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Many musicians are happy just creating music and enjoying the lifestyle that being a famous musician provides. However, a lot of pop, rap & rock stars have interests beyond music, including a passion for entrepreneurship.
Here is a list of the 25 most impressive musician entrepreneurs. While it’s tough to compare people in different fields, here are some of the factors that weighed heavily for these rankings:
Here we go…
25) Benji & Joel Madden
The brothers of Good Charlotte, who once sang negatively about the “Lifestyles of the Rich & Famous,” made themselves both rich and famous with their music and their clothing line. The Maddens started MADE Clothing in 2005, and eventually renamed the company DCMA Collection after expanding into hats, belts and other accessories. MADE/DCMA has become very popular with celebrities such as Paris Hilton, as well as artists and fans within the pop/punk music genre.
24) Kanye West
Kanye dropped out of art school and made a name for himself in the music business, first as a producer and then as a solo artist. Since achieving success, Kanye has set up his own record label (GOOD Music) and written a book (Thank You and You’re Welcome! - due in 2008). He also plans to open a café in Washington D.C., with some help from his father.
Pharrell Williams made a name for himself producing, but he also released hits with his group N.E.R.D. Known for his fashion as well as his music, Pharrell started both a clothing line (“Billionaire Boys Club”) and a footwear line (“Ice Cream”). These ventures uniquely fuse rock, hip hop and skateboarding culture.
22) Alicia Keys
In 2006, a 24-year old Alicia Keys started her own production company and signed a deal to produce a sitcom for the CW Network. Keys, who has been described as a “workaholic” and an “independent person,” also acts as the spokesperson for various charities. She has acted in a number of TV shows and movies. Keys also co-founded KrucialKeys Enterprises, a musical production and songwriting company.
In 2002, electronic artist Moby and his girlfriend opened a café called TeaNY in Manhattan’s Lower East Side. The vegetarian/vegan tea café was designed to be a hangout for New Yorkers, but eventually grew into a major attraction. TeaNY features about 100 different types of tea, all of which can be purchased online. The company expanded by partnering with White Knight Beverages and creating a line of bottled iced tea.
A natural businessperson, Moby is known for his progressive attitude toward licensing songs. He was instrumental in lessening the “sell-out” stigma once frequently attached to artists who licensed songs to commercials.
20) Dexter Holland
Dexter Holland, front man of The Offspring, started his own independent punk label in 1994, right around the same time The Offspring was experiencing mainstream success. Along with co-founder and Offspring bassist Greg Kriegel, Holland has run Nitro Records ever since, introducing new punk artists to the mainstream while allowing them to maintain artistic integrity. Holland also found time to create his own brand of hot sauce (called “Gringo Bandito”), which can be purchased online or in grocery stores across California.
19) Gene Simmons
Since the inception of KISS several decades ago, Gene Simmons has sold the KISS name to every product imaginable, from KISS checkers to KISS bowling balls to the KISS Kasket (yes, that is a real product). In fact, Simmons has approximately 2,500 licensing deals in total. When not making money from licensing, Simmons has kept busy with a variety of entrepreneurial ventures, including his own record label, TV shows and autobiographies.
In addition to fronting U2 for the past three decades and working as a political activist, Bono has undertaken a number of business ventures. In 1992, Bono and band mate Edge purchased The Clarence, a two-star Dublin hotel. They did a complete renovation and turned The Clarence into a luxury 5-star hotel. In the early 2000s, Bono and a handful of elite businessmen founded Elevation Partners, a private equity firm focusing on intellectual property. To date Elevation has invested over a billion dollars in various media projects.
Bono also unveiled his own clothing line in 2005. The line of blazers, t-shirts and jeans was created by Bono, his wife Ali, and designer Rogan. The clothing line was designed to provide jobs and money for impoverished citizens of Africa.
17) Gwen Stefani
In 2004, Gwen Stefani founded L.A.M.B., a fashion line heavily influenced by Asian and Central American culture. The L.A.M.B. name comes from Stefani’s first solo album, and Stefani is involved with all facets of production. In 2005, Stefani branched out into accessories. She also created her own line of cell phones and cameras. Her latest venture is a fragrance line, launched in 2007.
16) Queen Latifah
Dana Owens, known to most as Queen Latifah, was a trendsetter for rappers and musicians-turned-actors. Owens is President of Flavor Unit Productions, and has production credits for a bunch of films and TV shows. She has hosted her own talk show, starred in a sitcom, acted in several movies, and written an autobiography. Owens is also a spokesperson for Cover Girl cosmetics, where she created her own make-up line for the company.
15) David Bowie
David Bowie was ahead of his time as a musician, and when he became an entrepreneur, that didn’t change. Bowie started a technology company and an Internet service provider in the late 90s, making him one of the first musicians to fully realize the power of the web. In the early 2000s, Bowie started his own record company to free himself of the corporate structure of his previous label. He also runs a website where art students can sell their work without the burdens of a traditional art gallery (www.bowieart.com). These days, Bowie uses his website (www.davidbowie.com) as a means of promoting the artists on his label.
Even when she was part of Destiny’s Child, Beyoncé was known for her style, so it’s no surprise that she formed her own fashion line, House of Deréon, in 2004. Beyoncé made House of Deréon into a popular worldwide brand by promoting it on “Oprah” and “The Tyra Banks Show.” Beyoncé even snuck a plug into one of her songs, singing “Shake your derriere in them Deréons” on the track “Get Me Bodied.”
In addition to being an entrepreneur, Beyoncé also makes a ton of money from sponsorships with companies such as Pepsi, L’Oreal, Emporio Armani, Samsung, American Express and DirecTV. Her net worth is currently in the neighborhood of $300 million.
13) Victoria Beckham
Even though Victoria Beckham was in one of the most successful pop groups ever, she’s just as well known for being a style icon. In 2004, Beckham designed a line of jeans for Rock & Republic, and in 2006 she launched her own fashion line called dvb Style. The dvb brand specializes in jeans and eyewear, but Beckham has also launched a fragrance line and designed handbags and jewelry for a Japanese company. Beckham doesn’t just lend her name to these products; she is involved with all stages of production. In addition to her fashion achievements, Beckham has written two books and signed a reality TV deal. For all of these accomplishments, Beckham was named Glamour Magazine’s “Entrepreneur of the Year” in 2007.
12) Sammy Hagar
While many fans preferred David Lee Roth as singer, Sammy Hagar is definitely the Van Halen front man you’d want running your company. In the 80s, Hagar opened the resort Cabo Wabo in Cabo San Lucas, Mexico. The resort has become such a hit that Hagar opened a second location in Lake Tahoe, UT, but what’s more impressive is the brand of tequila it spawned. Hagar created Cabo Wabo tequila in 1996 as the “house” liquor, but has since taken the brand worldwide. In 2006, more than 140,000 cases of Cabo Wabo tequila were sold. In 2007, Hagar sold 80% of the Cabo Wabo tequila brand to beverage company Gruppo Campari for $80 million.
Ludacris (a.k.a. Chris Bridges) has a business degree from Georgia State, and while he may have chose to pursue music, that degree definitely came in handy. When Ludacris couldn’t get a record deal, he stopped trying to impress execs and started his own label instead. For the past decade, Luda has transformed Disturbing tha Peace Records from an avenue for releasing his own records into a major company, signing hit artists such as Chingy and Bobby Valentino. And while many rappers go into acting, Ludacris has done it better than most, appearing to critical acclaim in Crash, 2006’s Best Picture. Ludacris will also be opening a $2.7 million upscale restaurant in Atlanta in April, and is considering additional restaurants as well.
In the late 1970s, Madonna dropped out of college and moved to New York with just a few dollars. Today she is worth approximately $325 million, mostly because of her business savvy. Madonna is known for staying ahead of trends, musically and in her business ventures. Her 1992 book, Sex, was both extremely controversial and extremely popular. She has started an entertainment company, a publishing company, and a clothing line. She is also an avid investor. One business professor even called Madonna “America’s smartest businesswoman.”
9) Dr. Dre
In 1995, unhappy with the direction of his record label, Dre formed his own label, Aftermath Entertainment. Aftermath hit it big by signing popular artists such as Eminem and 50 Cent, and throughout the 2000s Dre has consistently been one of the top earners in all of music. Dre, a long-time director of music videos, has announced that he will begin producing films for Crucial Films in the near future. He also recently signed a partnership to “develop and market” both alcoholic and non-alcoholic beverages for Drinks America. Dre is well-known for being a perfectionist, a trait that has both earned him respect and caused difficulties between him and other artists.
8) Justin Timberlake
Justin Timberlake has been omnipresent in the music business since 1998, so it’s amazing that he has time to branch out into other areas. Timberlake has opened a handful of restaurants, including the new Southern Hospitality in New York City (seen in Timberlake’s Super Bowl commercial). He also, along with a lifelong friend, launched a clothing line sold through Bloomingdales. Recently Timberlake started his own record label, Tennman Records. In a very forward-thinking maneuver, he signed YouTube sensation Esmee Denters as the label’s first artist.
7) Jennifer Lopez
After succeeding in music, J.Lo launched a clothing line in 2003, and made everything from jeans to lingerie to gloves. Lopez also launched various accessory lines, a jewelry line, 9 fragrance lines, and even a children’s clothing line, resulting in a net worth of over $250 million. In addition to her fashion businesses, Lopez owns a production company called Nuyorican Productions. The company has produced both reality shows and feature films. In 2002, Lopez opened a restaurant called Madre’s in Pasadena, CA. She helped design the interior, and many of the dishes are inspired by her grandmother’s cooking.
6) Jermaine Dupri
As a teenager, Jermaine Dupri became a successful producer when he discovered the 12-year old rap sensations Kriss Kross. He went on to produce hits by TLC, Janet Jackson and Mariah Carey, among others. Along the way, Dupri founded So So Def Recordings, and became one of the most respected figures in music. He started So So Def Sports, a sports management company. He is owner and partner of 3 Vodka Distilling, makers of high-end alcohol. In 2007, he released an autobiography. And on top of these entrepreneurial ventures, Dupri was appointed President of Island Records’ urban division in 2007.
5) Pete Wentz
Wentz, the bassist for Fall Out Boy and idol to teenage girls worldwide, is also an active entrepreneur. Wentz runs his own record label, Decaydence Records, which is currently thriving despite the declining state of the music industry. Wentz also started a clothing company called Clandestine Industries in 2004. His clothes are extremely popular amongst fans of the emo/punk genre.
Wentz is also an author, having published a fictional book titled The Boy With The Thorn In His Side. Last year, Wentz opened a bar in Manhattan called Angels & Kings. He plans on putting out another book and opening a hair salon in the near future.
4) Master P
Percy Miller, a.k.a. Master P, started No Limit Records in 1990 with $10,000 that he received from a wrongful death lawsuit after his grandfather passed away. By the late 90s, Miller was a multi-millionaire and No Limits was worth an estimated $661 million. Among the company’s holding were a clothing line, a film company, a sports management agency, and a real estate company. Master P even tried to play in the NBA, nearly making the Charlotte Hornets’ roster in 1998.
Master P’s career has cooled down considerably since the 90s, and No Limit was reorganized in 2004, but Miller is still involved in many entrepreneurial ventures. He is currently developing a video game, and he also releases music via a new label, Guttar Music. Miller co-founded Guttar Music along with his son Romeo, who is a freshman at USC.
3) 50 Cent
Curtis Jackson is one of the most popular and best-selling rappers of the decade, but he’s actually made most of his money outside of music. Jackson developed the G-Unit Clothing Company in 2003 and signed a deal with Reebok to distribute his G-Unit sneaker line. Along with the beverage company Glacéau, Jackson created and marketed a Vitamin Water flavor called “Formula 50.” When Glacéau was purchased by Coca-Cola in 2007, Jackson reportedly made over $100 million after taxes as part of the deal. Like so many others on this list, 50 has his own record label, G-Unit Records. He is also an actor and author.
Shawn Carter co-founded Roc-A-Fella Records in 1996, and over the past 12 years he has grown the fledgling label into a massive empire using both his musical abilities and his business savvy. Roc-A-Fella now features a production company and a Spanish music label, and the company also owns U.S. distribution rights for the high-end Scottish vodka Armadale. Jay-Z and Roc-A-Fella famously created Roc-A-Wear, an incredibly popular clothing line that was sold last year for $204 million dollars.
In 2004, Jay-Z sold his stake in Roc-A-Fella and became President and CEO of Def Jam Recordings, where he remained until a few months ago. Jay is also part owner of the New Jersey Nets, and the 40/40 Club in New York City. Currently worth over $500 million, Jay-Z shows no signs of slowing down.
There’s nothing Sean Combs can’t do. Diddy worked his way from humble beginnings into Howard University’s business school. There, he preferred to spend his time working and making money rather than studying. By age 21, Diddy was developing talent at Uptown Records in New York, while also working as a back-up dancer in music videos. In 1993 he left Uptown to form Bad Boy Records, which became home to many big-time artists, most notably Notorious B.I.G.
Bad Boy is now an empire worth hundreds of millions, and Diddy has set up many other ventures. His Sean John clothing line is extremely popular and worth millions. His Unforgivable fragrance, launched in 2006, sells for roughly $70 a bottle. He serves as CEO of Blue Flame Marketing and Advertising. Last year, Diddy signed a deal with Diageo PLC to promote Ciroc Vodka. He’ll have a major role in the vodka’s branding and marketing, and he’ll split profits 50-50. Diddy also created (and appears on) the TV series “Making Da Band.” In 2004 he acted in the Broadway play “A Raisin in the Sun,” and he recently starred in the Made-For-TV version of the play. Diddy also owns restaurants in New York and Atlanta (named “Justin’s,” after his son). And if that’s not enough, Diddy holds the honor of having designed the Dallas Mavericks’ green alternate jerseys. All of this amounts to a net worth of roughly $350 million.
While music critics might tell you Diddy can’t rap, few people will deny that he’s a truly amazing businessperson. As Diddy himself once said, “Don’t worry if I write rhymes… I write checks.”
Let us know what you think. Who is the best musician entrepreneur, and what other musicians deserve to be on the list?
Ready to Create Your Empire?
The first step is to create your business plan.
Over the past few weeks, I've spent a lot of time studying a field called Landing Page Optimization. It's a fascinating field that deals with improving landing pages, which are the pages of your website that visitors come to either organically or through paid marketing initiatives. The goal of Landing Page Optimization is to maximize conversions (e.g., sales, newsletter signups, etc.) of these visitors.
One of the guiding principles of landing page optimization is that landing pages need to be simple. If there is too much information on the page, the reader gets confused and either clicks the back button or closes the browser.
This principle is the same as a guiding principle of business plan development; mainly that the plan, and particularly the executive summary, needs to present the business concept concisely so that the audience quickly understands it. If not, they will simply discard the business plan.
Interestingly a concise message might not only improve your business plan and your landing page, but your entire business’ success. Consider the case of Google. The Google homepage has always had very little text on it. In fact, if you go to it, it doesn’t even say that it is a search engine. But, by having a big empty box in the middle and having a button underneath it that says “Google Search”, it is pretty intuitive that Google is a search engine.
Now, when someone was referred for the first time to Google over the past few years and came to Google.com, what do you think they did? Well, due to its simplicity, I think we can assume that nearly all people who came to Google.com typed in a search term and hit the search button. Then, they instantly saw high quality search results and were sold on the fact that Google is a great search engine.
So, by keeping their landing page and business concept/proposition extremely simple, Google was able to get people to try its product. Because the product is high quality, those trials resulted in loyal users.
While there are many examples out there, one interesting company that I think could really improve its business plan, landing page, and thus chance of success is SpinVox. I first read about SpinVox in this Guy Kawasaki post in which he says, “This service translates voicemail to text and then sends a text message to your phone and/or an email to your computer.”
While Guy Kawasaki does a great job clearly explaining
SpinVox in this 22 word sentence, I don’t think SpinVox does. On its homepage, SpinVox has the following text:
"SpinVox captures spoken messages and cleverly converts them into text. It then delivers your message to a destination of your choice – inbox, blog, wall or space. Right in the moment. Giving you the power to Speak Freely... Simply put, we do one thing – turn voice into text. But it's one thing that can be applied to the many ways you communicate, from your Voicemail to your Blog. Use the finder below to find the right one for you."
If I were to come to this page without Guy Kawasaki’s clear explanation, I would most likely leave without trying the service. It neither clearly explains the most common use nor the value proposition of the service.
To sum up, KEEP IT SIMPLE. Use simplicity to hook the investor, the customer, the partner, or whoever else you are trying to influence. Once hooked, over time (which could be as little as 2 minutes later), you can tell the full story.
Last week, several theater chains and studios announced they were
nearing an estimated $1.1 billion financing deal to upgrade cinemas to
digital technology. This investment is expected to boost attendance and
save Hollywood billions of dollars in various annual print and delivery
"We're hopeful that in the second quarter we will get it all arranged," said Travis Reid, chief executive of Digital Cinema Implementation Partners (DCIP).
DCIP is a joint venture between Regal Entertainment Group, Cinemark Holdings Inc and AMC Entertainment Inc.
Growthink assisted in the development of the strategic business plan for the joint venture.
Read more about DCIP and digital cinema technology here and here.
It's always said that access to funds is the life blood of any company. Going out and securing outside financing to help grow a business is an important step in the life of an emerging organization. Keep in mind, the process of commercial borrowing is best done in preparation for needing the capital, rather than when the request is made in a dire situation. Here are some necessary tips to keep in mind when preparing to seek a loan.
1. Bookkeeping – Install accounting software so you can produce up to the moment financial reports including Balance Statement and Profit Loss Statement. These reports will give the Lender a snapshot of the current financial condition of the company. It also assures that you know enough about accounting to understand the internal cash flows.
2. Customer Credit – Show you have a process in place to check the credit of all your customers. Learn how to avoid issuing credit for more than they are qualified. Sales to customers are what business is all about. Knowing the difference between a solid customer and a bad credit is crucial to long term stability.
3. Borrowing Amount – Know how much capital the business requires to operate. Whatever the business does, whether provide a service or sell a product, you must be aware of the profit margin on these activities. You should have a solid business plan in place with budgets where you can determine the potential short fall and take precautions through financing.
4. Purpose – Your business plan needs to be able to show a purpose for using the capital. This must be very specific. The more details you can provide on where the loaned money will be employed, the better the Lender can determine the viability of your plan. By admitting potential problems and offering contingency suggestions, your business plan will have added dimension.
5. Repayment – In the business plan, give a reasonable timeline for the repayment of the loan. Preparing cash flow Performa will show the road map to ultimate success and profitability. Again, incorporating contingency budgets will help to mitigate potential risk.
6. Team – Make sure the owners, managers have strong bio’s and thorough knowledge of the industry. The Lender must have confidence that the operators of the business plan can perform based on their experience.
7. Loan package – Do your homework, and put all this together with your business plan into a binder so a lender can easily see who, what, where, how this company will deal with a loan. By being pro-active through the entire process you will become a more attractive prospective client to a Lender, and therefore will have some bargaining leverage with regards to the terms of the loan. It’s always a good idea to get involved with a professional to help you through the process.
Guest post by Creative Capital Associates, a leader in account receivables financing.
Learn more about commercial financing here.
There is no simple formula for creating a successful business. Luckily, there is an easy way to improve your chances.
And that’s by listening to the wisdom of those who have done it already.
With that in mind, here are 25 quotes from famous entrepreneurs…
1) "If you can dream it, you can do it."
-Walt Disney, founder of The Walt Disney Company
2) "Business opportunities are like buses, there's always another one coming."
-Richard Branson, founder of Virgin Enterprises
3) “Capital isn't that important in business. Experience isn't that important. You can get both of these things. What is important is ideas.”
-Harvey Firestone, founder of Firestone Tire & Rubber Co.
4) “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma - which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”
-Steve Jobs, co-founder of Apple and Pixar
5) “Find your passion… then it is no longer work!”
-L.A. Reid, co-founder of LaFace Records
6) “I had to make my own living and my own opportunity! But I made it! Don't sit down and wait for the opportunities to come. Get up and make them!"
-Madam C.J. Walker, creator of beauty products and the first female self-made millionaire
7) “The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.”
-Nolan Bushnell, founder of Atari & Chuck E. Cheese’s
8) “The key is to just get on the bike, and the key to getting on the bike… is to stop thinking about ‘there are a bunch of reasons I might fall off’ and just hop on and peddle the damned thing. You can pick up a map, a tire pump, and better footwear along the way.”
-Dick Costolo, founder of Feedburner.com
9) “The important thing is not being afraid to take a chance. Remember, the greatest failure is to not try.”
-Debbi Fields, founder of Mrs. Fields Cookies
HARD WORK vs. LUCK
10) “Genius is 1% inspiration, and 99% perspiration.”
-Thomas Edison, founder of General Electric (GE)
11) “I made a resolve then that I was going to amount to something if I could. And no hours, nor amount of labor, nor amount of money would deter me from giving the best that there was in me. And I have done that ever since, and I win by it. I know.”
-Colonel Sanders, founder of KFC
12) “Nobody talks of entrepreneurship as survival, but that's exactly what it is.”
-Anita Roddick, founder of The Body Shop
13) “Don’t ever let anyone tell you that something is too competitive. Once you subtract the people who don’t work very hard, or the people who aren’t as good as you, your competition shrinks dramatically.”
-Maggie Mason, founder of Mighty Goods
14) “Life is really simple as far as I’m concerned. There is no luck, you work hard and study things intently. If you do that for long and hard enough you’re successful.”
-Jason Calacanis, founder of Weblogs, Inc.
15) "When you reach an obstacle, turn it into an opportunity. You have the choice. You can overcome and be a winner, or you can allow it to overcome you and be a loser. The choice is yours and yours alone. Refuse to throw in the towel. Go that extra mile that failures refuse to travel. It is far better to be exhausted from success than to be rested from failure."
-Mary Kay Ash, founder of Mary Kay Cosmetics
16) “It doesn’t matter how many times you fail. It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and neither should you. All you have to do is learn from them and those around you because all that matters in business is that you get it right once. Then everyone can tell you how lucky you are.”
-Mark Cuban, owner of the Dallas Mavericks, co-founder of Broadcast.com, founder of HDNet
17) “Entrepreneurs are risk takers, willing to roll the dice with their money or reputation on the line in support of an idea or enterprise. They willingly assume responsibility for the success or failure of a venture and are answerable for all its facets.”
-Victor Kiam, owner of Remington Products
18) “The best reason to start an organization is to make meaning; to create a product or service to make the world a better place.”
-Guy Kawasaki, venture capitalist, CEO of Garage Technology Ventures
19) “A friendship founded on business is a good deal better than a business founded on friendship.”
-John D. Rockefeller, founder of Standard Oil
20) “An entrepreneur tends to bite off a little more than he can chew hoping he’ll quickly learn how to chew it.”
-Roy Ash, co-founder of Litton Industries
21) “I've been blessed to find people who are smarter than I am, and they help me to execute the vision I have.”
-Russell Simmons, founder of Def Jam
22) “One of the unique things we small companies have over the big guys is the ability to establish personal relationships. Big companies really can't do that. You read about effective organizations, learning organizations, lean and mean organizations, but small companies can be virtuous. We as small companies can have virtue because we as small companies are basically the embodiment of one or two people, and people can have virtue, while organizations really can't."
-Jim Koch, founder of Boston Beer Company
23) “Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you're generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don't make.”
-Donald Trump, real estate developer
24) “High expectations are the key to everything.”
-Sam Walton, founder of Wal-Mart
25) “I find that when you have a real interest in life and a curious life, that sleep is not the most important thing.”
-Martha Stewart, founder of Omnimedia
Ready to Create Your Empire?
The first step is to create your business plan.
We speak every week to many entrepreneurs and managers of emerging and middle market businesses seeking our assistance in strategizing, drafting, and packaging business plans.
Sometimes, the client has a very clear idea of their business vision, their key value propositions to their core target customers, an understanding of the competitive landscape in which they exist, and their mission critical milestones.
More often, however, folks come to us with a great idea, a contagious enthusiasm, and a gut, intuitive "feel" that there is a real opportunity in the marketplace for their business vision.
At Growthink we naturally share this enthusiasm, passion and excitement, and are fundamentally eager to dive right into the business plan drafting and the business-building process. We pride ourselves on being entrepreneurially allied with our clients and embodying a proactive, solutions-focused approach to the challenges and heartaches inherent to the entrepreneurial process.
But almost invariably, in short order what is revealed is what Bette Midler sang about in “From a Distance” – that “the world looks blue and green, and the snow-capped mountains white…and the eagle takes to flight” – with the unsaid being that upon closer inspection there is very little that is without blemish nor complexity.
Nowhere is this truer than in a business plan. There are no perfect ideas – no “slam dunk” business models driven by such creative insight and breakthrough that the business plan development process is simply a matter of documenting it on paper for posterity's sake.
Instead, the sometimes convoluted, sometimes messy, and always challenging process of fleshing out the various multi-faceted aspects of a business – its marketplace, its competitive realities, its profit model, and its “Monday morning” action plans – is where the new business idea will face its first real viability test. It is not an undertaking for the faint of heart nor for the lazy as it is hard, time and energy-intensive work. Those, however, that get through it can take solace in that they have dramatically increased their business’ likelihood of eventual success - and correspondingly - its value.
For Bette Midler, click here
“I’m not sure I knew what an entrepreneur was when I was ten, but I knew that starting little businesses and trying to sell greeting cards or newspapers door-to-door or just vending machine kind of thing is… there’s just something very intriguing to me about that.”
-Steve Case, co-founder and former CEO of AOL
According to a 2006 study, approximately 2/3 of entrepreneurs claim it was their “innate drive” that inspired them to start their own business. In other words, they were born an entrepreneur.
Of the remaining entrepreneurs surveyed, 21% credited work experience as their motivation for taking the leap, and 16% said they were inspired by the success of others around them.
Forty-two percent of these entrepreneurs also said they started a childhood business venture, meaning that kid selling lemonade down the street might just be a future business owner.
Is a person born an entrepreneur, or is the entrepreneurial attitude created out of experience? Can it be either? Or maybe some combination of both?
Were you born an entrepreneur?
Entrepreneur.com has published an interestingarticle reporting that entrepreneurs are connecting with venturecapitalists on VCs’ blogs – and some start-ups are attracting funding throughthese new online relationships. For example, Paul Edmondson contacted Will Price of Hummer Winblad via his blog, and this communicationresulted in a $2 million investment in his online publishing company, HubPages.
Here’s another sign of theimportance of blogging in the venture capital world. When looking for a newanalyst, early stage VC and prolific blogger Fred Wilson specifically requested“no phone calls, no resumes, no emails” – candidates should only provide a linkto their web presence.
Social media is having – and willcontinue to have – a significant impact on the shape of venture capitaland angel investment in the months and years to come.
There have been many articles written on the subject of why businesses fail, and most of them point to the same reasons, such as:
-Lack of a well thought-out business plan
-Expanding too quickly
-Insufficient marketing or promotion
-Inability to adapt to a changing marketplace
-Failure to keep overhead costs low
These reasons are widespread and no doubt cause many businesses to fail. However, the reason for a company’s failure is not always something so obvious. Here are 6 lesser-known reasons why a business might fail.
Why do these reasons remain untold? Simple. Most of the time, the business owner doesn’t realize that these reasons are what caused their failure, and consultants generally don’t ask the kinds of questions that would identify them.
1) Focusing on Short-Term Profits Rather than Building Long-Term Value
It’s important to be profitable, but NOT when short-term profits come at the expense of the long-term value of the business and the lifetime value of the customer.
Here’s a real-life example: In the late 1990s, there was a franchise of a national smoothie shop located in West Los Angeles, CA. At this store, smoothies sold for about $4. They cost only around $1 to make, resulting in a solid profit. However, certain ingredients, like mangoes and berries, cost more than the other ingredients, such as juice and frozen yogurt. Since juice and frozen yogurt were cheap, the franchisee put more of these ingredients in their smoothies and less of the expensive ingredients. By doing this, their profit margin per smoothie grew by approximately 20 cents, which seemed great… on paper. Unfortunately for the store, customers weren’t satisfied with the taste of the lower cost smoothies, people stopped going there, and the store eventually went out of business.
As you can see here, it’s important to consider the lifetime value of a customer. Repeat business is way more valuable than short-term profits. Saving 20 cents on a smoothie today will cost you big in the long run.
(Another great example of this concept is Google giving preference to relevant ads in order to improve the user experience, even though there are less relevant advertisers willing to pay a higher price per click.)
2) Ego Business vs. Business Opportunity
The foundation of a good business is a good business opportunity. As an entrepreneur, you want to fill a need in the marketplace. Unfortunately, many businesses are started solely to fulfill an entrepreneur’s ego (or, to put it less harshly, to satisfy one of the entrepreneur’s interests).
This can often be seen in the restaurant & bar industry, where too many entrepreneurs open shop because it’s a “cool” thing to do. Such businesses rarely succeed.
3) Life distractions
The best ideas don’t always come between 9 and 5. A person might have a great idea while driving, or in the shower, or while working out. It’s moments like these when an entrepreneur leaves behind the day-to-day tasks of running a business and gains a better perspective of the big picture.
Sadly, there are a lot of things that can disrupt a person’s home life. Illness, death of a family member, divorce, relationship trouble, and problems with a child are just a few of the many issues that can affect a person’s mindset. When things like this occur, moments of clarity are replaced by stress and anxiety.
Many entrepreneurial ventures depend heavily on new ideas and creative thinking, and when an entrepreneur’s head isn’t clear, business can suffer.
4) Bad feedback & white lies
People like spending time with friends and family.
Unfortunately, when it comes to business, friends and family members don’t always give the best advice. This is especially true at the birth of a business. Nobody wants to be a buzz-kill. No one wants to tell an entrepreneur their idea is bad, or their location stinks, or anything else negative. Most people are conditioned to be supportive of their friends and family regardless of the situation.
Plus, nobody wants to be wrong. Imagine your friend has an idea that you think is terrible. You share your objections, but the friend goes ahead with the idea anyways, and it succeeds. Now you’ll always be the naysayer that never believed in them. Nobody wants to be that person.
That’s why you’ll rarely get honest, objective business advice from friends or family members. And yet, oftentimes friends and family are the first people entrepreneurs turn to for advice.
5) Maybe the owner is just a jerk
There are a lot of great people in the business world, but there are also some jerks. And these jerks sometimes start their own companies.
A jerk, in this case, is someone who a lot of people can’t get along with. Maybe it’s because they’re a super-perfectionist, or they yell a lot, or they demand that everything be done in a certain way, or they constantly complain. Or maybe they’re annoying in some other way.
The key is that nobody -- not employees, customers, partners, suppliers, clients, etc. -- wants to give 100% for a jerk. Clients and customers will be turned off, and employees will start cutting corners. Most people believe that life is too short, and don’t want to spend their time working with someone they can’t get along with.
6) The entrepreneur never took the full leap
In most new business attempts, the entrepreneur never leaves their day job, or they create a back-up plan, or they have a job lined up in case the new business fails. In these cases, failure IS an option, as the entrepreneur has a safety net to fall back on. In cases where failure is NOT an option, and the entrepreneur depends on the new business to provide food, shelter and clothing, the business has a greater chance of succeeding.
There’s a great example of this concept in this NY Times article. Xiang Yu was a third century (B.C.) General in the Chinese army. He led his troops into enemy territory by crossing the Yangtze River. Then, in order to inspire his troops, Xiang Yu took some unorthodox measures. He burned all of his troop’s ships and destroyed all of their cooking materials. This left the troops with only two options: Move forward and conquer the enemy, or perish. The maneuver did not make Xiang Yu very popular with his soldiers; nevertheless, the troops advanced and ultimately emerged victorious.
Xiang Yu’s methods might be a little drastic in this day and age, but the moral of the story is what’s important. Author Anita Roddick has said that entrepreneurship is a matter of survival, and the truth is, if you’re not totally committed to your business, your chances for success will be greatly diminished.
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