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The Entrepreneurial Mind

Brigham Young forward Brandon Davies (L) passes the ball as he is pressured by Iona guard Lamont Jones (2) during the second half of their NCAA men's college basketball tournament game in Dayton, Ohio, March 13, 2012. In business as in sports, surrounding yourself with a team you can trust to take on certain tasks is essential, while trying to do it all yourself will lead to failure. (Matt Sullivan/Reuters)

When starting a business, delegate, delegate, delegate

By Guest blogger / 03.14.12

But delegating often turns out to be easier said than done. There are three common mistakes that entrepreneurs can make when delegating.
The first mistake is being hesitant to delegate.

When first beginning to delegate to employees, some entrepreneurs feel that no one can do what they do as well as they can do it.
Employees don't seem to care quite as much as the entrepreneur does. After all, this is your business, and your reputation is tied to its success. To employees it is simply a job.

To overcome this hesitancy to delegate, entrepreneurs should remind themselves that sometimes "good enough is good enough."
While employees may not carry out the tasks delegated to the level of perfection you would, they can learn to perform these tasks well enough for the business to run smoothly and for customers to stay satisfied.

The second mistake is rushed delegation.

Rather than being hesitant to delegate, entrepreneurs who make this mistake seem as if they can't wait to get tasks off their plates. We see this quite often with serial entrepreneurs who are so eager to get to their next new business idea that they don't take the time to get their current one running properly before moving on.
These entrepreneurs delegate without providing proper training and without giving clear expectations for performance.

In the rush to delegate, tasks and responsibilities can also end up being assigned to the wrong person or even to multiple people simultaneously. This can lead to chaos and frustration.

To overcome rushed delegation, develop a clear and detailed plan that includes what needs to be delegated, whom should be assigned the task and what needs to be done to prepare employees for their new responsibilities.

This plan should be reviewed by everyone to makes sure nothing is left out.

The third mistake is undermining the delegation process.

Even after the delegation of tasks and responsibilities, employees will still tend to want to go directly to the entrepreneur to get an answer to a question or to make a decision instead of the person now assigned to that area. If the entrepreneur answers that question or makes that decision, it will completely undermine the authority of the person it has been delegated to.

I developed my "seven-second delay" to avoid this mistake. When I was asked for an answer or a decision I would always pause for a few moments to ask myself, "Is this still my responsibility or have I delegated this to someone else."

If I had delegated it, I'd answer by sending them to the employee to whom I had given that responsibility.

Delegation is a lot like raising teenagers. At some point you have to begin to let go so they can learn -- and grow up. With your business, if you don't learn to let go and delegate, it will never successfully "grow up" to the next stage of development.

In this file photo, a player puts a dollar coin in one of Resorts Atlantic City's dollar-coin slot machines in Atlantic City, N.J. Many business owners long to catch a lucky break. The trick is being prepared to capitalize on it, Dr. Cornwall argues. (Curt Hudson/AP/File)

When lightning strikes, proceed with caution

By Dr. Jeffrey R. CornwallGuest blogger / 03.01.12

Most entrepreneurs dream of that one big break.  For some businesses it is getting the one big customer.  For others it may be betting that magical "shout out" from a national thought leader or big time media outlet.

Should you always walk through the door of opportunity that the big break opens for you?  Sometimes yes, but sometimes no.
 
If the big break is what pushes your business forward to success.  Business on Main has a video about a chocolate maker who got national attention for one particular recipe for beer infused chocolates.  Orders went through the roof.  And fortunately she was able to put in the twenty hour days it took to make her big break lead to success in her business.

But some big breaks end up  becoming more nightmare than a dream come true.  It can lead to demand that far exceeds your ability to deliver in terms of quantity and quality.  Or it can fundamentally change your business in ways you never planned for.

One local coffee shop here it Nashville has had the opportunity to scale up in a big way through franchising.  But the owner knew that it would compromise the quirkiness that has been the key to the success of his coffee shops.  So he has said no to such proposals.

I have seen too many businesses actually ruined by what appeared to be the big break of their dreams.

Think hard to be certain that the break will allow you to scale the model and pursue the vision that you already had in mind.  Some breaks require a fundamental change, not just a pivot, of the business model.  If you pursue this type of opportunity make sure you do so with a clear understanding of what it means and how it will change your business.

A money changer shows some one-hundred U.S. dollar bills at an exchange booth in Tokyo in this file photo. Dr. Cornwall argues that a dynamic business model is key to profitability (Issei Kato/Reuters/File)

The best business model is a fluid one

By Dr. Jeffrey R. CornwallGuest blogger / 02.28.12

Developing a sound business model is key to the successful launch of a business.
But you should never assume the business modeling is finished once the business begins to grow. Keeping a business model current is critical for long-term success.

A business model helps to ensure that all of the "moving parts" of the company are working together.
What is the value that is offered to the customers and what is it worth to them? Who is my target market? What do they expect out of me as my customer?

How do I get information to them, and how do they want to get the product? What are the key activities to make this all come together, and what will it cost? What are the resources I need to make this happen (money included)?

Developing a sound business model in a startup venture helps improve the chances that the business will survive the launch, begin to gain acceptance in the market and grow.

While a business plan may be important to secure financing, a business model is what will guide the entrepreneur through the inevitable trial and error of finding the best fit in the market.

Changes that result from forces such as technology advancement, demographic trends and new customer preferences can all require adjustments.

For example, a recent study by the Pew Research Center found that more than one third of all American adults now own a smartphone, which is changing customer preferences in how they want to communicate and engage in transactions with businesses.

These changes can have a profound impact and at the same time open many new opportunities.

Businesses expanding into new products or new markets should also give careful consideration to the business model.
I personally learned this lesson the hard way.

When we expanded our health-care business from Raleigh into Charlotte, N.C., we assumed that the business model we had developed in our first market would work equally well in the new market. However, we quickly found out that assumption was wrong.

There were significant differences in customer preferences and expectations in the new market. Unfortunately, we had made major commitments to space and staffing based on a flawed business model. As a result, our operation in Charlotte never reached profitability.

Even a more established business should revisit its business model, as every market experiences changes over time.

For most of its history, Best Buy had been a business that catered primarily to men, as they were the main purchasers of consumer electronics. However, a report in Harvard Business Review chronicles how over time more and more women became customers.

Best Buy found that these women were highly dissatisfied in their customer experience, as their approach to buying electronics was quite different from men's.
To remain competitive, Best Buy made significant modifications to its business model.

Don't assume just because you had your business model right when you opened your doors that it will always work smoothly. All businesses experience changes over time. Assessing and revising a business model is the best way to ensure that your entire business keeps pace.

Facebook CEO Mark Zuckerberg talks about the social network site's privacy settings in Palo Alto, Calif in this file photo. For every entrepreneur, Cornwall urges taking time to consider how to transition from working in the business to focusing on the big picture. (Marcio Jose Sanchez/AP/File)

Want your business to grow? Learn how to step away

By Dr. Jeffrey CornwallGuest blogger / 02.13.12

Entrepreneurs face a difficult challenge in how they should be spending their time as a business grows.

The dilemma is commonly referred to as needing to "work on the business rather than work in it." 

Typically, entrepreneurs are heavily involved in working directly with their customers during the startup phase. They do much of the work necessary to generate revenues. Tasks such as sending out invoices, bookkeeping and developing marketing materials are squeezed into their days as they can find time.

And if there's no time during the day, these things may get put off until the end of the day or the weekend.

But with growth comes the need to add more employees, and with a growing staff comes the need to develop procedures and systems to make sure that all the necessary work of the business gets accomplished.

This is when entrepreneurs' own job description needs to begin to change, as it is up to them to "work on the business" and make sure it evolves and develops.

However, for many entrepreneurs this transition in roles is much easier said than done. 

Often it's the "in the business" work that led someone to start the business in the first place. The owner may have started a cabinet company because he loves working with wood. Or someone may have started a Web development company because of her design skills and knack on the computer. 

It can be hard to let go of work you really enjoy doing.

Another issue that can get in the way of this transition for the entrepreneur is being uneasy with delegating important tasks to others. Developing good training programs, clear procedures and effective systems can help make that process a successful one.

I hear from many entrepreneurs that the process of moving from a hands-on role to more of a management role can create anxiety. They tell me that they feel they're not busy enough. Or they say that they feel as if they're not really contributing.

From my own experience, I can say that these feelings will ease over time as the business grows and the entrepreneur becomes more comfortable in his new role.

Some entrepreneurs are not sure what success looks like when working "on the business." They are more accustomed to checking things off the to-do list by working with customers and doing more routine work.

But creating effective systems and building a strong culture will become a bigger part of the entrepreneur's job. Any outcomes from these tasks will evolve slowly. Therefore, it will take a long time to see the results of these efforts.

It's best to view the transition of the entrepreneur's role in the company as a one- to two-year project. As you begin to delegate parts of what you do, replace them with things that will improve the business and help it grow.

Moving from working in the business to working on the business is best accomplished if it's viewed as a gradual process rather than an abrupt event.

Wake Forest MBA student and case writer Robbie Shappley distributes the IBM case to students competing for a $50,000 cash prize at the Wake Forest Marketing Summit. Cornwall finds that many aspiring entrepreneurs start with a backwards business model. (PRNewFoto/Wake Forest University Schools of Business/File)

Avoid the backward start-up

By Dr. Jeffrey R. CornwallGuest blogger / 01.30.12

"I've developed this really cool product and I have applied for a patent."

"I want to show you this awesome app that I helped design."

"We've got a great idea for a website." 

Those of us who work with entrepreneurs hear these types of introductions all the time when people come to meet with us.  Whether it is a result of years of development and research, or a sudden inspiration that leads to a "eureka moment," these aspiring entrepreneurs have come up with what they hope to be the next big thing.

The problem is that many of these entrepreneurs have gotten the design of their business models backwards.  

Rather than look to the market to tell them where opportunities are, they have come up with an idea and are trying to run full speed into the market with it.  
Starting a business by trying to find a market for an already developed product usually leads to a long and often futile launch of the new venture.  It results in a very expensive start-up process, as revenues tend to be very slow to materialize.  Expenses just keep piling up as the entrepreneur tries to find a target market with customers who need the product. 

The approach to starting a business that has the best chance of success is to look to the markets for ideas.  

Start by looking at markets you already are familiar with from your knowledge, skills, and experiences.  The best business opportunities come from solving everyday problems that you have observed from your previous work experiences, your hobbies, or things you see in your everyday life.   
Look for groups of customers who share a common dissatisfaction with how they are being treated or who cannot find what they really want.  It may be something as simple as a market that has not been given good customer service.

Look for markets that are ready to try a new product to replace the old ones they now using.  That is what has led to the success of the Nashville-based app company Aloompa.  Much of their growth has come in the music festival market, where their apps replace outdated printed programs.
Look for markets where something that has worked in other similar markets has not been tried in your market.  That is what inspired Bob Bernstein to open Bongo Java, a neighborhood coffee shop in Nashville, that was like the ones he loved in his home town of Chicago.  

Look for markets with "pain" and then develop a product or service that takes care of that "pain."  

My favorite meeting with an aspiring entrepreneur is when they come to my office and say, "I have found a market that needs...."  
I know they are starting down the right path to develop a business model that has a good chance of success.

A money changer shows some one-hundred U.S. dollar bills at an exchange booth in Tokyo in this file photo. Dr. Cornwall argues that raising too much money from investors can be a problem. (Issei Kato/Reuters/File)

In business, more money is not always a good thing

By Dr. Jeffrey R. CornwallGuest blogger / 01.03.12

One of the biggest mistakes I made during my days as an entrepreneur was raising too much money.
Because our business was successful, we had investors eager to offer us money. But by taking money when we really did not need it, we found that it created more problems than benefits.

When taking money from outside investors, you give up part of the control over your business.

"One of the reasons most people start a company is so they don't have a boss," says Jake Jorgovan, co-founder of Rabbit Hole Creative, a high-tech graphics and marketing firm. "If you take out funding, then you have an investor looking over your shoulder at every decision you make."
Taking outside money can also lead to building overhead and creating an infrastructure that can lock you into a specific business model as you attempt to make good on the things you have committed to in your business plan.

Michael Brody-Waite, CEO of InQuickER LLC, prefers to keep his company lean and adaptable even though it has grown to annual revenue of seven figures.
"We chose to stay agile and not lock ourselves into a rigid trajectory unnecessarily," Brody-Waite says. "The cost of taking money in terms of distraction and complexity is well-documented. Our company is built on maintaining less mass, agility and out-simplifying our competition."
Too much funding can also propel a company into a level of growth for which it is not prepared.

"Bootstrapping your growth allows you to grow at a pace that is comfortable for you," Jorgovan says. "Investors will want to see rapid returns on investment regardless of what that means for you. When you bootstrap a company, you can build it into the company that you want to work in. You can build it into a business that you enjoy going to work at every day."

Like many entrepreneurs, both Jorgovan and Brody-Waite have felt the pressure to consider taking funding from investors. It seems to be part of the entrepreneurial culture, especially in businesses that have the potential for significant growth. There seems to be an expectation that seeking investment capital is a standard part of starting such a venture.

Although both businesses have seen successful growth through bootstrapping rather than fundraising, there may come a time when bringing investment money into each company makes sense.

"I expect us to take money eventually," Brody-Waite says. "However, the cost in time, agility, complexity and mass would have to be significantly lower than the tangible benefit to our company."

When it comes to seeking investor money for an entrepreneurial business, the goal should never be to raise as much as you can.
Instead, your goal should be to raise money only if you truly need it. And even then only take as much funding as is absolutely necessary to reach the goals of the business.

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