The Entrepreneurial Mind
Entrepreneur Casey O'Donnell, creator of Odo Bat Company, makes custom baseball bats for players in the basement of his parents' home. When you work for your own company, take the time to set your initial minimum salary based on the valleys, rather than the peaks of your profits. (Josh Stilts/Berkshire Eagle/AP/File)
Three questions to ask when setting your own salary
How much should I get paid? This is a question that every owner of a successful business faces at some point in time.
Setting compensation for the owners of a business needs to start with separating your job in the company from your role as an owner of that business.
As an employee of the business you own, your compensation should be based on three issues.
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First, what can your company actually afford to pay you?
Too often I see business owners rush to set an unrealistically high salary as soon as their businesses begin to have some success. The early growth of a business is more akin to a ride on a roller coaster than a rocket. ( Continue… )
Facebook CEO Mark Zuckerberg and Russian entrepreneur and venture capitalist Yuri Milner laugh at the Life Sciences Breakthrough Prize announcement in San Francisco, Calif., earlier this year. It's important for first-time entrepreneurs to take their time when they're about to launch a business, Dr. Cornwall says. (Robert Galbraith/Reuters/File)
Launching a business 101
There are many new and confusing issues that first-time entrepreneurs face when they get ready to launch a business. The need to create a corporation is at the top of that list.
I recently had a conversation about incorporating start-ups with Chris Sloan, an attorney with Baker Donelson, who is Co-Chair of the firm’s Emerging Companies Team:
JC: Does every business really need to incorporate?
CS: No, it’s a function of the size of the business and the risk involved. One of the primary benefits of incorporating is the liability shield that protects your personal assets. In some cases, the business may be so small that it will not make sense. In most cases, though, it’s a good idea.
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JC: Some bootstrapping entrepreneurs postpone incorporating to save their limited start-up capital. Are there some businesses that can postpone this expense and incorporate sometime after they begin actual operations?
CS: The time to incorporate, in most cases, is the first time you are required to do something officially in the name of the business. It could be a contract, a permit, leasing space, hiring employees, etc. ( Continue… )
People enjoy kitesurfing in the ocean near Engure, Latvia. Entrepreneurship was and still is becoming a growing part of the culture in Latvia, Cornwall writes. (Ints Kalnins/Reuters/File)
Necessity is the mother of ... entrepreneurship?
I have been spending most of this month traveling with Belmont students throughout Eastern Europe learning about entrepreneurship.
While in Latvia, we saw huge numbers of “accidental” entrepreneurs. These are people who had never intended to be entrepreneurs, but who became self-employed out of life circumstances and necessity.
These accidental entrepreneurs were people who had been previously employed as professionals and workers in government-supported jobs. Latvia had been a communist economy when it was under Soviet domination for several decades after World War II.
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But when the Soviet Union collapsed around 1990, many Latvians were forced to find new ways to make a living as the economy shifted from a centrally controlled economy to a market-based economy. The jobs that had been “guaranteed” by their government were gone. ( Continue… )
Arianna Huffington appears as a panelist for Tavis Smiley's 'America's Next Chapter' in 2011. Creative destructors like the Huffington Post have played a significant role in the decline of the print-based media industry, Cornwall writes. (Earl Gibson III/AP/File)
'Creative opportunism': How entrepreneurs build the economy
Economists tell us that the primary role of entrepreneurs in the economy is to engage in a process they call “creative destruction.” Through their innovations, entrepreneurs help create new industries that transform or even replace old and declining industries.
For example, online media sites such as the Huffington Post have played a significant role in the decline of the print-based media industry and in the demise of many traditional daily newspapers. Creative destruction is a not a common occurrence, but when it happens, its impact is profound
The venture capital world views entrepreneurs as agents of “creative disruption.” Venture capitalists like to invest in businesses that challenge the status quo with new solutions to existing market needs. Introducing new products to existing markets is more common than entrepreneurs creatively destroying entire industries, but it is still not an everyday occurrence.
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The fact is that most entrepreneurs do not destroy or even disrupt. The vast majority of entrepreneurs engage in “creative opportunism.” Change creates numerous opportunities for entrepreneurs to fill small gaps or find little niches in the market. ( Continue… )
A man stands in front of a bike store in Fredericksburg, Va. Both the business model and the business plan are important tools for the entrepreneur's arsenal, Cornwall writes. (Suzanne Carr Rossi/The Free Lance-Star/AP/File)
Entering the market? Business model trumps business plan.
There has been a growing debate about business plan versus business model. The lines are being drawn. However, I would chime in to say that both sides of this debate are right, and sides are both wrong. To mix metaphors, let’s not throw the baby out with the bath water, even though that may be one ugly baby!
We have moved to much more of a focus on business modeling here at Belmont University. Why? Because my own experience as an entrepreneur and as an entrepreneurship educator is that the business plan is just a tool.
In that past, we did not teach much about business models because they were considered to be something that each of us developed a skill for in our own way. So we taught what is easiest to teach — something concrete and easy to evaluate. A business plan has a format and a process that lends itself to educational settings, especially considering that many who teach entrepreneurship have never launched a business and have not really learned to develop business models.
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But then a few years ago, some valid and elegantly simple tools came along to help conceptualize and teach business models. The most popular of these is Osterwalder’s Business Model Canvas. But there are many others coming out and many are trying to improve upon Osterwalder’s work. Since we have started using more of these tools, our students here at Belmont now can much more easily conceptualize a business model. They can see all of the moving parts and identify things that just don’t make sense before the codify it into a business plan. ( Continue… )
Student Hector Guevara, 16, (L) is interviewed by Lucia Donat during work readiness training at the Los Angeles Area Chamber of Commerce in Los Angeles, Calif. (Patrick T. Fallon/Reuters/File)
What's your 'elevator pitch'?
Entrepreneurs need to be ready to pitch any time, anywhere.
Jake Jorgovan, an alumnus from Belmont’s Entrepreneurship program, is always ready to give his pitch.
“At the most random situations, I will find myself giving a pitch,” says Jorgovan. “Out at drinks with friends, or just out socializing and suddenly I run into someone who is a contact directly in the space that I am working in. It can catch you off guard sometimes, but you should have your elevator pitch prepared and not be afraid to deliver it anytime of day.”
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Jorgovan has become an expert at pitching through a lot of practice. While in school at Belmont, he participated in every business plan pitch competition he could. He had lots of success, winning Belmont’s campus business plan competition and the business plan event at Collegiate DECA during his college years. He also was honored as the recipient of the 2011 Nashville Youth Entrepreneur of the Year Award and the third place winner of the 2011 Global Student Entrepreneur Award. ( Continue… )
Entrepreneur Rafi Akbar, left, teaches a training workshop helping small business entrepreneurs to build self-managed websites in Greenwich, London. Mentoring is not a one-way street, Cornwall writes, it is a relationship that needs to be mutually beneficial. (Matt Dunham/AP/File)
Want to be a successful entrepreneur? Look for mentors.
One of the greatest joys of my job is advising and mentoring the student and alumni entrepreneurs who come out of our program at Belmont.
Students take full advantage of my office hours for mentoring. Some come in with the seed of an idea, while others are actively growing their ventures even before they graduate.
Entrepreneurship alumni get a “life time warranty,” which means we never take ownership of alumni businesses and never take them as consulting clients. Instead, we meet at local coffee shops where we continue to mentor them as we had when they were students.
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A limitation of what I can offer to those I mentor is that I do not have experience in most of the types of businesses they start. In fact, since I have been out of the full-time entrepreneurship world for sixteen years, I really don’t have current experience in any industry! ( Continue… )
Staff at a family-owned jellies and jam company in Amesbury, Mass., organize boxes of orders to be shipped or picked up. Despite what Washington says, more debt is the last thing most small businesses need right now, Cornwall writes. (Melanie Stetson Freeman/Staff/File)
More debt is not the answer to small business troubles
Once again we hear from Washington the same solution they seem to have for any and every economic issue — more debt.
This time the problem that they debt solution is being applied to is small business exports. In a report just released by the Office of Advocacy of the SBA we are told that if only we could make more debt available to small businesses they would be able to export more products outside the US. The study says that smaller small businesses are in particular need for more governmental help with credit.
Most surveys of small business owners tell us that the weak economy and sluggish sales are their biggest problems, and not the availability of debt. Very few small business owners say that they are having problems getting the credit they need in recent surveys by the NFIB.
Tight credit is not their problem.
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A recession (or however you want to characterize the current economy) that has lasted five years with continued double digit real unemployment and ongoing economic uncertainty has created tight wallets among consumers. ( Continue… )
A collection of new and used vinyl records on display at a record store in New York. Entrepreneurs aim to grow their businesses to the point where they can finally get paid and begin to make a living from their new venture, Cornwall writes. (Ann Hermes/Staff)
Paying the bills with a small business
The number one goal for new entrepreneurs is to grow their businesses to the point where they can finally get paid and begin to make a living from their new venture. Tyler Barstow and Belmont alumnus Matt Fiedler, co-founders of Vinyl Me, Please, are trying to adapt their business model to reach that important goal.
Vinyl Me, Please is seeking to tap into the renewed interest in vinyl records. According to Nielsen SoundScan, the demand for vinyl records has grown for the past five years. There were 4.6 million newly pressed vinyl records sold in 2012, which is a 17.7 percent increase from the previous year.
Music enthusiasts love vinyl records for the warmth and depth of their sound.
The niche that Vinyl Me, Please fills is to bring new and interesting music to a new generation of vinyl record enthusiasts. Each month the subscribers to Vinyl Me, Please are sent a brand new, hand-wrapped vinyl album from a relatively undiscovered artist. ( Continue… )
An employee works on his computer at the office of CloudFactory, a Canadian startup based in Kathmandu, Nepal. The best way to cultivate business growth is to practice moderation, Cornwall writes. (Navesh Chitrakar/Reuters/File)
The key to growing a business? Moderation.
As my partners and I were pursuing an aggressive growth strategy in our business my late father frequently reminded me, “The leading cause of business failure is success!”
We also got similar warnings from our banker, who said he always worried the most about his clients who were growing the fastest.
While we did not heed the warnings of these two mentors and grew much faster than we should have, we did survive. And along the way I learned a very important lesson about the challenge of managing growth.
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The road to growth can be both narrow and treacherous. There is not a lot of room for error, and when you make a mistake it can lead to serious or even fatal consequences for the business. ( Continue… )
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