The Anatomy of an Entrepreneur

The Kauffman Foundation recently published an interesting report on the anatomy of an entrepreneur. Here is a list of its key findings:

  • Company founders tend to be middle-aged and well-educated, and did better in high school than in college
  • These entrepreneurs tend to come from middle-class or upper-lower-class backgrounds, and were better educated and more entrepreneurial than their parents
  • Most entrepreneurs are married and have children
  • There is an early interest and propensity to start companies: 52 percent of respondents had some interest in
    becoming an entrepreneur when they were in college, but 34.7 percent didn’t even think about it, and 13.3 percent had little or no interest. Those from lower-upper-class backgrounds were more likely to have been extremely interested in starting a business than the average (25 percent vs. 18.5 percent).
  • Motivations for becoming entrepreneurs include building wealth, owning a company, startup culture, and capitalizing on a business idea
  • Not important or less-important factors: inability to obtain employment or encouragement from others
  • Most had significant industry experience when starting their companies
  • Early entrepreneurs and those with an early interest in entrepreneurship are different
  • 60.3 percent said that working for others did not appeal to them. Responses to this question were relatively evenly distributed in a rough bell curve, with 16 percent of respondents citing this as an extremely important factor and 16.8 percent of respondents citing it as not at all a factor.

EE Interview: Isaac Childs of Rustico Leather, LLC

RusticoI interviewed Isaac Childs, Founder and Manager of Rustico Leather. His experience is a compelling story that any entrepreneur can learn from.

Isaac, describe your company for me.

Rustico Leather is a Utah-based designer and manufacturer of leather goods. We have 9 employees and average just over a million in annual sales. We are currently in over 600 retail locations across the country ranging from resort town boutiques like the Sundance General store to larger distributing retailers like Barnes and Noble. We also do a lot of custom projects in the entertainment, corporate and promotional industries. Some of these clients have included Disney, Oprah, Philip Morris and many more. We also sell direct to the public through our online website and are constantly providing unique custom leather products for individuals across the country.

Rustico specializes in hand-crafted leather journals, photo albums, binders, presentation covers, pad folios, satchels and accessories. All our products are proudly made here in the USA. All our products are Handmade to order. This allows us to create individuality in each one of our pieces, creating a “one of a kind” type feel to our products. We have our leathers specially designed so that they wear into a beautiful patina with use and age. All our leather and paper is all purchased here in the US. We have roughly 84 great standard products to choose from, and we are constantly creating new and unique custom products for individuals and companies.

Okay, Isaac, let’s dig a bit deeper. What’s the value proposition?

Custom products with very small or no minimums, short lead times and surprisingly affordable prices. They are hand made in the USA. Each product is made to order by skilled artisans ensuring a “bespoke” style of service and product. This increases its value as a keepsake or gift item and is meant to last a lifetime. Our best value is that we work with a company or client to create a product that will not only attract attention to the receiver but also be kept and used for many years to come.  All our products can be personalized with names or logos of companies for added effect.

What motivated you to launch Rustico? How did it all begin?

After creating the initial journals and having pretty good success selling them to family, friends and one local shop (Sundance general Store), several friends from college and I launched a website with the intention of selling these online. Shortly afterward, Disney gave us a call to help with a press kit for their upcoming series storm stories. From there we just launched forward, never looking back.

What is the mission and vision for Rustico?

We will be the premier custom leather goods maker. Ideally, we would like everyone in America to carry or have a Rustico Leather journal sitting on their desktop, bookcase or nightstand. We want people to turn to us for high end custom projects that require great quality and workmanship.

What would you say is an entrepreneur’s greatest or most valuable resource?

Passion. Passion for the plan, product, vision or business model is probably the most important resource an entrepreneur can have. Next would be a great mentor. Unguided passion can spell disaster pretty quick.

What is the biggest challenge you’ve faced as an entrepreneur and how have you overcome it?

The biggest challenge I faced would probably be learning how to manage people effectively. I am not sure if I have overcome this completely but I have read a lot of books, watched others that I felt where great managers, picked their brains for info, gone to trainings and hired others that have more experience than I do.

What motivates you to overcome your challenge with managing people? What gets you out of bed in the morning?

My inspiration comes when I travel. I’m able to get a breath of fresh air and then come back and dive back into the thick of it even stronger. I really love what I do. I honestly can’t think of another thing I’d rather be doing. When the challenges seem to come in waves I just have to remember that perspective and then I’m good to keep moving forward.

What role has innovation played in the development of Rustico?

Every project we do is a variation of something we’ve already done–continuous innovations. Many of our products have been developed due to problems that needed to be solved or a necessity that required some smart solution. So in that regard, innovation is very key. While many of our products are based off old world standards (i.e. leather, paper, handstitching) being able to create and produce such labor intensive and raw products in a larger scale and affordable takes 21st century planning and ingenuity. Without constant innovation and reinvention of our products and processes we would not be competitive.

What do you wish you had known before launching Rustico? Any regrets?

I wish I had a better understanding of forecasting and knowing what to look for in a balance sheet or P&L in order to see what is happening with the business. At the same time, had I known everything I know now, I’m am not sure if we would have continued moving forward; my naivety pushed me to move forward when conventional training would have told me to stop.

Got any advice for rookie entrepreneurs?

Be passionate about your idea. Remember, bigger is not always better. Develop a process. Have a healthy tolerance for the unknown. Constantly be ready to change. Improve. Innovate.

Americans Say the Government Frustrates Entrepreneurship

Americans think the government does little to encourage entrepreneurship. The Kauffman Foundation recently published the results of its study: Entrepreneurship and Economic Recovery, which evaluated “America’s views on the best ways to stimulate growth”. Here are the key findings–very interesting.

  • By a margin of three to one (63% to 22%) Americans favor business creation policies as opposed to government creating new public and private sector jobs.
  • While Americans narrowly support the stimulus package, 51% to 44%, only 33% of entrepreneurs support it.
  • Only 21% of all survey respondents say that the stimulus package supports entrepreneurial activity and 33% believe it will retard entrepreneurship.
  • 53% of Americans say that a better stimulus package that creates more jobs could be crafted, while 25% say the current stimulus will create sustainable jobs.
  • While 78% of survey respondents say innovation is important to the health of our economy, only 3% say they believe the stimulus package will encourage innovation.
  • Americans think the government does little to encourage entrepreneurship, despite its importance; 72% of respondents say the government should do more to encourage individuals to start businesses. Almost half of
    respondents think the laws in America make it more difficult to start a business.
  • When asked what would jump-start the recovery and end the recession, 37% of respondents say cutting payroll taxes, 19% say to first pass the stimulus package, and 16% want to rescue the financial system through bank bailouts.
  • Two thirds of survey respondents favor less-costly alternatives to the stimulus package, such as reducing legal barriers and red tape for new business development.
  • Despite the collapse of Wall Street, 89% of Americans say that capitalism is still the best economic system for our country.

Guest Post: The Green Ink of Grey by Chris Sorbe

The Financial Times recently published an article titled “The Red Ink of a Greyer Future”. It’s about the aging of western society, particularly the U.S. and the U.K.  Being in a newspaper, you’d expect the authors to take a negative slant to the issue. Of course there were statistics showing that our governments will be financially destroyed by the crushing debt of government funded pension obligations and medical care programs.

For America, the core of the issue is the impending retirement of the Baby Boom Generation. And 2009 is a watershed year since that generation will begin to tap into the Social Security and Medicare system.

Just how big of a boom will this generation create?  Consider these statistics. The population of the World War II Generation, the parents of the Boomers, was about 42 million people. Baby Boomers are estimated to be 78 million strong, nearly double the previous generation! And Celent has reported that the population of pre-retirees and retirees is projected to increase by 30 million by the year 2020, and to account for about 50% of the US population, compared to 44% in 2002 (Graph).

baby-boomers-forecast

Here are a few other issues to ponder. Baby Boomers (as a group) have improved health over there parents at this age.  They have a longer life expectancy than there parents. And they have saved and invested greater amounts than their parents.  And as a group, Boomers have higher expectations of what life in retirement will entail than their parents did. I believe that a rocking chair retirement is not in the plans of this generation.

I’ve watched as several family members, born just prior to the beginning of the Boom, have entered retirement. All are in good health and want to remain that way. And they want to stay active. I believe that the Baby Boom Generation will totally redefine what it means to be retired.

So while all of the doom and gloom may very well turn out to be true, there is great opportunity for entrepreneurs. I’ve been kicking around a few ideas in my entrepreneurial journal about potential business ideas that could cater to the needs of this demographic which is guaranteed to double in the next 20 years.

Isn’t that really amazing to consider? The number of retirees in the U.S. is going to double in the next twenty years. So goods and services that retirees consume are going to double in twenty years.

But if you’re like me and believe that Boomers are going to rewrite the book on what it means to be retired then there are tremendous opportunities to create new businesses, particularly in the consumer services sector. This opportunity is not just for pharmaceutical companies. There will be ample new business created.

So I have a question for the entrepreneurial community: how can you capitalize on this emerging shift in consumer demographics? Make no mistake; it is coming. As business owners and entrepreneurs, are you ready for the coming generational and demographic shift?

Entrepreneurs that develop and offer the goods and services that aging Boomers demand won’t be seeing red ink, they’ll be seeing green.

Post-Idea, Pre-Launch Entrepreneurship for Entrepreneurs

The process of taking a business concept to reality is all too familiar to serial entrepreneurs. They have an idea or hear of a great source of innovation and they launch or source the capital needed to launch. Inherent in this process is a gap that represents a great need. The ambiguous period of time between the enigmatic birth of a good idea–that point in time when a business concept is conceived–and the submission of those ideas to a prospective investor is assisted by few comprehensive resources that ensure the success of a business post-launch. Innovators need an all-encompassing solution for vetting and qualifying their ideas. It must allow them to develop their concepts and, at the same time, connect with needed talent and resources. Incidentally, Peter Drucker would call this source of innovation a “process need”. All of this activity, of course, occurs pre-launch. It even happens before capital is committed to the project. This process need is real and represents a great opportunity for entrepreneurs. Call it entrepreneurship for entrepreneurs.

Yes, entrepreneurs have fragmented solutions that have satisfied this need, but never one single solution. They know where to go to for market research. They know where to go to develop an effective business plan. And they know where to go to connect with talent. But all of these solutions are not located in a single location. If I’m wrong (and I have been wrong before) then I’d love to know about it.

Are Planners Doers? Pre-Venture Planning and the Start-Up Behaviors of Entrepreneurs

Think writting a business plan will help you stay motivated? Think again. The SBA just published a research report last month (February) about pre-venture planning and the start-up behaviors of entrepreneurs in an attempt to determine whether or not the process of pre-venture planning is beneficial to the success of starting new ventures. According to the report, “some researchers suggest that pre-venture planning enables  entrepreneurs to surface their assumptions about factors leading to success, reduces delays in implementing critical activities, and helps them communicate their vision to others. Others suggest, however, that planning is a distraction from the real work of creating and building a new enterprise. Establishing the value of pre-venture planning may be important to nascent entrepreneurs.”

The study found that “the activity of business planning, and the level of formality of the business plan (i.e. whether the plan is written, informally written, or existing only in thought) does not, as a main effect, influence the rate at which entrepreneurs engage in more activities, their tendency to concentrate activities in a short period of time, or the overall timing of other startup activities. Early planning, however, appears to be an impetus for early action.”

However, it was found that “early formal planners are doers.” And it is the SBA belief that “challenging prospective entrepreneurs to accomplish a formal business plan early in the venture creation process will likely enable them to engage in additional start-up behaviors that could further the process of business creation. By engaging in venture creation activities earlier rather than later,” explains the SBA, “prospective investors and other venture supporters might ascertain earlier whether a fledgling idea has potential as an ongoing business.”

My advice to those of you in the process of developing your business plans is to not let its development distract you from actually launching the company. Just do it. That’s the heart of spizrinktum.

The complete report can be found here.

The Hot Air of Corporate Social Responsibility

Last month, Stefan Stern wrote an article in the Financial Times about the hot air of CSR. I got a kick out of his opening statement: “Thank goodness, now the recession’s here we can forget all that nonsense about corporate social responsibility (CSR) and get back to trying to make some money.”

At the risk of offending liberal entrepreneurs, I have to agree with Stern. Too often, our responsibility to our community or the preservation of the environment distracts entrepreneurs from their responsibility to the bottom line, even during the economic downs. While I think it’s important that a business operate ethically and make a positive contribution to society, it should not invest in CSR initiatives just for the sake of being seen as a socially responsible institution. But I’m interested in your perspective: