Jumping Out of the Box

You'll notice a new title to this blog. The new dubbing feels to me like the right fit. It will be around for a while. Why did I change the name (yet again)?

Entrepreneurs often feel that just by their nature, they are out of the box thinkers. And they are in the sense that "corporate America" is the big box. However, the vast majority of entrepreneurs, jump out of that vast box, into a much smaller box, with an equal set of beliefs, guidelines, norms, and culture. The intent of this blog is to identify and discuss the nature of this box, and possibly, maybe how to jump out of this box as well. And maybe, just maybe, become an innovative leader with a product that will change the world.

I'll be working on new organization for the site over the next few weeks. To date, its just a bunch of thoughts, but watch out, organization is coming!

What's the trend that is going to impact business landscape 10 years from now?

As all types of resources become more in demand, we are moving to more commodity-driven market places. Oil has lead the way, with wheat and corn close behind. These three items drive cost of living indexes, and the daily patterns of us all. We like to think we live in the age of technology, and to be sure, innovation is increasing rapidly. However, it is traditional commodities that now drive our markets in ways we could never have imagined.

Globalization only expounds this phenomenon. Commodities are much more heavily contested and traded (driving prices further). We are feeling the full weight of population explosions, as global population growth and consumption has finally outstripped our ability to increase resource delivery. As the American dollar plunges in value, the USA's ability to purchase resources becomes crippled, while other nations abilities is enhanced. (There is a positive side to this, as the USA has the opportunity to become more of a producer of resources, mitigating its huge consumption trend.) This upset will take years to stabilize, and will create new way of doing things. Off/on-shoring will take an entirely new meaning.

What does this mean for technology? Technology will move to a more utility role. It will be the medium/tools that the new global commodity market is driven with. Innovations will center more on telecommunications, logistical mapping and control, trading, and process analysis. Business solutions, as opposed to consumer solutions (which have driven technology over the last 5 years). As consumer consumption slows down and business demands increase, this is already beginning to show in the market. Technology will always be innovating, however it will now be the tools of innovation, not the product of innovation.

As with technology, everything else will be driven by the acquisition and transfer of resources. Developing countries are well positioned to take advantage of this, which will ultimately balance the global economy in a way that is difficult for us Americans to imagine. The great fortunes, innovations, and entrepreneurs of the next age will be the innovators of this model.

Two Styles Create Two Outcomes of Entrepreneurship

There are many different ways to become an entrepreneur and many different styles of entrepreneurship. However, entrepreneurship can be very roughly categorized into two styles. These can best be defined by their desired outcomes.

The first is a "Lifestyle Entrepreneur". This entrepreneur wants to create a good income for themselves, wants to be in complete control of that income, and wants the flexibility to make lifestyle decisions- such as take the day off to go fishing, or take three weeks off to take a family vacation. In this path, lifestyle may take precedence over overall return on investment. As long as a substantial income continues, the entrepreneur is happy. Most "mom and pop" businesses fall under this category. Most small businesses also fall here, as well as independent professionals such as doctors, dentists, accountants, and attorneys. The risk is often relatively short lived and minimal. One can make a very good living as a Lifestyle entrepreneur,and if they manage their finances smartly, can become independently wealthy. However, at times, lifestyle may trump finances. The business then runs into problems.

The second style of entrepreneurship is what I call a "Impact Entrepreneurship". The desired outcome is high-growth. This type of entrepreneur typically wants to grow from a small business to a large business. They want to either make an impact on the world or create great wealth- often a combination of both. These people are willing to undertake larger risk over an extended period of time with the vision of large returns. The organization is designed (or should be) for constant and radical growth (2-4x revenue each year). Margins are thin in the first 3-5 years. However, once high-growth has been achieved, some very attractive exit strategies materialize. A first or second round of funding can occur to take growth to the next level. Or the company for a significant profit to the owner. Both can create great wealth, the first allows the entrepreneur to continue to create an impact or "change the world".

Sometimes a lifestyle business will accidentally convert to a high-growth business. This may be driven by changing goals of the the entrepreneur. However, sometimes it just happens because the business is at the right location, in the right industry, with a rapidly growing demand. In these cases, the entrepreneur must make a choice to change personal goals and lifestyle, or to suppress the business. This decision is often be delayed because the entrepreneur is uncomfortable with the related decisions. Delay serves to suppress the business. Organizational, financial, and quality control decisions that support high growth are not made. The business can begin to crumble. Perhaps not immediately, but surely over time.

Lifestyle entrepreneurship is most often engaged to create a sense of independence, that the entrepreneur is not reliant upon anyone for income, expertise, and lifestyle decisions. It takes time to achieve this goal. Lifestyle entrepreneurs are often frustrated with slower results. Further, if presented with a high-growth opportunity, Lifestyle entrepreneurs are often reluctant to give up independence and decision-making power. Impact entrepreneurship is dependent upon many factors. Financial obligation exist to investors, banks, or both. Expertise is generally held by an employee or partner. Decisions must be delegated. The market is often more volatile. Business travel is required. Time obligations are intense. This is a much different lifestyle.

The rewards are different. Successful Lifestyle entrepreneurship creates financial freedom and a fluid lifestyle relatively quickly. It creates a "family" business that can be passed on. It creates the satisfaction of being a business owner. Successful Impact entrepreneurship creates significant personal wealth, but is delayed 5-15 years. This personal wealth creates greater freedom and can be passed on to family or charity. It creates the satisfaction of having made an impact on the world around you.

Neither is the right way. But both have distinctive requirements and a conscious decision should be made at all times to engage in one or the other. You may have to make this decision every year. Your personal goals may change. Life is like that. But we must make the decision and take responsibility for the obligations and rewards associated.

The 4th Component of Entrepreneurial Success: Capital

In the first article on this site, I wrote "Energy can be defined as four things in this case (and in most cases): time, capital, action, and commitment.... A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested." The time has come to address the most sensitive and mysterious of these: Capital.

I am often approached with the request, "Can you help me get some money?". My answer is, "Sure, how are you selling?" The reply is usually, "Well, I am not selling anything, but I have a great idea!" That's swell, really neat.

There is a series of articles that I will write on this point and I am here to say that I am not the authority on raising money, but I get it. I know how to do it. Let's cover the basics in this article, and we will digress after that.

The bottom line is this: If you want someone to invest money in your business, you MUST show them how they will make a RETURN on that investment.

I am now going to repeat that in many other forms. An idea is worth nothing. Revenue is worth everything. It doesn't matter how great the idea is, you have to be able to sell a product to create value. An idea creates no returns, revenue creates returns. An investor wants to make more money on their money. They do not invest in a great idea, they invest in revenue. If you can't show how you are going to create revenue, your idea is worth nothing.

OK. Now that we got that out of the way, I am betting that at least half of you don't get it yet. The single biggest problem with a start-up is the entrepreneur only builds half the business. Most entrepreneurs start-up with a passion for creation. I don't discount this. In fact, I applaud it. I don't have it. I have a passion for the other half. Taking the business to market. In order for any business to be successful, you have to be able to take it to market.

Therein lies the twist, the mystery and the key to success. In order to be successful, you don't need to have money, you need to be capable of making money. If you can demonstrate this capability, or at least show me a great plan, I can find you investment capital. Angel funds, angels, and private equity will flock to your business.

The 3rd Component of Entrepreneurial Manifestation: Action

In the first article on this site, I wrote "Energy can be defined as four things in this case (and in most cases): time, capital, action, and commitment.... A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested."

In start-up, turnaround, and growth phases of business, consistent and progressive action is critical to success. It is about momentum, or the flywheel effect. A little bit of action feeds momentum, which creates more action, which creates more momentum, and so on. Similarly, if action pauses or ceases, the wheel slows and can rapidly come to a stop.

Everyone understands this. There is no need to type a slew of words to describe it over and over. Why then do we let action die? The answer is simple: excuses. Excuses are the enemy of action. Excuses are the antagonist of entrepreneurial ventures. Excuses have the ability to kill a business before it starts.

Excuses can kill action very subtly and quietly. For example, we have to wait on X before we can proceed with Y. Seems pretty straight forward. Things happen in progression, right? No. Milestones may happen in progression. But tasks leading to milestones may often happen concurrently. Let's take an example.

Bob is ready to open his bakery, but the outside needs painting. The painters are delayed by two weeks (aren't they always?). Bob doesn't want to open the store before the storefront is ready. He can list 6 reasons why he shouldn't. 5 are very good reasons, but they are all excuses. Bob can open the shop today. Sure, people might be leery of entering a store with peeling paint. Sure, Bob will have to set up a protective covering to shield customers as they enter. Sure, he will have to set up extra ventilation in the front of the store so that customers can smell the bread. But he will be moving forward. And when the painters finally finish, his sparkling new store front will already be open, will have a few customers, and will be ready for a Grand Opening fiesta.

This is an exceedingly simple example with many holes. But more complex examples involving agents and lawyers are the same. The question is, "What CAN I DO to keep momentum rolling?" Look for housekeeping tasks: strategic plans, business plans, accounting systems. Operational planning has dozens of tasks that can be revisited at any time. Marketing research can be done at anytime (and should be). Strategic relationships can be fostered.

At the end of every day, ask yourself, "What did I do today to grow my business? How did I feed the flywheel today?" Because if you didn't feed it, it is slowing to a stop. And no excuse is good enough to let that happen.

The 1st Component of Entrepreneurial Manifestation: Comittment

In the first article on this site, I wrote "Energy can be defined as four things in this case (and in most cases): time, money, action, and commitment.... A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested."

The first and most important of these is Commitment. Commitment is the basis upon which the other three components can grow and flourish. Commitment is the driving force. And entrepreneurship needs a driving force, for it is a path full of obstacles, hurdles, challenges, doubts, nay-sayers, and do-nothings. It is only with commitment that time, action, and money can maintain momentum in the face of these fantastic foes.

Commitment can be defined very simply as consistent and imperturbable motivation to achieve a defined outcome. This is best identified in the face of adversity, but it can also be equally recognized in the face of prosperity. As individuals, we are equally likely to "slack off" during good times, as we are to be disheartened during bad. Commitment never wavers from the defined outcome, even in the midst of extraordinary middle success. And need it be said that they exhibit the same steadfast character in the face of failure?

Consistent: firm, coherent; steadfast
Imperturbable: not easily excited or upset; marked by extreme calm and composure
Achieve: obtain, attain; perform, accomplish; succeed.
Define: explain, clarify; limit, set boundaries.
Outcome: consequence, effect, result, event, materialization

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Intrapreneurship: Anyday, Everywhere Entrepreneurship

I recently learned a new term that delights me: Intrapreneruship. Wikipedia defines an intrapreneur as "the person who focuses on innovation and creativity and who transform a dream or an idea into a profitable venture, by operating within the organizational environment." This delights me for two reasons. First, it steps outside the box that entrepreneurialism is typical placed in. Second, it describes much of my career in a word.

In my bio or my personal elevator pitch, you will frequently find the words "worked within an entrepreneurial environment for much of his career". Now I can just say "career intrapreneur" and be done with it. How great is that? I have not yet started my own high-growth entreprise. I will, later in life. But I have helped many people bring their dreams to fruition. Is that not entrepreneurship just as much as the founding father/mother? The fact of the matter is that entrepreneurial behavior is everywhere. It drives growth in every aspect of life. It is the foundation of evolution. We would not have the wheel or fire without entrepreneurial activity.

For us to package entrepreneurs in a box that says "Sole Proprietor", or "Start-Up", or "Small Business", or "Venture Capital" is completely missing the point. The fact of the matter is that our the word entrepreneur is like the word "snow", one word used to describe an entire variety of actions. The Inuit have more than four dozen words for "snow", each to describe a different type of snowing, or a different type of snow flake. Entrepreneurialism is the same. Here are just a few other words for entrepreneurs: Project Manager, Preacher, Farmer, Broker, Mother, Architect. Entrepreneurs are creators and innovators. They are people that drive change, create growth, and embrace progress. They are everywhere. They are our future.

Post-Script: Anytime that I discuss entrepreneurship in this blog, I am also directly referencing intrapreneurship. The founding principles are one in the same.