Posts Tagged ‘Entrepreneurship’

Book of the Week: Good Profit

Sunday, January 10th, 2016
Good Read

Good Read

My business (book) reading this week is Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies by Charles G. Koch. The author is the chairman and chief executive officer of Koch Industries, Inc., a $100 billion company. I have read other titles about the Market-Based Management®  system in use at Koch Industries which seeks to create internal markets to align incentives and actions within the company with the external marketplace in which the company must compete. I am trying to learn more about the MBM approach to aligning resources and opportunities.

This book picks up where Koch’s last book left off by addressing, in greater detail, how to create a company culture that brings forth the best contributions from all employees while ensuring that they are working on the right initiatives. Good Profit also advances a moral defense of capitalism which, despite the occasional market failure, is the best known system for creating wealth and improving human welfare. I highly recommend this book.

Bloomberg Mentor

Saturday, October 23rd, 2010

Bloomberg Business Television has a great new program “The Mentor”, in which seasoned entrepreneurs advise start-ups. The first in the series features Jim Koch of the Boston Beer Company advising two partners who have started a microbrewery. You can watch the program online, which I heartily recommend. Jim Koch’s insight is great. He says:

“Remember that getting rich is life’s biggest booby prize. People who aren’t happy want to be rich.  A small business has a really high chance of making you happy if it’s something you really care about. So focus on that. Whether it’s going to make you rich or not, who the hell knows? But if you’re doing what you love, it will make you happy and you won’t feel like you ever have to go to work.”

Self-Employment Becomes the Only Option for Many

Sunday, September 13th, 2009
Evaluating the Options

Evaluating the Options

With 6.9 million jobs eliminated this year, many unemployed workers are trying to reverse their fortunes by starting their own businesses, either as solo entrepreneurs or by purchasing a franchise. According to the quarterly Job Market Index of outplacement company Challenger Gray & Christmas, 8.7% of the unemployed who found work in the second quarter of this year did so by starting their own businesses, up from 6.4% in the first quarter. But the figures commingle businesses with paid employees with self-employed people who incorporate, the latter representing 75% of all small businesses. Unfortunately, the odds are not on their side; according to the U.S. Small Business Administration’s Office of Advocacy, 50% of new businesses will fail in the first five years. That is in normal times, and we are right now in a difficult recession. The National Small Business Association reports that 60% of small businesses reported declining revenues over the past 12 months, the first time a majority of respondents cited declining revenues since the polling question was first posed in 1993. At the same time, business bankruptcies have nearly doubled over the past two years.  Self-employment and entrepreneurship involve significant risks and at least some modest investment. As such, they are not viable alternatives to lack of opportunities in the formal job market.

Doing Well By Doing Good, Part 8 of an Occasional Series

Sunday, June 28th, 2009
Looking for Direction?

Looking for Direction?

For those thinking of making a change towards more meaningful work in the time of economic stress, perhaps my experience may be helpful. The essence of entrepreneurship is bootstrapping. I described in an earlier posting how I leveraged the only resource I had, my time and enthusiasm, to build websites for my business. I did the same to obtain technology resources. My first small business, Childs Capital LLC, was selected as the grand-prize winner in the sales and marketing category of the 2006 Cisco Growing With Technology Awards. This prize included $25,000 worth of Cisco equipment of our choice and we opted for a complete Voice Over Internet Telephony system.  We were the grand-prize winner of the Visa Business Breakthrough for Small Businesses, which provided a $10,000 grant for small business services. We won second prize in the Microsoft Technology makeover award, which offered a $25,000 package through CompUSA and a $25,000 package through Microsoft. We won the Web-preneur award from IBM and American Express, the SAP Small Business of the Year Award and the technology grant of the Amber Foundation.  Winning the Professional Development Grant of the Web Foundation allowed me to take a fully paid course on DVD authoring at the Sony Training Institute in San Jose.  Taking the time to write the essays in support of the applications provided the small business with much needed resources. Incidentally, the photograph here appears on our Intranet as a navigation aid. After putting all of this technology in place, I put it to use and developed a style guide for our Internet and Intranet. I took this photograph of the country manager for Land O’Lakes in Guinea as we pulled our jeep over en route to Labé from Conakry. Reading the sign was difficult; heavy rains caused the metal sign to rust. Why would you have metal signs in a rainy climate? Good question. The signpost was twisted 90 degrees at the bottom, so it would hard to tell the original directional intent. This photo was completely unposed and illustrates the challenges of working in that part of the world. And a great image to capture the meaning of looking for directions or navigational aids. That is what I love about bootstrapping – it really opens your creativity!

Diversification Lessons

Wednesday, April 1st, 2009
Diversify Your Risks!

Diversify Your Risks!

I often speak at small business conferences and am struck by the number of Baby Boomers approaching retirement age who see entrepreneurship and small business formation as the means of financing their pending retirements. This trend appears to be accelerating in response to declining employment in the corporate sector. According to the U.S. Bureau of Labor Statistics, 2.5 million jobs were lost in the United States since November 2008. The mainstream media are now reporting anecdotal evidence of laid-off workers starting their own businesses as they are unable to find employment elsewhere. CNN reports “No Job? Create Your Own” and the New York Times recently published an article under the headline “Weary of Looking for Work, Some People Create Their Own“. I would be the last person you would expect to be skeptical of this approach, but I am, because I worry that Americans still have not learned the lessons of risk diversification (the term economists use to advise against putting all of your eggs in one basket).

Remember what happened when Enron failed? Enron employees not only lost their incomes when their employment was terminated; they lost their assets and retirement savings that were held in the form of Enron stock. Corporate employees should diversify their risks by investing in stocks unrelated to their employment. Such a risk diversification strategy is much harder for a small business owner to execute. When a small business fails, and the rate of failure is very high, 80% of businesses started today will not be in business five years from now, the entrepreneur not only loses income, he loses an asset – his equity in the business. When you start a business, you often have to provide personal guarantees for services or goods, borrow funds or tap your savings for working capital and otherwise assume financial liability. These are significant exposures in risky ventures. And corporate employment experience is not necessarily good training for running your own business. When I worked for someone else, I didn’t worry about websites or marketing. There were functional departments staffed with specialists that assumed those responsibilities. My role in the company was very well defined. But as an entrepreneur, I have to be a generalist and that involved making a lot of mistakes and learning as I went along. As retirement is several decades away for me, I was and am comfortable with this risk. If I were one or two decades older, I would think more carefully about the consequences of small business failure. Entrepreneurship and small business formation should not be viewed as a panacea for inadequate retirement savings or loss of viable employment.