What’s in the World of the Entrepreneur? Deborah Ferro Burke, Ph. D William Polk Consulting Alliance February 11, 2010
Plan: Presentation with Discussion Some statistics Types of entrepreneurs Starting up Exiting Consulting need indicators Cautions for consultants Why work for entrepreneurs? How to work with entrepreneurs Ethics
A form of social responsibility Entrepreneurs renew society by constantly looking for opportunities to make products, institutions and practices better. Bill Green University of Miami Kauffman Foundation
Kauffman Foundation 2008 first month of significant business activity Innovation, improvement, creativity, social responsibility, economic engine Young firms: 2/3 of job creation, 4 jobs per firm 0. 32% of adults created a new business each month More than half-million new jobs per month
Kauffman Foundation 2008 first month of significant business activity Increases 2007 -2008 Lowest and middle income-potential businesses Men (women increased after previous decrease) Most for Latino, Asian, white, immigrant Non-college educated Widening gap between immigrant and native born Latinos increasing, lowest income potential Asians increasing, highest income potential Blacks decreasing
Kauffman Foundation 2008 first month of significant business activity Decreases College-educated Highest rates of activity Ages 55 -64 Construction #1, services #2 Increases in all regions except Midwest NY #3, MA #4
Types of Entrepreneurs Inventor: Wow! Have I got a neat idea! Cutting edge: start it, sell it, make $, repeat Friends: let’s make neat stuff together I can run this better: outsourced product/service Practicing professional: my one true niche Serial:
Types Franchise: why reinvent the wheel? Main Street: in my own home town Artists and creative folks Social: focus on the mission, be of service Intrapreneur: fly below the radar Lifestyle: when I’m not skiing…
Starting up Just do it. Who needs sleep? It’s my only activity, but I’m not obsessed Who has an extra garage? couch? I’ll ask my brother for money We’ll get cash flow from the first client This is what I’ve been saving for My credit is good, they approved
Starting up My local bank has good loan rates I’ll keep waiting table I know where we can get used parts Glad I’m on someone’s payroll I’ll take the buy-out
Exit Strategies Turn it into a stream of income Scale it – franchise, on the web, copyright merge, sell, IPO and go Sell but stay in work less, do special projects go back to the lab I love Keep doing it: COO/CEO/Professional expand, go public, right-size it Buy-out or be bought-out by partners
Consulting Need Indicators Crisis, problem No plan, no progress Growth exceeds capacity Sudden big win Event or milestone New regulations/legal requirements Market changes: bigger, smaller, different Supplier changes: commercial or technical Customer changes: commercial or technical Leadership changes: planned or unexpected
Cautions for the Consultant May not have money May not understand implications Hot-shot, “I can’t fail, ” won’t listen Idealist, shouldn’t be constrained Can understand only by doing Needs support, not real consulting You may have to be very patient These clients can be very needy
Why work with entrepreneurs? It’s fun, it’s easy, why not? You believe in the mission Fill in between other projects Relatively small, simple, local Pilot a new approach References, connections
How to work with entrepreneurs Offer small chunks Pick affordable price points Tailor the scope “Used” not invented, left-overs Give warm-fuzzies, be nice Be patient, this enterprise may grow High stakes for them, familiar for you
Ethics Familiar to you, but high stakes for them How much should you give away? How much can you re-cycle? How much can you experiment? Should you get paid if they’re barely making it? Should you defer pay? Should you get paid in products or stock? What if you could do it better than they are? What happens when partners fight?
Entrepreneurs come in different flavors • forms, motivations, success rates, styles • Are an engine of economic growth • half-million new jobs per month • Can be good clients if • you understand them • know how to work with them
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