Want to start a new business in 2009? U of M business expert says opportunity is knocking for those with an entrepreneurial mindset What: Opportunity abounds for entrepreneurs in current economy, according to U of M’s Holmes Center Media contact: Dawn Skelly, Carlson School of Management, (612) 624-8770 MINNEAPOLIS ( 12/17/2008 ) --John Stavig, professional director for the Gary S. Holmes Center for Entrepreneurship at the University of Minnesota’s Carlson School of Management, knows that business owners are facing a multitude of economic challenges right now. But unlike the business people who see this entirely as a negative, Stavig believes those problems can translate into new business opportunities for would-be entrepreneurs. “Having an entrepreneurial mindset means that you’re able to analyze problems and develop business opportunities in the anticipated solutions,” he says. “Today’s challenging economic environment offers an unprecedented number of problems and potential solutions. Mortgage defaults, state budget deficits, lack of trust in investment managers – these are all big problems where entrepreneurs can anticipate potential solutions that will require private sector support. The economic glass may not be full, but it is more full than empty to optimistic entrepreneurs. We are dependent upon these entrepreneurs to help solve some of these problems and to drive our economy forward.” Stavig cautions that customers aren’t looking for ‘nice to have’ products or services today. “With reduced budgets, layoffs and fewer resources to work with, organizations want immediate results. Aspiring entrepreneurs must work with potential customers to address critical problems and ensure their ideas quickly generate tangible results.” While potential opportunities abound, Stavig encourages new business owners to go the extra step when assessing business ideas. “It takes a lot more than a great idea to start a successful business. We teach our students to rigorously screen their ideas based on a simple set of criteria: Is it real? Can you win? Is it worth it? Only after you’ve validated the opportunity with real customers should you attempt the most challenging aspect of all – execution.” Another important consideration is obtaining financing for your business in a volatile economy. “Clearly, financing is a big constraint in today’s environment. But the upside is that both economic developments and improvements in technology have made it less expensive to start a business,” says Stavig. “Business owners can find reduced-priced office space, technology, software and other services. In addition, many talented people are becoming available, are interested in working with early-staged businesses and are open to free-lance, contract or virtual team arrangements, thus enabling start-ups to hire the resources they need as they need them. I’ve worked with many students at the Holmes Center who’ve gotten their companies started with just a few thousand dollars.” Stavig encourages would-be business owners to consider the many paths toward entrepreneurship beyond the traditional, independent startup. Acquiring or spinning off a business, partnering with another company, franchising or going into business with someone else are all ways to reduce risk and find the appropriate fit with individual skill sets. “The best entrepreneurs are great ‘bootstrappers’ who thrive when they are forced to creatively use scarce resources. If you don’t have the capital to launch a product right away, consider serving as a consultant for several of your potential customers. You can generate a consulting income while developing your product.” Dileep Rao, a lecturer in strategic management and organization at the Carlson School, faculty advisor for the Holmes Center, and author of the new book, “Finance Any Business IntelligentlyTM, says, “Raising funds for business startups is among the more difficult areas of financing. An economic environment like this makes it tougher to find the right financing, and there are more people seeking financing. However, there are many alternative ways to finance a business in the start-up phase beyond bank loans or credit lines. An often overlooked but attractive option is development finance, which is incentive-based financing, primarily from governments and non-profit organizations. Development finance usually has a lower financial cost than market-based financing, but it has other requirements, such as job creation or area development.” Rao says that it’s important for business owners to not just find financing but to find the financing that’s right for their business. “Finding the right financing begins with a sound business plan. Entrepreneurs should know how much money they need, what they need it for, what type of financing to seek, when to seek it and at what cost. Despite the credit crisis, money is available right now and solid financial and business plans will give entrepreneurs an edge in obtaining it.” Rao, who has 23 years of venture financing experience that included the successful financing of more than 450 companies, adds that a venture is more likely to succeed and help the entrepreneur reach his or her goals if the business has the right levels of debt and equity at the start, when potential sales are uncertain. “Once you’ve established a track record of sales, profits and cash flow, you can consider the best ways to “scale up” or finance your future growth.” For more information on Rao’s book, go to www.infinancing.com. The Small Business Administration offers extensive information and many tools on starting a business on its website, www.sba.gov. The Gary S. Holmes Center for Entrepreneurship (at the University of Minnesota’s Carlson School of Management) seeks to inspire and educate the next generation of entrepreneurs. Through applied classroom experiences and integration with the entrepreneurial business community, students develop an entrepreneurial mindset to seek out fresh challenges, discover new solutions and make an impact on society. They experience first-hand the process of analyzing and launching new ventures and complete our program with the skills and competencies to succeed on their own or as part of a larger entrepreneurial organization. |