Category: Opportunities

Turning Passion into a Business Model

Healthy vegetables
Image by Jerzy Górecki from Pixabay

Many people are driven into entrepreneurship based on a desire to share a deeply held passion they have with the rest of the world. Passion is often the fuel that propels people to take the entrepreneurial leap.

Bootstrap!

Starting with your passion rather than with a compelling market need inherently increases the risk of your startup. There may or may not be enough people who share your passion. Until you test the market, you cannot be confident that there is a big enough market and that your customers will be willing to pay enough to make your business profitable. These are the key elements of a successful business model.

In her article about the five steps to turn a passion into profits, Caroline Castrillon explains how to mitigate the risk of building a business from a passion. She suggests that you start small, don’t quit your day job, set manageable goals, outsource whenever possible, and set a clear vision for the business. These steps help you prove there is really a market for your idea while limiting your financial commitment. These are all foundational elements of bootstrapping.

Pivot Your Passion to the Market

As you bootstrap your startup, you need to use the information you learn from the market to pivot your business model. Wes Moore, founder and CEO of BridgeEdU, says he succeeded turning his passion into a thriving business by learning what problems his potential customers have and using that information to strengthen his business model. This often requires the entrepreneur to pivot from their initial business model to one that better aligns with customers’ needs.

When the Market Doesn’t Exactly Share Your Passion

Getting entrepreneurs with a strong passion to pivot their business model is easier said than done. I have found that they may become defensive when they feel what they are passionate about is being challenged. However, it does not mean the entrepreneur needs to give up what motivated them to create a business based on their passion. They just may need to tweak what they offer. A pivot to the business model may be necessary to better align with what the market is seeking.

Ryan Reisdorf turned his passion for healthy food into a thriving business. However, he had to be willing to pivot his initial offering to make the business successful.

Ryan, a Type I diabetic, wanted to create a business that sold “healthy eating.” He founded his business, called Placemat, to sell healthy prepared meals in Nashville. He got some advice from a mentor at the Nashville Entrepreneur Center that fundamentally changed the value proposition of his new business.

“I pitched him on what I was doing. And he’s like, ‘You’ve got it wrong, man. You’re leading with something that 90% of the world doesn’t care about – health. You’re providing a seamless way for somebody to have a private chef come to their home. That’s it. Nothing more, nothing less. When you get into the home, that’s when you get to talk about health and the why of Placemat. When they take that first bite, that’s when you get to talk about health. That’s where your value is.’

“And sure enough, I took his advice and haven’t looked back. It’s changed the direction of the company.” (from “Ryan Reisdorf” in Entrepreneurial Voices)

Ryan pivoted his value proposition without compromising on what drives him as an entrepreneur — offering customers healthy food. He just needed to adjust how he sold it to his customers. He has found a business model that is fueled by his passion and meets a market need!

Hopscotching Your Business Models

Image by Merio from Pixabay

The coronavirus and economic crisis have certainly challenged many entrepreneurs to do some serious re-evaluation of their business models.  One of my friends compares it to being a toddler playing at the beach, getting knocked down by wave after wave after wave.  More often than not, this has resulted in more hopscotching than simple pivoting when it comes to business models.  Rather than incremental changes, known as pivots, entrepreneurs are being forced to reinvent their businesses on the fly as the pandemic creates seismic disruptions in society and in the economy.

Typical Pivots

Significant pivots in business models are common during the early days of a new venture.  We pivoted the business model of every startup I have ever launched once we opened for business and received feedback from the market.  In the days when we relied on formal business plans to guide our startups, some of these pivots could be rather jolting.  Today’s business modeling tools facilitate a more incremental process of pivoting during early days of a new business.  Steven Blank refers to this as the searching stage of customer development.

Once the searching stage leads to a clearer picture of what the market truly needs our business model to be, the execution stage begins.  This is where the focus shift from customer discovery and pivoting, to scaling and building business infrastructure.

Hopscotching the Business Model

The disruptions being caused by the coronavirus and the governmental policies that are following the outbreak, force established businesses to jump, or hopscotch, to a new version of their business model or even a new business model entirely.

Some of these are more survival strategies.  For example, distilleries across the country have shifted some or even all of their production capacity to making hand sanitizer.  Such efforts have helped ease the temporary strain on the supply chain for hand sanitizer until the market can stabilize.  Restaurants, with their dining rooms temporarily closed, are turning to curbside service, grocery sales, home delivery, family take-out meals, and so forth to bridge the gap until they can return to business as usual.  Boutiques have found that people are buying fewer new outfits, as we are mostly working from home.  So many have decided to make face masks a fashion accessory.

Some changes in business models look to be more permanent.  I have already highlighted changes in travel and music that are likely to be more permanent post coronavirus.  I plan to look at other industries over the coming weeks.

How to Navigate the Need to Hopscotch?

So what is an entrepreneur to do during such a crazy time?

Steve Blank suggests using a tool called the Market Opportunity Navigator to help uncover new opportunities for a business to pursue amid the coronavirus.  In his blog post, Blank offers a great case study to illustrate how a healthcare company discovered how to hopscotch its business model.

Ted Ladd offers a process in a column at Forbes that is helpful.

The first step is to deconstruct your business model to its core parts using the Business Model Canvas.  As I tell my students, the business modeling tools we have at our disposal today are not just to help you launch your business.  They are powerful tools to help you navigate your business through the many changes that are likely to come in the future, even in “normal” times.  This article in the Cape Cod Times offers some specific things to consider when deconstructing and re-evaluating your business model.

Next, Ladd suggests that entrepreneurs reimagine each part of the business model, using creative thinking processes, to reinvent each part of the model in the new world created by the pandemic.

Finally, Ladd suggests that, just like you did at the startup stage, you need to work with your customers (which may be entirely new customers) to test and refine the new elements of your business model.

SCORE offers three tips for those hopscotching their business models:

  1. Don’t forget the need for quality in what you offer, even if it is a temporary change in your model.
  2. Stick to what you know — don’t forget your core competencies.
  3. Don’t leave your old customers behind.

The Need for Resolve

One of the first blog posts I made as the coronavirus crisis began to unfold was about resolve.  As I stated at the end of this post:

The resolve we are seeing among entrepreneurs will pay off for our economic future.  It will take time and hard work, but these entrepreneurs are the ones who will lead us into our next economic expansion….and we will have one!

To ensure this bright future, don’t just get ready to pivot — get ready to hopscotch!

Getting to the Other Side: Music

Image by Pexels from Pixabay

The best governments can do to help pull us out of an economic crisis is create conditions favorable for economic recovery.  It takes entrepreneurs to actually do the work that can get the economy growing and take us to “the other side.”  When looking back, this has been true for every economic recovery since the Industrial Revolution.

Entrepreneurs are already beginning to do what they do best: find opportunity in the chaos.  Financial author John Mauldin goes so far as to say that right now “the greatest entrepreneurial and technological boom in the history of humanity is brewing.”

To see where entrepreneurs will be leading us, it is best to examine things industry by industry. Given our home is in Nashville, there is no better place to start than the music industry.

From Performance to Product

Historically, the music industry has been resilient. Facing numerous disruptions over the past century, the music industry has adapted to every fundamental change in its business model.

The technological disruptions from Edison’s invention of the phonograph and Marconi’s (or was it Tesla’s) invention of radio brought music directly into people’s homes. Music evolved from only being experienced through live performance, to a product to be “consumed.”

As usually happens after entrepreneurs creatively destroy what was, the industry consolidated around the new business model that emerged. The large companies that emerged became very efficient at making money from the production and distribution of music as a product. Musicians made money by working for these companies.

From Product to Digits

The next disruption of the music industry came from the Internet.

The digital age took away the value of music as a physical product.  We no longer had to purchase an album or a CD to consume music. Music could now be streamed directly to us via the Internet.

Over the next two decades, new business models evolved for music. Tech companies replaced music labels as the dominant players in the industry.

When music was a product, singers and songwriters made money by getting a small piece of the revenues generated by the music they wrote and performed. But as music was no longer a physical product, the share of revenues available for the artists from the digital distribution shrank to almost nothing.

Singers and songwriters had to adapt.  To earn a living required that they develop a new relationship with their fans. They had to tour more and develop alternate revenue streams, such as merchandise for their fans, to make a living.

However, just as a new equilibrium in the industry was settling into place, along came the coronavirus!  Live performance of music ended abruptly, and artists are now struggling to find a new way to make money.

From Artist to Entrepreneur

Yesterday, our family gave a musical gift to Mrs. C. for Mother’s Day that would not have been available a few months ago. City Winery and a group of their regular artists got together and offered a personalized video of a mini-set to give as a Mother’s Day gift.  The video was waiting for  Mrs. C. in her email inbox yesterday morning. Mark Broussard, one of our favorite artists, opened with a personalized message to “Yammy” (her grandma name) and he then performed the four songs that he wrote for each of his four children.

Artists and others in the music industry with an entrepreneurial spirit are starting to innovate and experiment with new business models.  Private Zoom concerts. Live streaming.

What we are seeing so far is that people want to keep the personal connection with their favorite artists. This is the value proposition that artists tapped into over the past decade through live performances and social media.  But with the outbreak of the coronavirus, it will be a long time before we are comfortable sitting shoulder to shoulder at a concert with our fellow fans.

So what comes next?  That story is just starting to unfold.  The funny thing about markets is that they often surprise us.  The odds are that anyone who says they know what will be next for the music industry will probably be wrong.

But, there will be a next act for musicians. Whatever comes next will be a result of musicians and others in the industry stepping forward as entrepreneurs.

A dear old friend once described entrepreneurship as being a lot like sausage making.  We love the finished product, but we really don’t want to see it getting made.

The process of innovation and entrepreneurship is messy, confusing, and frantic. But when it’s done, the outcome is quite satisfying!

Serial Entrepreneurs to the Rescue

As the economy starts to come back to life, don’t be misled by statistics on small business failure.  Although the number of small businesses impacted by the current crises will be staggering, there is a slight-of-hand trick that may fool people when it comes to entrepreneurs’ contributions to rebuilding the economy.  Ladies and gentlemen, may I introduce to you the serial entrepreneur!

Don’t Just Watch the Businesses: Watch the Entrepreneurs

A serial entrepreneur is someone who starts multiple businesses over their careers.  To understand the serial entrepreneur’s economic contribution we need to consider not each business started by them, but by their cumulative body of entrepreneurial work.

For example, over my lifetime, I have been a part of about a dozen and a half startups, including solo startups, partnerships, and family businesses.  Of all of the startups I have participated in over my career, only two are officially still operating: my consulting practice and our educational content family business, Entrepreneurial Mind LLC.  Were all the rest failures? Absolutely not!  We sold some the ventures, and others just ran their course.  Probably two or three of them could truly be called failures.  They all created jobs, built wealth, and contributed to economic growth.

To understand my long-term economic contribution as a serial entrepreneur, you have to look at all that I have done over the past four-plus decades.  You can’t just look at the outcome of one single deal, no matter what its outcome, good or bad.

A Current Tale

Two of my alums, Corey and George, are current examples of serial entrepreneurs at work amid the pandemic and accompanying economic collapse.

Corey’s current business lost most of its accounts during the first week of the economic shut down.

George had been doing gig work between startups. However, his employer furloughed George from his current gig.

Rather than define what they are experiencing as failure, they put their heads together and asked one simple question: What pain being created from the current crises could they provide a solution for?

Newly Created Pain

Organizers of most meetings, conferences, and other gatherings cancelled them due to the coronavirus.  Corey and George’s hypothesis is that as we come out of the current crises, there may be a more lasting impact on such events.  Sending people to meetings and conferences is expensive.  If companies find that there are viable virtual alternatives to physical travel, there may be some level of permanent shift away business travel for meetings and conferences.

Most of the current alternatives in the market that offer virtual meetings focus on educational content delivery and training. While this is an important part of going to conferences and meetings, most people say the biggest benefit they receive is from the informal interactions in the hallway or over drinks with other attendees at the end of the day.  Current offerings do not really offer this as a part of their virtual meeting platform.

Corey and George are feverishly working on solving this shortcoming.

Follow the Ball

Just as in the carnival “cups and ball trick,” we need to pay careful attention to see where the serial entrepreneur ends up next.

This is the essence of a serial entrepreneur.  To a serial entrepreneur, entrepreneurship is a process, not an event.  Even though the last business may no longer have enough demand to keep operating, the entrepreneur never stops.  For the serial entrepreneur, their career is a journey from opportunity to opportunity.

“Mount St. Helens” Recession

Perhaps the recession we are entering into should be called the “Mount St. Helens” Recession.

Mrs. C. suggested this to me on one of our walks this past week.  When she said that the events surrounding the 1980 eruption reminded her of the current state of the world, I knew it was the perfect metaphor for our current and future economic conditions.

A History Lesson

Although us older folks remember the eruption of Mount St. Helens like it was yesterday, many of you were probably not around when this volcano erupted in Washington State forty years ago.

Scientists saw signs that Mount St. Helens was coming to life years before it erupted.  However, concerns heightened in 1980 when the mountain’s activity created thousands of small earthquakes. Then the volcano began to change shape.   The movement of magma upward created a huge bulge on the side of the mountain. As the mountain came to life, it spit out steam and ash.  As the earthquakes and small eruptions intensified, experts predicted an eruption was imminent.  They could not, however, predict the exact time and date.

On May 18, 1980, a massive earthquake from deep within Mount St. Helens caused a huge landslide on the north side of the mountain.  The landslide was followed by a lateral eruption that sent gas, rock, and ash out at over 600 mph, devastating an area of 230 square miles.

The lateral eruption was unusual, so dozens of people who were observing the volcano or just waiting it out in an area they assumed was a safe distance were killed by the blast.

After salvaging much of the lumber leveled by the blast, officials decided to let nature take its course and heal the landscape.  Over the coming years, vegetation grew back, animals returned, and the lakes and rivers that had been choked with mud and debris returned.  For a detailed history of this event, see this link to The History Channel’s website.

The Lessons for Today

As evidence showed that an eruption of the volcano could happen at any time, people were warned or given precautions to take – some listened, some chose not to.

Just as the days, weeks, and years before Mount St. Helens erupted, we had signs that we might face a crisis. Epidemiologists warned of a possible pandemic. Economists insisted that the economic boom that we faced was becoming fragile and unsustainable.  But just as with Mount St. Helens, nobody could have predicted when things would turn, nor the immediate devastation that would result.

The coronavirus pandemic seemed to come out of nowhere.  We were living our lives, planning for our spring breaks, starting new businesses, getting ready for new careers, and then suddenly everything catastrophically changed in what seemed like an instant.

The landscape after the eruption of the volcano looked like a moonscape.  How could it ever return to normal after such devastation?

And yet, it did return.  Not exactly like it was before, but it did return to a thriving ecosystem, and much more quickly that many experts predicted.  It showed the resiliency of nature.

If we let things take their natural course, our society and economy will come back.  Not quite like before.  Hopefully, through all of us working together, it will be a bit better.  Consumers will begin to spend again. Small businesses will start back up. Entrepreneurs will find new opportunities in the ashes of this recession.

A Note of Caution

One of the lessons of Mount St. Helens is that something like its 1980 eruption will come again, if not on that mountain, on one of the string of volcanoes that make up the part of the ring of fire circling the Pacific Ocean that cuts across the Western US.  It may not come for many decades or even centuries, but it will happen again.

My parents and grandparents never forgot the lessons of the Great Depression.  They tried to pass them along, but over the generations, memories faded.  None of us alive today will ever forget these challenging times. But to our grandchildren and grandchildren’s children, the events of 2020 will just be a vague part of history.

Let the wafts of steam that still come out of Mount St. Helen today act as a warning:  sometime in the future, generations to come will also face devastating events in their lives.

But just as nature is resilient, so are we.

Photo credits:  Jeff Cornwall

 

The Linear Thinking Crisis

America has raised two successive generations trapped in linear thinking.

I see it year after year as students get ready to enter the world of work. Many of the young people view their careers through the lens of linear thinking.

The Linear Career Path

Students come to me for both formal and informal advice.  Their career decisions leave many stressed, and even emotionally paralyzed.

They have to get into the right school. They have to get the right professors. They have to land the perfect internship. They have to land a dream job that feeds their passion.  Step after step, they are convinced that one wrong move jeopardizes their future.  They are convinced that each step along the path predetermines the eventual outcome of their careers. One misstep leads to a dead end, from which they can never come back.  They have methodically followed the “one path” in life that they believe will lead them to success once they enter the work world. However, when they reach the point in life when they enter that “real world”, the nice clean path they thought would be waiting for them is not there. No wonder so many students move back home to “figure out life” after college!

The Un-coachable Entrepreneur

Many aspiring entrepreneurs we work with also have this same mentality.  They identify the one business that will bring them fulfillment and feed their passion.  They accept no feedback from mentors, professors, or even customers that challenges their thinking.  They have “figured it out,” so they expect all to get out of their way and let them forge ahead.  Customer discovery, market research, advice from experts be damned!

They are what my good friend and mentor-extraordinaire Shawn Glinter calls the un-coachable.

Don’t get me wrong.  There have always been un-coachable entrepreneurs, at least during the four decades I’ve been working with entrepreneurs.  What is different is how many more we are seeing.  They suffer from the same generational affliction of linear thinking as many of the students I work with.

Time for New Approach to Thinking

And now we face unprecedented economic and social disruption from coronavirus.  Linear thinking no longer will work for life plans nor business plans.

Phil Lewis wrote an excellent piece a couple of days ago about the critical need for lateral thinking. Lateral thinking is coming up with novel, even non-logical, solutions to a problem.  It is creativity at its best.

The critical point is this: it does not matter a jot what you do or where you work. Everyone has it in them to add transformational value through lateral thinking—even, or especially, in times of change or crisis.

Small business owners and entrepreneurs are facing personal crises within the broader context of the coronavirus crisis. The ones whose businesses have the best chance to survive, and eventually thrive, are the ones who can become nimble, lateral thinkers.

Nothing we have learned in the past can prepare us for what is next.  Entrepreneurs, particularly young entrepreneurs, must break free from their habit of linear thinking and find new solutions to the new problems this transformation we are living through has created.

These new problems are coming fast and furious.  There is no time for a contemplative approach to business planning and business modeling.

Experiment often. Fail quickly. Find traction. God speed!

(Photo Source:  Jeff Cornwall)

Making it to the Other Side

(Photo source: Image by Ralf Unstet from Pixabay)

When our world was turned upside down by the coronavirus, my mind quickly began racing through my mental rolodex, wondering how everyone is doing.  Certainly my immediate concerns were for family and friends, especially those with health concerns.  Soon my web of worries shifted to all of the entrepreneurs I know — students, alumni, and friends.  I began a steady campaign of reaching out.  First to friends and family.  Next to my alumni entrepreneurs.

What I heard from my alumni entrepreneurs was particularly heartwarming and encouraging.

Entrepreneur’s Response

First, those with employees expressed how important it is to find ways to help their staff.  We are seeing story after story of business owners doing what they can to lessen the blow to their employees. Locally, we are seeing country stars do what they can to help the employees of their bars and restaurants on Lower Broadway in downtown Nashville.  Dierks Bentley and Florida Georgia Line both committed to give each of their employees $1,000 to help them make it through the time while his Nashville bar.  Between the two establishments, this is over 200 employees.  John Rich has committed to keep paying his bar workers during the shutdown.  I am hearing the same commitment from several of my alumni entrepreneurs.

Second, I heard a consistent message of doing what it takes to “make it to the other side” of this crisis.  Reports from places like South Korea, which is several weeks ahead of the US in its outbreak, talk about a slow return to business.  This is encouraging, and supports those who predict we might see the beginning of a turnaround by early to mid summer.  The entrepreneurs I talk to are shoring up cash flow and making cash budgets that can see them through to June or July, even with little or no revenues.  These are often tough and austere plans, but they are doing what they must to keep their businesses alive.

Finally, I am hearing the indomitable entrepreneurial spirit in their responses.  They are worried, and even scared, but they are also showing hope and resiliency.  They inspired me.  Facing much more dire circumstances than I am right now, their optimism and courage reminds me that it will be our entrepreneurs who lead us out of this.  It may seem like a long, dark tunnel, but there is a light at the other side where things will improve.

The Other Side

I do want to offer a note of caution, however.  When we do get to the other side, and we will, it will look very different than the side we left.  Entrepreneurs will be tested to adapt to a new reality.  A shock to our economy, to our society, and to our culture as we are now experiencing right now will fundamentally change many aspects of our lives.  Entrepreneurs will need to be ready not only to survive during this short-term period, but to adapt over the long-term, probably like never before.  The other side will present a myriad of both amazing opportunities and significant threats.

Be ready to be more entrepreneurial than you ever have been before, and you will be alright when we get to the other side of this crisis.

Life’s a Pitch. Be Ready!

Entrepreneurs need to be ready to pitch any time, anywhere.

Jake Jorgovan, an alumnus from Belmont’s Entrepreneurship program, is always ready to give his pitch.

“At the most random situations, I will find myself giving a pitch,” says Jorgovan. “Out at drinks with friends, or just out socializing and suddenly I run into someone who is a contact directly in the space that I am working in. It can catch you off guard sometimes, but you should have your elevator pitch prepared and not be afraid to deliver it anytime of day.” Continue reading Life’s a Pitch. Be Ready!

Just Because Nobody is Doing it is not a Reason to Launch

“I’ve got a great idea for a business.  I know it will work because nobody is doing it!  I need to move quickly before someone else does it first.”

As someone who works with entrepreneurs for a living and hears a lot of business ideas, this type of business pitch puts up a big red flag for me.

Just because nobody has started a particular type of business is by no means an indication that the market needs that type of business. Continue reading Just Because Nobody is Doing it is not a Reason to Launch