A new study by Chad Moutray with the Office of Advocacy of the SBA shows why so many of us are trying to reach across college campuses to teach about entrepreneurship.

College graduates who specialize in social science tend toward self-employment as compared to those with bachelor’s degrees in other subjects, according to a working paper released today by the Office of Advocacy of the U.S. Small Business Administration.  The paper used data tracking a group of university graduates from the class of 1993 through 2003.

 

What is very telling is why these students want to be entrepreneurs.  It, once again, helps dispel the myth that entrepreneurship is “all about the money.”

 

Moutray found that a student’s motivation as measured by a series of “values” questions in 1993, closely tracked with employment decisions a decade later.  For example, those who valued job-security were more likely to be government employees, those who desired intellectual challenge were likely to work in non-profits, and those who did not highly value prestige and status were more likely to be self-employed

I am in Portland, Oregon at the University of Portland giving talks with my co-author Mike Naughton on our new book, Bringing Your Business to Life.

We are here as part of the Bauccio Lecture in Entrepreneurship series.  The donors behind this series are Fedele and Linda Bauccio.  Fedele Bauccio is the founder of Bon Appétit Management Company, which is an onsite restaurant company that provides café and catering services to corporations, colleges and universities, and specialty venues. They have over 400 locations in 28 states.

At dinner last night Mr. Bauccio talked about the key to his company’s success.  He competes with some of the industry giants by a simple, but powerful recipe.  He stressed that he has grown by finding customers in his niche who share his values and believe in his mission: “Bon Appétit Management Company… food services for a sustainable future.”

.From their website:

Breaking bread together helps to create a sense of community and comfort. We recognize the important role we fill and take great care to honor our position on a corporate or school campus.

Entrepreneurs can get tempted to take on business for the sake of getting more business.  But Mr. Bauccio warns that this does not help the business build its brand.  Your brand is much more than simple name recognition.  A good brand encompasses your values, your mission and your reputation.  It clearly communicates who you are and what your niche is.

Word of mouth never just happens.  By staking a strong claim on your piece of the market you can develop relationships with customers who understand what you stand for, and who are eager to tell others.

Blogger/entrepreneur David Weisburd offers this view of what success means in his entrepreneurial journey:

So why do it all? Why not do something more “productive” like writing and psychology, two of my favorite hobbies?

The answer is simple, nowhere in the world can you influence as many people as you can through entrepreneurship. It is the ultimate leverage of societal influence and change. Be it entrepreneurship in business, nonprofit, politics, etc.

You can create new products/services, give employment to hundreds or thousands, and have a place where people can come to develop their skills and grow as individuals.

I read an interesting post at the blog Escape From Cubicle Nation.  Pam Slim states the following:

I have a theory I am postulating in The Book that once people disconnect from the “my corporate job sucks and I am trapped in cubicle hell” world and start a successful entrepreneurial venture that they naturally become more compassionate and interested in social change.

I like to ask my students what they would do if they had enough money to take care of all of their financial needs for the rest of their lives.  The majority talk about such things as giving back to parents who have supported them, focusing their time and resources toward addressing social problems, and giving to their church. 

I see evidence every day — from my students and from the entrepreneurs I meet in the community — that supports Pam’s assertion. 

F. Scott Fitzgerald said, “Optimism is the content of small men in high places.”

I could not disagree more.  Optimism is the content of free people who have been empowered to make change. 

Once entrepreneurs are freed to make economic change through their ventures, their desire to turn that energy toward making social changes makes perfect sense.

I received information about a study that reminded me once again that business ethics is messy.

We would like to think that being ethical is a simple process of deciding right from wrong.  Although sometimes it is, more often it seems to take us into a murky gray of ambiguity and seemingly irresolvable dilemmas.

The study was conducted by Experian, a global information services company.  The study examines the payment behavior of the small-business owner in relation to the current mortgage crisis. The study found that business owners with a severe mortgage delinquency were more likely to pay their business obligations instead of their mortgage. It seems that because of deteriorating equity, high mortgage payments and limited refinancing options, business owners chose to ensure the business’ survival, preserving their source of income at the risk of losing their home. For the report, Experian compiled a sample of 2.7 million business owners and analyzed the payment behavior of those owners with a mortgage over the course of one year.

New entrepreneurs often struggle with the need to put their house at risk to help start a new venture.  This study suggests that once the business is operating they will tend choose their business over their home.

What an agonizing choice this must be for most of these business owners.

Keep your business afloat, but lose your home.  Keep your home, but risk losing your business.  Ethical choices are not always as clear cut as we would like.

 

Virtual Entrepreneur reflects on some of the ways that entrepreneurship builds a person’s character in a post about the non-financial rewards of starting a business.

While there is no guarantee of riches, through the pursuit, you will obtain rewards of character. And the development of sound character is perhaps the most important perk of entrepreneurship. At the end of the day, no one really cares how much money you made. They care about who you are.

I could not agree more.  And we need to be deliberate in our decision making and actions in business, as each one shapes our character.  From Bringing Your Business to Life:

[T]he moral and spiritual character of an entrepreneur or businessperson will be captured in the responsible relationships he has forged with others in the actions of running his business. More specifically, this can be shaped by the opportunities he pursues, who he chooses to do business with, who he hires, decisions he makes about products and markets, decisions about whether and how fast to grow, the corporate culture he builds, and his engagement with the community as a leader and/or citizen.

Bill Hobbs passed along a blog post by Steven Berglas from Business Week: 

While there is no simple answer I believe that combativeness, one of the three attributes I presented in my last post as defining serial entrepreneurs, is the characteristic that best predicts who will thrive in the most oppressive market conditions. By “combativeness” I am not referring to orneriness, acting despotically, or -worst of all– manifesting narcissistic entitlement. Instead, I see combativeness as the ability to convert anger into healthy, goal-directed passion and, as a result, to be positioned to pluck diamonds from coal bins.

It is true that entrepreneurs need to be able to shift into a crisis mode.  I know that when I get in that mode I certainly become more decisive and keenly focused. 

However, as we take a little deeper look into his post, some complexities come to light.

First, it is clear that he is defining entrepreneurial success in terms of maximizing financial returns.  Now don’t get me wrong — I went into business to make money.  But making money was by no means to only “goal-directed passion” that my partners and I had in mind.

We wanted to create a certain culture for our employees.  We also wanted to create stable and reliable jobs for them.  We would often miss paychecks and borrow more money rather than make temporary lay-offs.  I know we did not maximize our financial returns at all times.  Creating the culture we wanted cost potential profits, as did providing stable employment.

In our new book Bringing Your Business to Life, Mike Naughton and I define entrepreneurial courage this way:

[W]e need to be mindful of two necessary characteristics that define courage. First, as we’ve already mentioned, courage is the habit of taking risks and enduring hardships. The second characteristic, which often gets overlooked in the popular press, is the ability to direct risk-taking and endurance to good ends. It is the goodness of the end that determines when to stick at something, how much to sacrifice, and when, ultimately, to give up.

Courage is an entrepreneurial virtue.  But, every virtue is like a road that has two “ditches” – one ditch is excess and the other is defect.  The defect “ditch” for courage is easy to see.  It is the entrepreneur who becomes paralyzed with fear and is unable to act.  The economy goes south and the entrepreneur is unable to make the hard choices. 

What Berglas calls “combativeness” sounds a lot like the other “ditch” of excess.  It is easy to lose one’s way when all that is pursued is financial success at any cost.  Is financial success worth sacrificing the other reasons we went into business?  Or even worse, is it worth us losing our souls along the way because we did whatever it took to meet our financial goals?

 

Many of you know about the Four P’s that make up a marketing strategy  — product, price, promotion, and place. 

Those of you who read this blog regularly or have had me in class also know about the Three M’s used in assessing opportunities in entrepreneurship — market, margin, and me (or mission for social and corporate ventures).

In our new book, Bringing Your Business to Life, Mike Naughton and I introduce the Two V’s that together help make a “good entrepreneur” — vocation and virtue.

Entrepreneurs who understand their work as vocation seek to not only serve themselves through their venture, but to also serve a greater purpose.

The entrepreneur has to define the success of his business beyond financial, technical and market achievements to moral and spiritual principles that reveal the business as a gift to others.  This may initially sound a bit too moralistic and idealistic.  We have found, however, that when entrepreneurs describe their success and satisfaction of their company with a broader criteria than merely financial gain, they are on the way to setting a foundation to building a company that is faithful to their deeper commitments.  Some of the criteria include

–  creating jobs in which employees can find security;
–  generating and distributing wealth for their investors and their employees;
–  developing a highly positive culture that attracts workers who see the business as a good place to work;
–  maintaining low rates of employee turnover and high employee satisfaction;
–  providing needed services and products with great quality, and so forth.

No matter what path leads us to become entrepreneurs, the only way we can be fully human in our work is if we see our work as an opportunity to give our talents to others in service to the good of society and to God.   

Virtue includes those good habits that define how we approach our work as entrepreneurs.

When a person works, he affects the inner landscape of his character. The issue is not whether he changes himself, but how he changes himself. And the key to understanding the significant revealing of his personhood is not found in the amount of revenues he has generated, or levels of promotions, or the percentage of market share he has captured. Rather, the moral and spiritual character of an entrepreneur or businessperson will be captured in the responsible relationships he has forged with others in the actions of running his business. More specifically, this can be shaped by the opportunities he pursues, who he chooses to do business with, who he hires, decisions he makes about products and markets, decisions about whether and how fast to grow, the corporate culture he builds, and his engagement with the community as a leader and/or citizen.

When people use the term lifestyle business they usually are referring to something small and even part-time.  Academics and policy folks will often say the term lifestyle business with a hint of indifference, boredom, or even condescension.  This is not a business that interests them very much.  If is not designed to scale up and grow.

I would argue that every business is a lifestyle business. 

Why?  Because the business we create will dictate our lifestyle.

We can choose the lifestyle our business creates deliberately, basing it on our goals, aspirations and values.

Our lifestyle may be one of integrating our business with our passion to change the world.  We call this a social venture.  Our lifestyle in this venture would be one of sacrificing our own income and wealth potential in exchange for making the world a better place.

Our lifestyle may be one that has the flexibility to spend the time we want to with our family, our church, our community, our hobbies, travel, or what ever.

Our lifestyle may be one that keeps things simple.  We are willing to trade off the growth potential in a venture for the peace of mind of having no employees to worry about or to provide for.

Our lifestyle may be one of fame and fortune — of work ahead of everything else.  So we look for opportunities that provide wide open markets with significant growth potential. 

Be deliberate in planning a business that reflects the lifestyle you want.  And understand the trade-offs that come with the choices you make — there are always trade-offs.

High growth ventures offer high rewards of income and wealth. But, they also come with the risks associated by pursing such ventures.  Your income is more at risk, certainly in the short-run.  Your family will likely see you less.  Your hobbies and interests will take a back seat.

The decision to keep your business small can offer the ability to control your time and make it more flexible for other parts of your life.  But, your income potential will be more limited and you will have to be content with passing on opportunities to add on more products, move into other geographic locations, or maximize our share of the market.

The key thing is to recognize that every business has an affect on your lifestyle.  Be honest with yourself.  Know what lifestyle you truly want and then engineer that lifestyle into the business you build.