The entire internet could be printed off on 136,000,000,000 sheets of paper (yes 136B).
Is It Time to Kill “Start-Up” Culture?
Over the last decade, start-up initiatives rule the landscape. From high tech incubators to national initiatives and small business boot camps, the chorus reigns loud and clear: we need to encourage more startups. Small business, the saviour of economic woe, freer of the labour oppressed and solution to every problem of our modern time is the new demi-god and those of us so lucky to serve at its altar, must bear witness to the life-changing effects it has on our lives.
Start-up culture is a global movement,focused on encouraging small business development. Its homogeneity is ubiquitous, and its reach all encompassing. It has infiltrated national policy & creates soundbytes for politicians interested in furthering their careers. It exists in nearly every sector, from the not for profit, to banking, but its alter exists in the world of high tech.
Leaner, faster, stronger. This is the new mantra of business, and its gods are the high tech millionaires and billionaires, generally under 30, mainly male and very intelligent. Priests serving this deity abound. Cloaked under the auspices of “consultants”, these priests and priestesses of modern technology advise, write, speak and work to develop a culture that is focused on birthing small businesses and getting more people on a path to salvation.
I used to be one of its priests. I worked with clients to start-new businesses, get funding and grow as quickly as possible. And I was good at it. I secured millions for clients. I watched young entrepreneurs change their lives over night, build empires and become leaders. It was addictive in many ways, the energy of start-up, the passion, the drive and excitement. I saw the absolute joy that people experienced when they got their funding, when they could see their dreams begin to develop shape and fruition. There was satisfaction that I was helping good people start companies and get funding.
There is however, a fallacy in all of this. We have a culture so focused on start-up and we do little or nothing to help people once they have a business. Anyone who has ever run a business can tell you, the hardest thing is not starting a business, the hardest day you will ever have, is when you finally open the doors. This is when the real work begins.
Start-up culture is driven and focused on youth. The language it uses, the time frames it operates in, and the adjectives: leaner, faster, stronger, are adjectives of the young, or those that want to be young. The focus is on building a multi-million dollar business as quickly as possible. We focus on maximizing market penetration, and increasing shareholder returns. Our definitions of value are not long-term temporal, they are immediate.
The trouble with all of this is we only focus on the successes. We only see the tech millionaire and not the million others that never gain notoriety, fame or fortune. We have not created a start-up culture or system that is sustaining and business strengthening. We have not encouraged the growth of business but rather the proliferation of start-ups. The facts are staggering. Over 90% of tech start-ups fail; 75% fail to pay back investors and many successful tech entrepreneurs have failed once (or many times) before being successful. High failure rates with small business is nothing new. Consider that over 75% of restaurants fail within 5 years, nearly 90% within 8 years. Why do they Fail? They do not pay attention to their customers, the quality of their product decreases, and they run into financial/cashflow trouble. This is the same for all small businesses.
It is time to stop the start-up culture, and move towards a culture of long-term sustainability, growth and shareholder value that is NOT quarter to quarter, but year to year, and decade over decade. This is real entrepreneurship and community building.
Next week, we will look at how start-ups can be successful.
I want to confess: I have a secret. One of the things I do in my spare time is peruse Craigs List for enjoyment. You can see humanity at its most vulnerable. It really is a entertaining to read. Craigslist is also a great place to start your entrepreneurial journey. You can pick up odd tasks, jobs, but just watch out for scams!
Once in a while (like once a week) you get some really interesting “opportunities”. Today was that day this week, and I just thought this one was too good not to share.It provides a perfect opportunity for someone seeking to earn some extra cash, albeit in kind of a weird way…..
This post was found in Victoria’s Craiglist:
65 $ CDN cash immediately after the job
I need to be baptized in a body of water
I will provide your pool pass if needed
YOU: ABLE TO READ AND PUSH MY HEAD UNDERWATER
ME: FULLY CLOTHED AND IMMERSED IN WATER, BRIEFLY ( not including all my hair, which is clean and nice )
If you know of a dock or even something more adventurous where you would like to do the immersion I’m allll ears.
The reason I’m offering so much money is that I can’t find any messianic people to help me out here.
Again, all you have to do is dunk my noggin and briefly read something that I wrote on the back of a zig zag papers pack. I am 100% serious.
Entrepreneurship is about seeing opportunity. For some, they might see an individual, who is a little on the weird side, as an entrepreneur I see an easy way to earn $65. Go out and seek those opportunities today.
What Made You Decide to start your own Small Business?
I often get asked why I became an entrepreneur? Why did I start my own company? I could answer that I grew up in an entrepreneurial home, with a father who ran his own business for years. I could answer, that the change agent in me did not like working for large corporations and instead wanted to build my own business and make things happen. However, neither of these reflect reality. My answer, much to the surprise of most, is that I became an entrepreneur out of necessity.
Throughout my professional career, I found entrepreneurship to be the one constant that I could keep coming back to.
I first started working for myself during graduate school as a way to make ends meet. I had worked for nearly 3 years in industry doing market research, proposal writing, financial analysis and marketing and sales. I brought these varied skills to entrepreneurs and started working with green energy companies at the time helping them re-write and re-design marketing materials. After that, I kept doing the occasional business or marketing plan.
“Throughout my life, I always found entrepreneurship to be the one constant I could keep coming back to.”
I was home on maternity leave with my daughter and throughout this, worked on several projects to keep me busy. When my daughter was 6 months old I found out I was pregnant again. This barred any return to work. Within another month, my husband found out that he was losing his job. After the initial shock wore off, we began to think how we were going to manage.
Being the industrious type, I immediately began to seek out projects to work on to keep myself busy. I tried different types of outsourcing and contracting, but time was limited with two kids under 18 months. I found quite a bit of success in writing business plans. Part, education, part experience, and part intuition I could relate to the entrepreneurs I met. I could understand their pain, as I had seen it before in my father and his colleagues understood, what I like to call “the entrepreneur crazy”, fever and passion all in one that these entrepreneurs had for their businesses. I was inspired by their energy and dedication and genuinely loved working with them.
At the time, I decided to return to school to improve my financial analysis skills. I pursued a designation in accounting, a designation that focuses on strategy. I returned to work for 18 months as a requirement of the designation, but hated every position I was in. After having worked for myself, I had a difficult time working for anyone else. Perhaps it was a distaste of authority, or as I like to call it of the “inefficiency” of large organizations, but I was not a happy camper during these times.
At home, my children were suffering too. They had wonderful caregivers, but they were not mom. I was seeing changes in their behaviour that I did not like. These combined with my own unhappiness, made for a very miserable home life for my poor husband. Night after night of miserable conversations, my husband just said, why don’t you quit. While I was working for others I had continued working on several large consulting projects. It was in these projects that I found my passion again. I took his advice to heart and took the leap.
That was four years ago. Since then I have worked with hundreds of entrepreneurs, helping them to define their businesses and their dreams. There is no going back for me now. This is what I love to do, and want to do for the rest of my life.
What is your reason? What is your drive and motivation for working on your own? Why do you want to leave it all to begin a consulting career? What will your motivation or dream be? Perhaps like most of us, the decision is not a grand vision or altruistic social purpose but out of necessity, out of life change and a need to learn to fend for ourselves.
Develop A Business Growth Plan
It seems like all we do is plan. We write business plans, strategic plans, marketing plans, and disaster recovery plans. We plan our businesses to death. In the early days of your business, your need to plan less. Personally, I am a planner by nature. Planning is how I organize my thoughts, how I mitigate my risks and develop my to- do lists. When our businesses are first being developed, we need to focus on the DO, and less on the planning. Yes, you heard me correctly. You need to plan less and DO MORE.
Let me explain. This does not mean the abolition of “Planning” but rather it needs to evolve to Growth Planning. As a small business you always need to be in growth mode. This does not mean chasing the aggressive growth of early business days, but it does need to evolve to be focused on implementation and the “how” rather than the “what”.
A growth plan, in its purest sense, is a cross between a business plan and a strategic plan. A business that is growth oriented has to evolve with its customers, in needs to be in touch with the market, it has to be aware of trends and the social and environmental impact of its products or services. Most importantly, a business that is not growing is stagnant and not healthy. It is reaching the peak of its life-cycle and beginning its decline.
Should businesses be in perpetual growth? Some people may say no. Some experts will tell you that a business where the owner seeks to exit, may begin to think about succession and naturally, as we age we begin a process of seeking to “slow down”. However, think about it from viewpoint of a prospective buyer for your business. Would you rather buy a business that is healthy and growing? Or one that has shown decline over the years leading up to the sale? The answer from this perspective is simple. Focus on the growth, and the rest takes care of itself. The following are what I define to be the 10 Key Components of a Business Growth Plan.
The 10 Key Components of a Growth Plan
1. Where Are You Now?
Examine the following for your organization:
- a. Mission- this is the “DO” of your organization. What you do, and how you do it.
- b. Key Success Factors – What do you do well or better than your competitors?
- c. Key Constraints-What are you limited by? Who are you limited by? What is the financing available?
- d. Stakeholder analysis-What do your customers think? How about your suppliers? Your employees? Your partners and family? Get everyone’s input, it matters
2. Where Do You Want To Be
- a. Vision Statement-Define where you want to be in 5 years and build a vision for your company around it.
- b. The Magic Number- What do you want your company to be worth in 3-5 years? How much do you want to make? This is your magic number that you will be working towards.
3. What is Going on In Your Environment and Industry?
It is vital to understand what is going on in your industry and how your company fits into it. The following analyses should be conducted to understand how all the pieces fit together.
- a. SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats). Look inward and outward to your company and industry and judge how you fit.
- b. Porter’s 5 Forces-This business school classic has staying power for a reason. The five “forces” of Porter identify how you work within the broader industry. It examines your customers, suppliers, competitive rivalry within the industry, the threat of new entrants and the threat of substitutes in the industry for your product or service. It creates a picture of how dependent or independent you can be of industry trends in general.
- c. PESTLE Analysis (Political, Economic, Social, Technological, Legal and Environmental). This examines the broader trends in your industry, from each of the above contexts and how they can potentially impact what you do.
4. What have others in your field doing?
Competitor Innovation Analysis. In the history of your industry, how have your competitors innovated? Can this type of innovation still be useful to you? What products or services do competitors offer that are successful? Can you mimic them? What is not working? Is this something you are currently doing?
5. What are people doing in in other industries that can be applied to your Industry?
External Innovation Analysis- what are others doing that is innovative in another industry that can be applied to your industry? Can you change the business model of your industry to become more innovative?
6. Prioritize Your Current Opportunities
Prioritize opportunities based on a model that identifies needed inputs, available resources and constraints. Identify your resource requirements based on:
- a. HR
- b. Technology
- c. Financial
- d. Network and contacts needed to help you grow
7. Do you Need Extra Capital or Resources to Make Growth Happen?
How will you raise it? What can you cut, divert or change from your current operations or business model to make this happen?
8. New Initiatives
What new initiatives will you develop? Identify your identify your CIPD Strategy- How will you Concentrate, Innovate, Penetrate (Market) or Diversify your company’s products or services? This is the foundation of growth. Your CIPD Strategy can happen in any of the following areas:
- a. Marketing
- b. Sales
- c. Technology
- d. Partnerships
- e. Alliances
- f. Products
Find the ones that work best for your industry and company.
9. Develop Your Implementation Plan.
Your implementation plan should be detailed and should include quarterly goals (financial and growth) and should identify key resources and steps needed to accomplish your vision and get you to your “Magic Number” of growth. Identify the riskiest steps, and develop action items to specific how you will address each item.
10. Just DO It!
At some point, you have to start growing your business. The faster you get this point, the faster your business will grow. For most entrepreneurs, this is the scariest, but most exciting part. There are ways to make this manageable. Develop a daily checklist. Do 3 things every day that will grow your business in a solid way and contribute to growing your business based on your Growth Plan. A growing business requires daily infusions and care to push it forward, but not at the detriment of the owner.
Business growth needs to be sustainable, responsible but ever pushing forward and upward. Implement these strategies, and watch your business and profits soar.
Do You Really Love Your Business?
One of the things I never learnt in school was how to be a psychologist. Over the years, I took psychology courses, but with a graduate and a professional designation, neither of which are in psychology, I am very ill equipped to deal with psychological issues or offer any kind of advice. Yet when Entrepreneurs come to me, confused about why their business is NOT growing, why they are stuck, I cannot help but notice their need to talk to someone, anyone who will listen to them talk about their business. Many of these individuals have lost marriages, their families, close friends and relationships all because of their businesses. They are working 60+ hours a week to make their “dream” come true. Then they come to me, tired, miserable and alone and ask, “Why?” Why is this business not working? Why is this not fun any more? We hear so much about work life balance, about taking time for yourself and to spend time with those you love, but we rarely hear about the need to balance your “business” with your life.
Many Entrepreneurs got into business because they love with they do. Be it cooking, baking, customer service or programming, you are passionate about a cause and you want to share that talent with the world. Most entrepreneurs are good people who genuinely want to improve the world with their contributions and talents. However, this being said they will sacrifice everything around them for their business. They will ruin their health, their relationships and their Entrepreneurial spirit all for this business.Many Entrepreneurs defensively will say ” My business is my life” or that this “sacrifice” is needed in the early years. To both of these, I say phooey. The sacrifice is not needed and if your business is your life then you need to get a life. Put yourself in your customers shoes. Who do they prefer to do business with, a rested, energetic, reliable individual, or the individual that looks like htey have not had a vacation in 5 years, who is tired, grouchy and cannot balance their family and work life? Who would you do business with?
How do we balance the love of what we do with the practicality and time requirement of early start-up? How do we balance? My advice? Love what you do.Here are five ways that “loving what you do” will help you to grow your business and yourself.
1. If you love something, you set it free.
If you love what you do, you build it strong enough to survive without you. A business to be successful needs to survive without the entrepreneurs. It needs to have the straighten to stand alone and be independent from you.
2. If you love something, you nurture but don’t smother it
If you love something you nurture it, you give it what it needs but do not smother it. You give it what it needs to grow, but also the room to grow.
3. As in Relationships, you also need Alone time from your Business
As in a relationship, you cannot always be “with” the one you love. Take some time away from your business to do the things you enjoy. This will help you to relax, grow as a person, and then give back more to your business.
4. You Business May Move Away Some Day
As with our children, we have to be prepared for the fact that our business will not be with us forever. It may grow beyond our capabilities, you may need to sell, you may need to leave it for retirement or health reasons, but that business will someday leave you. How will you manage after the fact?
5. The best thing you Can do for those you love, is to take care of yourself
The best thing you can do for your business is to take care of yourself. If you take the time to nurture the other important things in your life, then your business will also grow, because your business is YOU. If you are tired, if You are cranky and cannot see the forest for the trees, guess what? So is your business, so do yourself a favour and if you really love what you do, then act like it, and please take care of yourself, those that are important to you and you will see how your business will flourish.
What is the Value-add of Incubators?
Over the last decade, incubators have been popping up all over the country. There are economic development incubators, venture capital incubators and industry specific. On the tech side, Accelerators are the newest label to be put onto incubators. Despite all of this growth, one question that seldom appears to emerge, is “What value does your incubator add”?
The concept of “value added” is one that rarely emerges in the ever changing world of technology. Value added is no longer “trending” in this world of “build it and they will come”, yet the concept of value add is one that all companies, regardless of industry, company age or experience need to maintain to ensure their long-term success.
Value add is simple, it is the value that you create for your users, your customers and market. It is what makes you different and special in a world filled with competition. It is the service you provide, that has a real, tangible outcome.
In the case of incubators, what is the value add? Most would say for technology incubators, it is the networks, the social connections, the ability to facilitate the flow of capital and investment to young entrepreneurs to commercialize their products/services. Every VC is seeking the next dropbox or Facebook. The job of incubators and accelerators is to function as the intermediaries (middlemen) of old, and connect these two resources.
3 Key Differences
1. While the connection to capital, is most certainly an important value added service, in other circles-mainly those crazy socialist Europeans (note the sarcasm here) are more concerned with a firms longevity rather than its immediate bottomline. The reasons are both social and historical, but it is sufficient to note that Europeans tend to be less concerned with concepts such as quarterly returns, and more concerned with yearly, and multi-year returns. They pioneered concepts of “patient capital” and social innovation. Where North American incubators are connecting individuals to capital, European are offering business support services-Entrepreneurship training, business administration support & yes, financing.
2. Europeans also tend to be more invested in the “entrepreneur” rather than the idea. Rather, than focusing on finding the next facebook, they seek to find the next Mark Zuckerburg. What an original concept, invest in people and the results will come.
3. Finally, more European incubators then tend to invest for longer, in these companies (3-5 years) to get the returns they seek. They are not so much concerned with getting the current cohort out the door, and finding the next batch. The long-term investment is to ensure the long-term success of the company, and the people who work for it.
What differences do these entrepreneurial models create in the end company? What metrics should be used to evaluate incubators? MARS recently released a report calling for an IMPACT metric for measuring incubator success. The time has come to measure and demand outcomes. Standards need to be created for education, program and service offering and not just simply seeking the next high tech dollar.
Around the country, incubators are popping up. Tech incubators, health incubators, manufacturing incubators. Venture capitalists continue to create to new opportunities to attract the next big tech company and angel investors sit poised, ready to be mentors and investors to new entrepreneurs.
Every start-up at some point in their existence, considers chasing venture capital. The funding may be a life-line to emerging companies, who have been boot-strapping to just get by. Location plays an irrefutable role in the ability of these firms to get funding. Location determines both the likelihood and the amount that start ups are likely to receive. Consider that start-ups in Vancouver receive typically receive 80% less funding than start-ups in silicon Valley?
Where is a Firm Most Likely to succeed?
Several studies have examined the likelihood of venture capital success. In a 2009 study in the Harvard Review by Chen, et al, and another in 2010 by Josh Lerner, found that start-ups who received funding that were OUTSIDE of the geography of their venture capitalists, significantly outperformed, those closer to the VC’s office.
This posits an interesting phenomenon, why is that investors continue to be scared of secondary markets? Start-ups are naturally attracted to cities where VC’s exist. VC’s often set higher hurdle rates for firms that are outside of their area due to increased monitoring costs for items such as travel time. Do those firms, because of their higher hurdle rates, outperform start-ups in NY, Silicon Valley and Boston? Or, to actually attract VC attention, are these firms better to start with?
How does this affect firms seeking VC funding?
Is it better for firms who are seeking VC funding to pack up and head to a larger tech center?
The propensity of these firms receiving funding would increase. What does this mean for firms located in smaller cities? Should local governments invest more in encouraging more VC’s and investors in an area?
We will examine these topics in the coming weeks and provide insight and recommendations for firms looking for VC investment.
In the wake of massive lay-offs in the manufacturing sector, downsizing across all industries and renewed vows to create sustainability, SME’s are a powerful way to counter large Corporations and create REAL, SUSTAINABLE, solutions. Here are 5 Trends why we think SME’s will grow in the future…..
1. Generation Y– brought up to value their own individuality, their talents and skills, as this generation matures research has shown that they are more entrepreneurial than those before them They value the flexibility of entrepreneurship and bring passion and savvy tech skills that allow them to work anywhere at anytime. In addition, this generation has lived at home longer, and has been less likely to purchase major assets (from cars to homes) permitting them to bootstrap and live on less income than generations before. In pure numbers, they represent a major “wave” of demographics, and the impact of their generation is just beginning to be felt.
2. 3-D Printing and Changing Nature of Manufacturing
The changes quietly started over 50 years ago with the advent of the CNC machine, and within a decade you may have one of these little machines in your home. Imagine printing up toys that your children have designed, a new component for a broken piece of equipment or a piece of art for your home. The possibilities are endless. Greater still, is the impact that this will bring to the nature of manufacturing. No longer will massive warehouses dot the landscape, but a manufacturing facility could sit on 2500 square feet or less, producing made to order components, warehousing only enough to fill a small truck. These shops will not employ thousands or even hundreds, but scores. This will change the nature of our suburbs and create opportunities for new buildings, space sharing and collaboration.
3. Increased Environmentalism & Sustainability Awareness
Environmentalism over the last hundred years has come and gone. However, over the last two decades, the awareness and trend towards “green” has not diminished, but increased in importance. Corporations are adopting “sustainability” as a way of life, incorporating these concepts into their Strategy Maps and Balanced Score cards. Consumers are demanding that the companies they do business with be environmentally aware and sustainable. It is far easier to develop a sustainable operation as a small entrepreneur and to maintain a low carbon footprint. Many small businesses start off as home based businesses, and these offer shorter commutes, lower electricity consumption from smaller machines and growth in internet communications technology (email and social media) that permit SME’s to connect to the world from a smartphone.
Beyond this, there is growing dissatisfaction with the income that CEO’s earn. The erosion of our middle class, has created calls for for egalitarian pay distribution which recognizes the value that all bring to our workplaces and society. Generally speaking, most founders are not making millions, but earn incomes far more modest than the CEO of Goldman Sachs or Citibank.
4. Increased Social Responsibility
SME’s are connected to their local communities. Many times entrepreneurs are involved community leaders and advocates, volunteers for local charities and non-profits and catalysts for local change. SME’s are tied to their local communities because these communities support them and are where they work and live. Large corporations try hard to stay connected to the public-via technology such as Twitter and Facebook, they interact with their customers. However, the public demands more. They want to know who is behind the nameless corporations and want to ” know” those they are doing business with.
Add to this, the enormous growth in social entrepreneurship over the last decade and the awareness that you can do good, while earning a living. Very few large social enterprises exist. This domain is nearly all dominated by SME’s and micro-enterprises. This continued demand for Corporate Social responsibility (CSR) will continue to drive the growth of SME’s.
5. Worsening Financial State of Western Governments
Everywhere we look, from the USA and Canada to Europe, governments are increasingly facing fiscal pressures and inabilities to manage their own budgets. In Canada, government funding for social programs and welfare are decreasing. Cuts further erode the quality of life of individuals caught in cycles of poverty. Social justice advocates will always secure some funding for those most in need, but many will fall between the cracks. Consider the role of microenterprise and SME’s can play in alleviating poverty.
Studies show that median household income of self-employed microenterprisers increases 78% in two years, and 91% over five years. In another guided program (Welfare to Work) participants’ business assets and their net worth grew by nearly 250% during a two year period, and home ownership increased from 14% to 22%. Finally, in Washington State a study by the Center for Economic Opportunity showed that over 50% of microenterprises moved toward self-sufficiency by completely reducing all forms of public assistance over 3 years. This reduced reliance on government programs has a significant impact on the burden the state carries to support low-income families. In this study participant unemployment decreased by 24% in the first year. Strong local economies can be created by fostering microenterprise in low income communities and encouraging the break from the cycle of poverty. Given that governments have less and less money to give, the growth of microenterprise and SME’s is predicted to grow at increasing rates in the coming years.
There is a lot written these days about innovation, competitiveness and intellectual capital. I hear the banter of politicians, the monologues from leading Venture Capitalists and Investment firms, and I sit back and think about how they have it all wrong.
Our society is aging. David Foot in his ground-breaking work, “Boom, Bust and Echo” discusses the impact of the aging population on everything from Baseball to Housing Markets. As people age, we generally become more conservative. Be honest with yourself, do you find yourself thinking, “how can kids do that”, or even worse looking at your own kids and forgetting what it was like to be that age?
As the whole of society begins to turn grey, we will see a fundamental shift in attitudes, work style and social values. While these changes are not bad in themselves, they will begin to shift Canada from a competitive and innovative nation, to one that lags in industrial and technological competitiveness. The beginnings of these shifts are already occurring. Report after report documenting lagging Canadian productivity and economic slumps hits the airwaves every few weeks. Taken individually, these may represent nothing more that an slow economy. However, our economy has been slow for nearly 5 years. The “Boom” years are gone.
The graying of our population is not a bad think in itself. There is much wisdom that can be reaped from the experienced to new firms starting out. Repeatedly, our politicians push money into grants, into mega-projects, and large industrial complexes, in hopes of getting a sound-byte with their name on it, when really what we need are small focused, incubators, mentorship programs, and training platforms to transform the tacit knowledge that exists in our aging population and extend it to our youth.
Youth also must understand that they are not “unique snowflakes” (as one friend often refers to the Y-Generation) and that the struggles that they as new entrepreneurs experience are not unique and in fact–exceptionally common to almost every entrepreneur.
This does not mean that the creativity of Generation Y cannot be harnessed to develop unique products, competitive solutions and to be, yes, innovative. Mentorship programs need not be one way only–we often think of a Mentor as an older individual–young people can also run Mentorship programs teaching others–who are new to an industry, a way of thinking, how to be more creative. As we age, we become more risk adverse, how about a mentorship program that teaches us to be less prone to risk? How about a Mentorship program that engages social leaders at all levels and teaches us to be innovative?
Our next blog post will discuss how smaller cities can be more competitive in a global environment.