Archive for June, 2012

Leveraging The Power of the Press

Posted: June 24, 2012 by Bill Cunningham in Customer Service, Leadership, Marketing

 “It is a special pleasure for me to introduce our two home run kings … Mike McGwire and Sammy Sooser.”

–Sen. Ted Kennedy

We all say things we would love to take back as the foot-in-mouth syndrome neither tastes great or is fulfilling. Unfortunately for public figures like the Senator from Massachusetts, the media waited like vultures in the desert for his next faux pas of the English language. So it goes for entrepreneurs as well!

Recently, one of our more successful entrepreneurs got caught up in the sensationalism of a Silicon Valley blogpost. If that blog set out to prove that Silicon Valley has a ton of great resources for entrepreneurs, then the blogger must be hard up for news. Everyone knows the valley has been very entrepreneurial since Hewlett met Packard. Silicon Valley loves to manufacture entrepreneurs, but so does Cincinnati and Pittsburgh and Cleveland and Louisville and Lexington and Detroit. (more…)

Lack Creativity? Short on good ideas? Become an Entrepreneur!

Posted: June 17, 2012 by Eileen Weisenbach Keller in Innovation, Marketing, People

What? You may be asking, is she suggesting?

Many people, who would not qualify themselves as creative, find themselves studying markets, exploring and investigating as they look for opportunities. In the process they consider firms both large and small and the suppliers who work with them. They study the customer base for companies, the large customers like retail partners and the individual customers – the consumers. Pursuit of this line of study often comes from experience and deep knowledge of a particular market.

The entrepreneur who immerses him/herself in understanding these chains of business relationships will discover an occasional chink or weakness in the chain. In this weak point there is opportunity; some describe it as pain that the entrepreneur can relieve. Ta-da, a business idea is born, not by the most creative person in the room, but by the one who was willing to learn and look for opportunity where others might not see any. The ability to provide a solution and seize this opportunity is an opportunity to create value, which is the essence of success in entrepreneurship.

Although this may seem self-evident, consider an example from a young, developing entrepreneur. In a recent competition this local student studying entrepreneurship pitched a software program designed to assist restaurants with management of server effectiveness, job satisfaction and retention. With experience as both a chef and a catering company owner/chef, this young man discovered that the turnover rate for restaurants deteriorates service, increases expenses and costs the industry millions of dollars annually. With this discovery, the student who has already dabbled in entrepreneurship using his ability as a chef, now pictures himself providing software as a service in the global restaurant industry. Rather than cooking the food and supplying it to patrons, he will be a supplier to the restaurants.

If one were to categorize this student as either a “creative/innovative” type, or an “entrepreneur”, he would no doubt fall into the latter group. But can it really be said that he isn’t creative? The ability to take knowledge gained from deep experience in a particular area, search for pain, inefficiency or trouble in the supply chain and determine a viable solution is certainly a good description of entrepreneurship – but a clear argument could also be made for using this as a description of creativity in problem solving.

Is this young man a creative genius? Probably not, by most standards, but the judges at IdeaStateU (the Kentucky State Business Plan Competition for Undergraduates), felt his idea was worthy of a second place out of seven competitors in his category. The prize? Seed money to encourage him to persist and develop the idea which he is now doing.

The bottom line? Creativity comes in many forms; sometimes more colorful, other times more practical. In entrepreneurship solving a problem in a way that others have not is a good, creative way to begin.

$64,000 Question!

Posted: June 10, 2012 by Chuck Matthews in Money, Startup

Here is the scenario: You have identified a “gap” in the marketplace, a real “pain” point and have devised an elegant solution with solid potential to take full advantage of this emerging unserved and/or underserved market opportunity.  You may have even begun to selectively share your “big idea” with a trusted team and early feedback is very positive.  Your plan is to start relatively small, but in the back of your head, you are thinking this new venture idea of yours could really take off or “scale” as the investors like to say.  Then it hits you: the $64,000 question – literally.  How are you going to finance this new venture?  How much money is it going to take to get this idea off the ground and on solid footing?

Number one source of funding: You!

Actually, results from a longitudinal research study on nascent entrepreneurial ventures (the Panel Study of Entrepreneurial Dynamics) in which I have been engaged with a number of colleagues suggests that the most common sources of start-up capital include: the founder’s own money (90%); credit cards (30.6); spouse (25.1%); friends and family (13.8); bank loans (12.1%); and friends and family of team members (9.4%).  The sample of over 800 nascent entrepreneurs reported that only 3.2% were seeking venture capital for their start-up.

The good news is that according to the Wells Fargo/Gallup Small Business Index survey just completed this past April, 2012, fewer small business owners expect difficulty obtaining credit in the years ahead and in general are carrying less debt than compared to one year ago.  Even given this uptick in financial optimism, lingering uneven economic conditions compel us to take a very hard look at the tasks, timetables, budgets and responsibilities needed to give your new venture a good start.  Let’s examine some of the key things you can do to enhance your personal and business financial planning, make reasonable financial (and sales) assumptions, and take charge of your new venture’s financial health.

Conduct a personal and business financial audit

When starting a new business, I strongly recommend you conduct a personal and a business financial audit.  On the personal front, ask yourself the following key questions:  What are your personal monthly living expenses? Where can you or are you willing to cut back?  How much outstanding debt do you have?  How much do you have in savings?  On the personal financial side of the house, a good rule of thumb is to calculate the amount needed to cover six to eighteen months of living expenses in order to better understand your personal financial needs as you plan and launch your venture.

On the new venture financial audit side of the house, ask yourself the following two key questions:  How much start-up capital do you need and what are your working capital requirements?  Start-up expenses might include but are not limited to such items as leasehold improvements, licenses and permit fees, professional fees such as legal and accounting, initial inventory costs, and other expenses specific with starting your business.  On the working capital front, you will want to include on-going monthly expenses associated with how and where are you doing business.  The rule of thumb here is to identify the cash needs which allow the business to meet daily operating expenses.  Over time, your working capital will be the measure of your operating liquidity, so eventually you will want to work toward establishing a working capital reserve fund, but always bear in mind, cash is king.  The day you are unable to pay your most pressing creditor is the day your business fails.  Also, you will want to match your short-term financial needs with short-term financing and long-term needs with long-term financing.

Planning assumptions are crucial

Another rule of thumb centers on the initial planning assumptions which are used to calculate your costs, sales, margins, and timing of cash flows.  Keep it simple to start, but remember it will need to be adjusted over time as your business grows:

1)    Calculate the start-up funds needed.  Determine how much over what period of time, what will it be used for, and what is the “ask” if seeking outside debt and/or equity.  Also, what are the needed salaries and wages for yourself and your employees (often too low or overlooked all together);

2)    Estimate your monthly fixed operating expenses;

3)    Prepare a projected sales forecast.  This is the heart and soul of the planning assumptions.  I recommend that you prepare a worst case scenario along with the expected case just to be prepared.  Also, what is the projected growth rate for your business and is it in line with industry averages; and

4)    Calculate and monitor the timing of cash flows.  As noted above, cash is king and cash early is always better than cash late.

Armed with this information, you are better prepared to answer the $64,000 question.  Till next time, all the best for continued entrepreneurial success!  For more information

7 Startup Habits

Posted: June 3, 2012 by Bill Cunningham in Leadership, People, Planning, Startup

Getting started in business is a lot more work than running the business. That’s why 50% of the potential entrepreneurs never act upon their great. You need to look inward to find the courage and strength to “Take that job and shove it.” Sometimes, however, a little external inspiration justifies your perspiration and reduces the FUD factors — FEAR, UNCERTAINTY and DOUBT.

Using Stephen Covey’s 7 Habits of Highly Effective People, let’s build a list of ideas to get that business launched!

Be Proactive!

  • Get started today – what have you got to lose – the only thing you will be waiting for is your competition getting ahead of you.
  • Don’t worry about your business plan (just yet), but tell the story of your new venture. Visualization helps you determine your goals.

Begin with the End in Mind!
Habit #2 requires imagination and creativity and a willing suspension of your judgment (your brain tends to resist change and gives you many reasons not to do this — don’t listen!)

  • Act like you have achieved your goals. Not in a gloating way, but carry the confidence you imagine when  you will have when you achieved your goals. Imagine yourself as a successful online apparel entrepreneur, then people sense your confidence and expertise!
  • Don’t skimp or cut corners if you wouldn’t do it later. Prevention beats remedies every time.

Put First Things First!
Number 3 means you have to make choices — and you must choose the most important ones, not the most urgent ones.

  • Decide what factors are the most critical to the success of your venture — then just do them and them alone!
  • Don’t respond to the urgent things, unless they are important. It takes willpower to decide and choose – so just do it.

Think Win/Win!
The fourth habit creates positive aura in your venture — showing the “abundance mentality” of creating value making everyone a winner.

  • Create the attitude in your culture where everyone wins in the organization if every one is winning! Don’t create zero-sum activities with your employees, your customers or your suppliers.
  • Customers who become winners with your help will never forget you!

Seek First to Understand, Then to Be Understood!
More simply said “Listen before you speak” Understanding your customer (or your employee, or your spouse) enables you to more effectively communicate — thus you will be better understood.

  • Create opportunities for listening in every part of the business – customer service, accounting, manufacturing, sales and marketing.
  • Let everyone know your company listens by responding. People who feel they have been heard increase their sense of worth and purpose. Wouldn’t you like to be the cause of that?

Synergize!
The sixth habit simply says “You can’t do it all by yourself.”

  • Look for complementary talent — don’t hire everyone like yourself (a common entrepreneurial disease.)
  • Look for ways to partner with other firms — you don’t have to do everything yourself. When you are just starting, it is better to have the best team doing the work part-time.

Sharpen the Saw!
The last habit keeps you from going stale. Buddy LaRosa says “Make your good better and your better best” You need to keep ahead of the pack (or the scenery never changes.)

  • Plan for reinventing, reorganizing and rejuvenating your business.
  • Do the same thing for yourself and your employees.

Abraham Lincoln once said “If I had six hours to chop down a tree, I would spend the first four hours sharpening the saw.

The list is long and the road is distant – but the journey is the reward! Enjoy the ride!

Bill Cunningham is the CEO of OneMorePallet.com and shop foreman at the Greater Cincinnati Venture Association.