For example, online media sites such as the Huffington Post have played a significant role in the decline of the print-based media industry and in the demise of many traditional daily newspapers.  Creative destruction is a not a common occurrence, but when it happens, its impact is profound

The venture capital world views entrepreneurs as agents of “creative disruption.”   Venture capitalists like to invest in businesses that challenge the status quo with new solutions to existing market needs.  Introducing new products to existing markets is more common than entrepreneurs creatively destroying entire industries, but it is still not an everyday occurrence.

The fact is that most entrepreneurs do not destroy or even disrupt.  The vast majority of entrepreneurs engage in “creative opportunism.”   Change creates numerous opportunities for entrepreneurs to fill small gaps or find little niches in the market.

All three of these roles of entrepreneurship are important in their own way, and they all work hand-in-hand to build economic growth.

Creative destruction helps to renew our economy so it can continue to expand.  Creative disruption creates significant wealth out of change, which is the fuel for economic growth.  And creative opportunism creates most of the new jobs in our economy – almost 80 percent of the new jobs over the past thirty years were created by small businesses.

So what industries are currently ripe for the destructive, disruptive, and opportunistic work of entrepreneurs?  Where should entrepreneurs be looking for the next waves of opportunity?

When I first came to Nashville ten years ago, healthcare and music were industries I would put at the top of this list.  While there are still many opportunities for entrepreneurs in these industries, other industries have emerged as being on the cusp of fundamental change.

Here are a few that have recently caught my attention:

• Advertising:  While mass media advertising worked well with the Baby Boomer Generation of consumers, the Millennials do not trust traditional advertising.  They get information on what products to buy based on the opinions of their friends transmitted through social media, not from ads developed on Madison Avenue.
• Senior care:  We all know that the wave of Baby Boomers, also known now as the “grey tsunami,” will create significant opportunities in senior care.  However, Boomers have fundamentally different expectations than their parents, so they most likely will not accept many of the business models for senior care that are common today.
• Education:  Technology and unsustainable cost increases will be the likely sources of significant disruption in the education industry over the next decade.

And what successful entrepreneurial ventures will come out of the changes taking place in these and many other industries?  Stay tuned.  That is something that only time and the forces of the free market can tell us.

The post Creative Destruction, Disruption, and Opportunism appeared first on Dr Jeff Cornwall.

We are starting our visit in Finland, where we visited Aalto University’s amazing entrepreneurship program.

I have been a fan of Aalto’s Startup Sauna (formerly known as Venture Garage) since it launched a couple of years ago.  I finally had my first chance to visit this program yesterday.

While Finland was never under communist control, socialism has long controlled its culture and economy.  As we heard about the genesis of the Startup Sauna it became clear to us that it is part of a movement not just to spur high growth entrepreneurship, but to change the way people think about free enterprise.

Our guides were a twenty-five year old on-and-off-again Finnish student named Antti and a former Belmont student Shirah Foy, who is now doing graduate work at Aalto.

As we toured the co-working space that includes incredibly creative and flexible working environments, I had to remind myself that the Startup Sauna was a student initiative.  Students created the program and students still “run” it.  In universities in the US, such a program would be run by faculty and an army of staff.  But this incredible space and its myriad of programming is all guided by the creative hands of undergraduate and graduate students of Aalto.

Antti stressed that Startup Sauna is as much a cultural initiative as it is an economic one.  The highly entrenched socialism of Finland has created a culture that is highly risk averse.  The students running Startup Sauna hope that they can be a part of a movement to change this by creating an entrepreneurial ecosystem in Finland.

Antti told my students about how the media in Finland reports on entrepreneurship.  When a Finnish startup gets to the point of a successful exit, it is reported as yet another local business “being taken over by the Americans.”  The Finnish media seems indifferent to the wealth that was created for the Finnish founders.  And they ignore the likely use of this wealth to be invested to spur even more new Finnish ventures.

Startup Sauna is more than just a co-working space.  They have started accelerator programs and major entrepreneurship events throughout Eastern Europe and Russia.  They are also working aggressively to create internship opportunities within  high potential startups to get the best and brightest Finnish students to think beyond corporate careers.  They want to open the eyes of these students to the possibility that they, too, can create new ventures and build wealth and opportunity.

While the work being done by Startup Sauna is just one small step, it holds the promise of a brighter economic future for Finland and the rest of Northern and Eastern Europe empowered by free enterprise.

The post Students Work for Free Enterprise appeared first on Dr Jeff Cornwall.

We have moved to much more of a focus on business modeling here at Belmont University.  Why?  Because my own experience as an entrepreneur and as an entrepreneurship educator is that the business plan is just a tool.

In that past, we did not teach much about business models because they were considered to be something that each of us developed a skill for in our own way.  So we taught what is easiest to teach — something concrete and easy to evaluate.  A business plan has a format and a process that lends itself to educational settings, especially considering that many who teach entrepreneurship have never launched a business and have not really learned to develop business models.

But then a few years ago, some valid and elegantly simple tools came along to help conceptualize and teach business models.  The most popular of these is Osterwalder’s Business Model Canvas.  But there are many others coming out and many are trying to improve upon Osterwalder’s work.  Since we have started using more of these tools, our students here at Belmont now can much more easily conceptualize a business model.  They can see all of the moving parts and identify things that just don’t make sense before the codify it into a business plan.

We have framed most of our curriculum around the business model.  Students love it, faculty find it easier to teach the array of topics within a more unifying framework, and we are getting more and more successful student business launches coming out of our program.

Have we abandoned the business plan?  Absolutely not!!!  It is still a critical tool that entrepreneurs must learn.  Why?  It is the most commonly used tool to communicate a business model to a banker or investor.

Is a business plan a useful guide for an entrepreneur to launch a business?  Not really.  It is too rigid.

Those of us from the trenches know how often we look back at a business plan, often just a few months after launch, and just shake our heads at how wrong we were about so many assumptions.  That is why we should really use the business model to guide our launch and early development of the venture.  It is a tool that makes change and updating simple and highly effective.

But we still need to know how to make that snapshot picture of the business model we call the business plan.  The financial world still looks at business plans and always will, unless you are a highly-experienced serial technology entrepreneur who can raise money simply due to your relationships and reputation.  But those are a rare breed.

One of the problems with entrepreneurship education is that we get too caught up in mimicking what goes on in places like Silicon Valley.  That is NOT the type of entrepreneurial experience that our students will face when they graduate.  If fact, 99% of them will NEVER experience that world.  But its cool, its sexy, and its complicated, so we academics love to put our spotlights on it.

For the rest of us, we need to know how to develop a fluid and dynamic business model that we will refine as we enter the market and engage real customers.  We need to be ready, willing and able to pivot on signifiant aspects of our early model.

But, we do need to know how to put this information we develop in our business models into a business plan when we are ready to talk to somebody about money.

Both the business model and the business plan are important tools for our arsenal!

There.  I feel better now.  Time to get my grades in!

The post The Battle Over Plans Versus Models appeared first on Dr Jeff Cornwall.

The post My Interview with VC Vic Gatto appeared first on Dr Jeff Cornwall.

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.”

Jorgovan has become an expert at pitching through a lot of practice.  While in school at Belmont, he participated in every business plan pitch competition he could.  He had lots of success, winning Belmont’s campus business plan competition and the business plan event at Collegiate DECA during his college years.  He also was honored as the recipient of the 2011 Nashville Youth Entrepreneur of the Year Award and the third place winner of the 2011 Global Student Entrepreneur Award.

Jorgovan is now working on his second venture since graduating from our program.  He is currently founder and CEO of Virtual Physical Therapy.

Here are the five tips Jorgovan offers to young Belmont entrepreneurs who, as an alumnus, he advises and mentors:

1. Present a clear case of the problem and the solution. This is the most important part of the pitch.  If the audience does not believe there is a problem, or fails to understand your solution, then nothing else you present beyond that will matter.

2. Present with passion.  Don’t just run through the entire pitch in a monotone voice with no excitement.   If do not sound excited about your venture, your audience won’t be excited about it either.

3. Work on your delivery. Learn how to use your voice to help emphasize key points.  Slow down and emphasize your most important points so the audience knows that is what is important.  Make it seem as if you are talking to each person in the room by using eye contact.

4. Know the audience.  Each pitch should be tailored to whom you are presenting to.  If it is a business plan competition, tailor your pitch specifically to the judging criteria. If it is an investor pitch, talk about the issues important to investors and be clear about the return they might gain from investing in your business.  If it is a sales pitch, tailor it to the value proposition you offer to the customer.  “There is no one size fits all pitch presentation,” says Jorgovan.

5. Practice, Practice, Practice.  The more times you can run through your pitch, the more effective you become. “Try it in front of your mom, dad, sister, neighbor, dog, or whoever will give you the time of day,” recommends Jorgovan.

You never know when you might run across a potential investor or customer.  So you always need to be prepared to give a clear and concise pitch of your business.

As I tell my students, “Life’s a pitch. Be ready!”

The post Life’s a Pitch. Be Ready! appeared first on Dr Jeff Cornwall.

23 of the 25 students on the Belmont team made it to the finals this year in a variety of business related events.  10 of them made it to the national finals in two events.

Belmont students swept the top three awards for the Entrepreneurship Growing a Business event (business plan event for students who have started their businesses while still in school).

Ross Hill — First place

Tom Haarlander — Second place

Tim Weber — Third place

For the second year in a row Belmont students had eight of the top ten teams in the Entrepreneurial Challenge event (we had nine teams in this event).

Our teams took two of the top three awards:

Eric Guroff, Taylor Fish, and Blake Mankin — Second place

Ross Hill and Griffin Wendt — Third place

Top Ten Teams:

Jeremy Gold, Riley Bauer, Elizabeth Rhyne

Charles Williams, Max Magura, Cole Auville

Tim Weber, Jen Baiada, Maya Asked

Matt Madden, Hillary Unis

Amy Ashida, Kylie Davis, Lauren Gunther

Gabe Zurek, Levis Padrom, Jena Lavicka

The following students were Top Ten national finalists in their individual events:

Eric Guroff — Entrepreneurship Starting a Business (b-plan)

Hillary Unis — Entrepreneurship Starting a Business (b-plan)

Charles Williams — Corporate Finance

Maya Akser — Fashion Merchandising and Marketing

Lauren Gunther — Marketing Management

Kylie Davis — Retail Management

Max Magura — Sales Management Meeting

The following student was a national finalists:

Griffin Wendt — Marketing Management

The post Belmont Sweeps Entrepreneurship Event appeared first on Dr Jeff Cornwall.

Students take full advantage of my office hours for mentoring. Some come in with the seed of an idea, while others are actively growing their ventures even before they graduate.

Entrepreneurship alumni get a “life time warranty,” which means we never take ownership of alumni businesses and never take them as consulting clients.  Instead, we meet at local coffee shops where we continue to mentor them as we had when they were students.

A limitation of what I can offer to those I mentor is that I do not have experience in most of the types of businesses they start.  In fact, since I have been out of the full-time entrepreneurship world for sixteen years, I really don’t have current experience in any industry!

What I can offer them is help on the issues and challenges that all entrepreneurs face, such as financing options, growing pains, partnership issues, ethical quandaries, and so forth.   I can be their “process mentor.”

But, what I can offer them is not always enough.  Sometimes there are issues that they face that are specific to their industry.  That is why I always encourage entrepreneurs to also find a “content mentor” – someone with a depth of experience in their industry.

Why two mentors?

Some of the best business advice I received when I was an active entrepreneur was from people outside of my industry.  They brought a fresh perspective and asked questions that someone inside my industry might never ask.  Sometimes “the way we do things” in an industry may not actually be the best way to do things.

But, every entrepreneur also benefits by getting help from battle-scarred industry insiders.

When seeking out people to serve as mentors of any kind it is best not to come right out and ask them to be a mentor – at least not a first.  Mentoring is not a one-way street.  It is a relationship that needs to be mutually beneficial.

What do mentors get out of the relationship?

Some mentors will see a financial benefit from the relationship.  They see the entrepreneur as having great potential and want to have the opportunity to participate in deals as an investor or in some other significant way as the entrepreneur’s career unfolds.

For other mentors it may be more of an intrinsic reward.  Perhaps the entrepreneur reminds them of themselves when they were just getting started.  Or maybe someone helped them as a mentor early in their career and they just want to “pay if forward” by helping young entrepreneurs.

Remember that the best relationships take time to develop.  Get to understand what a potential mentor might want from the relationship.  Time will tell if it is a mutually beneficial relationship.

And what do I get out of mentoring entrepreneurs?  I love to be around people with so much enthusiasm and optimism.  It gives me hope for the future.

The post Find Two Mentors appeared first on Dr Jeff Cornwall.

This time the problem that they debt solution is being applied to is small business exports.  In a report just released by the Office of Advocacy of the SBA we are told that if only we could make more debt available to small businesses they would be able to export more products outside the US.  The study says that smaller small businesses are in particular need for more governmental help with credit.

Most surveys of small business owners tell us that the weak economy and sluggish sales are their biggest problems, and not the availability of debt.  Very few small business owners say that they are having problems getting the credit they need in recent surveys by the NFIB.

Tight credit is not their problem.

A recession (or however you want to characterize the current economy) that has lasted five years with continued double digit real unemployment and ongoing economic uncertainty has created tight wallets among consumers.

Add to this the complete confusion over the impact of ObamaCare and other new regulations, increasing taxes, and an attack on free markets and we can see why small businesses are so cautious right now.  Many of those who have survived the last five years are just a bit shell shocked right now and in no mood to take a risk on preparing for expansion.  They are not building inventories, not investing much in fixed assets, and not growing their workforces.

More debt is the last thing most small businesses need right now.  Sure interest rates are low right now, but they are artificially low.  Small businesses do not have the financial statements to support increased debt.

I thought one of the lessons of 2008 was that we should not be encouraging banks to give credit to those who really can’t afford it.  And yet here we go again recommending that we find policy solutions to encourage banks to issue more debt for the smallest — and most fragile — small businesses.  Not good policy and a lousy business decision for banks to make.

I have written before about why entrepreneurs in the US are not engaged in international commerce.  American entrepreneurs are just not comfortable dealing in international markets and often don’t even consider exporting products.  Americans don’t travel abroad as much as people from other parts of the world.  We don’t speak second languages.  It is an issue that has roots in our society and culture — not in the amount of credit available to small business.

The post Same Wrong Answer appeared first on Dr Jeff Cornwall.

Vinyl Me, Please is seeking to tap into the renewed interest in vinyl records.  According to Nielsen SoundScan, the demand for vinyl records has grown for the past five years.  There were 4.6 million newly pressed vinyl records sold in 2012, which is a 17.7 percent increase from the previous year.

Music enthusiasts love vinyl records for the warmth and depth of their sound.

The niche that Vinyl Me, Please fills is to bring new and interesting music to a new generation of vinyl record enthusiasts.  Each month the subscribers to Vinyl Me, Please are sent a brand new, hand-wrapped vinyl album from a relatively undiscovered artist.

In addition to the monthly vinyl record, subscribers are assigned a personal music consultant who gets to know their musical tastes and preferences.  Every month the consultant creates a personalized playlist specific to each subscriber.

Vinyl Me, Please brings together in one service what today’s young music enthusiasts want.  Their customers love the sound of vinyl, they like to interact on social media with friends about new music to try, and they like the surprise factor they get from services like Pandora.

The challenge with their business model is that although they have identified what their market wants, their model has proven to be a challenge to scale to a large enough size to pay the founders a consistent salary.  They need to grow to at least 700 subscribers to reach this important milestone.

“The biggest challenge we face is keeping the personal touch,” says Fiedler.  “We think this is what makes the experience unique to a lot of people and is something we’re going to have to fight through in order to achieve true scalability.  We need to find a way to maintain a personal touch but be able to bring a massive number of customers into the system without it straining the resources of the company.”

They have recognized that it will not be possible to continue to hand wrap the albums as the business grows.  They also are looking at ways to make the personal consulting more efficient.

“We have plans to set up an internal database that allows us to categorize and sort music to create a more efficient process around creating playlists,” explains Fiedler.  “We are also looking at rolling out a playlist-only offering that will help us capture more users and, at the same time, start paying our consultants without dipping into the revenue that comes in from standard, full-membership subscribers.”

The entrepreneurs behind Vinyl Me, Please recognize that just finding a market niche is not always enough to build a sustainable business.  Adjustments in the business model are often necessary to be able to grow a business to the point that it can provide a consistent paycheck.

The post Scaling Requires Business Model Pivots appeared first on Dr Jeff Cornwall.

We also got similar warnings from our banker, who said he always worried the most about his clients who were growing the fastest.

While we did not heed the warnings of these two mentors and grew much faster than we should have, we did survive.  And along the way I learned a very important lesson about the challenge of managing growth.

The road to growth can be both narrow and treacherous.  There is not a lot of room for error, and when you make a mistake it can lead to serious or even fatal consequences for the business.

There are two ditches alongside the road to growth.

One ditch is the one that catches those businesses that underestimate what they have to do to manage their growth.  This is the ditch that most people worry about with fast growing businesses.

Entrepreneurs who end up in this ditch spend too much time continuing to be involved in the day-to-day operations of the business and not enough time working on creating an organization that can support growth.

These entrepreneurs move too slowly to build a team to whom they can begin to delegate important functions and tasks.  As they add employees, they don’t create systems and procedures that make sure work gets done efficiently and effectively.  They don’t think about what organizational structure will best support their strategy and achieve their goals.  And they don’t take the time necessary to intentionally build the culture they want to have within their business.

Entrepreneurs who get caught in this ditch alienate customers with poor service and lose their best employees due to frustration with the constant internal chaos.

If failure is the ultimate result, it is not because of a poor product.  It is due to poorly managed growth.

The other ditch is the one that catches those entrepreneurs who actually over-prepare for growth.

These entrepreneurs hire too many managers too quickly, added overhead expenses that the business is not yet ready to support.

They also make systems and procedures that are much more complicated than necessary, also adding to cost and bogging down employees and customers in excess complexity and paperwork.

Eventually it can seem like employees are serving the system, rather than the system supporting them and making their jobs more manageable.  And even worse, customers can begin to feel like they are serving the company rather than the company serving them.

If failure is the ultimate result for entrepreneurs who end up in this ditch, it is due to over-managed growth that kills the innovation that made the business special and successful.

So what’s the best way to stay between these two ditches during growth?  Moderation.  Entrepreneurs need to be careful about how fast they allow their businesses to grow.  And they need to balance the need for systems and structure with the need to keep the entrepreneurial spirit alive in their companies.

The post The Two Ditches of Growth appeared first on Dr Jeff Cornwall.