One question that often gets posed by entrepreneurs is “where do I begin?” This makes perfect sense as there are literally hundreds of things to do when starting a business – market research, buy inventory, rent office / store space, contact potential customers, draft legal documents, raise capital, craft a marketing plan, and on and on and on. With so much to do, which activity should an entrepreneur focus on first to build their business?

I think this is a very subjective question and will vary depending on the type of business; however, I would love to hear general thoughts from the group on this topic.

Not to keep with my Warren Buffett theme, but rather in the spirit of the holiday season, I whipped up a little poem expressing my views on the capital markets, which is pertinent to any entrepreneur…enjoy and Merry Christmas!

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‘Twas the Night Before Christmas- An Investors Rendition

‘Twas the night before Christmas, when all through the land

Not a banker was lending, not even “Gold-Man”

Foreclosures were hung by the courthouse with care

In hopes that Hank Paulson soon would be there.

 

The Bankers were nestled all snug in their beds,

While visions of bonuses danced in their heads.

And Chad [Hufsey] in his office and me in my room,

Had just settled an argument about the depth of the gloom…

 

When out on Wall Street there arose such a clatter

I sprang from my bed to see what was the matter

Away to the computer I flew like a flash!

Started up the ticker, and threw up some cash…

 

The i-banks on the brink of another bad blow

Sell all your stocks and look out below!

When, what to my wondering eyes should appear?

Green on the screen as the Fed interfered

 

With the same old chairman, so ready to lend

I knew in moment it must Big Ben

More dovish than Greenspan, his governors they came

And he printed and lended and called them by name!

 

“Now Lockhardt! now, Lacker! now, Evans and Plosser!

On, Geithner! On, Fisher! On Yellen and Krosner!

To the Treasury! To the Mile High Mint!

Now print away! Print away! C’mon now print!”

 

As credit spreads that before defaults do fly

When they meet with an obstacle, they drop green from the sky

So up to the Capitol the governors they flew,

With a chopper full of money, and Rick Wagoner, too.

 

And then, in an e-mail I read from a friend

Capitalism was dead, and this was the end

As I sold my last stock and started to cry

On the TV came Buffett and he said “Time to buy.”

 

He was bullish on stocks, from Nike to CVX

And his portfolio was tarnished with options and CDS

A bundle of buyouts he had flung on his back

And he looked like a genius, just following his knack

 

His stocks how they fell! His returns how scary…

Yet his cash- how it swelled! And His letters so merry…

He was chubby and cheerful, a right jolly investor

And I smiled when I saw him, despite my dreadful semester

 

A twinkle in his eye and the use of his cash

Soon gave me the know that stocks wouldn’t crash

He spoke not a word, but went straight to his work

Shoring up balance sheets, and buying preferreds

 

And laying his finger aside of his nose

And giving a nod, UP & UP Berkshire rose!

 

He sprang to his NetJet, to his pilot gave a whistle,

And away they all flew like the down of a thistle.

But I heard him exclaim, as he drove into the sky,

“Happy Trading to all, and to all a good buy!”

 

 I do enjoy the holidays but it does bring up some interesting concerns. I have always given a Christmas bonus to my employees. However with the economy being a little rough I am tempted to cut those back this year. It would certainly help the bottom line but what about morale? I need to keep these people happy so I have them when things take off again. So I have decided to give the Holiday bonus to help keep everyone happy. Besides who wants to be called scrooge all year.

Everyone with an interest in business remembers learning about how prices are determined in a free market economy based upon supply and demand. In economics courses, professors give an equation or a graph that shows the supply and demand and we (students) have to determine where the two intersect. This has been a useful thing to learn, but has left a big question in my mind - how does a real business determine how much consumers , system, in which they try different prices to discover which result in the highest profits. I am especially curious to know how businesses determine prices for new products or services, without the benefit of existing financial models or data.

As a student with a lot of classroom experience but little exposure to the corporate world, I hope that those of you with real business experience can tell me what you know about how pricing is done.

I am glad the election is over. The economy always gets a little stagnant around the election with all the talk of change and cut this or that. This election was a bit worse with all the bad economic news the last couple of months.  A couple of things we have in our favor are the low interest rates and drilling for gas and oil has been a plus. I had a lady retire last week and I am not going to replace her until I have a better idea which way the economy is going. I am hoping for the best but preparing for the worst.

The Wikipedia definition of entrepreneurship: “Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities…Entrepreneurial activities are substantially different depending on the type of organization that is being started.”

I have been shocked over the past few months at what I believe to be a misinterpretation/misapplication of the word “entrepreneurship” or “entrepreneur”.   It seems that many people believe that the term “entrepreneur” or “being entrepreneurial” is reserved only for those who are currently bootstrapping together a new business from scratch.  I have encountered numerous of these people at TTEA events who will ask me, “Where are all of the entrepreneurs?”.  While I respect anyone who is currently forming or running their own business (especially those starting from modest beginnings, without “daddy’s help”), I have to respectfully disagree with their “elitist” definition of the term.

I believe entrepreneurship can be displayed in numerous venues and positions and is not reserved for only one specific action.  In fact, there are several actions/activities that I would consider very entrepreneurial such as:

• Starting a non-profit organization
• Working at a VC/PE fund or a law firm where you are constantly forming and nurturing early stage companies
• Working at a firm where innovation is expected and is “part of the job description”
• Taking part in a restructuring or a rebranding of a firm

These are just a few examples of other activities that I believe should qualify people to be classified as entrepreneurs.  In addition, I think those that aspire to one day run their own businesses, and are in the process of preparing to do that, are also entrepreneurial.

I believe our good friends at Wikipedia have put forth a pretty good definition of entrepreneurship (see top of post).  Specifically, they mention “revitalizing mature organizations” and they say that entrepreneurial activities are “substantially different depending on the type of organization.”  I would put forth the following tweaks to the Wikipedia definition in order to fully capture the ideals we believe in at TTEA:  

“Entrepreneurship is the practice of starting new organizations, revitalizing mature organizations or conducting business via innovative thinking in existing organizations.  This is particularly seen in new businesses, generally in response to identified opportunities, however is also true of existing organizations that are managed with innovation in mind.  The key tenant of entrepreneurship is innovation, regardless of the form or forum.”

TTEA was created to provide a (i) forum for the exchange of ideas, (ii) educational opportunities and (iii) opportunity for all members to give back to their respective communities.  We believe it is vital to have each of these “pillars” take place between established, in-progress and aspiring entrepreneurs.  Only through this exchange of varied backgrounds and perspectives can the maximum benefit be created for all ENTREPRENEURS.

My general feeling toward entrepreneurship is that there is never going to be the PERFECT time to start your own company.

When you are young, there is going to be a reason or reasons that urge you to wait a few more years to start a business. At some point, this reasoning will turn into, “Well if I was ever going to try it, the perfect time would have been a few years ago.”

No one knows what the perfect time IS, they only know what the perfect time WAS.

The point is that if you give it a shot when you are young and you fail, there is always more time to try again. However, once you realize that the perfect time was a few years ago, then you have missed your opportunity.

This doesn’t mean that it is best for every entrepreneur to start a business right out of school, just that you need to be aware that at some point you are going to have to take a chance.

Some people in the world choose to waive risks and live a secure life, which is a fine decision. However, I’m assuming that people on this site are entrepreneurs at heart and look forward to being their own boss one day and growing a business that they created.

The truth is, it is never going to seem like the perfect time to start a company and that is why it is important to stay focused on the pro’s of starting a business and not let the thought of failure and other deterrents shape your decisions.  You don’t have time to worry about the risks of failure.

As stated by Richard Branson in the November edition of Entrepreneurs Magazine, “There are moments when things have gone wrong in adventures where I’ve certainly been scared. But equally, I’ve realized that just like in business, I have to stay completely focused. I haven’t got the time or the energy to spend getting scared.”

When I think about one day starting my own business I generally put my options into three categories:

• The Big Idea:  Come up with the next big idea that will either completely revolutionize an industry, or maybe even create a brand new one.  Examples of this in my mind are companies/ideas like Microsoft and Under Armour. 
• Build a Better Mousetrap:  Improve on an existing idea or business model, even a very simple one (like a mousetrap), thereby giving my company a competitive advantage.  Examples include the Apple iPhone, a specific niche of investing and our friends at Game Wager.
• Execute and Outperform:  Take a classic business and just do it better than your competitors.  This can include anything from the restaurant business to air-conditioning service to private equity investing.

While there are shades of grey in between these categories, and there are numerous sub-categories one could create within each, I think this provides a framework for aspiring entrepreneurs thinking about how they will successfully start a business.  Each option presents its own challenges, opportunities, positives and negatives that must be weighed. 

		Positives		Negatives
Big Idea		·         Huge profit potential (e.g. Bill Gates) ·         Clear competitive advantage with little to no competition		·         Much more difficult (i.e. lower chance of success) ·         Waiting for a big idea could be a non-starter
Better Mousetrap		·         Likely defensible competitive advantage ·         Large profit potential (e.g. Apple’s run the last two years)		·         Not as much upside as Big Idea ·         Competition can adapt quickly
Outperform		·         More business opportunities (i.e. easier to do) ·         Good profit potential (millions of small business owners can attest)		·         More competition ·         Likely lower profits than Big Idea and Better Mousetrap

 

Everyone would like to come up with a ground-breaking idea and reap the huge rewards that it can lead to.  However, the majority of people will not generate such an idea and must rely on one of the other two options.  The fact is, that does not mean one can’t be an entrepreneur – in fact, it might mean you have a higher probability of success.

I would love to hear your opinions on these observations.

I was thinking about some points that I wanted to talk about related to starting your own business. With all the bad economic news and uncertainty in our economy I had a lot  of topics. I decided to point out some of the good points. Being your own boss means you can hit the golf course when ever you want. There is no one to answer to when making your schedule.Cell phones and the Internet means you can make critical decisions real time from your office or from an exciting vacation spot. The new business owner will find little time to do this in the beginning but it is a goal that is very attractive to most entrepreneurs.

 I have several employees that have not embraced any of the new technological advances. In fact some don’t even want to be involved in any new technology. It is a dilemma when you have a person that is very capable in their job but they do not want to learn new ways to do their job. I am implementing a paperless invoice system for some technicians. To say it was met with a luke warm reception would be an understatement. This is a green initiative and also eliminates double work writing the invoices once and then putting them in the computer later. I found a couple of technicians to start the program, once the others saw them learning a new skill it became easier to find volunteers. The technicians are smart enough to know the more skills they have the more money for them. Competition,more money, and peer pressure helps keep people motivated to learn.