Born or Made?

The age old question debated in entrepreneurship classes across the world: can an entrepreneur be taught or is there an entrepreneur gene? According to a recent Babson College study, there is overwhelming evidence that taking two or more core entrepreneurship courses positively influenced the intention to become an entrepreneur and actually becoming an entrepreneur. The study consisted of 3,755 Babson Alumni, a prestigious private business school in Massachusetts, who graduated between 1985 and 2009.

The basis for the study was the prejudicial question many scholars and business professionals posed, “Is entrepreneurship worth teaching?” With the new empirical evidence from Babson’s study, educators can rest at ease that their coursework does a positive influence on students. In addition, business students learn that entrepreneurship classes can help a student decide if they want an entrepreneurial career path and if they think they have what it takes to succeed as a business owner.

Some other interesting facts that study uncovered include:

·         Males are more likely to become entrepreneurs than females

·         Having entrepreneurial parents played no significant role in become an entrepreneur

·         Full time students are more likely to become entrepreneurs than part time students

·         MBA or graduate students had no difference in wanting to become entrepreneurs

·         Greater job satisfaction lead alumni less likely to want to become entrepreneurs

References:

http://www3.babson.edu/Newsroom/Releases/bygrave-research-on-e-value.cfm

http://bostinnovation.com/2011/06/20/can-entrepreneurship-be-taught-a-babson-college-study-says-yes/

Keeping your Trademark Yours

A trademark can be more valuable to a company than the majority of its clients. Large companies that have built their brand names with millions of dollars in advertising and hours upon hours of hard work go to great lengths to protect themselves from trademark infringement. Why should a small business shy away from protecting itself?

If some company improperly uses your trademark and then produces inferior quality goods it can lessen the brand value for your company. In addition, if a larger company steals your trademark, consumers may think the theft was the other way around since you are the smaller enterprise. In the end, actively policing your trademark’s safety is the only way to ensure your brand stays clear of infringement.

A few tips for protecting your trademark and your brand:

1.    Hire a watch service

A trademark watch service does just that. They will actively and continually monitor all activity that has to do with your mark in order to prevent brand dilution. Watch services will mine through trademark registries to find copy cats or ones that are too similar. Remember trademarks are territorially based, meaning that just because you registered in the United States does not mean you are protected in France.

2.    Lawyer up from the beginning

Some small businesses attack trademark violators only to find that they are not the original creators of the trademark to begin with. To avoid such costly and embarrassing situations, you should hire a trademark attorney to ensure that the mark will be legally yours from the beginning. Trying to settle things up in the end always ends up being more costly.

3.    Be cautious in protecting yourself

Creating cease and desist letters is not the easiest endeavor. Seek professional help from an attorney who deals with these issues regularly. At times a cease and desist letter may not even be necessary. While in other situations, the wording of a letter sent out could be potentially harmful to the letter writer.

4.    Do a little on your own

The overall majority of the protection for your trademark should be left up to professional services: lawyers and watch services for example. But it cannot hurt for you to do some self monitoring in your own. There are services such as Google Alerts that will notify you every time it sees your mark appears in the news or the web. Note that Google Alerts should not be your only method of protection and does not substitute for a lawyer or professional watch service, only as a supplement.

The Mission Statement: 3 Questions You Need to Answer

A mission statement needs to be concise and aligned with the company’s vision. Too many firm’s missions end up becoming an exercise in futility, but a well-formed, thoughtful mission statement can be a company’s lighthouse in the corporate storm. An effective mission should carve the organization’s purpose down to its core values and goals. To avoid a worthless mission statement, team leaders need to ask themselves three key questions: what, how and for whom?

What?

The firm needs to answer from the customers’ perspective. What does this firm offer its customers? Take for example an insurance firm. When asked what the firm does, they could answer: “We market affordable health insurance.” However, to truly understand what insurance firm x does, they need to answer from a buyer’s perspective. In this case, they might answer: “We provide financial security via affordable health insurance.” Looking from a consumer-fulfilling perspective will help answer the other two questions.

How?

In answering the ‘how’, the management team will describe how the physical product or service is brought or delivered to their customers. The description should match the consumer-focused answer to the first question. Until the firm reorganized its answer to the first question, Insurance firm x originally began selling insurance the traditional way, door to door. After insurance firm x modified its ‘What’ answer, it realized in order to make its product more affordable to customers the firm should begin selling via telephone. The delivery method needed to match the product being sold.

For Whom?

To narrow the firm’s marketing efforts, insurance firm x must define its target market. To get started classify the demographic and include any possible buying limitations. The basic characteristics of the firm’s average customer are important in order to form marketing strategies. In addition, since insurance firm x shifted its business from in-person sales to phone sales, the firm is able to cut out geographic limitations for its potential customers. As the business grows, more target groups may be added and limitations may be added or subtracted. As time goes on, the firm can write individual, specific mission statements for each customer group in order to better serve each target market.

In the end, a mission statement is meant to guide your business by focusing the firm’s efforts on the few most important avenues. That said, the mission statement is not intended to narrow the focus so much that the company ceases to innovate. As the company grows and the surrounding environment varies, the mission statement may need alterations in order to stay on target. Therefore, the mission statement should not be set in stone, instead it should be revisited every so often to make sure it is still an accurate assessment of the business’ goals.

References

http://sbinformation.about.com/cs/businessplans/a/mission.htm

http://www.wikihow.com/Write-a-Mission-Statement

http://www.inc.com/ss/5-tips-on-developing-an-effective-mission-statement#0

The How, When, and Which to Incorporation

When starting a business, most entrepreneurs will have to eventually ask themselves: Should I incorporate, what is the correct entity type, and how do I incorporate if that is the right move? To accurately determine the answer to these questions for each individual firm must look at a couple key considerations: tax and legal. The five main business structures to examine are sole proprietorships, partnerships, corporations, s corporations, and limited liability corporations.

*The following entity structure definitions come directly from the IRS website, irs.gov

Sole Proprietorships

A sole proprietor is someone who owns an unincorporated business by himself or herself. However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation.

Pros:

-Quick to start

-Maintain complete control of the business

-Free from many various regulations

-Pass through entity

Cons:

-Unlimited liability

-Difficult to expand past a certain size: hiring employees and obtaining financing

Partnerships

A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return.

Pros:

-Easy to start

-Pass through entity

-Spreads risk among partners

Cons:

-Unlimited liability for all partners

-Less control over business decisions than sole proprietorship

-Any one partner can cause dissolution

-Must have at least two partners at all times

-Difficulty in transferring interests

Corporations

In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.

The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation.

Pros:

-Limited liability

-Guaranteed continuity of life

-Can raise capital or financing through sale of stock

Cons:

-Difficult to set up

-Double taxation

-Faces regulations to doing business

-Multiple parties required to make decisions

S Corporations

S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.

To qualify for S corporation status, the corporation must meet the following requirements:

• Be a domestic corporation
• Have only allowable shareholders
• including individuals, certain trust, and estates and
• may not include partnerships, corporations or non-resident alien shareholders
• Have no more than 100 shareholders
• Have one class of stock
• Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.

Pros:

-Limited liability

-Avoids double taxation

Cons:

-Limited size growth

-Formation costs

-Passive income limitation

-May be responsible for additional state taxes

Limited Liability Corporations (LLC)

A Limited Liability Company (LLC) is a business structure allowed by state statute. LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation.

Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single member” LLCs, those having only one owner.

A few types of businesses generally cannot be LLCs, such as banks and insurance companies. Check your state’s requirements and the federal tax regulations for further information. There are special rules for foreign LLCs.

Pros:

-Rather easy and inexpensive to establish

-Limited liability

-Pass through entity

-Possible to have a single owner

Cons:

-Difficult to issue stock for an IPO

-Self-employment tax

-Must operate as a distinct entity and not as part of owners’ personal affairs

Choosing an entity structure is not only about the particular tax burdens and legal requirements along the way but also about planning for the eventual liquidity event or exit. How the business will eventually end, in terms of the original owners, plays a part in the business’ structure as well. Certain structures are better geared towards particular exit strategies. For example, if the ultimate liquidity goal is an IPO, an LLC is not the best option. On the other hand, if the goal is complete, singular control over a firm, a sole proprietorship might be the owner’s best choice. In summary, one set of factors does not entirely dictate the entity structure decision. Look to all relevant factors before making the decision.

References:

http://www.inc.com/guides/201103/s-corp-vs-llc.html

http://www.inc.com/magazine/20090101/how-to-choose-the-right-legal-structure_pagen_2.html

http://www.irs.gov/businesses/small/article/0,,id=98277,00.html

http://somersetblogs.com/2011/04/11/which-business-entity-is-best-for-you-pros-and-cons-of-different-business-structures/

Top 5: The Most Hopeful Social Entrepreneurs of 2011

Social entrepreneurs harness their business savvy to solve society’s social issues through creating a viable and functioning social venture. While social enterprises are measured in the traditional sense (profit, etc), they are also graded, more importantly, based on social capital, or their return and impact on their social goals. Here are Business in a Nutshell’s top 5 picks for this year (not in any particular order):

1.    Sustainable Harvest

Portland, OR

Founded: 1997

Employees: 30+

Last Year’s Revenue: ~$32 million

David Griswold founded Sustainable Harvest with the goal of building a socially responsibl coffee importing business. Sustainable Harvest creates a linkage between growers in developing countries throughout Latin America and East Africa and roasters in developed nations. Since its inception, Griswold’s firm has channeled over $1 million to coffee-growing communities. Sustainable Harvest invests upwards of 60% of its operating income to train and build infrastructure to its chain suppliers.

2.    Southern Bancorp

Arkadelphia, AK

Founded: 1986

Employees: 300+

Last year’s Revenue: $60+ million

Founded by a prominent group of Arkansas business people and government leaders, 

Bancorp’s goal is to reduce rural poverty in Arkansas through reducing unemployment rates and increasing high school graduation rates. An affiliated non-profit helps achieve those goals through dividends earned from the bank. Bancorp competes with traditional banks head to head and funnels its profits bank into the community.

3.    The Redwoods Group

Morrisville, NC

Founded: 1998

Employees: 90

Last Year’s Revenue: ~$12 million

Founder Kevin Trapani’s, insurance company insures YMCAs, a typically undesirable niche market. Redwoods Group insures 480 of the 970 YMCAs in the United States. Trapani’s firm strives to implement measures to reduce YMCA accidents, such as drowning, transportation incidents, and sexual abuse.

4.    Progreso Financiero

Moutain View, CA

Founded: 2005

Employees: 200

Last Year’s Revenue: N/A

Financiero specializes in making micro loans (avg. $900) to Hispanics who lack the necessary credit to receive regular bank loans. When the loans are repaid, the customer’s progress is reported to credit bureaus to build their credit scores. The yet-to-be profitable firm has made over 50,000 loans since its inception, and estimates $50 million in revenue by year-end 2011. Recently, Progreso has landed $28 million in venture capital and former Visa exec joined its board. 

5.    Organic Valley

LaFarge, WI

Founded: 1988

Employees: 500+

Last Year’s Revenue: ~$500 million

Begun as a small co-op of Wisconsin farmers, Organic Valley has come to include 10 percent of all U.S. organic farms. Organic Valley strives to hold its 1,200 members to higher standards than the organic certification standards. The co-op hopes to improve consumers’ view on organic products as well as benefit individual farmers across the country.

References:

http://www.pbs.org/opb/thenewheroes/whatis/

http://www.skollfoundation.org/skoll-entrepreneurs/

http://www.ashoka.org/social_entrepreneur

http://www.organicvalley.coop/

http://www.sustainableharvest.com/our-impact/

http://images.businessweek.com/ss/10/06/0608_socialentrepreneurs/19.htm

10 Keys to Delivering a Killer Presentation

Speech giving is an unforgiving area few business men and women have honed due in part to the fact that many components make up the perfect presentation. There are several steps necessary to create any speech. To summarize, the author of the presentation must determine the reason(s) for giving the speech, define the audience, collect information, structure the information appropriately, examine and review the presentation, and lastly, deliver the final product. The information’s structure and delivery is the core of the presentation because the audience sees and hears these components. Presentation delivery is important because it affects the speaker’s credibility, validity and presence.

Eye Contact

               Make eye contact with the audienc

               Do not:

                         Scan the audience too quickly

 Look at the floor

 Gaze at the horizon

Voice

 Speak two levels higher than normal

 Not too fast, not too slow

 Use pitch and inflection, stay exciting

 Articulate and enunciate

 Emphasis

            Use purposeful pauses

 Language

 Powerful

 Clear

 Appropriate

            Audience dependent

 Stance

 Stand shoulder width apart

 Square up to the audience

 No swaying, pacing or weight shifting

 Keep arms at sides and shoulders level

 Gestures

 Use meaningful, appropriate gestures to emphasize

 Gesture in the chest/shoulder region

 Do not fidget or use distracting mannerisms i.e. playing with hair, jewelry, etc

Space and Distance

Nonverbal intimacy

            Degree of perceived physical or psychological closeness between people

                   Reduce barriers between speaker and audience

                   Stand front and center

                   No pacing or dancing

                   Take command

       Use meaningful movement to enhance transition and flow

 Time

 Less is more

 Stay short and concise

 Keep it under 20 minutes if possible

 Attire

 Dress one notch above the audience

 Notes

 Do not use any

 Address the audience extemporaneously

            Conversational tone

 Polish

 Prepare, practice, polish

 No fillers   

                          Avoid: um, err, ahh, like, okay, etc

                          They sound unprepared

When presenting, the speaker wants to be perceived as poised, dynamic, confident and enthusiastic. These traits will give the audience the perception of leadership in a speaker. If the audience perceives the presenter as their leader, they will pay more attention to what he says and be more willing to agree in the end.

References

Limon, Sean. Professional Communication. 2009  

Where’s the Best Place to Start Your Business?

What makes a place a fertile breeding ground for new business growth? In the past, many have tried to determine the ultimate formula for deciding the greatest cities to start a new venture. Here, we borrowed from Inc.com’s “Top 25 Cities for Doing Business in America’s” decision criteria, in which the top criterion was current and historical job growth. In a nutshell, job growth statistics reflect more than just a single factor. A city’s educational systems, living costs, taxes and regulatory environment, in addition to numerous other measures are the typical gauges used by other lists in determining the best cities for small business. “Business in a Nutshell” has found a factor ultimately representative of all the most important singular factors.

Do not be surprised when the highest ranked cities are not the biggest, most innovative cities of the 2000s. During the recent recession cities in previously “backwards” areas of the country have stepped up their game and managed to trudge through the poor economy, poised to take off in the near future.

10. Bakersfield, CA

Population: 800,458 

The cornerstone of Bakersfield’s economy is agriculture, manufacturing, and petroleum extraction and refining. Even though the city’s rapid population growth has begun to slow, Bakersfield is still growing because of its relatively low cost compared to Los Angeles. For firms looking to expand to service the Southern Californian market Bakersfield is a comparably cost-effective option.  

9. Fresno, CA

Population: 505,479

Stimulated by population growth and affordable real estate costs, Fresno is poised for rapid growth in the high-end service, information technology and manufacturing sectors. As costs increase in the Bay Area and other previously booming California tech hubs, Fresno is becoming a viable alternative. 

8. Sarasota, FL

Population: 55,241

Despite being hit hard by the downturn in the real estate market, Sarasota’s heavy retirement and tourism industries have kept the city more than afloat. Due to the age range of the population, healthcare and financial services have prospered in recent years. Community organizations such as SCORE have helped small businesses in the area with financial and managerial advice.

7.  Madison, WI

Population: 222,428

Madison boasts a highly educated workforce due in part to laying claim to one of the region’s top universities. In addition, Madison is strategically situated between Chicago, Milwaukee, Minneapolis and St. Paul. What it lacks in relatively high housing and property taxes, Madison makes up for in great tax incentives for small businesses, including an angel investment and venture capital tax credit.

6. Green Bay, WI

Population: 302,935

Green Bay lacks the population-driven growth that the larger cities such as Las Vegas and Atlanta. What it lacks in population Green Bay makes up in with a skilled labor force, a diversified economy, and a reasonable cost of living.

5. West Palm Beach, FL

Population: 99,919

South Florida’s favorable tax structure, the perceived high quality of life, and reasonable housing prices make West Palm Beach a great location for a start-up ventures. Henceforth, several major corporations have headquartered in the area. Also, a large cultural and arts population help draw tourism to an already popular tourist destination.

4. San Antonio, TX

Population: 1,251,086

While San Antonio benefits from a talented labor pool, it also offers very low cost of living compared to other cities its size. In fact, over 16,000 start ups were launched last year. Healthcare, tech, and financial services form the base of San Antonio’s economy. Because of San Antonio’s proximity to several military bases, the city also attracts lucrative military contracts. In addition, amusement parks in the area draw a steady flow of tourism into the city.

3. Las Vegas, NV

Population: 1,951,269

Despite the dip in tourism following the recession and 9/11, the steadily growing population has made the housing construction industry important to the city’s economy. In addition to home building high-end sector jobs and manufacturing has begun to make its way to Vegas. However, tourism remains the keystone to the Las Vegas economy.

2. San Bernardino, CA

Population: 209,924

San Bernardino has earned the sobriquet the ‘inland empire” and well deservedly. While living and business costs have sky rocketed in the Bay Area, San Bernardino has maintained a relatively stable and affordable cost of living. Not only does tourism draw a stable economic base but also the nearby universities provide a steady supply of educated workers.

1. Atlanta, GA

Population: 4, 500, 000

Top-tier universities, major corporate headquarters and one of the largest international airports in the country help place Atlanta at the top spot. Atlanta has many of the big city advantages without all the big city negatives, such as high cost of living and large tax burdens. In addition, Atlanta has one of the most diversified economies in the nation as opposed to some of the other major cities: New York (finance) and San Jose (technology). Atlanta’s broad economy has better allowed the city’s businesses to take advantage of the recovery efforts.

Now that you know the top ten is it time for a move? Remember this, these cities are great choices for starting a business if a fresh start or relocation is in the cards, but the most important factors in launching a new business do not change from year-to-year like the top cities’ do: strategy, tactical planning, and sound execution.

References

http://www.inc.com/magazine/20040301/top25.html