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How to Teach Entrepreneurship – It’s the Wild West!

Michael Houlihan & Bonnie Harvey — Sun, 30 Mar 2014 00:44:14 +0000

Schools and courses in entrepreneurship are popping up all over the country. Each school has a slightly different approach to teaching this relatively new class study. Some schools have a few specific courses, while others have full curriculums devoted to entrepreneurship.

This results in a wide variety of approaches about how to teach entrepreneurship. Some schools stress the structure and function of building a business and borrow extensively from their business school curriculums, while others are very hands-on and even give academic credit to students engaging in start-ups. Entrepreneurship is so new that there is no consensus on exactly what should be taught.

With the exception of a few schools like Babson that has been teaching entrepreneurship since 1979 and devotes 100% of their classes to it, most schools offer entrepreneurship along with their main, more established majors.

Many universities know they must have entrepreneurship on their curriculum, but what is it exactly? What are the essential courses necessary to create successful graduates? And who will teach it? Have they been entrepreneurs themselves, and were they successful? How is the success of their method of teaching entrepreneurship measured? Is it number of new businesses launched? Or the number of businesses still operating in two years? And how is the success of the graduating students measured? Is it the amount of funding their start-ups garner, the amount of jobs they create, or is it the speed with which they achieve self-sustaining cash flow? These questions have advocates on all sides, and it’s still the Wild West out there when it comes to entrepreneurship education.

Since the first part of 2013, we have been traveling and speaking at colleges, universities and centers of entrepreneurship. We have participated with entrepreneurship education organizations where professors of entrepreneurship debate best practices for teaching this course of study. In the process, we have been exposed to many different approaches.

One of the Guiding Principles for Success we promote is to ask questions. We think it’s the best way to truly understand what your customers, employees, suppliers, and financiers really want. We encourage aspiring entrepreneurs to find out who their customers are at every level, identify their needs, and ask for constant feedback to provide relevant products and services. Why should it be any different for schools who teach it?

We were recently honored to be the guest speakers at Mississippi State University where we had a truly new and unique experience. From the board of advisers to the students, from the faculty to the Entrepreneurs Club, we were asked basically the same question, “What do you think we could do better to prepare students for the real world? Since you’ve been through it yourself and seen over 20 schools of entrepreneurship, what can you tell us about what others are doing, and how do you think we can improve our program?”

We hadn’t realized before that our experience of not only building Barefoot but, more importantly to them, visiting as many schools as we have gave us a unique overview.

We are not experts and what we know is based solely on our own experiences – building a successful consumer products brand, and talking with students and professors. We respected those who asked the question, and gave them several ideas about form and function that you can read in more detail on our Brand Building site, www.thebrandauthority.net

But one thing we did stress is the importance of the Liberal Arts and Sales Training, also known as the “Soft Skills,” because when you are an entrepreneur you are ipso facto a sales person. You must sell your own people, your buyers, their customers, your vendors and your financiers. It’s a firm foundation in the Liberal Arts that will give students a better understanding of different cultures and better communication skills, a necessity for sales. And after all, sales cures all ills!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Take the Time to Explain the Reasons – Part 1

Michael Houlihan & Bonnie Harvey — Sun, 28 Apr 2013 02:49:05 +0000

Training without explaining is like trying to program a computer. The computer will only do what it’s been programmed to do. It will not know why it’s doing it and its approach to the job will be limited to what it’s been directed to do. That approach to training staff has become more and more popular, because it’s easier to explain what you want done than why you want it done. Some say anything more is just too much information and not necessary for the performance of their job. This, of course, results in robot-like behavior that is by the book. But your company will pay the price when an analytical or thoughtful decision is required of that person and they are not prepared to make it. In programming, it’s called a bug, but in human behavior it’s called a misunderstanding. Lack of comprehensive training may be a better descriptive.

In our company, we spent hours making sure that each member of our staff understood the “whys” of what we were asking them to do. This extra time and energy spent in big-picture education paid off handsomely with fewer mistakes, less misunderstandings, and more efficiency. And on occasion, new jobs were designed by our own people to improve our customer service.

Like many production businesses requiring distribution, we had a reoccurring problem with out-of-stocks. Sometimes the problem was at the retail store level and our reps would try to solve those. Other times the issue originated with our distributor. But sometimes the problem was right under our noses, in our own company, and we didn’t see it.

A previously “invisible” cause of out-of-stocks was discovered and solved by one of our own people. But, because she understood the big picture, she was able to identify it even though she was working in a totally different end of the business.

One day out of the blue, a woman in our accounting department came to us and said, “You need a traffic officer.”

“A what?” we said

She said, “You need someone to ‘babysit’ the delivery process from your wholesaler’s purchase order to the trucking company and all the way to our warehouse.”

“Isn’t that the distributor’s and trucking company’s responsibility?” we asked.

She replied, “Yesterday an 18-wheeler drove here from Minnesota to pick up a load, but because the driver didn’t have an appointment, our warehouse manager turned him away due to backed up scheduled orders. The truck drove all the way back to Minnesota – without our product! This means the work you put into getting retail placements in Minnesota will be lost.” She went on, “Last week our LA distributor’s purchase order you got verbally was lost in the vacation shuffle at his own company, so it was picked up two weeks late, resulting in run-outs all over LA.”

We made her the traffic officer the very next day!

Because our company policy was to explain the why’s, she went beyond her job description of sending out invoices for orders that were shipped. Because whatever question she or any of our staff asked was met with a relatively detailed explanation starting with the customer and working back to their job and their question, she gained an insight to our overall operation which alerted her to the problem and allowed her to present a solution.

Next time we will share some of the ways you can give your people a better conceptual understanding of the big picture so they can make better decisions and improve your bottom line. It’s not just what they do, but why they do it!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Happy Birthday Barefoot!

Michael Houlihan & Bonnie Harvey — Sat, 30 Mar 2013 21:06:29 +0000

Twenty-seven years ago, Barefoot Wines were bottled for the first time. But how the wine found its way to the bottling line was a fluke in itself. A farmer wasn’t getting paid for several years for his grapes and his friends went to bat for him to see how much they could collect. It wasn’t easy. The winery owing for the grapes had no money and was in bankruptcy. It was controlled by the secured creditors (other farmers who hadn’t been paid by the winery). They wanted to get paid too. It didn’t look good.

The farmer’s friends managed to cut a deal with the winery to trade for bulk wine and bottling services. It wasn’t going to pay the farmer’s bills, but it was better than what the other creditors got – three and a half cents on the dollar, four years later, with the attorneys taking most of it. The trade was the best option they had.

Next, they had to bottle the bulk wine and sell it. Of course, that meant coming up with a label, a marketing program, a distribution plan, a budget, buyers, and, oh yes, money. They had none of that. In fact, all they had was the wine and the bottling services. So they went to work, hopeful and naive with the wide-eyed youthful excitement of those who have no idea what lay ahead. If they had, they may not have even begun.

Not knowing any better, they set about this daunting task guided by what seemed logical and obvious to them, not realizing as wine industry outsiders they were breaking the rules and writing new ones. So instead of designing a label and trying to sell it to the buyers, they went to the buyers and asked them what they wanted. One buyer said, “Gee, no one has ever asked me that before! But as long as you asked, here’s what I need.” He explained that the label was going on a curved surface under fluorescent lighting making the label difficult to read. He said supermarket shoppers were mostly female who were pushing shopping carts at least four feet away from the shelves in a wine section that had hundreds of labels and looked like a pizza. He said the new label should be readable and stand out in all this.

Another buyer said the name should be the same as the logo, it should be in plain English (there were lots of snobby French style labels at the time), it should be easily recognizable and memorable, and – get this! – friendly! Imagine that!

What a wealth of knowledge! What if they hadn’t asked?

The farmer’s friends remembered a generic-looking novelty label that had been around for only a few years and sold a limited number of cases. But the elements of that old label just might satisfy the buyers’ suggestions.

So, they bought the rights to the defunct Barefoot label, completely redesigned it, and put it on the shelf. The logo was the same as the name, in English, and easily recognizable. The brand took years to get off the ground, but in time, it became popular, and the farmer was paid back 100 cents on the dollar.

Barefoot wine was born during Easter week in 1986 and we were, and still are, the friends of the farmer. Happy Birthday Barefoot! As they say, “You’ve come a long way, Baby!”

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Cause Marketing or Worthy Cause Marketing?

Michael Houlihan & Bonnie Harvey — Sun, 03 Mar 2013 02:30:29 +0000

The nation’s #1 wine brand was built without relying on commercial advertising. Instead, while building the Barefoot Wine brand, we used what we termed, “Worthy Cause Marketing.”

Every business faces the same problems. How do you get the word out about your product or services? How do you do this in an efficient, targeted manner? How do you gain a loyal following? Customer acquisition and retention can cost millions, with advertising generally the most costly. Many smaller businesses and start-ups, like us, simply don’t have a big advertising budget.

We discovered an alternative to conventional advertising that was, for us, more effective than conventional advertising.

Getting to know our customers was key to keeping our products relevant and providing excellent customer service. An examination of your customer’s needs beyond their need for your products or services can provide essential clues about what is important to them. Each of your customers has a cause that they hold dear, and many are members of non-profit organizations.

By supporting those non-profits, a company aligns itself and its products with that cause. But that’s where the similarity between Cause Marketing and Worthy Cause Marketing ends.

National non-profits have discovered the value of their logos to corporate sponsors. With their huge membership and social appeal, these non-profits know that the big boys will pay to identify with them, and today, many national non-profit organizations raise substantial funds by selling their sponsorships.

Large companies can show their customers that they care by providing those sponsorships. However, simply “buying” a sponsorship is out of reach for most start-ups. And, sponsorships are generally sold on an annual basis, so one company can be the sponsor this year and another the next, sometimes discouraging loyalty.

We discovered, however, that we could offer support beyond funding to causes that were worthy of our time and energy. These were causes that our company, our product, or we ourselves naturally resonated with. We made up for our lack of funds with passionate support in other areas that were just as, if not ultimately more, valuable to the non-profit.

We gave them our products, services, and labor. We used our access to the market to help them get their word out, and yes, even helped them raise funds. Instead of buying a sponsorship, which we couldn’t afford anyway, we set out to become active members, promoters, and participants in their cause. This approach also helped build positive company culture because our people knew they were making a difference when they helped at fundraisers.

We focused on small rather than large, local rather than national, and at the time, relatively unknown rather than well-known non-profits. We focused on marginalized groups that supported equal rights or conservation that were not yet mainstream and were considered radical. They were particularly grateful for our getting the word out about their cause to our market audience. As they grew, we grew, and became part of their community. By helping them when they most needed it and making a lasting commitment, we established enduring trust as true partners. Of course, it was risky at times, but the payoff was being on the right side of history when their causes became mainstream.

The return on involvement with Worthy Cause Marketing was slow but steady, and over time, it built a loyal customer base that had a social reason to buy our product. The difference is making a difference by supporting worthy causes that are important to you and your customers.

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Mayans Under Investigation! World Doesn’t End!

Michael Houlihan & Bonnie Harvey — Sun, 23 Dec 2012 04:24:32 +0000

According to some interpreters of the Mayan calendar, the world was supposed to end December 21st 2012. We wonder if they were somehow disappointed when they woke up the next morning and discovered that their plans fell through.

Seems like every ten years there’s a new doomsday scenario grabbing the headlines and pandering to our natural survival instincts. Whether it’s a calendar, comet, or polar shift, the planet is pretty much instantly destroyed in these popular doomsday scenarios.

This may actually comfort those who seek shelter in the notion that we are all powerless, that there’s nothing we can do to save the planet and ourselves. Why bother if we’re all going to be taken out by some kind of eminent and irreversible catastrophe anyway? Why work so hard to find solutions for everything from recession to global warming? Why even worry about paying the bills? Now we have a great excuse for not getting on with the business of living, surviving, and improving our world. It is a perfect excuse!

For the rest of us December 22, 2012 was like any other day – another opportunity to make a living, address our challenges, and hopefully, spend time appreciating our friends and family. The prediction did, however, give us pause to reconsider what we are doing to improve our lives and the world around us.

Everyday, the decisions we make, big and small, can help save the planet, and we set an example for others to follow. We already have enough natural catastrophes without adding more. But, rather than some sudden, overwhelming, cataclysmic force that we can’t control, the destruction is slow, insidious, and in our own hands. It’s how we vote with our money.

Every time we buy single-use plastics, we add to the growing, continent-sized, plastic junk pile floating in our ocean, threatening our very food supply. Every time we fill up with gasoline we vote for extreme weather. Every time we use the sewers, storm drains, or landfills to dispose of household chemicals, antibiotics, and electronics we poison our own drinking water.

We can’t simply point our fingers at the government. We all contribute daily to a real end-of-the world scenario with our purchasing decisions – or not. More and more alternatives are becoming available. New sustainable products are starting to make their way onto the shelves, and alternative transportation is becoming more practical and accessible. More places offer healthy choices, and farmers’ markets are springing up everywhere.

But since we dodged the “Mayan bullet,” and since we are starting a new year soon, perhaps we should renew our efforts to make our everyday purchases and actions more responsible. Why not make a New Year’s resolution to vote for the planet you want for yourself and your family. You’ll help the economy and do your part toward saving mankind and our environment. Support the entrepreneurs who are developing products that have a smaller carbon footprint. Remember, our purchases are our votes. Happy New Year!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Corporate Structure Can Turn Information into Currency – Part 2

Michael Houlihan & Bonnie Harvey — Fri, 05 Oct 2012 15:49:26 +0000

Johnny Carson used the expression, “I did not know that” and brought the house down. It was his way of stating his lack of knowledge about any surprising event. The audience was also surprised and couldn’t help but laugh.

It’s no laughing matter when your staff finds out that they are out of a job because your company lost a major buyer or couldn’t solve a critical problem. But if they don’t understand the challenges, they can’t help with the solutions. If their good ideas are suppressed or the free flow of information is stopped because of politics or turf wars, the challenges your company faces can be become even greater.

Your people are your greatest assets. They all come with a brain, imagination, and a desire to better themselves. They will use those resources to the benefit of your company if you let them.

Here are some effective practices we found that engaged our people to help us solve our challenges and keep the information free flowing:

1. Need-to-Grow Trumps Need-to-Know. We told our entire staff our major challenges and asked for their suggestions. Their outsider’s view in many cases provided fresh, out-of-the-box solutions. What if they didn’t know? We would have lost those insights.

2. De-Specialization. Every year we asked each employee what they would like to do within our company. We put our various job requirements on the table and they were all picked up, but not necessarily by the same folks who had them the previous year. We found that people whose job fit their skills and desires out-performed strict job specializations.

3. Performance-Based Compensation trumps position, tenure, or attendance-based compensation. Once all our people were getting bonuses on sales it became clear to them that the money came from the customer, and not the “company.” Sharing information and ideas was good for everybody’s paycheck.

4. Out-sourcing. Rather than trying to do everything in house, we would out-source for as much as possible. We paid only for the products and services that were to our specifications. Our people managed outsourced companies, which had the net effect of keeping us smaller and less restrictive. It reduced the typical company pyramids and enabled people to communicate directly with the decision-makers in our company, allowing more good ideas to reach top management.

5. Public Acknowledgement. We would “catch” someone doing something beneficial to the entire staff and, much to the chagrin of the lawyers, publicly acknowledge them in writing. We encouraged everyone to come forward with new ideas and for that they would gain appreciation. This practice also built a strong company culture since everyone understood and appreciated how other folks in the organization were improving their job security and increasing their paychecks!

Of course, all these ideas may not work in every situation, but it’s the spirit behind them that can help any business. Respecting the intellect of your human resources, giving them a financial reason to work as a team, and sharing your challenges can avoid hardening of the information arteries and prevent them from saying “I did not know that.”

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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7 Keys to Advice Management

Michael Houlihan & Bonnie Harvey — Fri, 31 Aug 2012 21:32:20 +0000

We have always recommended seeking the advice of experts, but your approach will make it either affordable and effective, or expensive and unproductive. Most advisors work by the hour, so be careful you don’t run up the bill unnecessarily. Make sure you are paying for their expert advice and not for listening to your vague ideas. We call it “Advice Management” and it is made up of essential rules to follow if you want to get your money’s worth.

From our experience working with advisors of all types, we have developed a set of policies that helped us get the most from experts without wasting precious time – and money. Here are our seven keys to advice management:

1. Goals. Clearly state the outcome you want from your business idea or the actions you are contemplating. Write down your goal(s), what you intend to achieve, and your timelines. Be succinct. Practice communicating them. Don’t let your advisor make assumptions about your intentions.

2. Selection. Choose the right advisor for the job. Make sure you match the experience of your advisor with the skills you need. It’s a common mistake to ask a lawyer or accountant for business advice, for instance. They may not be qualified, but will try to research it at your expense. Don’t pay for your advisors’ education. Get someone who already knows.

3. Duration. Tell them the date by which you need the project complete. Before each meeting or telephone call, announce how long you want it to go. Get a bid for the job and limit their discussions with colleagues on your dime. Sometimes a monthly retainer buys you more than an hourly rate. If the retainer limits the hours covered, require notice to exceed.

4. Homework. Do your research on your own time, not in a meeting with them. Find out all you can before you have a meeting. Write an agenda for every meeting and deliver it in advance. Anticipate the questions your advisor might have and have the answers ready. You can keep phone calls brief by having your questions in writing ahead of time.

5. Roadmap. Prepare a graphic plan that identifies the options you see to achieve your goal. State your intended path. If you have an example of what you are looking for, make the required changes on it ahead of time. Put your thoughts and concerns in writing before your initial meeting.

6. Hurdles. State the obstacles you see in the way of your goal. There are a ton of websites out there offering a vast array of business advice and industry know-how. Check them out. Be clear about what you need from your advisor to overcome specific hurdles. Listen to their recommendations and consider seeking a second opinion. There may be more than one way to achieve your goal.

7. Control. Get frequent updates – don’t let your advisor get too far down the wrong road. Try to pay for outcome, finished products or milestones instead of time. Ask, “When will you be getting back to me on this?” and put it on your calendar. Don’t let them seek outside advice without your pre-approval. You could wind up unintentionally paying for multiple advisors.

Have respect for your advisors’ experience, but stay on top of them. They don’t know it all, so don’t ask them for advice outside the realm of their expertise. A little more work on your part will make all the difference in getting the right advice at the right price. After all, time is money and they’re on the clock!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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The Advantages of Being a Small Start-Up – Part 3

Michael Houlihan & Bonnie Harvey — Sun, 05 Feb 2012 01:34:46 +0000

By focusing on your customer, and not your big time competitors, your small start-up has the opportunity to address the market with creative and relevant products.

In this series we have examined some of the powerful advantages of being small, undercapitalized and able to turn on a dime.

These days, with lawyers running the big corporations either in fact or in fear, more and more truly game changing concepts are coming from outsiders like you.

Here, then, are a few more advantages of being a small start-up that can help you achieve your goals:

11. Being an Outsider. When you’re new and small, you naturally approach challenges with “common sense” and the experience you have gleaned from other industries and personal experiences. Not necessarily so with the big established companies. They find security in sticking to the straight and narrow. They may not even realize that they are doing things because, well, that’s how it’s always been done. In their sometimes misguided desire for job security, they don’t want to “shake the boat” and can end up doing what they have always done instead of innovating. No one has yet proven to them with financial success that it can be done differently. Perhaps the outsider will!

12. Producing Multifaceted Concepts. Being undercapitalized forces you to make every cent count and every idea solve more than one problem. Like the Swiss army knife with its many tools for many uses, your branding concepts have to embrace and satisfy a variety of needs. You simply can‘t afford to rely on conventional and expensive solutions. For instance, you have to build marketing into the brand. You have to build publicity and customer service into the culture. You have to enhance distribution with packaging design. The big boy, because of his size, divisions of labor, and convoluted communication has to simplify everything, even brand concepts. “Just tell me the one thing that this does” is the common query. They know that even a simple message can get lost in translation in their massive structures. So they attempt to “‘dumb” everything down. This results in an advantage for the little guy who produces products or services that are thoughtful, sensitive, and relevant on a variety of levels important to the consumer. It’s more than just the big blade on the Swiss army knife.

13. Flying Under the Radar. The big boys focus on their big boy competition. They generally don’t even see your small start-up’s product for years. This is usually because they expect their market share to be taken by their big competition. They don’t expect game changers who cut the pie in a different and more popular way. Your tiny company will take what ever sales it can. It can’t afford to be choosy. Many of your first buyers may be little guys themselves, also off the radar, over seas, or not registering sales to the big reporting companies. Your small start-up may not go national for years. You may be forced, for reasons of channel distribution or cash flow management, to start small and sell only in a local territory you can control. This advantage allows your small start-up to test the waters, make adjustments and get sea worthy before you take on the world.

Next time we will examine why having the freedom to establishing a new positive culture, making overall company preservation job one, and the trend to acquiring new ideas, gives you a competitive edge. With all the challenges your small start-up faces, you still hold some impressive cards. If you play them right, you can have the winning hand!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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The Advantages of Being a Small Start-Up – Part 2

Michael Houlihan & Bonnie Harvey — Tue, 24 Jan 2012 03:35:06 +0000

This is the second installment in a four-part series designed to encourage small start-ups by recognizing some of their inherent advantages.

Small start-ups face a myriad of challenges. They are undercapitalized, unproven and have no market traction. They are up against the status quo that will use its established power and influence in the marketplace to suppress any new challengers. Buyers are reticent to take a risk on anything new or unproven.

The big boys have might and muscle, but there are still several advantages the little guys have that can move them ahead:

6. Being New. The small start-up has not yet established its direction and can turn on a dime. This advantage affects everything from plans to budgets, from design to being responsive to consumer feedback. Flexibility is a big advantage when it comes to satisfying your customer and improving your product. The big corps are well established with set ways of doing things that can bog them down.

7. Closer to the Ground. If you are the little guy, survival is dependent on having your ear to the ground and in most cases, your feet as well. Starting out requires a lot of hand-selling and “missionary” work. You are painfully aware of what needs to be done in the market place. Because it’s your company, you deal with your customers up close and personal on a daily basis. You can’t afford to be isolated and insulated. You don’t have MBAs and focus groups to rely on. You rely on yourself.

8. Faster Communication. Information can cross departmental lines easily in a small start-up. For one thing, there are fewer departments. For another, staying in business is more important than “going through channels,” which can be a maze of department heads, divisions, silos, and, if you’re lucky, ending with the intended recipient. The big company keeps order by installing informational gatekeepers. They can stop, change, or delay a critical message based on their perception of priorities, and, too often, job security.

9. Out-of-the-Box Thinking. Because the small companies are usually under financed, they are always scrambling for inexpensive and effective ideas to stay in business. This apparent financial hardship forces you to discover and employ unorthodox ideas, strategies, and tactics that the big guys wouldn’t dream of. They don’t have to. In a small company, cost-saving ideas, customer retention, and marketing concepts can come from anywhere. The big guys tend to want ideas to originate from their proper divisions, which can miss or kill some gems in an effort to defend precious turf.

10. Better Risk Tolerance. Just starting something new is a big risk, and most start-ups don’t make it. Because they are desperate to survive and have less at stake, they are more risk tolerant than the established companies. Small companies tend to tell their legal advisors what they want to do, then ask how to do it. The big guys are more risk adverse and tend to be guided by their legal advisors. Risk adversity can blind companies to new, unproven concepts.

So when you feel overwhelmed by big, established competition, remember that your flexibility and freshness can help you survive. The benefits of being a start-up give you the flexibility to grow and ultimately improve not only your own company, but also your industry.

Next time we will see how being an outsider, with enhanced concepts and simplified processes can have an advantage over an insider with simplified concepts and complicated processes.

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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The Advantages of Being a Small Start-Up – Part 1

Michael Houlihan & Bonnie Harvey — Mon, 16 Jan 2012 03:02:47 +0000

Today we need new products, new services, and new ideas to invent our way back to prosperity. Small start-up producers have always been the backbone of the economy, not just because they provide the most new jobs, but because they improve the very quality of our lives by bringing more good ideas to the market. This is the first in a four part series on why small start-ups have an advantage over big companies.

“Build a better mouse trap” is the challenge to today’s inventors, entrepreneurs and start-ups. If you have a good idea, why wait 10 years just see someone else take “your” idea to the market, and say, “I had that same idea ten years ago!”

Sure, you’re undercapitalized, inexperienced, and up against the “big guys,” but you have several advantages that can make the difference:

Humility. Small start-ups tend to be more open about what they don’t know and are more likely to hire, contract, or otherwise engage the experience of experts outside the company. It’s OK if “it wasn’t invented here.” Your people’s jobs and raises are not dependent on coming up with all the good ideas or even pretending they can. Its OK to give someone else credit because you and your people’s concern is company survival. No one thinks he will have a job if the company goes under. No one thinks that company survival is not his concern. Your company is small and fragile, and your people know it.
Positive cash flow earlier. Being undercapitalized tends to force a cautious start that pays the bills as soon as possible. You simply won’t exist if you don’t. The big guys can get a budget for a new project that will lose money for years, or worse, they might not let a bad idea die because they have put so much time and money into it. The small company has to dump what’s not working fast to survive. Its OK to admit you’ve made a mistake and learn from it.
Innovation and Resourcefulness. If necessity is the mother of invention, being undercapitalized is surely the “father”. A start-up is forced to be resourceful. In the process, you can discover advantages you may never find with a second or third round of financing or a bigger budget. Bonnie says, “I feel sorry for a person with a good idea and I feel doubly sorry for them if they have money!”
Hire whom you want. If a candidate has all the skill and experience you need but lacks the credentials, you can still bring him on board. The big guys are concerned about liability and setting a precedent, so in their effort to remain safe and consistent they can miss out on some real gems. You can write and bend your own rules to accommodate opportunity when he or she knocks.
Freely shared information . In a small business, your staff knows more about the total operation. They may even manage several different jobs. Information in the big corporations tends to be treated like a coveted commodity, often used as a type of currency to buy a lunch, get a promotion, receive kudos, or trade for other information. Some information is down right suppressed because it may threaten some supervisor’s concept of job security.

Next time we will examine the advantages of being new, closer to the ground, communicating better, engaging in out-of-box-thinking, allowing good ideas to come from anywhere, and having an “outsider’s” view of your industry.

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