Growthink Blog

Individual States Plan to Encourage Entrepreneurship


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Last week, we talked about how entrepreneurs, who serve a crucial role in growing an economy, have been shortchanged by the proposed stimulus package.

See our previous post: How Entrepreneurs are Key to Job Creation.

Now, as the Wall Street Journal reports, many individual states are planning to harness the energy of entrepreneurs in an effort to jumpstart the economy.

Maryland is tackling the issue head on by allocating over $70 million for programs to support small and minority owned businesses, and $15 million for heath insurance at such businesses.

The approach in Florida includes low interest rate loans for small businesses with less than 100 employees.  Loans up to $250,000, that would be purposed for everything from expansion to new salaries, would be available at a 2% interest rate.

In New Jersey, to spur expansion and hiring, a stimulus plan includes grants and tax incentives. $3,000 is available for small companies that hire an employee and keep them for a year.  Sales tax credits are being considered for capital investments that exceed $5,000.

Similar tax incentives are being considered in Colorado, Arizona, and Minnesota.

Such considerations at the state level are a step in the right direction, and signal recognition, at the government level, that entrepreneurs can and will play a significant role in reinvigorating the American economy.


Entrepreneurs are the Key to New Job Creation


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As the House rushed to put the $819 billion economic stimulus package in place, Congress may be overlooking one of the most critical components to creating new jobs: entrepreneurs.

The stimulus package is chock-full of plans to stimulate job creation though public works and projects. However, a study by Grant Thornton recently released to the US Department of Commerce Economic Development Administration reports that investing in business incubators, which support young companies and entrepreneurs, is a more effective strategy for creating jobs.

And the numbers are staggering. Here is a look at what a government investment of $10,000 accomplishes in different sectors:

  • Roads and transportation projects:  4.4 to 7.8 jobs created
  • Commercial structures: 9.6 to 13.4 jobs created
  • Business incubators: 46.3 to 69.4 jobs created


Business incubators create jobs at an expense as low as $144 per job -- almost 10 times less than road and transportation projects, which typically cost more than $1,200.

This data, while surprising to some, supports what we’ve always believed here at Growthink: That the American entrepreneurship isn’t just one piece, but the most important piece of our economy.

If you're looking to start your own business, you need to learn the main components of a business plan before you start. Keep that in mind before you begin putting your plan together.

Related post: President Obama and Entrepreneurship


An Interview with Venture Capitalist Dave Humphrey


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Earlier this week, Growthink's Co-Founder Dave Lavinsky spoke with Dave Humphrey, COO and Senior Investment Professional for Oklahoma Equity Partners, based in Tulsa OK. Humphrey has served as a principal at Davis Tuttle Venture Partners (the oldest VC firm in Oklahoma). Also, in over 10 years with Koch Industries, he led $300+ million of expansions and acquisitions, and served as the CEO of a $200 million business where he increased profitability by six-fold.

You can click here to listen to the entire interview: http://www.growthinkuniversity.com/public/248.cfm

In the interview Dave discussed how networking plays a role in both capital raising and bolstering a management team, as well as a way to approach financial projections that will show investors your true capacity to execute on a market opportunity.

Also discussed are the 3 key elements that Humphrey looks for in every business plan.

To listen to the interview, visit this link: http://www.growthinkuniversity.com/public/248.cfm

 


Webinar: How to Invest in Venture Capital and Private Equity


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We welcome you to attend our webinar "How to Successfully Invest in Venture Capital and Private Equity."

In the webinar, Growtthink's CEO Jay Turo provides an overview of venture capital and private equity investing, including commentary on current market conditions (credit crunch, decline in stock market, real estate bust) as well as private equity investing "best practices" for success in the current environment.

During the webinar, Jay provides his perspectives on:

  • The credit crisis and the stock market correction
  • Why smart investors are engaged in a "quest for value" and how this relates to private equity
  • The importance of applying portfolio theory to private equity & venture capital
  • How to assess risk and price venture capital & private equity deals
  • Why most private equity investors fail -- and what to do about it
  • Which sectors present opportunities NOW

 

Use this link to learn more and reserve your spot:


Growthink's Private Equity & Venture Capital Webinar

 

Special Announcement:
Are you an entrepreneur looking to raise capital from private investors? With Growthink's Private Placement Memorandum Template, you can finish your PPM quickly and easily, so that you spend less time "preparing," and more time speaking with investors.


Risk of Inflation is VERY Real


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Sometimes things are so obvious as to be hard to see.  

That is certainly the case right now with the incredible flood of federal stimulus pouring into the economy - both in terms of fiscal and monetary policy.   But saying it in this way, as it is often done by the chattering media classes, makes the issue unnecessarily opaque and complex.   We agree with Milton Friedman (and not just because of his long Stanford connection) when he describes inflation as "always and everywhere a monetary phenomenon."


President Obama and Entrepreneurship: "The Risk-Takers, the Doers and the Makers of Things"


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In my 10 years at Growthink and my 20 years in business, I have never lived nor worked through a period with as much uncertainty and negativity, as much economic depression, as much market fear, as we are living through right now.  As spirits have waxed low in the markets, I would be not candid if I did not confess that I have bouts of dispiritedness.

Why I Hate January At the Gym: Parallels To Raising Capital


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I’m really good about working out. With few exceptions, I go to the gym every day after work and try to work out at least one day over the weekend.

Part of why I go is to stay in shape, but I think it helps me a lot business-wise as the exercise helps me release excess energy so I can really focus on the tasks at hand when needed.

Because there’s always too much to do each day and yet I insist on going to the gym, I’ve devised a laser-focused 25 minute workout that I follow. It’s nothing too fancy -- it’s mainly that I go from machine to machine to machine with no breaks in between (many people do a similar routine but it takes them twice as long since they take breaks in between each rep and/or machine).

Anyway, what this means for me is that every January is a nightmare. Why? Because every January, the gyms are full. And this means that I can’t quickly go from machine to machine to machine because I have to wait for others who are using the equipment.

This happens because every year, tons of people make New Year’s resolutions to go to the gym more. So, in early January, the gym is full of these “resolutionists.” Fortunately, by February, they’re usually gone and it’s back to normal.

The reason I tell you about this is that it’s incredible how much this mirrors raising capital.

To begin, raising capital, like weightlifting and exercising, only works if you do it EVERY DAY. You don’t get strong working out like crazy for one month and then relaxing the rest of the year. Rather you need to put in an hour a day or an hour every other day throughout the year to realize an impact.

When raising capital, you need to constantly be speaking with investors, finding new investors, and making presentations. You need to constantly tweak your business plan to make it better and better. This will not happen overnight. It takes months.

Also, in weightlifting, if you don’t know what you are doing, you will have poor form and you will most likely hurt yourself. In capital raising, if you don’t know what you are doing, you will also hurt yourself and your company by failing to raise the capital you need.

And, like in the gym example, all the “resolutionists” HURT YOUR CHANCES of success.

At the gym, the “resolutionists” hurt me be using my machines and thus slowing me down.

When raising capital, those who don’t know what they are doing also hurt your chances. They submit their business plans haphazardly to every investor who will accept them. While these investors will rarely if ever fund these plans, they waste the investors’ time. As a result, the investors have less time to review good plans and meet with good entrepreneurs, like you.

I wish I could tell you that raising capital was fun. But I can’t. I wish I could tell you that it was easy. But I can’t do that either. Like weightlifting, it’s neither fun nor easy, but once you learn how to do it, and you repeatedly do it right over a period of time, you can succeed and the rewards far outweigh the costs.

GrowthinkUniversity.com, our new membership website, was designed to teach you how to raise capital using the proven techniques that we have implemented over the past decade for our consulting clients.


Downturn Provides a Silver Lining for Entrepreneurs


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In his post, Could the credit crunch be good for startups?, Alexander Muse of Texas Startup Blog discusses Nortel's bankruptcy filing, and the silver lining he sees for entrepreneurs in the telecom space.


Muse writes:

With the bankruptcy and ultimate breakup of the company, there will be lots of room for innovation from startups and entrepreneurs in the telecom space... Tightening credit markets mean that companies need to generate profits and can’t simply use debt to wait out under capitalized startups.  

Just as forest fires cause great destruction, they are fueled by dead wood and allow new healthier forests to emerge.



This is a great analogy.  Muse's optimism is in line with our belief that, despite all the negative news, there is always room for innovative, bold entrepreneurs with great ideas, excellent plans, and the will and tenacity to execute.

 

Related post: The Downturn - Keeping Things in Perspective


How Entrepreneur-Friendly Is Your State?


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The Small Business and Entrepreneurial Council recently released its ranking of the states that impose the fewest burdens on the growth of new businesses in their areas. 

The report analyzes dozens of factors affecting entrepreneurship including regulatory costs, health-care costs, and crime rates.

Here are the full rankings of all 50 states, including District of Columbia (which came in dead last):

  1. South Dakota
  2. Nevada  
  3. Wyoming
  4. Florida   
  5. Washington
  6. Texas     
  7. South Carolina
  8. Alabama
  9. Virginia
  10. Colorado
  11. Tennessee         
  12. Georgia
  13. Arizona
  14. Missouri
  15. Utah      
  16. Alaska   
  17. Mississippi
  18. Ohio       
  19. Michigan
  20. Indiana
  21. Oklahoma 
  22. North Dakota
  23. Kentucky
  24. Illinois
  25. Pennsylvania
  26. Wisconsin  
  27. Louisiana
  28. New Hampshire
  29. New Mexico
  30. Arkansas
  31. Kansas
  32. Oregon
  33. Montana
  34. Delaware
  35. Idaho        
  36. Nebraska
  37. Connecticut
  38. Maryland
  39. North Carolina
  40. West Virginia
  41. Hawaii
  42. Iowa
  43. Vermont
  44. Massachusetts
  45. New York
  46. Minnesota
  47. Rhode Island
  48. Maine
  49. California
  50. New Jersey
  51. District of Columbia


Click here to read the full report.


Where does your state fall on the list? 

Does your state's ranking reflect your personal experience?


Entrepreneurial Skills and Traits: Are You the Next Richard Branson?


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What traits and skills really make Richard Branson, Bill Gates, Donald Trump, and countless other entrepreneurs so successful?

Over the past decade, we've identified key ingredients that lead to success, which we've observed both in celebrity entrepreneurs and in our most successful clients. When it's all said and done, they have all of the following critical skills, which are essential to entrepreneurial success:

Vision & Leadership: Entrepreneurs must have a vision of where the company will be in the future.  In addition, you must be able to communicate you vision so as to motivate employees, investors, and partners to help you achieve that vision.  You must be able to identify staffing needs, expertly fill them, and lead your team to success. Rarely do entrepreneurs build successful companies all by themselves.

Focus & Execution: Entrepreneurs must focus to make sure that goals are achieved, customers are satisfied, and employees are motivated. For most entrepreneurs, staying focused is harder than it sounds.  Be careful not to be seduced by the next exciting opportunity without executing on the priorities at hand.  And don't let perfectionism prevent you from taking action, either; at the end of the day, a product on the market is better than a product shelved due to lack of focus, execution, or perfectionism.  Get to market and get feedback from your customers as soon as possible.

Persistence & Passion:  As an entrepreneur, you must be passionate about what you are trying to accomplish. In addition, you must be willing to commit whatever is needed of them, whether it's time, energy, money, or other resources.  You must persist through trying times (which will be frequent), and fight as much as needed to achieve the goals you have set for yourself and your team.

Technical skills:  As the owner of your firm, you may not need to be the most skilled technicion on your team.  But you need to have necessary foundational knowledge to be able to lead your technical team and make informed decisions. 

Flexibility: Successful entrepreneurs understand that the world and the environment in which they operate are constantly changing. While you must focus on the end game, you also must adapt your strategies and offerings to meet changing market conditions.

There has often been debate regarding whether entrepreneurship can be taught. Can you really teach persistence or passion? Perhaps you can't.  But if you understand the importance of these entrepreneurial traits, you can focus on them and make the necessary adjustments to succeed in your entrepreneurial endeavors.


What about you -- what skills or traits do you think make entrepreneurs successful? 


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