Best Practices

Subway is one of the top growing franchises in the world. If you were to invest in a Subway franchise, I imagine that your first question would be: What can I expect in terms of sales? Interestingly, if you take a closer look at their franchising brochures, Subway has a policy that 'no employee or agent of ours can provide you with projections as to your potential sales, earnings and profitability.' Instead, they encourage you to talk to other Subway owners. While this is largely due to legal reasons to be sure that they do not misguide you as an investor, their recommendation to talk to other Subway owners makes a lot of sense. In fact, it is the same thing I recommend all of the students and/or entrepreneurs that I work with - find some best practices and talk to them! You can learn a lot not only about what kind of sales projections you can expect, but also learn some great tips about what to do and what not to do. When you are looking for a best practice, look for another business that has a lot of similarities with you, but that are not necessarily a competitor. For instance, if you are going to open a mini golf course in a mid-sized college town, find a different mid-sized college town and talk to them! You may be surprised, as many business owners are more than happy to share their knowledge. And, who knows, you might just find someone to serve on your board of advisers and help you out indefinitely.

Getting help with business planning...

"I need to write a business plan. Can you help?" Given my prior consulting experience coupled with my degree in entrepreneurship, this is a question that I am frequently asked from friends, family, students and others that are interested in starting their own business. As I really like to write business plans (strange as that sounds), I am usually more than happy to help out. However, what I would like to discuss today are some pointers in what kind of help one should look for in putting together their business plan.

• You need to be involved in the business plan process. This is NOT something that you can completely outsource. Why? Because this is YOUR business and although I greatly suggest getting advice from others, you ultimately need to decide what business strategies you will take.
• Find a business plan outline, and then customize it to your specific business. If you are having difficulties finding a business plan outline, do a quick google search. There are MANY web resources. A simple place to start is the SBA. You could alternatively use one of the many books out there -- one that I frequently recommend is Business Plan in a Day by Rhonda Abrams.
• Write the first business plan draft yourself. This may be difficult, but the business plan is essentially a tool for you to determine if you have thought out all the little details that go into starting a business.
• Then, take your business plan to other "experts" in order to get some feedback. Think strategically here. If you are having a hard time with the financials, find a friend or acquaintance in your network that might be able to help here. Other "experts" can include consultants, friends, family members, other business owners, bankers, etc. This is a good time to start putting together your board of advisors whom you can develop a relationship with and come back for advice on a regular basis.
• Revise the business plan, and get more advice. Beware, as different "experts" might have differing opinions on what you should do. This is good -- as it will help you think out the many different paths your business can take. The ultimate decision is up to you
• Last, remember that your business plan is your road map for your business. You want to continuously update it and rely upon it as you plan out the direction you want to go.

Business planning is a lot of work. So is starting a business. Be prepared. Seek help. Be persistent.

"Social" Entrepreneurship

The concept of social entrepreneurship is becoming more common and accepted both in the media and academic worlds. Just what is social entrepreneurship? As summarized by Wikepedia, a social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change.

There are many different examples of social entrepreneurs, but perhaps the best known social entrepreneur currently is Muhammad Yunus, the founder of the Graneen Bank who won the Nobel Peace Prize in 2006. Another one of my favorite examples of a social entrepreneur is Pura Vida Coffee. Pura Vida (which translates to Pure Life - a common phrase in Costa Rica) was started by two Harvard grads who had the "radical idea of putting the power of capitalism to work for the direct benefit of people in the developing countries where coffee is grown."

There are many different forms of social entrepreneurship. On one end, you have a nonprofit that needs to act entrepreneurial to simply survive. In the past 20 years, the number of nonprofit organizations has multiplied, making it more difficult to obtain donors and requiring more justification and quantification of the social benefits being provided. By integrating entrepreneurial principles, nonprofits can become more competitive and more efficient in providing their social benefits. Some nonprofits are even creating for-profit entities to help financially sustain them and reduce their reliance solely upon donations.

On the other end, there are for-profit firms that want to provide both financial and social returns. Perhaps Ben & Jerry's ice cream is a good example, where they have a product, economic and social mission. The extent to which financial and social returns are emphasized varies on a continuum.

What does social entrepreneurship have to do with you? Well, if you are trying to brainstorm a business idea, think about the social needs that exist. If you already have a for-profit business, you can still find creative ways to incorporate the social issues that are important to you.

Startup Weekend

Are you looking for an intense weekend of which you'll walk away an entrepreneur? Formed in 2007 by Andrew Hyde, Startup Weekend offers you just that! In select cities, they bring together a group of highly motivated individuals and leave with a community focused on creating a brand new business of which all the antendees have a share in. Upcoming weekends will be taking place in Bloomington (Feb 8-10), Portland (May 23-25) and Ann Arbor (June 20-22).

For more information, just go to www.startupweekend.com!

SBA: Are you ready to start a business?

The U.S. Small Business Administration is a wonderful resource. Yes, it can be fairly bureaucratic at times, depending on what you want to do. And yes, some parts (especially some of their loan programs) are better for smaller, growing businesses rather that brand new start-ups. However, if you take a look at their website, there are many resources there for the taking.

One of the tools offered is a self assessment of 'are you ready to start a business?' This is ideal for those 'wanna-be entrepreneurs.' What I like about the assessment is that based on the answers you provide, they offer suggestions for your next step in the entrepreneurial process and link you to helpful resources.

This is just a sampling of what is available on the SBA's website. In the coming months, I will periodically profile some of the other facets that I think you will find useful.

Passion

I remember sitting in my entrepreneurship class while doing my undergrad back at Ripon College, and my professor (who is now a good friend) Mary Avery started talking about passion. Once you find something you are passionate about and enjoy doing, the next step was to find a way to make money doing it. A prime example was the horse ranch that Mary and her husband Tom started up - due to her love of horses and riding since she was small!

Why is being passionate about the business so important? Well, for one, if it is something you are passionate about, you likely have a depth of information about it - which can be leveraged in creating a greater competitive advantage. For instance, my friend Michelle (who actually took the entrepreneurship class with me at Ripon College) just emailed me about the business she was starting - Snappy Scrapping. Michelle is very passionate and knowledgeable about scrap booking, and this results in her ability to identify an opportunity in the industry as well as to be able to create high quality products. The second reason passion is so important is because starting a business requires a LOT of hard work and perseverance. Thus, if it is something you are passionate about, you are likely to have more motivation and work through it.

So, if you are still trying to think of a great business idea, ask yourself: What motivates you? What are your hobbies and interests? What are you passionate about? Then - find a way to make your passion your business.

Updated GEM Data

In my post earlier this week, I discussed how entrepreneurial the U.S. was in comparison to other countries in the world. Yesterday, the latest figures updated for 2007 were released by GEM (thanks to Michael Chmura from Babson for the email letting me know). The U.S. decreased slightly from 10% of adult population undertaking entrepreneurial activity to 9.6%. The most entrepreneurial country in 2007 was Thailand, followed closely by Peru. The least entrepreneurial country was Austria.

Another interesting fact from the 2007 GEM report: 40% of the early stage entrepreneurs surveyed expected 25% or more of their sales to come from outside their country.