Libraries: An invaluable tool for entrepreneurs

When is the last time you have gone to the library?

As an entrepreneur, or a wanna-be entrepreneur, libraries represent an invaluable tool that I fully endorse. Here are just a few reasons why:

• Quiet place to think and fully concentrate on your business plan
• Free access to computers, programs and the Internet
• Free access to a wealth of knowledge via the librarians (really, they are geniuses that can help you find out nearly ANY piece of information that you need)
• Free access to journals and other documents (that can otherwise be quite costly) that can help provide much needed insight into your market and industry
• If your library doesn’t have the documents you need, they can usually access them from another library for you
• From home, you can still usually access many of the electronic tools
• From home, you can also typically submit a research question/request to the librarian that they’ll work on for you

As this week is deemed National Library Week, I encourage you to reconsider what your local library can do for you today!

Steps for Starting a Business

Recently, I've been searching online for potential web resources that outline the steps for starting a business. This would be helpful for someone that wants to start their own business, but isn't sure where exactly to start or what to do. Most people, in my experience, are especially anxious about the paperwork and legality side of a business -- as they usually have the business idea down pretty well.

One of the better "steps" that I found was by startupnation.com, which included the following:

1. Create a Life Plan
2. Choosing a Business Model
3. Create a Business Plan
4. Select a Business Structure
5. Create Key Business Assets
6. Find the Funding
7. Organize Logistics
8. Find Great People
9. Establish the Brand
10. Market and Sell

I liked these steps because it starts out with creating a life plan, which I firmly believe in. You don't start a business just for the heck of it, it needs to fit into your life strategy. I think it is also pretty realistic in the sequence of starting a business. They offer much more detail after every step -- providing the wanna-be entrepreneur with the guidance he/she needs.

The Small Business Planner put out by the SBA is also pretty good as they focus on what is needed not only to start up the business, but also grow and eventually exit the business. They offer a specific set of steps within each of the four categories below.

1. Plan your business
2. Start your business
3. Manage your business
4. Getting out

Building on my previous post about looking for local websites when doing market research, a last source for identifying the steps for starting a business should be a local government website -- depending upon whatever state you live in. As a whole, these websites are not (in my opinion) that great for offering an overall sense of what it takes to get your business started, but they are especially useful in providing you with the paperwork and bureaucracy that needs to be taken care of. As an example, the State of Illinois offers a step-by-step process with links embedded to all the necessary government forms.

Information Overload

The good thing about the Internet is that it makes an enormous amount of information available at your fingertips.

The bad thing about the Internet is that it makes an enormous amount of information available at your fingertips. It is like going to Wal-mart to buy toothpaste and feeling a bit overwhelmed at ALL the many different kinds and choices you have -- when all you wanted to buy was just some ordinary toothpaste!

The real question then becomes -- how can you maneuver online to find good and useful information for the purposes of starting your own business? Here are just a few suggestions...

- Trade Association websites: One of the first places to look should nearly always be a trade association website. Most industries have trade associations (i.e. National Restaurant Association) and they can be a wealth of statistics, knowledge and trends -- that can very well impact the development of your business idea. To find your trade association, simply do a google search of the words 'trade association' and whatever industry it is you are entering.

- Find websites 'close to home'. For instance, if you are looking to start a business in the state of Illinois, you might look to the Illinois guide (sponsored by the state government) that includes details specific to that state. Also, check out your local Small Business Development Center or economic development corporation. It is a good place to look for local grant and loan programs that may be of help.

- Entrepreneurship-related magazines: There are many magazines geared to entrepreneurship that have a lot of up-to-date statistics, articles and help by topic that can also be a good starting point. One of my favorites is Entrepreneur Magazine.

- Try the SBA: The U.S. Small Business Administration actually has quite a bit of good, basis information to start with. Check out their small business planner.

- Get some referrals: Pick up the phone or go talk with people to find out what websites they recommend. Word of mouth is usually a great source!

How do you sift through all the information on the web?

Web Resources: DocStoc

A while back, I was referred to a website called 'DocStock.' Here are the main benefits:

(1) Find Documents

- Download legal, business, tech & educational documents

- Store your documents online for free

- Get your documents indexed by search engines

(2) Share Documents

- Upload and share your documents with the world

- Get business leads by sharing your documents

- Embed documents on your blogs and websites

I was a little skeptical at first, but then I gave it a chance and browsed around. I personally have always thought that it is easier to start with an existing template instead of starting from scratch. The types of documents available under the business category include biz planning, contracts, employment, financing, job descriptions, operations, project management, sales and marketing, and Spanish press releases. Hmmmm....ALL the kind of stuff an entrepreneur needs to do to actually get the business up and running.

If you are looking for some help with putting together a business plan, for instance, they have over 3000 documents on this topic alone - and that are further segmented by due diligence, executive summary, Internet start-ups, Market research and sample business plans! I also appreciate the fact that you can also choose to view the most viewed, downloaded, reviewed, recent and/or highest rated.

Now, keep in mind that some of this is more or less junk and useless. You also have to beware that their is nothing backing the actual quality of the documents, But, that said, there is a lot here that as an entrepreneur I believe you will find of use. Don't reinvent the wheel (or shell out a lot of big bucks) unless you have to.

Do non-profits need social media?

If you are an entrepreneurial non-profit, or wish to be, some of the questions that you might be wondering is (a) what social media applications are appropriate? and (b) how should I integrate them?

Like for-profits, I suggest starting with a bit of market research. See what your 'competitor' non-profits are doing, or perhaps better stated, what other best practices are out there that you can learn from. If someone else is doing it, it makes much more sense to take what they have done and customize it to your specific needs/preferences. A website that was recently referred by the Church of the Customer blog is the "Association Social Media WiKi." Although the number of associations that have registered to date is not huge, you can definitely pick something that is relatively close to your industry and see what social media venues it is using and check them out. A great start.

Assumptions versus Knowledge

One of my favorite quotes is that new ventures have a 'high ratio of assumption to knowledge' (McGrath & MacMillan, 1995, p. 4). Essentially, when you start a business, you are relying on a huge pile of assumptions. Take the business plan, for instance. It is an important tool that I highly recommend, but it is based almost completely upon assumptions such as what price you think you can charge, how you think the customers/competitors will react, the sales you think you can get, etc. You will likely get financing if your assumptions appear believable, but it is still not a guarantee of success.

As a business grows, however, this ratio of assumption to knowledge should change. You will get customer feedback regarding your prices and products/services. You will see how your competitors react. You will find out how much sales you can actually build. Then, if you are going to be successful, you integrate this knowledge into your working business plan to reduce your reliance on all those unknown assumptions. 

As I am writing this blog, I am sitting here at my favorite coffee shop and just finished a conversation with the owner. (By the way, if you ever get to Linton, IN, you have to look up Francisco de Borja!!!) They are in their second year of business and he described their experience thus far as a roller coaster as they try to figure out what works and doesn't work for their business. One example he gave me was their pastry cases, they realized that customers are more apt to purchase pastries if they are on the counter where they can see it and help themselves rather than in the case. I've also noticed that they have modified what they sell for lunch and also what they sell retail.

What I admire about their business is that they are willing and open to taking in new knowledge and integrating it to produce a more successful business. Other businesses can get stuck on that initial business plan (based entirely on assumptions) and don't take the opportunity to adapt and grow into a mature business with the new knowledge being given.

 

Commercializing your new product

Coming up with a new idea is an essential part of the entrepreneurial process, but that idea alone will not turn you into a successful entrepreneur. Sometimes I even think that coming up with the idea is the easy part, and that turning an idea into a business is really the hard part. VentureNet Iowa is a new organization that is dedicated to helping Iowans in the commercialization process. Their model below is a great representation of the many key questions that need to be asked throughout this process.

 

 

 

 

 

 

 

 

 

 

In my experience, I have found that individuals tend to have specialized knowledge in different aspects of this model. For instance, you might have an inventor or an engineer that is great at coming up with ideas, but they might not have that much knowledge of the marketability or how to write a business plan, or vice versa. The answer it to know where your strengths lie and then surround yourself by people that can help you. This is valid for both independent entrepreneurs as well as corporate entrepreneurs. Before pursuing my Ph.D., I worked for Brady Corporation and at the time they were spending a significant amount of time and effort to create teams across the product/market/business arenas as they knew it would enhance their ability to better commercialize products successfully.

Many thanks to my former student and respected colleague, Cris Grunewald, for passing this model along.

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.

Learning from Franchises

Even if you are not interested in starting a franchised business, there is a lot you can learn from franchises in general.

Take, for instance, the rankings put out by Entrepreneur Magazine. If you look at the top new franchises for 2008, which include Instant Tax Service, Massage Envy and Snap Fitness, you gain insight into some of the latest trends for new businesses. When looking at the top overall franchises, including 7-Eleven, Subway and Dunkin' Donuts, you can further investigate what they are doing right to be able to expand so much (and then possibly replicate their strategies).

When you research an individual franchise that is in an industry that you are considering entering, you can also gather quite a bit of market research to help you put together your business plan. For example, what is their location strategy? Do they only locate in metropolitan areas, near major freeways or in malls? What is their marketing strategy? (it is obviously working and you can learn a thing or two here) What are the capital requirements? What can you expect in sales? Margins? What processes and systems do they have in place to run efficiently? And, yes, you can find this all out. A lot of this information may be on their website and you can also ask to have additional information sent.

Internet Market Research: The Competition

Whether you are in the process of writing your business plan or already in business, it is always helpful to assess how the competition is doing. Prior to the Internet, we were somewhat limited to physically visiting the competitors to obtain marketing information, gain insight through interviews (if possible) and observation. However, with the Internet, there is so much more!

The most obvious starting point is the competitor's website. Here, you can find out details such as their logo, sales and marketing strategy, promotions, pricing, hours of operation, etc. However, don't just stop there.

Next, do a search of newspaper and magazine articles. It is here that you might find out more important details such as estimated sales, any negative occurances, management changes and more.

Then, it starts to get fun. Do a general web search (such as google or my personal favorite dogpile.com) to see what you can find. Pay special attention to blogs. People share a lot of information in their blogs - for both personal and commercial usage. Some of the more interesting ones to read are the personal blogs where current and prior customers talk about how good/bad their experience was.

You can also look for industry related websites that offer ratings. Make sure you not only look at the ratings, but also the comments included as they can also give you some insight into how they are doing. For example, on milwaukeemoms.com, the members (mostly females with children) have rated how kid-friendly restaurants are in the area. On dine.com, you can see customer ratings on restaurants across the U.S.