Thoughts on Entrepreneurial Education

October 12, 2018 Commentary, Entrepreneurship, Featured Comments (0) 41

In December, I will complete the required coursework and earn a master’s degree from Western Carolina University’s Master of Innovation Leadership and Entrepreneurship program. Over the course my graduate work I have been asked many times if a master’s degree is worth the money if I really needed a master’s degree to be an entrepreneur, what prompted me to continue my education, and why I chose a Master of Entrepreneurship degree over an MBA.

As I wind down the program, I wanted to share my perspectives on these questions and offer other thoughts on entrepreneurial education.

My motivation for pursuing a graduate degree.

When I started the program in January 2017, my primary purpose was to earn the credentials to teach courses as an adjunct in higher education. My goal was to teach the basics of licensing and intellectual property protection to those students, like my summer interns from Savannah College of Art and Design (SCAD), who were on a path to creative careers but seemed to have little knowledge and understanding of licensing options for generating revenue and the importance of aggressively protecting their creations.

It was apparent to me that those with aspirations for careers in the creative arts are missing education in the fundamentals of business necessary to support themselves in those careers. I saw this not only in my student interns but also in my interactions with working artists and creators some of whom have been out of school for many years. I wanted to teach students how to establish a better business foundation for extracting long-term value from their future creative careers.

Two years later, my desire remains fundamentally the same; however, my vision is different. The coursework for the master’s program led me to think more broadly. We live in a world where corporate loyalty to employees is virtually nonexistent, and many individuals are pursuing entrepreneurial endeavors—some out of desire, others out of necessity. Moreover, the Internet enables everyone who wants to start a business, a way to find an audience, sell a product or service, and facilitate the delivery of...

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The Founder’s Identity Crisis

October 2, 2018 ENT600 - Entrepreneurial Planning Comments (2) 56

There are just a few things you need to launch a business.

You need a vision (the ability to spot an opportunity or solve a previously unsolved problem), confidence, desire or passion, and a high tolerance for the probability of losing everything.

Fundamentally, this is all you need. These four things will get your business off the ground and, probably, help you land your first few customers. You don’t need much money to make this happen, and when it does, you’ll become a startup founder.

Growth, however, will bring new challenges.

Growth means you’ll probably need more employees, maybe a partner or two, a board of directors, and likely investors. You’ll need to learn new skills—what I call “adding tools to the toolbox”—so your business can scale and so you can become more effective as a founder. You’ll need to learn how to become flexible, how to be accountable to others, and become comfortable leading rather than dictating. You’ll need to improve your communications skills. You’ll need to define, develop, and maintain a culture, and figure out how you’ll deal with internal, and external conflicts (Eisenmann, Howe, & Altringer, 2017). These basic skills will carry you far, particularly if you are self-aware and introspective, and understand your shortcomings. With these “tools in your toolbox” you’re on your way to “Chief Executive Officer (CEO)-material,” but you’re not a CEO.

This point in your growth is where you get yourself into trouble as a founder. You want that CEO title because it gives some prestige and respect. While you may be the highest ranking individual in the company, overseeing the corporate decisions and managing operations, it’s disingenuous to claim the CEO title when you have only a few employees, and you’re flying by the seat of your pants, which is usually the case in a startup. You’re not fooling anyone with the title, let alone an investor.

When you take on investors, you must become a CEO; not just call yourself the CEO. The desire to have the CEO title without accumulating the skills necessary to be the CEO is the fastest way for...

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Interview: Lynda Liner on Entrepreneurial Recruiting

October 1, 2018 ENT600 - Entrepreneurial Planning, Interviews Comments (0) 886

The following is an interview with Lynda Liner, Senior Executive Recruiter with Victoria James Executive Search, for my Entrepreneurial Planning graduate course. Lynda and I have known each other since 2015 when she recruited me for a position in a small business. We discuss entrepreneurial recruitment for A-Players.

Q. Please share with me a little about your background and experience recruiting.

A. Thank you, David, for the invitation to share insights into the recruiting industry.

My early introduction to recruiting was joining a well-known international retained executive search firm as Assistant to the Administrative group that allowed me to learn the industry literally from the bottom up and benefitting from support from mentors while advancing and working each layer of recruiting: research, strategy, candidate development, interviewing, client management – total experience and education in Best Practices and Values I continue to apply today. The CEO of the recruiting firm gave me advice I’ve never forgotten, “Always remember, recruiting is a contact sport.

Things happen when you engage with people.”  And has influenced my dedication to the best possible experience and service to our clients and our candidate professionals.

Q. Your areas of expertise, as I understand it, are in the sales and marketing disciplines. In your experience, how important is it that entrepreneurs find the right talent for roles in these disciplines in a startup? Why do you believe this to be true?

A. The “right” sales and marketing talent will ultimately be responsible for the forward success of an organization. A start-up would initially focus on sales and marketing as the backbone and frontline of an organization and primary management partnership to establish a solid foundation on which to build the organization’s mission, philosophy, culture and simultaneously developing a strategy and action plan for their product or service.

To confirm the importance of identifying the right talent for sales and marketing, in my experience, having placed numerous marketing professionals in middle to senior management roles, I’ve observed large and small companies, from start-up and established, realize positive outcomes, e.g., increased revenue, brand awareness, acquisition, other - as a result of successful key...

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Is your startup hiring?

September 28, 2018 ENT600 - Entrepreneurial Planning Comments (0) 63

If it is, you are likely asking yourself who it is you truly need to hire.

You often have many needs, but you also have a limited payroll budget. The temptation is always to hire the most technically skilled person for the job, for the least amount of payroll. Getting the biggest bang for your buck sounds logical, but is it?

If you have started your hiring search by developing job descriptions that incorporate both hard skills and soft skills, you’re off to a good start. When those resumes start coming in for review, there are other things to consider. For example, are you looking for generalists or specialists? Do you want individuals with a small company background or big company background? How about experienced versus inexperienced? It depends in part on your business needs.

If your business operation has formalized processes and procedures, you will likely want to hire a specialist because they are likely to be focused on maintaining efficiency in their areas of expertise. If your business is more flexible than formalized, you might find that a generalist is a better hire because they can tackle almost any task with some degree of efficiency and effectiveness (Wasserman, 2012). Generalists bring a broader skill set that may help you get your business off the ground, but as your business grows the job requirements will likely become more specific, and you may find the need more specialists to support your day-to-day operations.

Related to the consideration of a generalist versus a specialist is the place at which the applicant’s prior experience has occurred. While some argue that those with a lot of experience in a small company are a better fit for a startup because they have been in the trenches and likely understand the challenges (Wasserman, 2012). Conversely, those who have a big company background can bring a wealth of knowledge about operational processes that might be beneficial to a startup (Wasserman). The experience that comes from each background can add value to a startup founder, but the big company versus small company experience is just one part of the equation.

Perhaps the most challenging...

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Thinking Hard and Soft

September 21, 2018 ENT600 - Entrepreneurial Planning Comments (2) 86

Skills are both quantitative and qualitative.

Quantitative, or hard skills, are measurable and can be, for the most part, expressed with numbers. These are skills that can be taught, defined and measured. Accounting, architecture, computer programming, and auto mechanics are among many hard skills. Hard skills are acquired in on-the-job training, formal education, and apprenticeships. And when you complete your training you are thought possess the skills for which you have been trained. You have a certificate or diploma that asserts in an objective manner that you have attained a certain level of proficiency with consistent results.

Qualitative, or soft skills, are also measurable, but not necessarily by quantifiable means. Most soft skills are considered personal attributes such as patience, tolerance for ambiguity, empathy, courtesy, flexibility, decision-making, reliability, or language proficiency (Ramsoomair & Howey, 2004). Of course, these skills can be taught, too. You might have learned them at home, on the playing field, or in a classroom. However, defining and measuring the impact of these skills is much more difficult. You might be able to take a course in soft skill, for example, but assessing your proficiency in that skill defies most testing. Because, whether you possess a soft skill and use it well is often subjective.

In the broadest sense, some might argue you can learn hard skills but have a more natural tendency toward certain soft skills based in part on your personality. For example, you might be well-educated and have a lot of experience in our field, but if you don’t work and play well with others finding and keeping a job might be a challenge.

You might worry less about finding and keeping a job as an entrepreneur, so you probably think less about soft skills. Yet soft skills are an essential component of your ability to launch a business.  Soft skills, for example, are necessary to both build and maintain social and business networks. Such skills also support your decision-making in day-to-day operations and guide your strategy development. It’s difficult to recognize your own soft skills, let alone those such skills in partners and prospective employees. But,...

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Hiring People Like You

September 15, 2018 ENT600 - Entrepreneurial Planning, Entrepreneurship Comments (2) 113

You will have the desire to hire people like you when you're an entrepreneur.

Leveraging social capital to build your founding team makes it easy to hire people like you. People with your values, your background, and a substantially similar knowledge base can be advantageous for you, the founder. You’ll have a common language, communication may be more comfortable, it will take less time to get those new hires up to speed, and you will have greater confidence in their ability to achieve your goals and objectives (Wasserman, 2012). Hiring people like you might seem to be a smart business choice.

When you hire, people like you are probably hiring them because you have had a good working relationship in the past. You hire people you like and people with whom you enjoy working. You hire them because your experience tells you they are good at what they do. You hire them because although they have different areas of expertise—sales, marketing, or finance—they are likely to have similar backgrounds, networks, and possibly industry knowledge. Arguably, this may give you an advantage at first. Surrounding yourself with people like you when you’re risking everything else to get your business off the ground will provide some comfort. On the surface this seems rational; homogeneous teams may make things a little easier in the beginning but are likely to be the cause of stress as your business grows.

Hiring people like you means you may be hiring people who have not just similar strengths, but also similar weaknesses. Hiring people like you may also mean few will challenge your view of market opportunities, customer targets, or product features and benefits. People like you will tend to see the world in much the same way as you. And this might mean you miss business opportunities because hiring people like you limit your ability to see much of anything different than you may see it. Hiring people too much like you may well restrict your long-term success in business.

Hire people who...

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Are you building the right kind of capital for your startup?

September 8, 2018 ENT600 - Entrepreneurial Planning Comments (2) 110

In its original use the word, “capital,” referred to the number of cattle a person might own. The headcount of cattle and total assets of the owner were often synonymous in ancient Greece and Rome, so capital took on the broader meaning of “wealth” until sometime in the thirteenth century when it evolved to mean money advanced to an entrepreneur to start a business (Hodgson, 2014). Wealth created through goods and stock—assets that could be turned into cash for investment—became the primary definition of the word capital for more than 500 years.

In the eighteenth century, industrialization changed the economic structure. Labor, as well as money, became a critical factor in the ability to create wealth. Economist Adam Smith recognized the importance of labor in the creation of new products and introduced the idea that “capital” applies to people as well as things (Smith, 1776). Karl Marx expanded on the Smith’s idea, arguing that “capital is not just things or people, but a social relationship between people, established by the instrumentality of things” (Hodgson).  And the concept of capital grew again—financial, human, and social.

In modern economics, capital is typically defined as an asset that you can use to produce something that is economically useful to a business or an individual.  The word, then, has different meaning depending upon its context (Goodwin, 2003). The most common types of capital are:

  • Financial – referring to an investment that produces something of value;
  • Natural – involving the supply of natural resources in any form that plays a productive process in economic gain;
  • Human – referring to individual education, skills, abilities, and labor used in some combination to produce assets for economic benefit;
  • Produced (Physical) – relating to those physical assets (products or objects) created for sale by applying Human Capital to Natural Capital for economic gain;
  • Social – referring to the goodwill, trust, shared values and social knowledge that, in combination, facilitates a financial benefit.

Even with these different meanings, you still might think capital is synonymous with money. And it would make sense since if you’re a founder, you are spending a lot of time raising and...

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Choosing between wealth and control

August 30, 2018 ENT600 - Entrepreneurial Planning Comments (8) 147

You’re an entrepreneur. You identify a problem, come up with a solution, and then launch a business to deliver that solution to the marketplace. And as the company grows, you continue to exercise control over every aspect of it, because after all, it is your idea and your solution, so there is no one better to ensure the vision of the company than you, it’s creator.

Until you’re not.

Many startup founders desire to maintain control as the primary means to achieving their goals with their business. One of those goals, of course, is solving that problem on which the company is built. However, many of the other goals are much more personal. Things like personal pride and wealth, for example, come to mind. Thanks to men like Jobs, Gates, and Zuckerberg, almost every first-time entrepreneur has aspirations of building something big by controlling everything and then gaining fame and a fortune when the company goes public.

It rarely happens.

Pride and personal recognition have fanned the flames of more crashing businesses, than the successful companies those same goals have fueled. Control is the problem for founders who, like Yertle in Dr. Seuss’s Yertle the Turtle, desire “to be king of all they can see” (Geisel, 1958). A king might see the wealth in the distance, but eventually, somebody sneezes, the king loses control, and everything comes tumbling down.

Being a king and building wealth are not mutually inclusive. Some research suggests that if you focus on maintaining control of your business you may become king, but it is unlikely you will ever create significant wealth. And if you focus on building wealth, it is inevitable that you will give up control (Wasserman, 2012). It is rare for an entrepreneur to maintain control and achieve wealth.

Here’s why: Like it or not, your business will inevitably outpace your skills, abilities, and expertise. If you believe controlling all aspects of the company will ensure your success, it is unlikely you’ll recognize when your company has outgrown you. You might be the king, but you’re likely to have little else. Plus, investors don’t like kings all that much. Particularly...

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The Entrepreneur and the Sunk Cost Fallacy

May 25, 2018 Change, Entrepreneurship Comments (0) 359

If you’re an entrepreneur and you’re not familiar with the term “sunk costs” you may have a problem.

A “sunk cost” is any past cost for something that you’ll not be able to recover. Typically, sunk costs are not included when making forward-looking decisions because those costs will remain the same regardless of what you may choose to do. In manufacturing, for example, a sunk cost might be the cost of equipment because it is a cost that has been incurred which will remain constant regardless of whether that equipment produces any product.

Think of it this way: It’s money you needed to spend that you’ll never get back.

The problem for most of us is that our forward-looking decisions become too tied to those sunk costs. We often become emotionally invested and the more investment we make, the harder it becomes to divest ourselves from those costs. In these situations, it is difficult to consider the pros and cons objectively. Instead, we try to recoup sunk costs, which makes us do irrational things.

Researchers Hal Arkes and Catherine Blumer argue that when we continue a behavior or work because of our previous investments of time, money, or effort, we fall victim to what has become known as the sunk cost fallacy (Arkes & Blumer, 1985). We place such a high value—either monetarily or emotionally—on those investments that we irrationally behave when faced with a decision that devalues those prior investments. Moreover, we look for ways to justify our choice rather than accepting the sunk costs as what they are—money we can never recoup.

Let’s look at it a more personal way.

Say you bought a quart of your favorite yogurt at the grocery store. It’s been in the fridge for a few weeks unopened, and putting away the dinner leftovers you spot it and realize that yesterday’s date is the “use by” date on the package. Concerned that it will spoil, you open and eat as much of the yogurt as you can—maybe even all of it—even though you’ve already had dinner because you’d rather do that than “waste your money” on food that will...

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Interview: Jim Mitchem on Entrepreneurship

May 8, 2018 Interviews Comments (0) 922

Jim Mitchem, an author and partner with branding firm Out of the Ether, and I explore starting a service business, the willingness to take risks, branding, continuous self-improvement, and many other things in this interview for my Everyday Entrepreneurs podcast.

 

You can listen below on Soundcloud or subscribe to the podcast on iTunesGoogle PlayStitcher, or wherever you get your podcasts.

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