The Venture Edge

It seems like every time I turn on the news, some commentator or talking head is claiming that the U.S. economy won't get better until the government brings certainty into the financial or regulatory or tax or whatever [insert favorite excuse here] situation.

If you've been reading this blog for more than a month or two, you've probably noticed that I'm a big fan of contests for entrepreneurs. Not only do I think they're fun, but they can be a good source of cash -- and what entrepreneur can't use a little extra cash? Entrepreneur magazine recently ran a contest roundup, including a UPS Store Facebook contest (deadline = August 31, 2011), 2011 Avaya Small Business Innovators contest (deadline = August 30, 2011), Staples Youth Social Entrepreneur contest (deadline = September 9, 2011), and Cleantech Open Global Ideas competition ( deadline = September 30, 2011). 

A bit more than a year ago, I wrote a blog post about a relatively new way to raise money to start up or grow an enterprise: Kickstarter. As I mentioned in my post, Kickstarter is "...a funding platform for artists, designers, filmmakers, musicians, journalists, inventors, and explorers." Kickstarter leverages the power of online crowdsourcing to gather together potential investors for new creative and business ventures. As it turns out, Kickstarter is still around, and an increasing number of companies are getting the funding they need from the organization. According to a recent article, design company Studio Neat used Kickstarter to successfully fund two projects. The first, a miniature iPhone tripod called the Glif, raised $10,000 in just 30 days while eventually landing the company almost $140,000 -- far exceeding its original request. Studio Neat was able to ship the Glif to customers just a month and a half after the funding period ended. The second product -- a pen stylus for the iPad -- also raised about $140,000 via Kickstarter. Says company cofounder Tom Gerhardt,  “If Kickstarter wasn’t around I don’t think the Glif, or projects like it, would have even gotten off the ground. It’s probably naive, but we had more fears and perceived more risk going the traditional [VC] route.” 

I read Kathy's last post -- An American entrepreneur in the Middle East -- with great interest. About five years ago, I was hired by the Beyster Institute at the Rady School of Management, University of California, San Diego to write a book titled Entrepreneurs at the Crossroads: Success Stories from the Middle East and North Africa. After the book was published, it was widely distributed to entrepreneurs and entrepreneurs-to-be in the Middle East and North Africa. The project was funded by the US State Department, which believes (probably correctly) that it's a good idea for our country to help support entrepreneurship in these volatile areas of the world because the more people who become successful businesspeople, the fewer people who will find terrorism a viable way of life.

According to the Small Business Administration, 70 percent of Americans dream of one day starting their own businesses. And one of the most popular ways that people become entrepreneurs is by turning a hobby into a business.  

Sometimes an entrepreneur-to-be knows exactly what kind of business he or she wants to start -- it may have been a closely held dream for many years, or it may be an irresistable opportunity that recently popped up on the horizon. However, in many cases, new entrepreneurs don't really know exactly what kind of business to start -- they just know that they want to start their own business.

This past Thursday morning I had the good fortune to have breakfast with Troy Hazard, a self-confessed (but non-repentant) serial entrepreneur. I was fascinated to learn more about this entrepreneur who founded 10 different companies in the span of 20 years. 

I just read an article in the local newspaper about a pair of entrepreneurs who have tried just about everything they could think of to fund their young business: Fiji Yogurt, a frozen yogurt franchise with four company-owned stores and one new franchisee. While the traditional sources of capital were tried -- and offered limited results -- twin brothers Cory and Kyle Miholich stumbled on a non-traditional source of funding for their business that was actually pretty effective: The Wheel of Fortune television game show. While the business partners can't yet reveal exactly how much money they made for their business because the show hasn't yet aired, according to Kyle, "We had a chance to win a million dollars, which we blew. Actually, my brother blew it on the first puzzle. But we were able to walk away with a decent chunk of change.”

In a post last week about the potential effect of the new Healthcare bill on small business, I talked about the importance of assessing your business's cash flow position so you can weather the changes that will be coming. Insuring that your business is sufficiently cash flow positive is the first step.  The second step is to make sure that your business remains flexible and ready to change quickly.  That means not taking on non-essential capital expenditures such as a new building,  new equipment, or even extra people for that matter.