Category Archives: Entrepreneurship

Consider 8 Ways to Start a Business

Through the non-profit EntreDot, I have the opportunity to work with entrepreneurs on a daily basis who are trying to commercialize a business idea. Yet, some people are concerned about their ability to generate original ideas. Last week I had the opportunity to attend a book club meeting in Charlotte, courtesy of BiG Council. The book being considered was entitled Idea Stormers, written by Bryan Mattimore. Bryan shares ideas for brainstorming that can help most anyone in any situation generate new ideas. While some of his methods are whimsical, others are more structured–something for everyone!

In a blog post for Entrepreneur.com earlier today, Jane Porter tackles the challenge of coming up with good ideas to start a business. She cites Stephen Key, the cofounder of inventright.com, and author of One Simple Idea for Startups and Entrepreneurs: Live Your Dreams and Create Your Own Profitable Company as an authority on the subject.

Porter considers the following 8 methods significant from Key’s work:

Ask yourself, “What’s next?”
Think about trends and technologies on the horizon and how you might move into those areas, says Sergio Monsalve, partner at Norwest Venture Partners, a Palo Alto, Calif.-based venture capital group. He suggests, for example, thinking about innovations related to the living room and home entertainment systems now that companies like Apple are developing new television technologies. “What can that mean in terms of new ways to live in your house and be entertained?” he says.

Do something about what bugs you.
When Colin Barceloux was in college, he thought textbooks cost far too much. In 2007, two years after graduating, he decided to take action and founded Bookrenter.com, a San Mateo, Calif.-based business that offers textbook rentals at about a 60 percent discount. What began as a one-man operation created out of frustration now has 1.5 million users and 200 employees. “You just have to look at what frustrates you,” he says. “There’s your business idea right there.”

Look for new niches.
Take a look at what some of the big players in an industry are missing and figure out if you can fill the gaps, Key says. In 2003, for instance, he started the company Hot Picks, now based in San Jose, Calif., after realizing the major brands in the guitar pick industry weren’t offering collectible novelty picks. Key designed a skull-shaped pick that filled an empty niche and was sold in 1,000 stores, including Wal-Mart and 7-Eleven. 

Apply your skills to an entirely new field.
Think about your skills and whether they might be useful in a new area, suggests Bill Fischer, professor of innovation management 
at IMD
, the top-rated Swiss business school, and co-author of The Idea Hunter: How to Find the Best Ideas and Make them Happen (Jossey-Bass, 2011). Consider, for example, JMC Soundboard, a Switzerland-based company that builds high-end loudspeakers. Jeanmichel Capt invented the speaker by applying his experience building guitars as a luthier, using the same resonance spruce to create a loudspeaker that produces a high-quality sound and looks like a sleek wood panel. 

Find a category lacking recent innovations.
For example, when he realized there were few new developments in the product information label business, he created Spinformation, a label consisting of two layers—a top layer that rotates with open panels through which you can see, and a bottom label that you can read by spinning the top layer over it. Companies needing to fit more information about a medication, for example, could use the extra label space for the details.

Make a cheaper version of an existing product.
Take Warby Parker, an eyeglasses company launched in 2010 by four business school friends. The New York-based business sells prescription glasses, which are typically priced at $300 or more, for $95. Since its launch, it has grown to 100 employees.

Talk to shoppers.
If you are interested in mountain bikes, hang out in the aisles of sports and bike shops and ask customers what they wish they could find in the marketplace. If you’re interested in developing an e-commerce business, consider sending an online survey to potential customers to learn about their needs and interests.

Play the mix and match game.
Walk up and down the aisles of a drug, hardware or toy store combining two products across the aisle from each other into one, Key says. That should spark quite a few ideas, but be prepared for most of them to be bad. “You will come up with all these horrible ideas, and every once in a while you will find some brilliant idea out there,” he says.
 

Do these concepts stir your creativity? Great! Go start a business – EntreDot would love to help!

 

Avoid Deskitis

Business owners are a very interesting breed. In the early days, when they are most entrepreneurial, most are willing to do “whatever it takes” in order to get the business off the ground and well established. The average executive at this point in the life cycle of a small business wears every hat and can predictably be found doing dirty jobs because there’s no one else there to do them. As the business experiences a little success, hirings are made and there are others to whom some tasks can be delegated. At this point, the owner may still take on tough assignments like outside sales, negotiating contracts with vendors and customers, and handling sticky customer service situations. If the business grows beyond the first 5-10 employees, some specialization of labor begins to occur and the owner should be smartly stepping away from  business disciplines that don’t match what I’ve heard referred to as “motivated ability.” 

However, it is very common that a business will hit a plateau at some point in it’s first several years. When this occurs–whether due to changes in the competitive environment, or simply apathy on the part of the original 5-10 employees, it is time to do something that hasn’t been done in a while. One must roll up his sleeves and get the job done. What job? Spending time outside the office, talking to customers, suppliers, even competitors in an effort to determine what is working and what is not. Why don’t most executives do this? It can be attributed to an acute case of deskitis.

desk chainIn case you are not familiar with the term, deskitis is an affliction in which the infected feels attached to his desk at work and that prolonged contact with the desk will resolve all problems known to man. You chuckle only because you’ve encountered people who suffer from the malady described and it seems to you to be as trivial as the common cold. Unfortunately, this is a very severe disease and must be treated with the utmost care and concern.

Who are the prime sufferers from this affliction?

  • Billable hour professionals who think that billable work is more important than community involvement, networking, and relationship maintenance.
  • Owners of a trade business (one that relies on a specific skill that is often learned through apprenticeship)
  • Any executive in a small business whose base compensation is over six figures per year

What can be done to counteract onset of the condition known as deskitis?

  1. Leave the office, damn it!
  2. Visit someone who is important to the success of your business–
    • a referral source
    • a client
    • a fellow board member of a non-profit
    • your attorney, CPA, banker (as long as they are not going to charge you for the appointment)
    • your spouse
    • an association executive in your industry
    • someone who is a good networker
    • the local chamber of commerce executive
    • your friendliest competitor
    • a supplier
  3. Ask the other person what they think about the direction of your niche market.
  4. Take notes!
  5. Ask many follow-up questions; you do not know it all!
  6. Buy their lunch, coffee, etc; thank them; ask what you can do for them in return.
  7. Go to your vehicle and review your notes.
  8. Identify what new questions come to mind, what nuggets you’ve found, and actions you think you should take.
  9. Review your lists the very next day with your leadership team.
  10. Reinvent your business continually!

Hope that these suggestions are helpful to you. As a business development mentor, organizational development consultant, and management succession resource, I observe deskitis more often than I should. Don’t become a statistic–become vigilant instead!

 

Succeeding As the Little Fish in the Big Pond

When you set out to start a business, you can’t possible anticipate all of the challenges that will be faced. Many, many days you will find that something totally unexpected can come into your world and dominate your thoughts, perhaps even threatening your livelihood. However, most every entrepreneur knows that they start out the underdog. It is your job number one to figure out how to compete with the market leaders, outfoxing them when you can to carve out enough market share to pay your employees and pursue your dream.

First to market can be a hard advantage to overcome. Note – not impossible – just hard. 

little fish quote The Office imageWriting for Inc.com recently, Mayra Jimenez described how she and her husband found a way to compete with “the big dogs” in their industry. Her designer swimwear business, The Orchid Boutique, has grown nicely into a multimillion-dollar business. Here are some of the insights she shared earlier this week:

Separate “professional” from “robotic”

Larger companies tend to present themselves in a rather corporate manner. Their frosty approach gives you a chance to charm the market with your personalized company story. Clients want to feel they are shopping with a company that cherry-picks their products or personalizes their services in some manner. Casualness and customization are not your enemy! Take advantage of the fact that your ideas don’t have to go through a string of departments to get approved, and make it as personal as you can.

React quickly to industry trends

The most important advantage that you have over your competitor is your ability to react quickly. The bureaucracy of large teams and approval processes are tedious and time-consuming. While your senior competitor moves like an elephant, you’re a vibrant cheetah running rapidly towards your next milestone. Stay abreast of innovative strategies and implement them. This is especially important in ecommerce, as blogging, videos, and social media have changed the rules of converting browsers to customers.

Push the boundaries of your industry playbook

Let yourself think outside the box. Way outside the box. Be bold. As long as the end goal is increasing profit or branding, go for those ideas that sound crazy. Monitor the results closely, and if it’s not working, change it, cheetah.

Consider Mayra’s recommendations in your own business. How can you improve the customer experience to be more friendly, less obtrusive, an easier to navigate? When technology or another factor causes your market segment to shift, how can you respond nimbly and be on the cutting edge of innovation (though not out in front, as that often carries unnecessary risks)? All too often, established companies suffer from the “TTWWADIH” syndrome – that’s the way we’ve always done it here. Since you don’t have as much history, use it to your advantage and brainstorm new approaches that make sense for you, your team, and your target customer- without the constraints of worry about whether it will seem outlandish! 

Long ago, I heard the saying, “when small, act big; when big, act small.” The adage is just as wise today as it was when I first heard it. Think about how you can copy the things you like about your competitor but outmaneuver them in a subtle myriad of ways.

Alternative Lending Helps Small Businesses

Small businesses rely on capital to fuel business growth. Some are able to generate working capital from operations. Others, however, are forced to consider taking on debt or new stockholders because they can’t. Since most entrepreneurs would prefer to avoid giving up voting rights and/or access to profits, debt is the preferred path among those whose businesses don’t self-fund. With the recession of the past few years, however, small business lending became  much harder to secure. Ami Kassar, who founded Multifunding, published a blogpost yesterday in the New York Times, discussing the current status of small business lending in the United States.

small business lendingKassar studied numerous reports from organizations like the Small Business Administration (SBA) and the Federal Deposit Insurance Corporation (FDIC). He noted that SBA loan data, even when combined with bank lending data, fails to tell the whole story since there are so many alternative lenders who don’t aggregate and report their business activities. Kassar related his own experience as a loan broker to fill in some of the knowledge gaps resulting from the (un)reported numbers. Below are excerpts from his comments:

If you’re trying to start a business today, you can almost forget about going to a bank for financing. This situation hasn’t changed much in the past year, and we don’t see it changing any time soon — with a few exceptions. If you are opening a franchise outlet that is on the approved S.B.A. list or if you have solid personal collateral outside of your new business, you’ve got a shot.

In 2012, frustrations about the difficulties involved in financing start-ups resulted in a lot of political capital being focused on one possible solution, crowdfunding. Unfortunately, crowdfunding hasn’t taken off yet, and I don’t think it will in 2013. It will take time to iron out the kinks and figure out how to make it work — how to strike the right balance between helping companies and protecting investors.

On a happier note, things have definitely gotten better for companies that are clearly creditworthy. In 2012, if you owned an existing business and you had collateral, cash flow and good credit scores, it was a good time to borrow money at low rates. And I think that will continue for some time. Banks are now hunting eagerly for these borrowers.

The problem is that there are not nearly enough of them. And that’s why a group of alternative lenders — including factors and merchant-cash advance lenders — are lined up and ready to supply money to most of the rest of us. The challenge is that these borrowers face high rates that make it tough to grow and expand as much as they would like.

The alternative financing industry is growing rapidly and, I believe, will continue to grow in 2013. These lenders are extremely entrepreneurial and are leaving the banks behind with their speed and use of technology. Many are backed by premier investment banks and Silicon Valley venture capital powerhouses — investors who understand that entrepreneurs and small-business owners are throwing up their hands in frustration over how long it can take to get a loan from a bank, especially if the loan is backed by the S.B.A. More and more businesses are willing to pay the price of the alternative lenders just to be able to get their capital and move on.

There are some indications that the price of alternative lending may be coming down a bit as the industry gets more competitive. I expect this to continue in 2013. That said, there is still a wide discrepancy in pricing between bank loans and alternative loans.

Educate yourself on alternative lending in your area. I attend meetings of the local chapter of the Commercial Finance Association and have met some folks who are staunch supporters of small businesses through their practices rather than the mere words that we often hear from politicians or some of the large banks who really have a poor track record with small business. It very well may be that your capital needs could best be served by this emerging category of providers!

 

Tremendous Entrepreneurial Success From Reading

 

Charlie “Tremendous” Jones, who is well-known in the insurance industry as a motivational speaker, believes in helping people improve themselves. His conviction for years has been that one must take responsibility for their own success. The quote below illustrates how he thinks one can best accomplish success in life:

You are the same today you’ll be in five years except for two things: the people you meet and the books you read. In every turning point and crisis of my life, there’s always been a book that helped me think and see more clearly and keep laughing and keep looking up and keep my mouth shut. I would never tell anybody I ever had a problem, so everybody always thought I was on top of the world, and yet I was just like everybody else with problems coming out of my ears. Now, when people come to my office, they come to talk to me. Instead of conversing with me like they think they are going to do, I get them reading. I pick out some great books and have each person read three or four sentences. I just received another email from a person recounting how his life was changed by learning the power of reading together–rather than talking.

As you may have read in a previous blog or Twitter post, I follow Under30CEO.com. Matt Wilson, one of the co-founders, posted on the Under 30 blog today some insights he gained from reading books this year. A few excerpts are provided below, with Wilson’s comments.

  1. Who’s Got Your Back by Keith Ferrazzi  – Relationships should be about quality over quantity.  The goal should not be to “know everyone”.  Build a small group of people that want to go out and conquer the world together.
  2. Boomerang by Michael Lewis – Base your economy, your company, and your income on creating real value for others.
  3. Small Loans Big Dreams by Alex Counts – Entrepreneurship knows no borders or social classes.  Coupled with education and accountability, access to capital can create sustainable micro-businesses.
  4. 48 Laws of Power by Robert Greene – “Disdain things you cannot have: Ignoring them is the best revenge.”
  5. Startup Nation by Dan Senor and Saul Singer –  “Immigrants are not averse to start from scratch. They are by definition risk-takers. A nation of immigrants is a nation of entrepreneurs.”
  6. The Education of Millionaires by Michael Ellsberg – “The biggest thing you won’t learn in college is how to succeed professionally.”
  7. Start Something That Matters by Blake Mycoskie –  It is truly possible to build a business both rich in profit and in social good.
  8. The Greatest Salesman In the World by Og Mandino –  “You were not created for a life of idleness.”
  9. Iceland, India, Interstate by Colin Wright – Go out there and LIVE.  Life is short, take advantage of it, and when you get a crazy idea–go for it.
  10. The Art of Non-Conformity by Chris Guillebeau – “If something is worth doing, you might as well do it all the way–so I’ve added ‘radical goalsetting’ to my own unconventional life planning.”
  11. Delivering Happiness by Tony Hsieh – There will never be another 2013.  When Tony sold his first venture to Microsoft, he said there would never be another 1999, and went to work on his next act, passing up millions of guaranteed dollars if he had simply stayed with the company and let his shares vest… All to chase his passion.
  12. The 4 Hour Chef by Tim Ferriss – Whatever you want to do in life, think about how to hack the system, so you can compete with only the best.

Matt’s list was 17 items long. Since there are 12 months in the year, I condensed it to 12 books and corresponding lessons to be learned and applied. Hope you find a nugget to help now and a book to read later. May you be better in five years for having applied yourself to reading!