post

Does Education Help Entrepreneurs Succeed?

The other night, I was having dinner with some friends when someone asked me a typical American question: “What do you do for a living?”
“I’m a professor at a local university and teach entrepreneurship,” I replied, knowing the usual follow-up question that would come next: “Hasn’t Bill Gates (Microsoft), Steve Jobs (Apple), Mark Zuckerberg (Facebook), and Larry Page and Sergey Brin (Google), shown that you do not need to go to college to be a successful entrepreneur?”
There is a growing misconception that higher education is not needed for entrepreneurial success, but that is just not true. A Kauffman Foundation study revealed that over 90% of American tech company founders hold a bachelor’s degree, and those with MBA’s are able to start and build their companies faster.
For the passionate entrepreneur, educational programs (especially those using the case study method) offer a great place to start learning practical skills that can reduce the learning curve for running a company. Let’s look at four ways entrepreneurship education can help the aspiring entrepreneur:
1. Innovation Labs (i-lab) and Accelerators:
There’s certainly overlap between incubators and accelerators, but the big difference is in the stage of the start-up. An incubator is a place where pre-revenue start-ups go to learn about their business model and how to build a company. The accelerator in most cases is post-revenue, has a specific amount of time in the accelerator, and receives a certain amount of funding for equity in the company. They are more interested in creating growth with the assistance of investors and connections.
There are 243 i-labs and accelerators located within universities around America. The University I teach at is creating an i-lab, which is slated to open April 11, 2019, for students, faculty, and local start-ups. These i-labs and accelerator programs connect young entrepreneurs to real start-up resources such as business mentors, lawyers, marketing personnel, classes, accountants, access to investors, and much more. This type of immersive education in entrepreneurship is harder to come by when you are starting out on your own.
2. Experiential Leaning
It is imperative that when studying entrepreneurship, you choose a university or set of courses that are taught by professors with real experience in the start-up world. It is just as important that the class be an experiential learning class (which emphasizes “doing” by applying learned skills, instead of just learning from the textbook). While some believe that entrepreneurship is not an innate talent that people are born with (which is a debatable claim), and you can therefore study to be an entrepreneur, entrepreneurship is—above all else— a skill that can be cultivated through learning, studying, and creating businesses. I agree when people say, “You can’t learn to be an entrepreneur from a book,” because books alone will not teach you all you need to know. That is why experiential learning must be part of the entrepreneurial development process. It is absolutely critical.
Entrepreneurs are much better off learning by “doing” and meeting mentors who have been down the start-up path and experienced most things themselves. These mentors are invaluable when it comes to learning and making the fewest mistakes as possible. They can give you advice from the journey they forged before you. Learning from the mistakes they made is one of, if not the, greatest opportunities to grow as an entrepreneur.
3. Learning Leadership Skills:
It’s often said that more than half of new businesses fail during the first year. According to the Small Business Association (SBA), this isn’t necessarily true. The SBA states that only 30% of new businesses fail during the first two years of being open, 50% during the first five years, and 66% during the first 10.
The good news? Business majors with a track in entrepreneurship are required to take courses in leadership, problem solving, entrepreneurship creation, and introductory management skills, which heighten their chances of defying those statistics.
Entrepreneurship courses like the one I teach, “Presentation Strategies for Entrepreneurs,” will help you determine whether your business model will be feasible before you put any money into your new venture.
When I truly understood that I was never going to be the smartest person in the room just because I was CEO, I started trusting my expert employees to do what they do best: create and execute. I learned that I was only a teacher that gave them the vision they needed, and then I would turn over the reins. The secret then is to measure and double measure my metrics to help guide my employees. This type of leadership worked well for me. Leading is knowing where you are going and communicating that clearly to those working with you.
4. LOVE what you do:
As I tell my students at the beginning of class and the closing of the semester, “You have to do what you love, because you will spend one third of your life doing it.”
Entrepreneurship is very lonely at the top. It consists of ungodly amounts of worrying, anxiety, time, effort, and much more. If you don’t like being on the edge—living life one day at a time—then entrepreneurship is not for you.
I was an airline pilot for 20 years and hated it! When I created my first company in 1992, built it, and sold it to a larger firm, I knew I was going to be an entrepreneur for the rest of my life. The 25+ years since then as an entrepreneur have been the most exhilarating, educational, and fun years that I’ve had in my entire life.
Teaching entrepreneurship at universities is also filled with a great deal of excitement. Being able to give back what was so freely given to me is the joy of my existence these days.
You must do what you love, or you will be miserable for a long time.
Happy entrepreneuring!😊

post

Entrepreneurship Across Different Cultures

As I get ready to start my Doctorial studies in Business Administration at Felician University, I’m already thinking about my dissertation that is due five years from now. In my thesis, I’d like to explore how different cultures other than our firmly established American culture of entrepreneurship view entrepreneurship, and what makes the American entrepreneur so resilient and plentiful?
Entrepreneurship is often thought of as an “American thing” and reminds us of “the American dream,” “bigger is better,” “of course I can do that,” and a whole list of other sayings (I myself have said many of these statements). We also think of the unlimited upward social mobility, and the belief that if you have a good idea and a good work ethic, you can start your own company and make plenty of money (which is sometimes true, but most of the time, not).
We also tend to celebrate the American garage heroes, such as Mark Zuckerberg, who started Facebook and the whole social media craze; Larry Page and Sergey Brin, who started Google and data analytics; and the renegade Elon Musk, who constantly pushed the envelope of ideas (and still does), even when most people didn’t believe his ideas would work.
Let’s look at some highlights of American entrepreneurial culture, as well as some different entrepreneurial cultures, such as those of Germany, Sweden, and China. These are but a few examples, but even with a brief look at how some of these cultures view entrepreneurship, we can begin to understand how Americans and other countries can further develop their entrepreneurial drive and methods by incorporating the tactics, attitudes, and experiences of different cultures.
America
Americans are the young kids on the block with the “can do” attitude and the “don’t tell me what to do” belief system. Personally, growing up in a solid lower middle-class family with an entrepreneurial father, who quit his job one day and started a busing company without a busing license, set me on my own entrepreneurial path. At the time, my father had three little children and a stay-at-home wife. This is the typical American dream: working hard and making something of yourself. Despite the many years of lean times, and dying at the young age of 54, my father’s dream and hard work turned out well. After all, this high school dropout ended up employing many people and created a successful bussing company.
In America, there is the mythological figure of the entrepreneurial billionaire who gets incredibly rich, incredibly fast. However, alongside that figure sits a very different reality. This different reality defines “entrepreneurial culture” in the United States as being inconsistent with the “notion of America.” This may seem counterintuitive, since the American dream was built on hard work, innovation, and the hunt for success, but if we take a look at some American trends, it will explain why entrepreneurship no longer fits into the way of America in the same way it used to when it was framed as the American dream.
According to the Kauffman Foundation, the American education system is still weighted toward placing graduating students into existing big companies, rather than equipping them with the skills necessary to start their own businesses. Some high schools are now offering a few entrepreneurship classes taught by non-entrepreneurs, but higher education is still primarily geared toward providing students with the necessary skills to climb the corporate ladder.
It is worth considering, however, that the culture of entrepreneurship is still relatively new. The Kauffman Foundation suggests that the prestige of entrepreneurship came as a response to recession-era layoffs in the 1970s and 1980s, leaving entrepreneurship as the only option for advancement. As the culture continues to grow, we can notice a growing interest in entrepreneurship, as collegiate courses on design thinking, innovation, and entrepreneurship spring up across the country.
Expanding one’s perspective on entrepreneurship is important if one wants to become a more successful business leader. The newer courses offered in entrepreneurship are a step in the right direction, but it takes more than that. While your personal history, culture, and values are all important, they shouldn’t blind you to other perspectives from around the world, because they, too, have plenty to offer. We now live in a globalized world, so, Americans can and should learn more by broadening their approach. This will help people find more creative solutions, build a stronger business, and possibly even find more fulfillment in their work and role as a business leader.
Germany
According to the U.S. News & World Report’s annual “Best Countries” rankings, Germany is, for the third year in a row, considered the world’s best country to be an entrepreneur.
Germans have a culture built around work ethic and are a notoriously driven people. However, despite its having been ranked as the best country for starting a business, doing so is much more difficult in Germany than it is in other countries. In fact, the World Bank ranks it 113th in the world in terms of ease of starting a business. Part of the reason for such difficulty is because Germany prioritizes jobs in the government and in large, established firms. The most talented and hardest working people gravitate toward established jobs, mostly for prestige and advancement. This leaves entrepreneurial opportunities less explored and less celebrated, at least by German standards.
Yet, the country still sees decent rates of entrepreneurship, thanks to an immigrant population that brings more entrepreneurial values into the country. How Germany manages to be one of the best countries for entrepreneurship, despite its difficulty to start a business, is a question worth exploring, because we can learn a lot about entrepreneurial strategy.
Sweden
The World Bank has ranked Sweden in the top ten countries for entrepreneurship. The article continues to rate Sweden, along with entrepreneurship, as the most business-friendly country, most culturally influential, most modern, offering high quality of life, the ability to retire comfortably, transparency, and gender equality. It is also considered the best country to headquarter a corporation, raise kids, live green, and get a great education, and it is among the best countries overall. But this is a Socialist country, so how can all of that be? Interestingly, Sweden has a 90% privately owned business community. Although the ease of starting a business in Sweden is rated high, staying in business may be tough due to the very favorable labor laws, and the tax burden placed on business owners. Looking at how those who managed to both start and stay in business should offer us huge insights into innovation and entrepreneurial tactics.
China
For the past few decades, China has been the manufacturing hub of the world, but Chinese culture is shifting to focus on the merits of entrepreneurship, as China attempts to reposition itself as a growing tech innovator. They are making this shift through education, governmental assistance, and culture.
Statistics show that the number of Chinese students studying abroad at higher education institutions in the United States during the 2016-2017 academic year was almost 351,000 students. The Chinese government has also taken multiple initiatives to foster increased rates of entrepreneurship, including a $338 billion investment into government-backed, tech-centric, venture capital firms. The increased availability of cash for entrepreneurial ventures is fueling a renewed interest in innovation.
Chinese citizens are hungrier for success and are willing to make great sacrifices for the chances of success; accordingly, Chinese start-ups tend to grow more rapidly than their American counterparts. If Americans can understand how entrepreneurs in China do business and grow so quickly, they can apply it to their own American businesses.
Of course, there are similarities in each entrepreneurial culture. Some of the tactics and values offered by different cultures can be reflected in American culture, but the differences in other entrepreneurial cultures offer Americans the chance to learn significantly. The attitudes, strategies, and entrepreneurial mindsets of our peers across the world can provide us with great, applicable knowledge. Taking the time to understand the similarities and differences between American entrepreneurial culture and the different entrepreneurial cultures around the world can create beneficial change in the way we do business and think about innovation.
If you’d like more information, please feel to contact me directly at dmuir@muirandassociates.net or go to my academic web site for more white papers and research at https://douglasmuir.academia.edu/

post

Overcoming Obstacles Is Key for a Successful Entrepreneur

Overcoming Obstacles Is Key for a Successful Entrepreneur

Entrepreneurship is not a sprint, it’s a marathon. Successful entrepreneurs don’t have the expectation of “finishing,” but they understand that it is all about overcoming the next obstacle that presents itself. If you do have the expectation of “finishing,” you won’t continue to push yourself to step outside of your comfort zone enough to grow. Entrepreneurship is like an escalator going down, and you are standing still, observing all the way, as opposed to sprinting right to the bottom. As an entrepreneur, you must keep seeking out the things that truly help your business achieve explosive results, and discovering all those things requires you to stretch yourself beyond your comfort zone.
Becoming a successful entrepreneur means understanding that hard times are when you need to push forward the most. You will have times of unbelievable joy, as well as more than a few setbacks. During the times of joy, you may feel like you can take over the world. It can give you the strength and motivation to continue to put in the long hours that are required to grow your business. During the hard times, negative feelings and emotions can easily take over, and before you know it, you’re feeling sorry for yourself, and things start getting dark very rapidly. This kind of funk is something you must snap out of quickly, or it will take you down. As an entrepreneur, you are at the top, so there are few people to turn to except other entrepreneurs and mentors. Even though it can be extremely difficult to pull through the hard times, it is possible. I want to share with you a few things that I’ve done to help myself during the down times.

1. Overcoming Problems – The only way to get through obstacles is to start by acknowledging that they exist. Your thoughts act as the gateway to your feelings and emotions. There is a very wise Buddhist notion about how what you think about and focus on is what you’ll attract more of into your life. If you believe you are failing, then you will, and it’s over. When you’re dealing with obstacles, your thoughts focus on what you can’t control and why that situation is happening to you. Instead of falling into that negative, cyclical thought process, give yourself a few minutes and take control of your thoughts. Focus on what brings you joy and what you’re grateful for in your life. It’s hard to be down when you’re expressing gratitude. It will amaze you how the right solutions come into fruition when you focus your mind on positive and creative solutions.

2. Embrace Change – Growing a business is not easy, or the world would consist of more than just 3% of entrepreneurs. Life is messy, and change can be uncomfortable, yet change is absolutely essential for entrepreneurs. There are always going to be things you can’t, and shouldn’t, try to control. There are, however, things that pop up that you can do something about, and situations that you can exercise some control over. For example, if your marketing plan no longer works, adjust it, and if sales are down, go back to what worked and make small adjustments. Or, if an employee is causing more trouble than he/she is worth, remove them immediately before they influence the others. Create a plan that will help you get on the path to recovery. There are things you can fix in your business no matter what is happening. First, identify what the problem is, then, do something about it. Focus on results.

3. Get a Mentor – Some obstacles feel like they are more than you can handle. Seeking counsel and support can be the difference between getting through crises or failing. Don’t try to be the super hero—seek help! One of the best things you can do is make decisions that help you recover, and seeking help is one of those decisions. Talking and planning with someone who understands your situation and has experience making it through a crisis is indispensable.

4. Make an Action Plan – Make decisions that are action-based. If you are contemplating a decision that will push you toward an action to help your business, make the decision! I’ve found that one of the best ways to recover from difficult situations is to take massive, laser-like action. Taking action regarding the things you can control will give you progress, confidence, and results. As you consistently take action, you’ll be closer to your goal before you know it.
I’ve found that obstacles always become my most productive learning moments, and they don’t have to be business breakers. I have learned from each failure, and have used them to make myself a stronger and wiser entrepreneur. I’ve seen how the most successful entrepreneurs understand that it’s not the crisis or failure, but the response to that crisis or failure, that determines how successful you’ll be. Stay strong, process your thoughts, create a plan, and then take action. It will get you through a crisis every time!

post

Business Mistakes Transformed into Knowledge

As I ponder what I’ve learned over the years as an entrepreneur, I can confidently say that my biggest insights have come from my mistakes. I would like to share these educational pitfalls with all new entrepreneurs who are starting new businesses. The number of mistakes I made as a new entrepreneur was painfully high, but I would not change those learning experiences for anything. However, to assist the new entrepreneur who may read this article, I wanted to write about what I should have done differently in business. I would like to invite all seasoned entrepreneurs to add your experiences to this list.

 

I really don’t believe in failure. I believe that what looks like failure is actually a learning experience with the opportunity to move you in a different direction. Every time I start a new company, it is an opportunity not to repeat the past, but to learn from my past mistakes. After many years as an entrepreneur, I finally have the experience to identify how not to follow the same path of mistakes over and over again. I would like to share some of these insights with you, so you can avoid some of these mistakes, too.

 

My biggest learning experience in business was when I had almost lost it all. I did the typical entrepreneurial financing for the first restaurant I opened: I maxed out 10 credit cards, leveraged my kid’s college funds (they were five and six at the time), put my home up as collateral, borrowed as much money from family, friends, and fools as I could, and personally signed for everything. The following are a few pitfalls that I learned from this experience, which I would change if I had to do it over now.

 

  1. Admit you’re in trouble – The ego has killed more businesses than I can count. When the proverbial you-know-what is hitting the fan, most people, including myself, stick their heads in the sand. This was the worst thing I could have done when my restaurant venture was failing. These are the times you have to ask for help and look the problem straight in the eye. When I finally asked for help, it was amazing how many people came to my rescue—landlord, vendors, the bank, and other experts. It’s such a liberating experience when you learn exactly what’s going wrong, and the solution to fix it. For me, the problem was that my partners were stealing from the company (due to a lack of financial understanding). This was an easy fix, and then I moved on.

 

  1. Partners – This should be the most researched area when starting a company, and yet, is the least respected. A partnership dissolution is worse than a divorce. When it comes to money, everyone changes. I recommend a serious background check, a credential check of past employers, and a review of tax returns and personal financials. If your partners are unwilling to comply, move on. When I started the restaurant, I hired the first person who told me he had a great deal of restaurant experience, which I later found out was false. Writing a very clear job description for each partner helps during the times when the lines start getting blurred due to growth. Each partner has their strengths and weaknesses, so make sure they are outlined in detail.

 

  1. Operating agreement – This saved me from a partner I had in a consulting firm based out of New York City. After expanding the company 5X, he thought creating a mirror company and taking the clients was legitimate. (A little side note: beware of the attorneys who use boiler-plate operating agreements. There is no boiler-plate anything when it comes to partnerships and entrepreneurship. Every company and partnership is different, so you need to treat them with regard to their highly individualized needs. Example questions you should be asking are: what happens if one of the partners dies? Who gets the stock? Does it go to the spouse? If so, should they receive the same pay for doing no work? What happens if one of the partners leaves within a year? Do they get to cash out for only one year of service? What if a partner is caught stealing? The questions could go on forever, but make sure you ask the tough questions in the beginning—it will save you hundreds of thousands of dollars in the long run.)

 

  1. Financials – The number one reason businesses fail is a lack of understanding when it comes to financial statements. This was the biggest learning experience of my career, and it proved to be a game changer when I took control of it! When I started my first restaurant, I hired a business broker who built business plans and developed all of my financials, without explaining any of it to me. What I learned from this mistake was that whoever knows the numbers is in control. There are three financial statements you should know as well as your children:

 

      1. Cash Flow Statement. This is the lifeblood of the company, yet it is one of the least understood aspects. When there is no more cash, the lights go out. You must hoard cash in the beginning, middle, and end.

 

      1.  Profit and Loss Statement. What we learn from this document is how much revenue comes in and how many expenses go out. The problem here is that your mortgage, accounts payables, etc. are not taken out of the bottom-line number called your net profit. So, it is possible to have a large net profit and still be bouncing checks—which is exactly what happened to me!

 

      1. Balance Sheet. The balance sheet is even less understood than the cash flow statement. The balance sheet helps you understand certain types of ratios. For example, I do an inventory ratio (how long my inventory is staying on my shelves), and a current ratio (how much short-term cash I have compared to short-term debt), so I know the health of the company.

 

  1. Know your market – Until I discovered the Customer Development process in conjunction with the Business Model Canvas methodology, I was a poke-and-hope type of guy. I believed the innovative idea I had would work because I said so. The idea that someone would try to start a company, without asking at least 100 people, companies, or potential customers what they think of their idea, just makes no sense. By taking time and doing the Customer Development process, along with a detailed Business Model Canvas, you develop a clear understanding of who your customer is, and what business model is best to deliver your product or service. This process has saved me a great deal of time, effort, and money. Below you can view an outline of the Business Development Model.

 

 

                       Business Development Model

 

 

If you are a new entrepreneur just starting out, try to remember that mistakes are a crucial part of your entrepreneurial journey, and more importantly, your success. You will make them time and time again, and while it may seem like the end of your business (or the world) at the time, remember to seek out the learning opportunities your mistakes have offered. But, also remember that you are not the first entrepreneur making mistakes out there. Many have done so before you, much like myself, and you can learn from us. If you’re going to make mistakes, make them original. Otherwise, why waste your time, money, and effort? Instead, ask questions from your mentors, and carefully study how to avoid common mistakes.

 

 

 

post

INTRAPRENEURSHIP YOUR COMPANY TO SUCCESS

In April of 2017, I decided to leave academia and my Private Equity Firm to retire in New Jersey and be close to my family. (I know, who retires to New Jersey?) As an entrepreneur, that retirement lasted for about a month. A thought began to plague me: “Wouldn’t it be nice to work full time for another company?” I had never done this before, but I thought I could take my entrepreneurial skills from Main Street to Wall Street. I was going to be an “intrapreneur.”

I was blessed to work with a broker/dealer that had the best reputation on Wall Street, and two of the finest owners a person could ever work for. Although the learning curve was massive, I quickly found out that the same business processes, tactics, and procedures that made me successful as an entrepreneur could be used in my role as an intrapreneur for my new Wall Street firm.

I have researched, taught, and written about big companies that typically struggle with innovation. The research shows that once companies reach a certain size, their investors become more conservative, their leaders less entrepreneurial, and their decisions are managed by consensus. Meanwhile, in an effort to protect their jobs, their employees become less willing to take risks with new and innovative ideas. However, without innovation, companies can get too comfortable with their past successes, just before they find themselves going out of business (e.g., Sears, Blockbuster, Eastern, Pan Am, and many companies on the floor of the NYSE). They lack the innovation needed for continued success.

The intrapreneur’s role, then, is to find new and disruptive ways of doing business, deliver innovative products and services to the market, and foster a culture of innovation to maintain market leadership. Interestingly, intrapreneurs often don’t have job descriptions, and if they do, most of their actual work is done outside what’s written down in the corporation’s policy and procedure guide.

Companies that are not familiar with the intrapreneurial process need to watch out for these four possible pit-falls:

  1. Lack of intrapreneurial learning and validation. Companies and employees unable to do the basics of Customer Discovery for new products and services will be doomed, and will likely fail. It is imperative for your company to bring in an adviser at this point. With the new GIG economy, there are plenty of people like me that would be more than happy to set your company up for intrapreneurial success.

 

  1. KPI’s not befitting a start-up. Let’s be perfectly clear, a start-up company is not a smaller version of your large company. Metrics must be designed for the start-up, and iterated as information and experience comes in.

 

  1. Enforcing the corporate structure in your start-up. Enforcing existing management systems is a common mistake when putting intrapreneurial initiatives into motion within a mid to large size company. This will only stifle the intrapreneurial spirit and crush innovation. There are certain systems and processes that only work for start-ups, and not for larger companies.

 

  1. Strict adherence to company strategy. Making no adjustments to strategy is the life killer of a start-up within a company. The waterfall-type process just does not work. You must be agile, and ready to iterate or pivot on the dime. Again, there are processes for start-ups that work only for start-ups within a company or organization.

You can avoid these four pit-falls if you familiarize yourself with the intrapreneurial process, and if you acquire help from an adviser.

If you are a mid to large company looking for innovation, create a culture of intrapreneurship inside your organizations. Let your employees know that it is okay to spend part of their day jobs tinkering around with new ideas. That it is okay to make mistakes, and that failure will not result in punishment if things do not go as planned. Hire people that have entrepreneurship wired into their DNA; leaders who are not afraid to take risks and make decisions on their own. The company that hired me managed this by first allowing me to teach the owners about the intrapreneurial process and culture. Then, I was able to teach the business unit managers, and finally, the employees, while monitoring, measuring, and iterating all along the way.

As I said before, intrapreneurs don’t typically have job descriptions. Instead, they break the confines of the norm and hunt down opportunities for growth. The innovation that an intrapreneurial culture fosters is indispensable for start-up success within a company. Don’t think you and your company can’t attain such a culture of innovation—you can, and with the right help, you will.

I have researched and written much on this subject and would be honored to share more with you. If I may be of assistance to your company, please let me know.

Email: dmuir@muirandassociates.net

post

Can Entrepreneurship be Taught?

I have been asked many times, “Can you learn entrepreneurship in a classroom, or only through real-world experience?” Similarly, I’m asked if entrepreneurs are made or born. I answer these questions with a story. I was a pretty good wrestler in New Jersey and was taught by one of the best wrestlers in the world, Mean Gene Mills. Gene was a sight to see on the mat. It was an art when he wrestled. Gene just had it. I, on the other hand, did not have the “it” and few people do. Nonetheless, I still did very well, because I perfected the necessary skills as taught to me by Gene. The same idea applies to the great entrepreneurs of our time; some people are born with the entrepreneurial drive, mindset, and skills, while others must learn them.

How does one know if they are a natural born entrepreneur? There isn’t a test you can take, but there are a few signs to look out for:

1.    Hate the status quo. You hate just going through the motions, doing what you’re “supposed to do.”

2.    Easily bored. You are simply not loving what you’re doing while working for someone else.

3.    Fired from jobs. You get fired more often than you’d like to admit. Hint: telling the owner what you think when they don’t ask is not a good thing!

4.    Resist authority. Resisting authority was my favorite thing to do as a kid, but doing so got me into a lot of trouble. I would always have to ask the question “WHY?”

5.    Ready to improve everything. You are always looking for ways to streamline and improve processes, policies and procedures.

6.    Not normal. You probably feel different from those around you. Until I realized I was different from my friends, who are 9 to 5 type of people, I always felt different. Then I jumped head first into entrepreneurship, risking everything and that’s when it all changed. Turns out, I wasn’t “normal” in all the right ways.

If none of these resonate with you, but entrepreneurship is something you are passionate about, then don’t worry, the game isn’t over yet. Just as I learned how to wrestle, you can learn how to think and act like an entrepreneur. Allow me to explain my front-row view of how entrepreneurship is changing the face of education and the ever-developing business world.

As a retired entrepreneur who started ten companies and sold them all, I felt a calling to go back to school and get my MBA, so I could teach what was so freely given to me by some of the best mentors. I’ve had the honor to teach entrepreneurship at University of Virginia and, most recently, Felician University. I have learned and experienced a lot about the entrepreneur and am happy to share some of that with you in this article.

We have seen entrepreneurship take root in the curriculums of universities across the country, and its appeal has spread from business schools to disciplines as varied as art, nursing, engineering, education, and many others. Courses offered in entrepreneurship have grown approximately 20-fold. In 1985, there were about 250 courses offered in entrepreneurship at college campuses across the nation. In 2008, that number grew to 5,000, with over 2,000 schools teaching entrepreneurship and creating accelerators and incubators within the schools of business (Kauffman Foundation).

So many of the lessons that I had to learn the hard way are exactly what I teach aspiring entrepreneurs, so they can avoid repeating the same mistakes I made. I teach entrepreneurs indispensable skills and insights that change how they approach their businesses. This can be done in many environments, ranging from universities, to incubators, accelerators, and even mentoring programs. A few of the lessons I teach include how to evaluate opportunity, how the entrepreneurial selling of your company differs from the professional selling of a product or service, and how to effectively communicate about your business. I also teach about some of the pitfalls of agreeing to 50/50 equity splits that are sealed with a handshake at the outset of a new venture. Students learn to highlight tools that improve processes, procedures, and productivity. They also learn how to use data to uncover patterns in the success and failure of new ventures that highlight the consequences of decisions.

I also teach another part of entrepreneurship that is crucial to success: Customer Discovery. Applying the discipline of Customer Discovery can help entrepreneurs avoid spending time and money building a product or service that no one wants to buy. Founders will also learn the skills of negotiation with investors, presenting to clients, marketing a product or service, and even how to hire good, qualified employees.

So, in a nutshell, the answer is YES, entrepreneurship can indeed be taught. It’s the “how to” that really matters; that is, how to do certain things, perfect certain skills, and learn how to ultimately think and act in an entrepreneurial way. Below are a few concepts and processes that students need to walk away with. They must know the “how to’s” of the following:

  •  Identify– opportunities.
  •  Market Research- Evaluate ideas and assess the market.
  •  Value time, money, and work hours– Appreciate the risks and rewards of entrepreneurship.
  •  Customer Discovery– Leverage experiments to validate your idea and refine your business model.
  •  Financials– Discover the key financial decisions any entrepreneur must make in the early stages of a new venture.
  •  Investors– Understand the process of raising capital, and how to speak to investors and understand their “Term Sheets,” which outline business agreements.
  •  Mentorship– Learn from successful entrepreneurs and leading investors, as well as peers.

If you can grasp these concepts and skills, you can enter the field of entrepreneurship; a field defined by breaking the rules, boundless innovation, passion, and even fun.

It’s true, some people are born with an entrepreneurial mindset or skills, and will excel naturally, while others may be a fish out of water and struggle to reach the same point until they learn and perfect those skills over time. People not born with the “it” of entrepreneurship can still learn how to become entrepreneurs, but they must be willing and able to learn things extremely fast. Your success rate increases with each class you take and skill you learn. But, beware, it takes a lot more than some slick power point presentations and nice new entrepreneurial textbook to become an entrepreneur. It takes a lot of grit, risk, and tenacity. Do you have what it takes?

If you’d like more information, please feel to contact me at dmuir@muirandassociates.net

Source: https://www.kauffman.org/currents/2015/10/the-evolution-of-entrepreneurship-on-college-campuses

post

6 Red Flags for Restaurant Owners

AAEAAQAAAAAAAAeEAAAAJDA3OGE5NzRiLTczNWEtNDJhNy04MTRjLWZmMDhhNTliMmZlMg

We’ve all had conversations about starting our own business, and one of the most popular dreams is running our own restaurant. I started my first restaurant in 2001, becoming the first franchise owner and proprietor of a new and exciting casual dining concept. I sold that concept and moved onto my new chain of restaurants in the fine-casual space. What I’ve learned over many years and from many restaurants is what I will be sharing with you in this article. We all love food; we like the social aspect of sharing conversation across the communal table, and it’s an industry where people choose to come through the door. So why does it often go so very wrong?

First, running a successful restaurant is one of the hardest businesses out there. We all know of places that we love to go to—and places that we don’t. It’s also tricky to recommend a restaurant, as sometimes it’s great and sometimes it’s not so great. But there are exceptions: if a place is consistently good, provides excellent food, a convivial atmosphere, and gives good value, we will go back again and again, and recommend it to anyone who will listen. But why is this so difficult to achieve?

Part of the problem is that people get caught up with the romantic notion of being the “main host” and floating from table to table shaking hands, backslapping their guests, and making it look like one big party—which is exactly how it should be as long as life in the “engine room” (or kitchen) is moving along swimmingly.

The kitchen is the heartbeat of the restaurant. If the orders don’t flow in an orderly way and the food doesn’t flow out in a timely manner, cracks will start to appear. Guests expect their lunch or dinner to appear in a certain amount of time—not too slowly and not too quickly—so the whole process has to be carefully choreographed.

That, however, is before we even start to talk about the real backbone of any business: cash flow, sales, and profit.  While all this sounds patently obvious, many people fall into the restaurant industry with no idea of how to price a plate of food, or whether they are going to make any money at the end of each sitting.

With this in mind, let’s analyze a day in the life of a typical Italian restaurant in the heart of a nice town in central Virginia. The average profit margin of a restaurant is between five and six percent, leaving very little margin for error. It’s all about people, product, and procedures. When one of these categories is missing, the whole ship goes down! The object of any business is to make money, so fixed costs must be as low as possible in order to survive the leaner months.  Fixed expenses cannot be brought in line if the gross revenues are too low, so day-to-day management is essential to constantly monitor where costs can immediately be adjusted if things start to go awry.

To this end, I’ve developed six red flags, or indicators, which explain where current problems may be hiding and where future issues are likely to emerge. Let’s go through each of them:

Develop a well-organized accounting system.

Amazingly, most restaurants don’t have any accounting system at all. When I ask my clients questions like, “What are your food, liquor, and labor costs?” I get the thousand mile stare. When I ask them for printed copies of basic financial statements (such as profit and loss, balance sheet, or cash flow), they have no idea what I’m talking about. Since you can’t manage what you can’t count, a restaurant without any of these three financial statements is set up for failure, or, at the very least, a loss of a lot of money and I would consider “flying blind.” The most common problem I see is the owner of the restaurant thinking their accountant is doing the financial statements when actually they are only doing the taxes.

What do the numbers mean?

Restaurant food, beverage, and employee expenses are the top costs. The numbers in Figure 1 show the standard industry average I use for my casual-fine dining Italian restaurants. However, those numbers will vary within the industry, but can be found on the National Restaurant Association website: http://www.restaurant.org/Home.  The battle begins and ends with these numbers, and not simply because they represent the largest percentage of your total expenses, but because you have the ability to control them. Costs such as utility and insurance are relatively fixed, but you can directly impact your food cost percentage with more effective purchasing, product handling, and menu pricing.  Similarly, hiring practices, scheduling, and even the layout of the kitchen and the way menu items are selected can favorably affect labor costs. That way, when a restaurant’s prime cost percentage exceeds the percentages in Figure 1, it raises a red flag.

post

Top 12 Contributors on Business Gists

Douglas Muir Was AwardedOutstanding

Powered by contributors worldwide, Business Gists is an online community for inspiration, education, and discovery, and is a place where everybody is welcome. Our mission is to provide the latest business news, current affairs, and top stories 24-hours a day from around the world. We feature breaking headlines, corporate news, economy, technology, banking, marketing, start-up, management, consumer reports, personal finance, and investing.

Adèle McLay is a high performance coach and business growth coach. She helps people to achieveAdèle McLay the success they desire in their businesses, work, and lives. Adèle is also an entrepreneur, inspiring professional speaker and teacher, and an author.

 

 

 

Achim NowakAchim Nowak is an author, speaker, C-Suite coach, and an international authority on personal presence. His book, The Moment: A Practical Guide to Creating a Mindful Life in a Distracted World (New Page Books), has just been published. His previous books have become prized resources for entrepreneurs and Fortune 500 executives around the globe. Achim and his work have been featured on 60 Minutes, Fox News, NPR, in The New York Times, and The Miami Herald.

 

 

Rob LlewellynRob Llewellyn is a trusted advisor to the C-suite and one of the few certified and independent Global Business Transformation Masters in the world. Having provided professional services to some of the world’s largest companies across Europe, Australia, and the Middle East since the 1990s, Rob helps executives takes a holistic and integrated approach to transformation. By using the Digital Capability Framework, BTM², and other management tools, he helps lead organizations to achieving value-driven competitive advantages.

 

 

Warren KnightWarren Knight is a Social Media Strategist, author of Think #Digital First, and one of the UK’s leading professional speakers in technology, sales, and marketing. As an award-winning coach and entrepreneur, Warren has helped thousands of companies grow their business through the strategic use of socially selling to their target audience. He nurtures and generates leads, and increases sales using simple and easy to follow strategies.

 

 

Steve BlakemanSteve Blakeman’s current role is Managing Director – Global Accounts for OMD based in London and Paris. LinkedIn named him as a Top 10 Writer for Marketing & Social for 2015 (Top Voices) and also “Agency Publisher of the Year” for EMEA

 

 

 

Lynda Spiegel

 

Lynda Spiegel is founder of Rising Star Resumes, a career coaching and resume writing service. With over 15 years of experience as a human resources professional, she leverages her background to help professionals in a variety of industries achieve their career goals.

 

 

John WhiteheadJohn Whitehead, MA, CEC, coaches individuals and organizations in becoming more effective by helping them improve their interpersonal communications, emotional intelligence, and resilience.

 

 

 

 

Ivette K. CaballeroIvette K. Caballero is an Entrepreneurial Marketing Communications Consultant with a passion for writing about personal and professional development, leadership, management, encouragement, and life in general.

 

 

 

 

Douglas MuirDouglas Muir is an authority in business strategy, having successfully built several multimillion-dollar enterprises from the ground up. He is considered the Start-Up Guru and speaks internationally on topics of entrepreneurship, innovation, and business growth.

 

 

 

Aura AlexAura Alex, an entrepreneur and the founder of the Business Funding Group LLC, focuses on helping fellow entrepreneurs and real estate investors find funding solutions to start and grow their businesses.

 

 

 

 

Christian J. FarberChristian J. Farber is married to Susan and lives near the shore in Tinton Falls, NJ with his three boys and best friend, Dash. Chris is a featured and contributing author to The Good Men Project (TGMP) and an active blogger. Chris’ daytime job is Chief Marketing Officer for Scivantage.

 

 

 

Donna-Luisa EversleyDonna-Luisa Eversley is a corporate business veteran with practical experience in a diverse range of industries. Sales, business development, and coaching are combined to deliver over 30 years of experience as Dwordslayer.

post

Information Missing from Entrepreneurs’ Pitches (7)

Information Missing from Entrepreneurs Pitches 7
-Revenue Model-
 

How do you actually make money from your product or service that is being sold to your customer segments? One of the most common mistakes people make is not knowing the difference between the revenue model and the pricing model, which are the tactics you use to set the price in each customer segment.

Let’s cover the three mistakes I see startups make most often:

1.They think that the revenue stream is the price they charge for their product.

2.They set their price by how much it costs them to produce the product.

3.They set the price lower than the competition (race to the bottom).

These common mistakes leave way too much money on the table. So, there are a few questions you must ask yourself while setting the revenue model and pricing:

What do customers value, and how much are they willing to pay for it? On day one, when you are sitting in your building, your lab, or at your desk, these questions are mere hypotheses, but when you get out of the building and talk to hundreds of potential customers, you come to understand what it is they value. This is what we will use to find out what the revenue streams and pricing should be.

How do customers pay for products today? How much are they currently paying?

All of the above leaves so much money on the table. There is a better way to figure out the revenue model, or strategy, and the pricing tactic. Such revenues are the lifeblood of a company. Revenue streams may have different pricing mechanisms, such as fixed list prices (i.e. Target), bargaining pricing (such as car dealerships), auctioning (Sotheby’s), market dependent (supply and demand), and volume dependent (such as food services buying in volume).

Revenue streams can result from two areas: one-time customer payment, or (my personal favorite) recurring revenues where ongoing payments deliver a Value Proposition or after-sales services to a customer (monthly recurring fees). Companies continually research the answers to questions such as: what are customers willing to pay for what value? How are they currently paying, and are they satisfied doing so? How much does each revenue stream contribute to overall revenues and profits?

Revenue Model (Streams)

These can be generated in many ways:

Asset Sales

This is the sale of ownership rights to a physical product. Ford sells automobiles, which buyers are free to drive, resell, or dispose of. A consumer goes into a Wal-Mart and buys household products. A customer goes into a hardware store to purchase tools.

Usage Fees

These fees are proportional to the usage of service. Examples are Verizon cell phone, Amazon Web Service, Fed Ex shipping, and electric power. I use this in my company, Credit Justice Services (www.creditjusticeservices.com), where I charge a per-trade-line fee to correct the inaccurate or unverifiable information on people’s credit reports. The more trade lines I work on, the higher the fee.

Subscription Fees

These fees are for continuous access to service. At Salesforce.com you pay for the continuous use of their product, at Netflix you stream all the videos you want, and my gym yearly membership fee is good for however often I choose to go. At my restaurant chain, Bella’s, we found a company that would charge one fee for my electricity and take over the bill. This was a very beneficial arrangement because the electric bill is now a fixed cost.

Lending/Renting/Leasing

These fees are for temporary access to a good or service. The revenue stream is created by granting someone the exclusive right to a particular asset for a fixed period of time in return for a fee. Lenders receive recurring revenues, and lessees pay a fraction of the full cost of ownership. We used to think leases were only for houses or cars, but what about Chegg, the textbook rental store, borrowlenses.com, which rents out camera equipment, and monthly furniture rental companies?

Licensing

This is a fee for the use of someone’s Intellectual Property (I.P.). Microsoft, Electronic Arts (EA), and Apple are just a few of the companies we use to license software. At the University of Virginia, we have a division that concentrates only on I.P. protection and licensing called the Licensing Venture Group (http://lvg.virginia.edu/about/lvg).  There, the content owners retain copyrights while selling licenses to third parties.

Intermediation or Brokerage Fees

Often found in marketplaces of various types, this is a fee for bringing together two or more parties involved in a transaction. The most notable examples are brokers and real estate agents who earn a commission each time they successfully match a buyer with a seller. A relatively new company in this model is called Airbnb. They don’t own all the apartments and homes that are available for short term rent, but receive a cut of the daily fee. Match.com brings people together on their dating site for a fee. At Credit Justice Services, we bring credit-challenged clients together with attorneys from around the country for a lead-generation fee.

Advertising

These fees are paid by brands and companies aiming to get in front of potential clients.  Newspapers—and the media in general—rely on this approach, which has spread to companies like Google, Facebook, and Twitter, all of which sell advertising on their sites. These companies draw massive amounts of users, monetizing their product or service.

Pricing Types and Tactics

There are two types of pricing: Fixed and Dynamic.

Fixed Pricing

This could be as simple as Cost + Markup, but the one thing that is missing from the equation is the value to the customers you’ve been talking to. Now that you know what your customer desires, you can price on value for each customer segment, or feature what your customer needs. A list price is what is stated in the store or brochure, but could be subject to discounts depending on the number of items purchased or service required.

Dynamic Pricing

By contrast, dynamic pricing moves depends on market conditions, and is subject to the power and negotiating skill of the purchaser. The price depends on the inventory and time of purchase (as in Expedia or Hotels.com). Price in real-time markets is dynamically established by supply-and-demand conditions. Prices at auction also result from competitive bidding.

Inside of each revenue stream you might have different pricing tactics. A few I have used in my companies are illustrated below.

Bella’s Restaurant Chainwww.bellas-restaurant.com Meatball Mondays, half price bottles of wine Tuesdays, 15%-off date night on Wednesdays; all of these are tactics that attract customers when the restaurant is normally slow.

Credit Justice Serviceswww.creditjusticeservces.com Make a one-time payment and receive a 20% discount, make two payments and get a 10% discount. This approach allows me to receive cash upfront for a discount to the client. While increasing short-term cash flow, you decrease long-term income. We are also the only credit repair company in the country with attorneys who will take your case for free if you’ve been wronged; another valuable tactic.

Bisenti Technologywww.bisentitech.com So many start-ups are being ripped off by American programming companies who hang a shingle outside their door and claim to be technology experts. We just ran into such a client, and after further review we found a 21-year-old kid who took our clients’ money and became overwhelmed with the project and ran. Our standard at Bisenti Technology is pay for performance. We do not get paid unless we perform. This makes our job more challenging, but our clients love it. We are also 1/6th the cost of any other local or national programming company.

 

For more information about starting a company or new product development, please feel free to contact me at dmuir@muirandassociates.net.

 

Source:

Blanks, S. (n.d.). (2015, November 13). Business Model Canvas, Udacity. Retrieved from www.udacity.com

 

post

Information Missing from Entrepreneurs’ Pitches (6)

Information Missing from Entrepreneurs Pitches 6
-Customer Relationships-
 

This building block dictates the nature of the relationships that an organization will develop with its various customer segments. Remember in the customer segment box we learned (among other things) exactly who our archetype client was, where they lived, what they purchased, and how. Now that we have a good understanding of who our client is, it is time to GET-KEEP-GROW the customer base. For me, this is the fun part. Let’s look at each of these three sections individually. I will be using my new chain of restaurants, Bella’s (www.bellas-restaurant.com), as an example throughout this article.

GET. Getting clients into your pipeline can be broken up into two categories: Paid and Earned.

Paid Media. These are paid-for services such as advertising on TV, radio, in newspapers, buying Google ad words, etc. At Bella’s Restaurant we launched a Facebook page and boosted every posting we made. We started with videos and pictures highlighting the very first day of construction, and then posted daily video updates showing the progress of construction and design up until opening night. Clients told us they felt as if they were a part of the development of Bella’s. They were excited to experience the restaurant once it opened and they posted many comments on Facebook. Starting two weeks before opening, we also advertised on radio, TV, and in newspapers and magazines in order to flood the market. This was a very direct style of marketing, since we already knew whom to target from doing our customer segment interviews.

Earned Media. Earned Media is public relations. This is the best type of media money cannot buy. Bella’s started off by sending press releases to all the media outlets in town, because they love local stories and are always looking for new content. They requested interviews for their TV news programs and newspapers. This campaign started two months before opening. On opening night there were three TV stations, two newspapers, and two magazines that covered the event. All this publicity cost us nothing!

So, how does one acquire and (once they are in the pipeline) activate their potential clients? This is more information on the GET section of our model.

Acquire. Customer acquisition is the process of persuading a customer to select your organization’s product or service over the competition’s. A number of mediums and tactics are available to entrepreneurs today who are interested in acquiring customers. Here are a few:

Content Marketing. This is a very valuable tool for entrepreneurs with limited resources. It includes your branding (i.e. logo, website, company story, and fliers) and any other content about why you exist in the marketplace. At Bella’s we created our logo and trademarked it. Our story was about my parents-in-law coming from Rome, and how they taught our chefs the cooking and recipes they served to their own family and friends in Italy. We wanted to emphasize that our menu was authentic Italian food. We filmed these cooking lessons and added them to our content.

Search Engine Optimization. Now it’s time to take your content and share it with the world. The more people who are exposed to it and share it, the higher your content will rank in search results. This is one of the most effective ways of getting your product noticed by your target customer. I do not believe in hiring an SEO. I do it myself, as should you. We placed everything on Facebook, Instagram, newspapers, TV, etc. All this goes on the web and increases your visibility.

Email Marketing. On Facebook, we had contests for a free dinner on opening night (we still have such contests). Through these contests we obtain clients’ names and email addresses, and use them for marketing. We also get this information when people make reservations. This data is rich and is the best way to reach your client directly. We then use Constant Contact to send out weekly emails with promotional material and information about the specials of the weekend.

Social Media MarketingAlthough you cannot be dependent exclusively on social media to get the word of your product or service out to the market, when used in collaboration with other tactics, social media can elevate your product significantly in your target customer segment’s estimation.

Activate. All of the above systems are well and good, but mean nothing if you don’t turn them into paying clients.

Conversion Rate. The more your company gets clients into the pipeline, the stronger your chances are of activating them by making minor tweaks to your content and learning what works. Bella’s did a test sample of 500 customers who ate at our restaurant by giving them a “How did you find us?” card to fill out at the end of their meal, and offered a 5% discount if they did so. What we found out was amazing. A full 68% of diners came in through word-of-mouth, 18% came in from seeing us on Facebook, 10% found out about us by driving or walking by and seeing the restaurant was always full, and 4% checked the “other” box and wrote a comment.

Analytics. It is not enough to just mobilize word of your products through the media. If companies do not use data gleaned from one or more of these resources and analyze it to better understand their customers, they are not taking full advantage of the investment they have made.

Stand for Something. Bella’s gets at least 100 requests per year to donate gift cards, space, and food for events. (Don’t they know we work on a 3% margin?) Although we certainly can’t afford to say yes to every request, it is very important to be known as good stewards of the community. Every fiscal year, in April, we examine all the requests for donations and accept four large ones and four smaller ones, giving out $200 in gift cards. This is a personal choice I made when starting the company.

Give Them What They Want. Bella’s conducted six weeks of taste testing with my mother-in-law working side-by-side our chef in the kitchen, cooking for 15 people every night. The clients would fill out an anonymous data card at the end of dinner. It was amazing what we learned. Customers are automatically more inclined towards a product based on how much it reflects qualities that they feel exist in themselves. Companies need to know their customers inside and out, have a complete understanding of the language they speak, their wants, needs, and desires in order to be successful.

Make It Personal. By providing a personal service to your customers, you increase your chances of creating a repeat customer. This couldn’t have been more evident than when I opened my second Bella’s restaurant, and was not spending enough time in the first one. My clients said the customer service was lacking, and it wasn’t the same without me there making my personal visits to each table. This could be the kiss of death if not done correctly, but we hired a “mini me” and this turned things around quickly. Clients love the personal touch!

KEEP. Once you get your clients, how do you keep them? It is much less expensive to keep a client than to get them in the first place.

Loyalty Programs. These are a great way to keep clients coming back. We signed up with a company called Cardagin (http://www.cardagin.com/) that handled all of this for us. The data we received from this company was tremendous, (such as spending habits, amount spent, what was purchased, etc.). This information was key to us and the loyalty points for free food, drinks, and even iPads were welcomed by clients.

Contests and Events. This has been very helpful to us. We place events on Facebook and the winners get something worth their time to participate in the event. People are competitive in nature and really enjoy these contests.

Product Updates. Changing things up and adding new things is good, so long as you stay with your core business. We do this at Bella’s by keeping the menu consistent, but adding specials every week. We find the best-selling specials during the year and add them to the menu. The clients feel they are a part of creating the new menu.

GROW. This is key to success. It doesn’t take much to do this, but it eludes more entrepreneurs than you can imagine.

Up-Sell. This is my favorite. There is a waiter in my company from Florence, Italy who is the best at this. When I eat at my restaurant and he waits on me, I notice how he upsells me and the people I’m eating with. It is so subtle that no one is the wiser. It is as simple as a client asking for water, and the waiter saying, “Would you like flat Acqua Panni water, or San Pellegrino sparkling water?” (In other words, leaving free tap water out of the equation.)

Cross-Sell. This is a great way to bundle some of your products together. For example, at Bella’s, we have a Specials Night when you can buy a complete dinner, including appetizers, salads, entrée, wine, and dessert for a fixed price. In my company, Credit Justice Services (www.creditjusticeservices.com), we cross-sell our legal program after a client is finished with the credit repair. This keeps the client in the loop longer.

Referrals. As you already know, this is the best avenue for growth in a company. As mentioned, 68% of Bella’s clients come from referrals. We have a referral program whereby a repeat client who brings in six or more guests receives a gift card as a thank you.

For more information about starting a company or new product development, please feel free to contact me at dmuir@muirandassociates.net.

Source:

Blanks, S. (n.d.). (2015, November 13). Business Model Canvas, Udacity. Retrieved from www.udacity.com