Dr Jeff Cornwall

Luck and Serendipity

While entrepreneurial success is tied to careful feasibility assessment, business modeling and planning, never underestimate the role that luck plays in an entrepreneurial journey.

I am not suggesting that aspiring entrepreneurs just sit and wait for an opportunity to come to them like a bolt of lightning out of the blue. As the Roman philosopher Seneca pointed out long ago, luck is the crossroad of preparation and opportunity.

Preparation comes from the development of what I call the process skills.

Entrepreneurs have a better chance of success if they learn fundamental business skills, such as accounting, marketing and managing people.

They also benefit from learning specific process skills tied to starting and growing a business, such as how to assess opportunities and translate them into business models.

Opportunities come from the development of content skills that come from our experiences in life. The best ideas for possible businesses most often come from jobs we have held, from our hobbies and interests and from our social network.

If we pay close attention, it is out of these experiences that we’ll notice customers who aren’t getting what they want or who are missing the service they expect. This is what creates the gaps and pain in the market that entrepreneurs can capitalize on with a new business.

There is one important caution regarding the opportunities that come from our experiences, though. Don’t become a slave to the status quo. Be ready to be surprised.

Luck is not the only element that leads to entrepreneurship. We also need to be ready for serendipity, which is when we find opportunity not by plan, but by accident.

The examples of the role of serendipity in entrepreneurial success are many.

For instance, the original plan for PayPal was to build a payment platform for the old hand-held Palm Pilot devices.

And 3M sticky notes came from an adhesive that did not work as well as it should have.

The key was that in both of these examples, while the original plan did not work, an entrepreneur was willing to pursue a surprising new direction that did work very well.

Entrepreneurial success can be the result of a path we did not expect.

While our experiences are important, we have to be careful not to get stuck in the old, traditional ways of thinking. And we must never become a slave to our original ideas.

So, the formula for success is quite often a combination of hard work and preparation, of the experiences we have in life and more than a few surprises.

Never underestimate the role of luck and serendipity in entrepreneurship.

When is a Failed Concept a Success?

A student come up to me before class the week before their business plans were due this past semester looking very dejected.  

“My concept just can’t work,” she said.  The more she tried to pivot the business model, the more she uncovered evidence that convinced her that she had reached a dead end.

This is what is known as a teachable moment.

Aspiring entrepreneurs go through an arduous process between the initial spark of an idea to the eventual launch of a business.  

They start by sifting through the various ideas they have to find the one that has the most promise.  Many ideas may appear promising at a first glance, but careful assessment helps to sort out those that have little promise. Eventually, the entrepreneur selects a product or service they hope will be accepted by the market.

The next step is for the entrepreneur to take the idea and begin to build a business model.   

The primary goal of business modeling is not to try and rationalize starting a business based on your idea.  Instead, the objective is to discover all of the challenges, flaws, and gaps that need to be addressed if you have any hope of moving from a good idea to a successful business.  Business modeling is a process of finding problems and fixing them by altering and expanding the operating framework needed to launch the business and, when necessary, pivoting the concept based on what is learned about your customers and what they really want.   

When developing a business model, you may reach a point where you realize that no matter what you do, it just won’t work.  This realization can happen very late in the process even at the point when you are developing a written business plan based on the business model.  If that happens, no matter how much time and effort you have put into the project, you need to be decisive and abandon it.  

But this is much easier said than done.  You have spent countless hours talking about the business with friends and family.  You have shared your idea with advisors and mentors.  You may have even pitched the idea in business plan competitions and to investor groups.  It feels like your reputation is riding on getting the business launched.  There is a sense of inevitability that launching the business is what you are going to do.

But do not ignore the evidence.  Have the fortitude to walk away.  The fact that you have spent countless hours getting your idea to this point is not a reason to keep moving ahead.  

So back to that teachable moment….  

As class started that morning I asked the student to share her story with her classmates. I then looked her in the eyes and emphatically said, “You did a great job!  You stayed true to the process and had the courage to acknowledge that your concept just won’t work.  Congratulations!”

The end of this story is that while her initial idea did not work out, the process helped her discover several new ideas and gave her the opportunity to make several new connections with people to add to her network.  She learned the lesson that while her idea may have failed, she was successful.

Summer School in a Food Truck

Can’t find a summer job as a student?  Then start a business.

That is what two students from Belmont University are doing this summer. Hayden Coleman and Ale Delgado took second place in Belmont’s Baker Donelson Business Plan Competition this past spring.

The $2,000 prize helped them launch Moovers and Shakers.  Their business brings together one of the hot new trends in small business, food carts and mobile food trucks, with good old fashioned soda fountain.

The beauty of food carts and mobile food trucks is the low start-up cost, as seen in this profile on the food cart boom in Portland, Oregon from Business on Main.  For just a few thousand dollars aspiring restaurant entrepreneurs are able to break into the food service industry.

But even with the ease of entry, there are always a few bumps in the road for any new start-up.

“It has been a pretty crazy adventure trying to get Moovers and Shakers started,” said Hayden. “There has definitely been a learning curve for us, since we are two students who have never started a business before. Also, we have had to deal with things such as health code regulations and searches for places to buy a proper food truck. Everything has taken about four times as long and cost about four times as much as we originally expected, so we have really had to be able to adapt and hustle.”

So was it all worth it?

“At the end of the day, after all the stress and setbacks, we still just love making milkshakes,” added Hayden. “The people that we have met along the way have been so supportive and helpful. If anything, our experience has made us even more determined and excited for the future of Moovers and Shakers.”

Don Quixote Syndrome

don quixote.gifPassion is what drives entrepreneurs. 

Passion is often what pushes us to take the risk to launch our venture.  Passion is also what keeps us going when we face the many hurdles and roadblocks that are inherent in almost every entrepreneurial endeavor.  Passion is what helps us break into the market and convince a skeptical market to part with their precious dollars to buy what we have to offer. 

But passion also can create an interesting paradox for entrepreneurs. 

If we let our passion cloud our vision as we assess opportunities we believe are in the market, it leads us to only see the positive evidence to support launching our venture.  I see this in my students everyday. 

Today’s students, just like many generations before them, have some strongly held beliefs and values. 

For example, I see many who want to translate their passion for healthier lifestyles into businesses.  But when they are asked to objectively evaluate whether their passion for being healthy is matched by market demand, they become blinded by their strongly held vision.  Rather than look for the trends and evidence that their passion will translate into a successful business, they view the start-up as a virtuous mission to change the world.  They plan an attack of all of the wrongs in society that have created an unhealthy lifestyle, and translate their passion into a business start-up with little hope of success.

I call this Don Quixote Syndrome.

Mind you, a passion to change the world is a good thing.  I tilt at my own windmills everyday.  It is just that I have learned that most of my “causes” don’t make good business opportunities. 

But this kind of passion does not always mean that they will have a ready market waiting to buy what they are selling. I am not saying that a business model based on passions such as healthier lifestyles are fatally flawed.  Rather, when they present their rationale for their business model and the value proposition they are tackling, it is rarely based on a ready and eager market.  It becomes a quest to change the way their intended markets think and behave.

While a noble goal, it is a time-consuming and expensive path to creating a successful venture.

So when your passion leads you to want to start a business, take the time to make sure that their are enough willing customers ready to join your quest.  If not, stay true to your passion, but find less expensive ways to pursue it than starting a venture that is doomed from the start.

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Finding Niches in a Troubled Industry

Even in a troubled industry, there are niches that can create opportunity.

The music industry has been going through pretty rough times for the past few years.  Dynamic changes in technology, fundamental restructuring of the value chain, and a chronic recession are all beating down the leading companies that once dominated every aspect of what music we heard and how we heard it.

As the music industry dinosaurs fumble and stumble their way around in a rapidly changing environment,  we are seeing entrepreneurs find new niches that can create exiting opportunity.

Many of our students and alumni here at Belmont are among these entrepreneurs.  I have highlighted a few of them over the past few months, including the founders of the music app business Aloompa and songwriter Ben Cooper.

Recently I have had the pleasure of working with a few more music entrepreneurs.

A group of our alum have formed a band called Tin Cup Gypsy, which recently was touring with Sarah Evans.  They just released their first full CD, Calico (a wonderfully varied collection of their work):

Another example of performers finding their way in the industry is a band made up of current Belmont students called Kopecky Family Band.  Gabe Simon is a member of this band and is a student in my business planning class this spring.  This band is gaining attention nationally for their music, but the key to their success is their understanding of the changing business model required to be a successful band.  While creating great music, they are also paying attention to creating value to their followers through a variety of products.  Their savvy marketing has helped land gigs such as appearance on NPR World Cafe.

A final example today is Jake Jorgovan, co-founder of a video company called Rabbit Hole Creative, who is balancing success in their business while trying to complete the final eighteen credits he needs this spring to graduate.  Jake, an entrepreneur minor, has taken full advantage of entrepreneurial learning opportunities both inside and outside of the classroom.  He was winner last spring of the Belmont Business Plan competition.

Over the past couple of months their business has gotten the kind of breaks that is fueling some exciting growth.  Recently they have been providing the video content for the musical acts on Saturday Night Live.

 The music industry is alive and well.  You just have to find your niche and apply sound entrepreneurial business principles. 

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Scrutinize Your Business Ideas

When planning for a new business, most aspiring entrepreneurs seem to try to prove to a skeptical world that their idea can really work.

Their approach to developing a business model and writing a business plan involves gathering as much information as they can to support their decision to start the business.

Most entrepreneurs gather some cursory industry data and talk with people already working in the industry, with one thought in mind: “What can I uncover that will validate my desire to open this business?”

They selectively pay attention only to information that affirms their desire to get the business started as soon as possible. As a result, they fail to uncover information that may not paint such a rosy picture about the viability of their idea.

When I talk with aspiring entrepreneurs, I always take the opposite approach. I start asking them questions that attempt to prove that their business idea cannot work.

I shoot as many holes in their idea as I can possibly come up with. If, after I am done, the concept is still standing, I feel better that they may be on to something.

Over the years this has resulted in some pretty frustrated students.

I once overheard a student exclaim, “That Dr. Cornwall sure is a negative guy for being an entrepreneurship professor.” My approach has even been called “being Cornwalled.” I have been labeled the Simon Cowell of entrepreneurship.
Assume business won’t work

Being a naysayer isn’t what my heart wants me to do. I would love to be their cheerleader. But I know that I am not helping them if all I do is blindly encourage new business owners to jump ahead.

One of the most important things I try to teach entrepreneurs is to always work from the perspective that their new business ideas won’t work.

Statisticians call this working from the null hypothesis. When they come up with their next “great idea,” I want the would-be owners to immediately take the null hypothesis. Assume that it cannot work, and start trying to disprove that it cannot work.

If the idea survives scrutiny, then it is time to further develop the business model and possibly move toward launching the venture. I know it may seem like we are coming at the same thing from only a slightly different angle, but the difference in outcomes can be profound.

Once you start looking at a business idea with a critical eye, you uncover the weaknesses and holes in it. If the idea survives evaluation from this perspective, the resulting business model will be stronger when it comes time to launch.

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Finding Success in an Industry Turned Upside Down

Living in Nashville means that we see more than our fair share of people interested in making it in the music industry.  And Belmont University, with its nationally recognized music business program, attracts many of these folks.

One of the challenges for those interested in the music industry is that it is in the middle of being completely restructured.  We are not talking about the kind of turmoil most industries go through from time to time.  Within the next five years the music industry will look nothing like it did when we moved here seven years ago.  The result is that the traditional employment opportunities we had seen in this industry have all but dried up.

But this is where entrepreneurship comes in.

Those who are looking at the fundamental changes not as threats to stable employment, but opportunities to become part of the change are finding their way to success.

Quite a few of my former students are part of this entrepreneurial wave sweeping over the music business.

I just had coffee yesterday with one of my former students named Ben Cooper, who is finding a niche in songwriting.  Ben was an entrepreneurship minor at Belmont, majoring in audio engineering. 

Ben learned his entrepreneurship lessons well.

Like most successful entrepreneurs, Ben knew he could not make it alone.  So he went to work to build his network.  Part of that network includes key mentors like veteran songwriter Gordon Kennedy

Building this network has helped Ben to connect with musicians, including bluegrass legion Ricky Skaggs.  Ben co-wrote eight of the fourteen songs on Skaggs’ new album Mosaic. 

Ben also remembered his bootstrapping lessons. There are so many talented songwriters in Nashville that even some of the really good ones can get lost. So Ben is using some of the bootstrap marketing lessons he learned in our program to build his “brand awareness” as a songwriter. One of the projects Ben is working on is a blog on songwriting called The Songbird Project.

Enhanced by ZemantaNot bad for only three and a half years out of college working in an industry turned upside down! 

The Null Hypothesis

Those who have been in my classes know that I often bring in knowledge from other disciplines to add to our understanding of the process of entrepreneurship.  In any given day I might bring in concepts from economics, psychology, music, theology, philosophy, biology, and any other number of areas of study to help us understand the process of new venture formation.

One concept that all aspiring entrepreneurs should pay attention to comes from statistics.  It is the null hypothesis.

A website aptly called Null Hypothesis offers a very clear explanation using the silly hypothesis that “the loss of my socks is due to alien burglary”.  Rather than try and prove this hypothesis to be true, statistics takes the approach of supporting this hypothesis by refuting the opposite hypothesis of “the loss of my socks is nothing to do with alien burglary.”

Null Hypothesis explains the process this way:

In statistics, the only way of supporting
your hypothesis is to refute the null hypothesis. Rather than trying to
prove your idea (the alternate hypothesis) right you must show that the
null hypothesis is likely to be wrong – you have to ‘refute’ or
‘nullify’ the null hypothesis.
Unfortunately you have to assume that your
alternate hypothesis is wrong until you find evidence to the contrary.
So it’s innocent until proven guilty for the aliens.

“So how does this apply to entrepreneurship, Professor?” 

Here is how it works.

Most aspiring entrepreneurs spend their waking hours trying to prove that their idea for a new business can work.  They quickly gather some cursory industry data and talk with people already working in the industry with one thought in mind:  “What can I uncover that will validate my desire to open this business?”  They selectively only pay attention to information that reaffirms their desire to get the business open as soon as possible.  As a result, they fail to uncover information that may not paint such a rosy picture about the viability of the business idea.

When I talk with aspiring entrepreneurs, I always take the opposite approach.  I start asking them questions that try to prove that their business idea cannot work.  That is, I come at their idea using the null hypothesis.  I shoot as many holes in their idea as I can come up with.  If after I am done it is still standing, I feel better that they may be on to something.

Over the years this has resulted in some pretty frustrated students.

I once overheard a student exclaim, “That Dr. Cornwall sure is a negative guy for being an entrepreneurship professor!”

My approach has been called “being Cornwalled”.  I have been labeled the “Simon Cowell” of entrepreneurship. 

It is not what my heart wants me to do.  I would love to be their cheerleader.  But I know that I am not helping them if all I do is blindly encourage them to jump ahead. 

One of the most important things I try to teach my students is to internalize the perspective of working from the null hypothesis.  When they come up with their next “great idea”, I want them to immediately take the null hypothesis that it cannot work, and start trying to disprove or nullify it.  If the idea survives, then it is time to further develop the business model and possibly move toward launching the venture.

I know it may seem like we are coming at the same thing from only a slightly different angle.  But the difference in outcomes can be profound.

Once you start looking at a business idea from the null hypothesis, you uncover the weaknesses and holes in your business model.  If the idea survives evaluation from this perspective,  the odds are much better that the resulting business model will be much stronger when it comes time to launch than it would have been if all you did in your planning was try to rationalize starting the business.

If you cannot disprove the null hypothesis that the idea cannot work, you have saved yourself a lot of time, money and reputation capital from starting a business that was really doomed from the start.  And if you end up refuting the null hypothesis — that the business cannot possibly work — you can rest assured that your chances for success have grown significantly higher.

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MBA Partners with Seven Year Old

Shawn Sweeney will soon be graduating from the MBA program at Belmont University. Like a growing number of graduate students and alumni, he made the decision to leave his corporate job to become a full-time entrepreneur.

But what makes Sweeney unique is his choice of a business partner for his venture. It is his 7-year-old son, Gunner.

As with many opportunities, this business was born out of an interest that Shawn and Gunner had in common.

When Gunner was 5, he became interested in recycling. It was around the same time that Gunner was also learning about money and how to count. Since Nashville’s recycling program does not pick up glass, Shawn Sweeney mentioned the idea of taking neighbors’ glass to the recycling center for a fee. That piqued Gunner’s interest right away.

In August 2009, Gunner and his dad walked through their immediate neighborhood to find customers. Six neighbors signed up.

The neighbors loved the service and began telling their friends and neighbors. Gunner Recycling soon reached the maximum capacity for the family truck, so father and son decided that it was time to invest in a trailer.

As Gunner Recycling continued to grow, it quickly became a family business. Tiffany Sweeney, Gunner’s mother, became part of the team. Shawn Sweeney recently left the corporate world to focus more time on entrepreneurship, including Gunner Recycling.

“It’s inspiring to see the amount of glass recycled through our small business,” Shawn Sweeney said. “Gunner’s vision is to get every person in the world to recycle as his customer. I’m still trying to talk him into focusing on getting every person in Nashville to recycle as his customer.

“We have a great opportunity to reach more residential neighborhoods, apartments, office buildings and small businesses.”

Gunner is already learning important entrepreneurial lessons.

“When you are forced to explain every detail in a situation, it helps to slow down the process and make a more informed decision,” Shawn said of teaching business to a 7-year-old. “We’ve learned not to over-complicate things. There is no need to make our simple business difficult. Keeping it simple for us means keeping it simple for customers, and they seem to appreciate it.”

Gunner loves to deliver bins to new customers because “his customers” are his favorite aspect of being in business. Customer service is an important lesson for entrepreneurs of any age.

I am a strong advocate for teaching children about managing money and business at a young age. Many undergraduate students who come to study entrepreneurship at college arrive with operating businesses in hand. I hope I have the privilege of having Gunner become one of those students in my class in a few years.

If you are interested in learning more about Gunner’s business, visit www.gunnersrecycling.com.

Finding Opportunity “On the Job”

With the unemployment rate remaining high, there continues to be a steady stream of people looking to create their own jobs through entrepreneurship.

For many of these accidental entrepreneurs, the most promising opportunities can often be found through experiences and observations from their previous jobs.

Brian Roland, an alumnus of Belmont University, had been working with Sprint for five years designing and developing online employee procurement portals for Fortune 100 companies.

These portals gave employees of Sprint corporate customers access to discounts on Sprint products and services. A pervasive problem was that the discounts Sprint offered to the employees of its corporate customers were being underutilized, thus not really serving as much of an employee benefit.

As Roland worked closely with many of Sprint’s largest corporate accounts, he realized that the issue was insufficient staff and technological resources within human resources departments to handle the large number of employee discounts offered by their vendors.

Roland immediately recognized the need for a third party to administer the details of employee discount programs, allowing the HR departments to stay focused on the day-to-day requirements of their routine business.

His novel idea demonstrates the most important aspect of any new business opportunity: how to find potential customers with clearly identified unmet needs.

Through market research Roland discovered that there were very few options available for companies seeking a third-party employee discount provider.

With a demonstrated market need and limited competition, Roland partnered with a custom software developer to co-found Abenity Inc. to offer employee
discount management to companies.

The team at Abenity has listened to customers and adapted its business model along the way since the company launched in 2005.

For example, Abenity found that employees valued specific discounts. Employees prefer discounts on four things: movie tickets, restaurants, groceries and gasoline. By focusing on securing these types of discounts, especially with local vendors, Abenity provides tangible value to its corporate customers.

Another change in the business model involved how Abenity secures vendor contracts for employee discounts. The industry standard was to charge the vendors fees to participate, and to make the majority of revenue from ad sales.

However, because the mission of the business is providing employees with benefits, Abenity realized that it should do everything possible to secure as many discounts as possible for the program. The company charges no fees to vendors and has made the participation process much easier for new local vendors.

Even in a weak economy, entrepreneurial opportunities can be found. Don’t overlook those opportunities you have observed “on the job.”

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