A Long Journey

In May of 2005 Jason Duncan walked across the stage at Belmont’s graduation.  At that moment he became the first alumnus of our new entrepreneurship program.

Like many who have followed him, Jason had worked on a business he wanted to launch while studying in our program.  His plan was to move to Montana and open a coffee shop.  He even had a name for his coffee shop – EVOKE.

However, as is often the case, nothing went according to plan.

Try as they might, he and his wife Jenni were never able to open their coffee shop in Montana.  But they did find a way to get into the coffee business.  Since every attempt to open a store seemed to meet a roadblock, they adjusted their business model and opened EVOKE as a mobile coffee catering business.

“EVOKE did not set out to be a mobile coffee catering company,” said Jason.  “But what we found out is that we grew up doing this, made money, and knew that we now had a foundation to stand up on.”

Although they had success with their mobile coffee catering business in Montana, in 2008 they decided that their best chance for long term success was to move EVOKE to Jason’s home town of Oklahoma City.

“When we moved EVOKE to Oklahoma City, we knew we had two options:  to work our tails off and learn from our mistakes in Montana or shut EVOKE down and move on,” said Jason.  “We knew we could be better.  We took the first option and worked tirelessly to run a solid company based on what we had planned years ago.”

Jason and Jenni realized they would have to adapt their business model once again in this new market.

“Oklahoma was very different than Montana,” explained Jason.  “We had competition, which we did not have in Montana.  So, we focused on a key part of coffee:  The relationship.”

The customer relationship part of the business model is the one that most often gets misunderstood.  There is not one best way for all businesses to interact with customers.  But there is one best way for your business model to build a relationship with your customers.

The large national coffee chains are built on a relationship with their customers that supports the core of their business model, which is efficiency.  They are good at getting a large volume of people through their stores each day.

EVOKE’s business model was based on a different relationship with their customers.  They chronicled their ups and downs openly and honestly in a blog to allow their customers to get to know them on a more personal level.  They worked hard to become part of the fabric of their community. By following this model, EVOKE has become one of the top coffee catering businesses in the country.

But they never lost sight of their original plan.

“We did not change our vision as we grew and kept our eyes on the ‘final’ goal — if there is one in business,” said Jason.

So on the first of May this year, their plan to open a coffee shop finally became a reality.  They opened the first brick and mortar EVOKE coffee shop in Oklahoma City.

Then Comes Generation Z

USA Today ran a story by Rebecca Walker on the entrepreneurial nature of Generation Y.  They have three interesting profiles on Gen Y entrepreneurs.

Here are my thoughts that I shared with the author for this story, which regular readers have heard me say many times:

Generation Y is the most entrepreneurial generation ever. Parents raised their children to be independent. This generation feels a general sense of distrust for large organizations and government.

What will be really interesting to watch over the next decade or so is the next generation coming along — Generation Z.

These are the children of Generation X.  They share some characteristics with Generation Y.  For example, they seem to view entrepreneurship as a perfectly normal career path.

But they have some fundamental differences.  Unlike Generation Y, they will probably not be seeking balance and meaning in life from their careers.  They are driven, high achievers.  They are the first generation for whom the constantly connected, social media world is ubiquitous.

Should be a fun ride as they start to enter university programs like ours.  We will need to be adjusting our programs and probably our expectations as this group begins to replace the Gen Y folks in our classrooms.  They will challenge us to integrate technology and social media in our classes.  They will be looking for more high growth opportunities than the Gen Y folks have..  And we will have to get comfortable with their multi-tasking personalities.

This may be about the last generation I teach.  By the time they have worked their way through the system it will about time for me to open my bait shop.  I will always be teaching in some fashion.  I will continue writing and will certainly honor the life time warranty I offer my alumni.

I will be leaving the next generation — will they be “Generation AA”??? — to my younger colleagues.  Who knows what they will bring into this world!

Find Yourself a Coach…and Listen!

A growing part of my job here at Belmont University is coaching.

We offer our students a “life-time warranty”.  We never take ownership in a student or alumni business and we never take a dime of consulting money from them no matter how successful they are.  We are always there to be their teacher, their mentor, their friend, their therapist, and most of all, their coach.

Besides the teaching I do in the classroom, this is easily the favorite part of my job.

Our students and alumni have learned how to seek out and accept feedback, constructive criticism, and advice.  But not all entrepreneurs have developed this skill set — and it is an essential skill that does not get talked about often enough.

This is something we have learned does not come naturally to many of the entrepreneurs we work with in our program.  Our faculty and staff often talk about what we are doing to try and help student entrepreneurs to become more receptive to our input.  For some students it comes quickly, but for others it can take months or even years to get them to understand the importance of seeking our council and to listen to what others can offer from an informed, outside perspective.

There is too much risk and uncertainty out there.  It is essential to find people who can help you see issues and problems that you are ignoring.  They also help you to discover the things that you don’t know that you don’t know.

Toddi Gutner has a post at Business on Main that helps explain how to become a “coachable” entrepreneur.

Working On the Business Easier Said Than Done

Entrepreneurs face a difficult challenge in how they should be spending their time as a business grows.

 

The dilemma is commonly referred to as needing to “work on the business rather than work in it.”

 

Typically, entrepreneurs are heavily involved in working directly with their customers during the startup phase. They do much of the work necessary to generate revenues. Tasks such as sending out invoices, bookkeeping and developing marketing materials are squeezed into their days as they can find time.

 

And if there’s no time during the day, these things may get put off until the end of the day or the weekend.

 

But with growth comes the need to add more employees, and with a growing staff comes the need to develop procedures and systems to make sure that all the necessary work of the business gets accomplished.

 

This is when entrepreneurs’ own job description needs to begin to change, as it is up to them to “work on the business” and make sure it evolves and develops.

Easier said than done

 

However, for many entrepreneurs this transition in roles is much easier said than done.

 

Often it’s the “in the business” work that led someone to start the business in the first place. The owner may have started a cabinet company because he loves working with wood. Or someone may have started a Web development company because of her design skills and knack on the computer.

 

It can be hard to let go of work you really enjoy doing.

 

Another issue that can get in the way of this transition for the entrepreneur is being uneasy with delegating important tasks to others. Developing good training programs, clear procedures and effective systems can help make that process a successful one.

 

I hear from many entrepreneurs that the process of moving from a hands-on role to more of a management role can create anxiety. They tell me that they feel they’re not busy enough. Or they say that they feel as if they’re not really contributing.

 

From my own experience, I can say that these feelings will ease over time as the business grows and the entrepreneur becomes more comfortable in his new role.

 

Some entrepreneurs are not sure what success looks like when working “on the business.” They are more accustomed to checking things off the to-do list by working with customers and doing more routine work.

 

But creating effective systems and building a strong culture will become a bigger part of the entrepreneur’s job. Any outcomes from these tasks will evolve slowly. Therefore, it will take a long time to see the results of these efforts.

 

It’s best to view the transition of the entrepreneur’s role in the company as a one- to two-year project. As you begin to delegate parts of what you do, replace them with things that will improve the business and help it grow.

 

Moving from working in the business to working on the business is best accomplished if it’s viewed as a gradual process rather than an abrupt event.

Moving Beyond the Kitchen Table

Bootstrapping is the name of the game for most startups. By keeping their expenses low, particularly overhead costs, entrepreneurs are able to start businesses with limited initial funding. 

A bootstrapped startup also allows the entrepreneur to determine what the market really wants without having to lock in specific long-term expenses tied to a specific business model. 
Once the business model has been tweaked enough that it begins to attract a significant growth in new business, the entrepreneur needs to shift modes and begin to create more formal form and structure to the business. This stage of development usually involves two major changes: hiring employees and moving into a legitimate space for the business. 
However, walking over the threshold from bootstrapping and model testing to the commitment of adding fixed overhead expenses can be a frightening step. 
“I think one of the struggles of starting a bootstrapped company is when to finally make the call to take on long-term commitments,” said Kurt Nelson, a Belmont University alum and co-founder of Aloopma, a design firm with links to the Bonnaroo music festival. 
“In the bootstrap world you fight to survive. You watch every dollar very closely. You sign short-term leases, hire freelance contractors and buy inexpensive desks and furniture that may not match.”
But the extreme bootstrapping approach can only take a business so far. 
One of the first big decisions is choosing when to move out of the bedroom, kitchen, coffee shop, garage, basement or wherever a business was formed during its startup days.
“Making the move into a legitimate office space is something that we put off for quite some time,” said another former student of the Belmont University entrepreneurship program, Jake Jorgovan, co-founder of Rabbit Hole Creative, a firm that does unique digital advertising and event graphics. “The money we saved in overhead was money we were able to put back into our pockets and into growing the business.”
That penny-pinching approach allows for only limited growth. 
“Eventually we realized that we needed a legitimate office,” Jorgovan said. “It was somewhere around the time when we had seven people working out of a 150-square-foot apartment, and I was sitting on a box because we were out of chairs. That was the moment when we realized it was time to upgrade our space.” (The company moved to new digs on lower Broadway above a restaurant.)
Adding employees is the second major step that can be intimidating for entrepreneurs. The thought of being responsible for other people’s livelihoods can be daunting. 
“Pulling the trigger to bring on salaried positions is a tough spot for a bootstrapper,” Nelson admits.
Jorgovan agrees, adding, “It was a tough decision because when you hire your first employee you realize that someone is counting on you to bring in revenue every month to pay their salary. It’s a whole new emotional level when you’re responsible for other people’s financial well-being.”
But an entrepreneur working alone can’t do it all. Eventually he or she will have to begin adding employees to support the demands of a widening base of customers. 
I recommend that entrepreneurs never lose the bootstrapping spirit. But they also need to understand that some of the extreme steps that worked in those bootstrap days can actually strangle a business after it has left the starting gate.

Bigger is not Always Better

One long standing aspect of American culture is that bigger is better. 
We seem obsessed with having the biggest city, the tallest building, the busiest airport or the largest house. When I went to business school in the 1970s, we were trained to pursue one goal: maximize market share. 
Even today when students in my classes describe the businesses they want to start, many feel the need to explain, justify, rationalize or even apologize if they do not plan to grow the venture to meet its full market potential. 
However, I always make a point to caution them about what I call the Growth Myth of Entrepreneurship, the myth that the success of a venture is best measured by the size of its revenues. 
The truth is that growth is not always good for an entrepreneurial venture. 
A banker once told my students, “The leading cause of business failure is business success.” 
What he meant by this is that to be successful with a growing business, one must also create systems, build infrastructure, grow the team and secure critical resources to support growth. 
To survive and thrive as a growing venture, entrepreneurs cannot simply run things the same way they did in the start phase of the business. If they don’t change how they run things in the growth phase, the odds of the business surviving the trials and tribulations of growth aren’t very good. 
So how big should an entrepreneur plan to grow the business?
Before answering this buy topiramate and phentermine question, we need to understand what needs to be grown. 
Revenues should never be the primary focus for growth, profits should be. Profits are what allow an entrepreneur to earn a salary and build wealth. Revenues should only be grown if they help grow profits. 
Too often, I see entrepreneurs chase customers just to build sales without making sure that those new sales will actually earn them more profits. 
The goal for growth should be tied to the entrepreneur’s aspirations and financial goals. Some people describe this as simply pursuing a lifestyle business. However, I would argue that every business is a lifestyle business. It all just depends on the lifestyle that you want to pursue. 
If you grow your business deliberately based on your goals and aspirations, you can create a business that is an intentional reflection of the lifestyle you would like to live. Entrepreneurs should always remember that success in life should be so much more that simply growing a company and making money. 
One of my favorite quotes about success comes from someone who grew a very large business. Paul Orfalea grew Kinko’s from a single copy shop into a huge chain of stores that eventually was sold to FedEx. 
When asked after all the things that he had accomplished since he opened his first store, what was his biggest success, Orfalea replied, “Success in life is having kids who want to come back to visit you when they’ve grown up.” 

Happy Easter

We’re off to spend Easter Break in Miami with my parents. I’ll be back some time next week.
If you get a chance, make sure to watch Belmont take on Duke in the first round of the NCAA tournament this Thursday at 7:10 p.m. EDT.
Go Bruins!!
Have a Happy Easter!
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