take that first success and create more success from it.  It’s a never ending learning process.  As a father of three, starting a business is much like raising a child.  It takes effort…constant effort.  It’s painful.  It’s risky.  It totally changes your life.  Sure, you can raise a child with little effort but we all know what those results look like.

So, what you think?  Are you ALL IN?

MBA for Starting Your Business

It’s the latest craze and it almost sounds like a contradiction but many universities in the USA have quickly adopted an MBA program focused on entrepreneurship.  If the university isn’t adopting a certified program, they’ve instituted seminars, weekend training, networking events and more that address entrepreneurial needs.   It’s hard to imagine that academia would be able to show budding new entrepreneurs how to run a successful business.  The MBA degree was developed to help managers become better managers. Now, we are taking into a position that requires a broader set of knowledge, skills and abilities.  Many universities realize the challenge in providing such education so they often solicit the support from local entrepreneurs.  In fact, many colleges hire entrepreneurs to develop the new MBA program.  While the MBA isn’t really a requirement for anything, an MBA entrepreneurial program isn’t either but it might be helpful for your startup.  In this post, we’ll take a look at some of the key elements of this type of program so that you can determine if it’s right for you.

Assessing business ideas.  If you want to be an entrepreneur but don’t have any idea what business you want to create, then learning to assess ideas is very important.  The ability to recognize and evaluate opportunities is not an easy task.  Most entrepreneurs and entrepreneurship educators recognize that only a small percentage of venture ideas actually represent viable business opportunities.  Such skills are critical as startups are usually plagued by high uncertainty, low information and the need for rapid decision-making.  Students are often introduced to numerous platforms for evaluating business ideas such as the Timmons Model of the Entrepreneurial Process, the New Venture Decision Making Model and the Opportunity Search Model.  These models help you assess potential opportunities by guiding your focus in areas of environmental attributes, owner characteristics, strategy factors, resources, economics, and product/service model.

Basic organizational structures.  Most programs offer guidance in identifying the various types of structure that might be suitable for your business, such as an LLC, C-corp, S-corp and so on.  The factors that are important here are usually the number of owners, tax benefits, liabilities, and record keeping requirements.  If you don’t know anything about these, then the knowledge you get will be helpful.  However, in my experience, spending a few minutes with a business attorney or CPA is just as sufficient.

Develop a sound Business Plan.  If you’ve been reading our blog, this should be easy.  We just saved you a ton of money.  MBA entrepreneurial programs will give you great support in building a good business plan.  The business plan serves two purposes:  (1) clarifies your value statement and revenue model, and (2) communicates sufficient growth potential and stability for investors.  Of course, the quality of plan is only as good as the experience behind the creator, so you might want to investigate the experience of your professor.   Ideally, you can create your business plan early in the program and implement it throughout the life of your MBA program.

Marketing Plans.  MBA programs concentrate more on analytical and strategic marketing, such as creating marketing plans and strategies for sales purposes.  There is potential to develop some powerful skills here, such as competitor analysis, market research, budgeting, branding, communication, marketing tactics and metrics for monitoring.  Marketing plans are very valuable for a startup as they will help you focus your energy.  If you don’t develop the skills yourself, you’ll likely be hiring them at some point. 

Funding.  Many programs offer courses on working with venture capital firms, banks and angel investors.  These sources are exciting as they often come with sophisticated investment analysis tools and models, as well as thoroughly researched and professionally prepared business plans.  The top tier programs also give you access to these fund providers.  Unfortunately, most startups don’t usually get to tap into such sources.  The more common sources of funds for new and smaller businesses are family, friends, informal investors and the entrepreneur themselves.  Much of what you’ll learn won’t be used right away but will be helpful later on.

Mock experience.  Most programs will tell you this is a huge advantage, as students are afforded the practice of key business skills in a safe environment.  You can basically work with a team of students to walk through the development and implementation of a business venture.  The intent of this mock experience is to help ensure decisions are made using sound business practices.  The hope is that you’ll fall back on your habits, developed during practice, when difficult situations arise.  Of course, you may have the view that there are many factors that can affect your decision making abilities that can be emulated in a classroom setting.  It reminds me of the scene in the movie Harry Potter:  The Order of the Phoenix when Harry asks Professor Dolores Umbridge “And how is theory supposed to prepare us for what’s out there?”  In this scene, the ministry felt that a “theoretical knowledge will be sufficient to get you through your examinations.”  Unfortunately, starting your own company has real consequences that can be quite costly and theory ignores the fact that real businesses often deal with irrational people, both in your own team and the customer.

Identify new ventures.  To sustain growth of your organization, you must be able to identify new opportunities, including understanding, qualifying and quantifying the market.  Additionally, you must also understand your competitive advantage, build a financial plan, secure funding and build a team that can implement the plan.  These lessons may seem a little premature when you’re just starting up as you’ll be more focused on implementing your business plan, which usually doesn’t include changing course or expanding products and services right away.  If you don’t know what kind of company you want to start, this may help you understand how to assess any opportunities you find interesting.

Global strategies.  Most offerings are designed to help you develop leadership and strategic thinking tuned to the realities of today’s global economy, including topics related to operations, partnerships, product development, and legal contracts.  If you don’t plan on going abroad anytime soon, this may be a little premature and not a great deal of help for your more urgent startup needs.

Networking with other entrepreneurial minds.  Networking is a common theme for MBA programs.  Apparently it works for entrepreneurial programs as many students partner with other classmates to launch their business.  Networking is always helpful as it lets you bounce your ideas off existing entrepreneurs, professors and students who can help you evaluate your ideas.   Now, this can be done in many places, not just a college campus.

Startup acceleration.  This offering is usually dedicated to helping fundable startups with scalable business models connect with companies who might be interested in supporting the business idea through mentorship and venture capital.  If you’ve got an idea that requires considerable startup funding, this might be a useful approach.

While I’ve always thought that universities have become quite adept at jumping onto new trends, entrepreneurship seems to be more popular than the MBA itself.  The concern I would have in partaking in such programs is that you will be spending a lot of money to learn skills that may not be easily transferable to other companies should you decide not to start your own upon graduation.  Even worse, you could graduate from the program and your startup company fails a short time after.  That would be a huge setback.  Now, this is not to say that such programs don’t have value.  They do have value, especially if you have an idea of the business you want to start.  I’m not sure you’ll gain great benefit in these programs if you have no idea what business you want to create.  Just think about the challenge of any MBA graduate who finds themselves at the end of the program asking themselves “now what?”

In our next, we’ll give you a list of questions you should consider before enrolling in such programs.  We’ll also try to bring you real experiences from graduates to assess how well the programs work.

Ask Dr. Business – Do I really need an MBA to start my business?

In this week’s post, Dr. Business answers the question about the need for an MBA to start a business.

Here’s what Dr. Business had to say on the topic.

The more education in business that anyone can get before starting a business is always a good thing. However, getting an MBA is not a prerequisite for young professional entrepreneurs who want to start a business. While all the courses they would take would help them with one aspect of their new business or another, MBA courses are really designed for those middle managers who want to continue to climb the corporate ladder, not start an entrepreneurial new business.

The exception to that is the MBA course on Entrepreneurship & Innovation that I teach. It is an elective and as such attracts MBA students who have an interest in starting a business, or at least getting to know more about all that is involved in the process. The primary deliverable in the course is the development of a business plan for an idea that they have had for a business for a long time. The value of the course for these MBA’s is that it gives them an opportunity to see if their idea for a business is commercially viable, or not. More importantly, they get to see how all the other MBA courses that they have taken contribute to managing a successful business in one way or another. Every year several of my MBA students in this course actually use the business plan they developed in the course to start a business.

There are a multitude of sources for young professional entrepreneurs to get advice and support. One of the best sources is the multitude of incubators and accelerators that are available now at many colleges, or affiliated with universities in one way or another. Colleges and universities also have successful alums volunteering to be mentors for would-be entrepreneurs. Lastly, there are a multitude of books that have been published and continue to be published on entrepreneurship and how to start and manage a profitable business. Success stories are also published almost every day in the business press.

The best advice I have for young professionals is to watch ABC’s TV show “SharkTank” to get a first hand view of how NOT to do it!

Join us next week when Dr. Business breaks down another burning question in the mind of the startup entrepreneur.

ASK DR BUSINESS – What barriers do entrepreneurs encounter?

In this week’s post, we ask Dr. Business to identify some of the barriers new entrepreneurs encounter.

Dr. Business says:

“The biggest challenge facing entrepreneurs is not squandering their scarce start-up resources. Since most entrepreneurs have not developed a business plan before they start their business, they cannot anticipate the typical cash consuming pitfalls that could have been avoided by having a plan. This is followed by the need to find investors to begin marketing their unique value proposition. The majority of any entrepreneur’s start-up cash is usually consumed in the process of getting ready to do business. For example, starting a bagel shop, pizzeria, or developing an App, requires time and money before you sell anything.

Once these basic challenges are dealt with there then comes a host of other operating challenges having to do with: finding employees, attracting initial customers, accounting for the business, legal issues, and the time and energy required to convert their entrepreneurial idea into a commercially successful and profitable business. Not to mention the “buy-in” required from family members, partners, and others. “
If you have a specific startup problem, share your problem with us and we’ll have Dr. Business share his advice.   Send us your info at info@blitzteamconsulting.com.
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Ask Dr. Business – How do I know if I want to be an entrepreneur?

This week’s question:  How do I know if I want to be an entrepreneur?

Dr. Business:  Everyone has an idea for a business, but not everyone can be an entrepreneur and convert that idea to a commercially successful enterprise. Why is that? Primarily because the concept of entrepreneurship is inherently about taking risks, and most people are risk averse. Additionally, not all of their ideas are viable enough to be profitable, or there just aren’t enough customers, the cost of making it happen is beyond their means, etc.

Another major requirement for success as an entrepreneur is a deep rooted passion to the extent that it consumes them. Entrepreneurship can be a long hard road to success.  Passion for your purpose is vital.

Lastly, is the lack of experience in running a business. For all these reasons, I require the students in my course on Entrepreneurship to develop a business plan to see if their idea is commercially viable and to help them understand what it will take in terms of time, money, and pain to start and manage an embryonic business. It’s an exercise that can save them from themselves. The popular show “Shark Tank” is a wonderful platform for anyone wondering if they want to be an entrepreneur to observe what happens to would-be entrepreneurs and their ideas.

Ask Dr. Business – Entrepreneurship: where do I start?

Here’s the latest question for Dr. Business.

Entrepreneurship: Where do I start?

Every business has started with a problem. An entrepreneur has come up with a solution to the problem and the rest is history. Many businesses have been started by entrepreneurs having a problem that they developed a solution for and then went on to commercialize the solution. The best place to start is to list all the problems you have all day every day driving, working, shopping, eating, etc. If you have those problems then others like you have the same or similar problems. How can you come up with a way to solve the problem, that is viable, and that you would be willing to pay for? We have had a lot of snow recently and many people would like an alternative to shoveling it themselves, but they don’t know where to find someone else to do it. An entrepreneur who had that problem developed an App called “e Plow” which allows those who need to have someone remove the snow for them to be able to contact someone else who does that – snow removal contractors and others with snow blowers and shovels. This entrepreneur has gone on to develop another App called “e Mow” for homeowners who need to find someone to mow their lawns for a week, or a month, while they go on vacation, are sick, or just can’t do it for a variety of other reasons.

Do you have any questions about a business that you would like to start, but are unsure as to how to get started? Ask Dr. Business.