Entrepreneurship on Line

Ditching the Stock Market

2011-03-01T12:05:00.002-05:00

2008 stole 1/3 of the value of my IRA funds from the market. I told myself if the market ever got back up to 11,000 (it was down around 7,000), I'd take all my funds out. Spring 2010 it did so I did. I took all my money out in CDs here in town. For return they are getting crap, but something and I know at least that I will not lose anything. Last month the market last 2%, my investments made between 1 and 2.5 percent depending on the investment. Not what I would like better than it could be.

Now I'm 65 and so money I lose I have less time to earn back. If I were 35 I might have made a different decision. I had to get rid of those 13% interest payments on my credit card. I was getting killed on the spread.

It did the trick and I came out with some investments in tact and all of my debt gone. But the fun part is just beginning.

Stay tuned.

Declaring All Out War on My Debt

2011-02-28T12:35:00.004-05:00

When I knew that my income would be relatively fixed and I knew I had a debt I had to get rid of or I was going to pay through the you-know-what interest I knew I had to get rid of my debt.

I had to get rid of my debt no matter what it took, NO MATTER WHAT IT TOOK, NO MATTER WHAT IT TOOK.

So I declared war on it. For ammo I had my 401K plan, what was left from the funds from the sale of my car, and social security and a small pension.

I saw these could handle the overage, so I did a bail-out.

I cashed out my 401K plan, took a huge hit, and paid off my master card bill. I had already stopped adding to the amount on my card but I had to something about the pile itself. I also dedicated the amount I had gotten from my car to retiring the overage.

It decimated my finances but had to be done. I've never looked back and never regretted it. Now I'm starting to build back up, slowly because interest rates on deposits are crap.

(To be continued)

Selling my car, part II

2011-02-27T11:32:00.002-05:00

(Continued from yesterday.)

I had a couple of options. I could sell it to a dealer. I took it out there and he looked at me down his nose and had a mechanic look at it and offered me almost nothing for it. I said thank you very much don't call me I'll call you.

I talked to a friend who said I should sell it on Craig's list and that he would do it for me for no charge. I said fine and waited for him to do something.

Meanwhile a friend called and said she was looking to buy a car. I told her I was trying to sell mine but she said she wanted a new car.

Two weeks or so later she called and asked if mine was still for sale and how much I wanted for it. She offered me less but enough and I said I would sell it to her but didn't she want to test drive it. (I had told her I'd just had it inspected, which I had) She said no problem she'd be in with the check.

I probably could have got more on Craig's list but I wanted to get rid of it right away. I took the money and put it in the bank. Turns out it helped me get clear of my debt left over from RE.

Converting an under-used asset helped me immensely in getting financially stable.

Selling my car

2011-02-26T15:42:00.002-05:00

A few years ago I shrunk my real estate practice. Rather than run all over the city I focused on my market area where I was likely to get sales worth the effort. One day a warning light on the dashboard of my Corolla came on.

I took my car to my regular garage. They were good honest guys and always had worked hard for me and never charged me much much. They worked on the light and it went off.

A few days later the light came on again. I took it back in and they worked on the light again and it went off again.

A few weeks later the light came on a third time again and the car started to not start on hot days. Once it happened when I was supposed to transport a client to a closing. Not my shining moment as a realtor.

Finally it started and after the closing I took it back to my favorite garage. They said it was some kind of environmental sensor and they had run out of tricks so I had better take it to the dealer who had equipment to deal with it. My guys meant they didn't want to do any more work for me for free with no result. So I took it across town to the dealer who fixed it and charged me $327. I had never spent anything on repair and wondered if this was the tip of the iceberg going forward. I had no more trouble with it but I began to wonder if I really needed the car at all.

So I went home and figured how much the car was costing me to run. The answer was $300 per month for parking and insuring not counting repair, upkeep, gas and oil, parking tickets, and yearly inspection. And because I really wasn't driving it much this $300 per month was mostly wasted.

I decided I didn't need it any longer and decided to put it on the market. (To be continued)

Causation and Correlation

2011-02-25T15:24:00.002-05:00

I find correlation more interesting than causation. I take correlation to mean: two things are correlated to the extent that two phenomenon occurr at the same time. Like age and wealth. Most people get wealthier as they get older. One does not caus the other. They may both be "caused" by an underlying cause.

Causation is tough. One thing is caused by another if the first thing wouldn't have happened with out the second thing happening. Take away the second thing and the first thing wouldn't happened.

For example a commonplace is that slavery is a cause of the civil war. It's true that slavery and the civil war coexisted. Would we have had the civil war without slavery? A matter for historical debate.

Or the rise of Hitler caused WWII. It might have happened anway but differently.

Fiinancial Stability (Continued)

2011-02-25T15:17:00.002-05:00

Once I got my revenue stabled, applying for social security I knew I had some work to do. So I had to figure out where my money was going.

I'd made some investments in my real estate practice was a thing of the past, I looked at all the automatic payments I was making to that support that practice would no longer be valid. So I did my best to get rid of those. Some I could just bail out on right away. Others I was contracted for a little longer so I had to put up with those payments.

By the end off three months time or so, all my payments for real estate things, like lead generation prgrams, web-based tools, etc. were things of the past. There was more work to do, and I'll tell you what I did next after that.

Financial stability

2011-02-24T13:55:00.002-05:00

First I wanted my undiscovered country to be financially stable. That meant I wanted positive cash flow every month. Every month. Not up one month and down the next. But my revenues exceeding my expenses on an ongoing basis.

First, I had to get my revenue solid and consistent so that I would know what it would be. I was 63 at the time. Real Estate was giving me nothing anymore and with the great recession at full bore with unemployment pushing 10+ percent and no immediate prospects of that turning around my first job was to figure out where my money was coming from.

I could wait on applying for social security or I could do it right away. The upside of waiting was that my monthly payment would be higher if I put off applying for Social Security until I was 65. How much more.

I got the figures each way and did a little time-sequence analysis. I found it would be a good 20 years before my delayed income would make up for what I was losing by not signing up. So I signed up. My other salary potential is capped, but so far no other outside salary is likely to come along in the near future so not to worry.

More on this next time

The Undiscovered Country

2011-02-23T08:28:00.003-05:00

Star Trek calls the future the undiscovered country. Each of us has our own undiscovered countries. "What is the future that I want?" I had to ask myself. What will I want this undiscovered country to be like after I discover it? Our president talks about winning the future. What future would I win and how would I want to win it. Well, I first asked what future I wanted to win.

No big deal. That's what I thought.

But to get to this country I had to go through 9 months of research and analysis about myself. And I had to burn the boats on the shore.

I'll share this with you one post at a time.

Sunk Funds

2011-02-22T12:07:00.001-05:00

Sunk funds are money I already spent and won't ever get back. Some of the money I sunk into my various ventures helped; a lot of it didn't. The key to differentiating one from the other is if I see some positive results. I have to make sure I sink funds in productive areas so that I get a result at least equal to what I sunk. Some money I had to spend--food, clothing, shelter, safety.

The way I figure if I'm getting back anything for the funds I've sunk is to write down and account for every swinging thing I spend money. At the end of each day I categorize. $2.50 for coffee at Starbucks; $29.50 for a book on marketing; $1.50 to take a bus; $8.00 for a movie; $58.56 for dinner with friends.... So on and so forth.

If I'm diligent about it I will start to see some patterns in my spending. And I can have a conversation about what I am spending and what I should be spending on. I do this every day now and it has given me a more productive life. My spending patterns have changed, and I'm more interested in making my numbers than in spending everything I spent. And I know that what I am spending my money on is what I should be spending my money on.

Technologies

2011-02-21T13:02:00.002-05:00

I find that there are three technologies that most people don't think of as technologies but are.

Technologies are the tools, techniques, crafts, systems or methods of organization in order to solve a problem or serve some purpose. They help us accomplish things.

We think of things like computers, the Internet, telephone apps, and so on.

What most people don't think of are thinking, speaking, and writing. These are three technologies we all need to keep updated on. Forget all that other stuff. If we can't do these three things, all the computers in the world will not do us any good.

Developing habits

2011-02-20T11:24:00.002-05:00

Key to achieving my goals are developing useful habits. I determine the direction I want to go in and the goals I want to achieve in my life. Then, I try to develop a habit that will support my achieving it.

That is, if I want to return to playing chamber music, I have to develop a habit of practicing my viola it. You know when you have a habit when some little bell goes off in your head somewhere that you're missing whatever it is you have a habit of doing but you've not been doing.

I developed a habit of stretching every morning after my daily shower. Up, fix coffee, shower and shave, stretch and do my exercises (to shift my weight from around my middle to my chest and shoulders where it's safer to carry it), then go to work. When I don't stretch my legs out, they complain about it.

When I say habit, I don't mean an addiction to alcohol, nicotine, or other drugs. Those are destructive habits. Get rid of those by not doing them for a period of time until not doing them feels more natural than doing them.

In fact, if you are doing something all the time that you think you can't do without, try doing without it for a while. A week or two weeks. Then maybe you don't need that habit.

Keeping my my skills

2011-02-19T16:12:00.003-05:00

A skill is a thing someone can do. Some people can talk. Some can dance. These are skills, things that are learned. Like knitting. Or writing. Or singing. Skills are a subset of human capital. Actually each of these is a cluster of skills. For example to be a skilled tennis player you have to be able to run, hit a ball, think, be physically fit, etc. Each of these abilities is a cluster of other skills and so one and so on. Skills are based on talents or abilities which ate things you are you born with.

Anyway, one of the skills I have learned is to play the viola. A viola is a musical instrument, a member of the violin family. It's bigger than a violin and sounds five notes lower. It has a more mellow and subdued tone which I really love.

I learned to play the viola when I was young. First I learned to play the violin and switched to the viola in 8th grade. I can play well enough to add enjoyment to my life. I can play in tune most of the time, have good relative pitch, an excellent musical memory, and reasonably good coordination so I can put my fingers in the right places and operate a bow reasonably well. Nothing fancy or fast or virtuosic.I could never (even if I wanted to) make a living off of my playing but I might have been good enough if I had worked at it when I was very young.

My greatest enjoyment is in playing string quartets. One of the instruments in a string quartet is a viola, along with two violins and a cello.

Well for a number of reasons I stopped working on my viola a couple of years ago and have played virtually not at all, since. I've been listening to some great string quartets lately and have decided that if I want to be able to play that music, I have to work on my skills or I will lose them.

The things I have lost are the pads on the ends of my fingers. I have to build them up so I can play without the ends of my fingers getting sore. That's the first thing for me. I've worked on it two days in a row now. I could tell the difference from the first to the second. Now I just hope that I don't weanie out.

Yes, skills can be learned. And they can be lost. Playing the viola is a skill that helps me in my life. I don't want to lose it.

Causation

2011-02-18T08:07:00.002-05:00

I pulled out of my grab bag a thing on causation. Turns out I already blogged on it. Here's waht I said last August.

"Causation" in real life is different than in statistical life. In real life, "A" is said to cause "B" if "A" would not have happened if "B" had not happened first. A man gets drunk and gets behind the wheel of a car and runs over a man killing him. The accident is said to have "caused" the death of the man.

In statistical life, "causation" means "correlation" or "prediction." "A" predicts "B", or "causes" "B" if knowing "A" helps us reduce the uncertainty that we have about "B". For example, increasing age in a global sense is related to increased wealth.

Not all wealthy people are old and not all old people are wealth. But in society in general, you get wealthier as you get old. Therefore age "predicts" and "causes" wealth. If you don't work and invest well as you age you won't be wealthy.

As entrepreneurs we need to know about causation in both senses. We need to know the effects of what we do as business leaders and starters. We need to know that if we don't devise a partnership agreement we can have all kinds of problems. We need to know that if we are mean to our employees and don't respect them they will leave and it will be hard to replace them and our business will suffer.

We also know that our success is caused by generating cash. And we need to know the cash drivers and how they "cause" our success.

We need to know both kinds of causation.

Tell me what you think.

Clarity and Relentlessness

2011-02-16T11:49:00.002-05:00

To things I will need, and in spades, I figure, are clarity and relentlessness. I'll need clarity in seeing the road ahead and relentlessness in order to reach mo goal.

I think I see the way ahead now. My goal is to have a book out on the Curtis String Quartet, to be supported by a regular round giving of speeches and talks and seminars and to have a non-profit organization that will help at least partially fund the effort.

Now I need relentlessness for me to achieve these things.

Market

2011-02-15T13:12:00.002-05:00

I found an article on "market" in my grab bag. This is kind of interesting.

The term market has a double meaning. It means a "space" in which buyers and sellers interact. That's a market, i.e. the "real estate market," the "automobile market," the "stock market, the "bond market," that place is a "meat market," blah blah blah.

To market used to mean "to go shopping," as in "I'll go to the market." The food store or food market. You still find that once in a while.

Sometimes I would encounter this when I was cold calling and asked for the director of marketing and the receptionist would hand me off the head of the purchasing department. The first time this happened I wondered why they did that, but it dawned on me they had an older definition of marketing in their minds than I did.

There's a big bunch of stuff written about markets. If I just think about a market being a place with buyers and sellers, I'll be okay.

Link Rot

2011-02-12T11:59:00.002-05:00

"Link rot" comes from computerese and refers to the process by which links on a website stop working over time as their sponsors go out of business, change their business focus, disappear, or suffer the thousand other slings and arrows websites fall heir to.

It happens to my cable box sometimes. My cable sometimes just stops working. I disconnect and then reconnect it and, PRESTO CHANGE-O, up it comes again.

Sometimes my printer stops working because the connection "got stale." It happens. Same thing. I disconnect it and reconnect it and it works.

"Link rot" also undermines my professional network. It happens as people move, change jobs, get older, alter their lives, have kids, divorce and remarry, die even. I've had that latter thing happen more than once, but I'm in that demographic group that is closest to my date of mortality. More on that later.

I try to avoid this by keeping in constant contact with all my contacts. I haven't done so good lately as I've done a couple of pivots. But if I can't do it with a phone call I at least try to connect with them by email so they remember who I am. It's tough because I have a lot of contacts which means I have to be constantly driven to do it and have to strategize about who to keep closest in contact.

I try to avoid link rot whenever possible.

Cash Flow

2011-02-11T11:55:00.002-05:00

What I've done is to figure out how to keep my cash flow positive. It's been a struggle because I had to radically change the behaviors that made my cash flow go negative too often.

What's important to me about a business is how much cash it brings in. Profit is an accounting artifact. Cash is where God lives. And because right now my business is living, so I daily track expenses and income to make sure that I'm never in the red. I'm on social security so I watch my cash outlays like a hawk. I've got my cash flow so that it's positive by reducing my expenses down below my income. Now my job is to get more income.

I never spend anything I don't have to without being sure I'm going to get back more in value than I spend. It might be supplies that I need to run my business or it might be a cup of coffee so I can go off to a caffeine den or think or read away from the office. I try to keep the caffeine trips to a minimum.

I record everything I spend. Even if it's 5 cents. Really, I do. It's amazing how your behavior lines up if you watch the money. Last summer I got lazy and didn't keep timely cash flow records. I lost my shirt. Now I have expense it back.

What I've done is to set up a spread sheet so that I know exactly how much I have left at any point of the day. It's simply monthly income - monthly expenses = balance. I can watch that balance seep out of my accounts every day and stem the tide when I do. I don't wait until the end of the week or the end of the month or the end of the quarter. It's too late by then.

Entrepreneurial Economics

2011-02-10T07:55:00.002-05:00

I reached into my grab bag and found a copy of a Wikipedia article on Entrepreneurial Economics. The gist of the argument is that the faillure of traditional economics to account for entrepreneurship means that traditional economics is floored?

Why is that? Maybe traditional economics is flawed but not for that reason.

To me, entrepreneurship is an attitude or frame of mind. It means you take life as a challenge not as a reason for whining. It means you look into your heart and find your passion and filter that through your brain. It means you dedicate yourself to something positive that will improve the world around you.

Economics is just economics. Eh?

Adopter Categories

2011-02-09T09:38:00.003-05:00

It's pretty much agreed now that in terms of how consumers respond to new products introduced, consumers can be lumped into these five groups: Innovators (2.5%), Early adopters (13.5%) Early majority (34%), Late majority (36%) Laggards (14%).

Innovators and Early Adopters look at new products differently than the others. They want to see what's new regardless so they buy the first things out of the shoot or they want to own the latest and the coolest and sexiest product on the block.

The middle group wants to see how well it works, who else is using it, what it will do for them, etc. Will it save them time? be more accessible? save them money? They don't care so much about the bells and whistles.

The last group only buy new things when the pain of putting up with dinosaurs exceeds the pain of getting new stuff. Then a good portion of them tend to jump to the newest or nearly newest thing.

I'm a laggard. I bought my first IBM Selectric typewriter 3 years before they stopped using it. I don't like to buy new stuff when what I'm using has worked well for me. But rapid market change means I'm sitting on a sand bar watching the tide come in around me. I can only hold out for so long. But I became an early adopter regarding the social media. I'm about to de-laggard myself over texting.

Where do you fit on this continuum? If you're making a new product, make sure you now how you're going to make sure your product can cross the gap between innovators and the others.

And keep in mind that people can fall into different groups depending on the product. A person may be the first person on his block to buy one thing, but the last person to guy another type of thing. I can't come up with examples, but I hope you know what I mean.

If you want more on this read Everett C. Rogers, Diffusion of Innovation, and Geoffrey C. More, Crossing the Chasm.

Taking a brake until 2011

2010-10-19T06:24:00.001-04:00

This blog will be on vacation until 2011. See you in the new year. YOu can reach me at 215 219 5825 or twb2@verizon.net

Validity

2010-10-18T09:08:00.002-04:00

An issue for entrepreneurs: how do you measure and reward performance? Your own and that of others.

Last time I talked about reliability, the consistency of measurement across time. Reliability and validity are two basic issues in measurement. To be effective, measures have to be reliable, i.e. repeatable, and valid.

Validity refers to the extent that you are measuring what you think you are measuing. You can have results that are reliable, that is they come out within acceptable limits time after time. If you aren't measuring what you think you are measuring reliability doesn't matter.

There are a number of different kinds of validity, so look it up on Wikipedia or in a research methods textbook.

Here's an example of how an entrepreneur I used to work for, the president of a market research sompany, used an invalid measure.

She measured the productivity of her employees according to how many hours they put in according to their time sheets. While I was there her data collection manager worked 60-80 hours a week. She thought her data collection manager (whom she treated like a daughter because she'd had a falling out with her real daughter--but another story) was the cat's meow.

My analyst came in at 8 o'clock a.m. every day, five days a week, took an hour for lunch, and left at 5PM every day. The president didn't think much of him because he didn't put in the hours that little Miss Data Collection Manager put in. She continually trashed him at every opportunity, used him as an example of a lazy employee, and wouldn't okay raises for my guy. She continually talked up her surrogate daughter and upped her salary repeatedly. My analyst finally got fed up with this nonsense and went and got a better job for more money.

Only thing was, Miss Perfect put in all those extra hours because she couln't do anything right the first time and had to do everything over. My analyst was really smart, got his work done, and went home.

So my boss lost a really good employee and rewarded a barely competent one. She measured productivity on what she could see, hours on a time sheet.

We hired a new analyst who looked really good on paper but who took really a really long time to get anything done, but put in 60-80 hours a week. My boss thought she was the cat's meow, too.

Sad, really, when you think of it. She thought she was measuring productivity, instead she was measuring ineptitude.

To repeat: how do you measure and reward productivity.

My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Reliability

2010-10-15T09:42:00.002-04:00

In real life, a reliable person means you can count on him being there for you over time. We think the same thing of products. We want a can of soup made by a certain company to be the same all the time. You can count on its taste and not to make you sick. You want a restaurant to put out consistently healthy and delicious food that costs the same each time. If one time it's good, another time it's bad, tha prices are all over the map, you won't go there.

In research reliability means that if you measure something at more than one point in time the measurements are relatively consistent within desired parameters. If you measure the age of umbrella owners one week and find that average is 48.5 years and replicate the study two weeks later and find the average age of the same group is 22.3 years, something is wrong. Your methodology does not produce reliable measures. You can't count on them.

Reliability is a real issue for entrepreneurs because if your business is new, people have to be sure they can rely on you being there for the long call. You have to convince them to buy from you the first time then give them reason to believe you'll be there next time.

An economical way of doing market studies is to sample small groups every so often to get a measure of reliability. Too many people do a big study once.

My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Entrepreneur

2010-10-14T09:55:00.001-04:00

An entrepreneur is a person who undertakes a venture within an environment of significant risk and uncertainty.

Entrepreneurs need to make sure they understand what risk and uncertainty is. Uncertainty is whether or not a tree will fall on your car. Risk is what is how serious the damage will be.

Entrepreneurs need to estimate both the risk and uncertainty of any given business they start and should evolve strategies for dealing with them.

My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Forms of Business Organization

2010-10-13T09:15:00.001-04:00

When you start a business you have to choose a form of organization. There are basically four: a sole proprietorship, a partnership, a corporation, or some hybrid form.

The simplest form of organization is a sole proprietorship. You're out there, doing it, your own boss, and so on. Just get a domain name, put up a website, get some cards, whatever collateral materials you need. You're in business. Your record your revenue and your expenses on a schedule C and you're good.

I recommend people start out as simply as possible but no simpler. It maybe that a sole proprietorship is insufficient. You may have partners and you may want to hire employees or you may want to set up something that will out live you. Then you might want to consider some hybrid form.

You need to consult an attorney and a accountant who can advise you about what's specifically best for you. Start simple. Don't get ahead of yourself.

Back in my early days, you had three forms: a sole proprietorship, partnership, and corporation. You could elect sub chapter S if you were incorporating. Now you have more options.

My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Network Effect (Externality)

2010-10-12T08:08:00.005-04:00

A network effect, or externality, is said to exist when the benefit to a node in a network changes as a result of the change in the number of links in that network caused by increasing the number of nodes. (Remember that a network is defined as a set of nodes and links. The nodes are the things connected and the links are the interstices between the nodes.)

Let's assume you live in a state of nature. You get a fax machine, but you're the only person on earth that has a fax machine. Your fax machine has 0 value because you have no one to fax anything to.

Then a friend of yours buys a fax machine and you can now fax back in forth. Now your fax machine is worth 1 unit of something because there is someone to fax something to.

Then another friend of yours and a friend of your first friend's gets a fax machine. Now, there are 3 people to fax things to, your second friend, your first friend, and your first friend's friend. If a friend of each of theirs gets a fax machine, the benefit to you increased even though you didn't do anything to increase it.

A silly example, but you see the point. The network becomes more valuable with more people in it.

That's a network effect. It's also called an externality.

My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Awareness

2010-10-11T08:39:00.002-04:00

Awareness is one of the four main issue areas for delivering product: awareness, image, usage, and satisfaction. A truly valid marketing effort has to address each of these issues.

Awareness refers to how and the extent to which a person or group perceives their environment. What they filter out they're not aware of.

Market surveys generally measure two kinds of awareness: unaided and aided. Let's say you have a great new craft ale you've named Dog Poop Ale. You've had it on the market for a while and sales are below where you need them to be to sustain your company. So you want to find out how many people area aware of Dog Poop Ale.

To measure unaided awareness, you ask, "Please name all the beers or ales you can think of." Turns out everybody mentions Budweiser (who wouldn't unless they've been living in a cave.) but nobody mentions Dog Poop.

To measure aided awareness, you ask the same question, but you prompt the respondent, to wit: "Next I'm going to read a list of beers and ales, and after I read each one, I would like you to say whether you have ever heard of it." Then you have the interviewer read each product and record the response.

The results tell you that everybody has heard of Budweiser, but 5% have heard of Dog Poop Ale. You could ask some follow up questions for each one they're aware of, like "How did you hear or become aware of this particular beer or ale?"

There are pros and cons to each measure, so consult a professional researcher before you decide to measure awareness, but that is what it is. But from this question you can construct a statistic called "Share of Mind." The idea is that before someone can buy something they have to know about it.

My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Filters

2010-10-08T09:33:00.002-04:00

Ever wonder why you notice some things but not others? It's primarily because of our filters. Filters are put there by our environment or by our genetic make-up or both. By filtering out most stimuli they allow us to focus. We have 1,500 to 3,000 or ore messages coming at us every day so we really need them.

Sometimes I'll notice something or someone for the first time. I'm not conscious of ever having seen that person or thing before and after I see them everywhere?

Just for fun, say that on Monday on the bus on my way to work I notice a man wearing a coat just like mine. I don't remember ever seeing him before. Then, almost every day thereafter I see him on the bus I take going to work.

At this point why I just noticed him is not clear. Maybe he just bought the coat. Maybe he just moved into my neighborhood. Maybe he just started riding the bus to work. Maybe he'd been there all along and I just didn't notice him because whatever happened to make me notice him hadn't happened yet but now it has and so I do. I won't know until I talk to him. If I talk to him I might gain a friend or a customer or learn something about myself or my world that I didn't know before.

One route I take to continued creativity and learning is to put myself in situations where the unexpected happens. I take a new route to the store. I go to a different part of town than I'm used to. I have coffee at a different place. My perceptual screen adjusts as I add a new facet to my world and I "see" new things or I get new ideas or I understand the world around me a little differently. As a result I grow as a person.

My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Fiduciary

2010-10-07T10:13:00.002-04:00

The word "fiduciary" works as both a noun and an adjective. A fiduciary is a person or organization that is legally bound to place the interests of another over his or her own. A fiduciary relationship is the legal relationship of trust and confidence that the fiduciary has with that other person or organization. A trustee has a fiduciary responsibility to the organization he or she is trustee of. If you violate this trust by acting not in accordance with the other's best interests, you can be prosecuted.

A skilled entrepreneur will act as though they are a fiduciary of themselves and their family and their business and their partners and their market and the greater society. If your actions aren't aligned you should look into yourself and see where the problem lies.

I once put together a board of advisors. I wanted this board to mentor me and treated them as though they constituted a board of directors. They didn't have any authority to make me do anything and I didn't have to do what they advised but unless there was a good reason not do what they advised I followed their advice. After all that's what I had them for. If I hadn't wanted to listen to them I wouldn't have asked them to help me out. And if I'd asked for their advice then not followed it they would have stopped advising me.

I invited my lending officer to serve on it but he said he could not because it would posed a risk to the fiduciary responsibility he had toward this bank. We remained good friends. And I still asked his advice when I met him at the bank. He had a serious case of the yeabuts. I'd have a good quarter, and when I pointet this out he'd say "Yeah, but look at {whatever}, you'd better do something about it." He did his best to make sure I didn't get too comfortable.

Act always as though you are upholding your fiduciary responsibility to the the three entities listed above and you'll be okay.

My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Focus Group

2010-10-06T09:49:00.003-04:00

There is a lot of nonsense out there about focus groups. They've come to be so misdescribed that they have come to mean a bunch of people in a room talking about something. Actually, a focus group is a group interviewing technique consisting of between 6 and 12 people (more or less depending) who are carefully screened according to specific criteria and who are led through a carefully designed list of questions by a trained moderator.

A focus groups is a qualitative research technique. The best uses are for understanding how people think about things that can be seen or heard or felt. You cannot predict from a focus group to a larger population. That is, you can't say that because 4 of 12 people in a focus group said a certain thing, 33.3% of the population think or believe something.

It's dangerous just to do one focus group. Say you want to know how teens aged 16 to 19 react to a certain kind of food. Doing just one group may be misleading. Two or three groups would give you a much better read.

Focus groups can be very useful and in some cases are best. Good uses are for testing advertisements, reactions to food (as above), acceptance to new products, and so forth. For anything that must be personally experienced.

I suspect as we go down the road web-based tools will be able to do a lot of the things focus groups used to be the best things for.

Entrepreneurship is the lifeblood of my professional activities. My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Entrepreneurship, Art, and War

2010-10-05T09:36:00.005-04:00

I'm reading the Art of War by Sun Tzu tr. Thomas Cleary,(Boston, Shambala, 2005) and seeing lots of parralels between the art of war and the art of entrepreneurship. There's good reason for this. An older meaning of entreprenur is who organizes military adventures.

We also talk of the entrepreneur as warrior as opposed to victim. A warrior sees setback as opportunity where a victim asks why this or that had to happen to him or her.

There is also an art to entrepreneuring. Dictionary.com lists among others these meanings to the word "art":

> The quality, production, expression, or realm, according to aesthetic principles, of what is beautiful, appealing, or of more than ordinary significance.

> The principles or methods governing any craft or branch of learning: the art of baking; the art of selling.

> The craft or trade using these principles or methods.

> The skill in conducting any human activity: a master at the art of conversation.

> A branch of learning or university study, esp. one of the fine arts or the humanities, as music, philosophy, or literature.

> Skilled workmanship, execution, or agency, as distinguished from nature.

There is another meaning to art, sneakiness, cunning, artificiality, which I suppose an entrepreneur needs to have in his arsenal, but that's not what I'm talking about here.

Entrepreneurship is the lifeblood of my professional activities. My second novel is out. Go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle but will be.

Central Tendency

2010-10-04T07:32:00.003-04:00

In nature we have variation. Things tend to spread out across a range. Some measures we have of variation are the standard deviation, variance, range, so on.

But nature also shows us another side. Things vary but they also clump. There tends to be more of one kind of species and less of another. We have thousands of different species of monkeys, but a few tend to be more common than others. We have We have millions of different kinds of birds, but some are more common than others. People vary in age between 0 and 130 years, yet those aged between 35 and 75 tend to predominate. And so on. I don't know whether my figures are right but you get the idea. There's only one platypus for example.

We have several measures to help us measure and describe central tendency: mean, median, mode, kurtosis, skewness, etc. These tell us how clumpy some aspect of nature is and how it clumps.

It's key for entrepreneurs to understand simple statistical concepts and how to apply them. They need to know them to understand their own business' and to be able to understand how other are using them or misusing them. For example, when some business proclaims, "We are Number One in customer satisfaction," you might like to know what that means. What measures are they using? Where did they get their data? how did they analyze it? And so on and so forth.

Chances are the proclaimer doesn't care about all of this. He or she just wants to shoot it's mouth off. Don't you just hate that? We get a lot of people shooting their mouths off to.

When I lived in Bloomington, Indiana, two radio stations proclaimed they were Bloomington's most listened to radio station. I said, "How can this be?" Turned out one was the most listened to in the city, the other county-wide.

A business in Madison, Wisconsin, proclaimed it had a "99.9% customer satisfaction rating. That meant that they had to have surveyed at least 1,000 customers and 999 of them had to have indicated some sort of satisfaction. But what does that mean? They were extremely satisfied? They weren't extremely dissatisfied? How were the data collected? What scales did they use? Hard to know. Pretty much they were blowing smoke.

Entrepreneurship is the lifeblood of my professional activities. For my books, go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle.

Variation

2010-09-30T07:35:00.003-04:00

Variation means that not everything is the same. Some people are tall some are fat. Some are men and others are rodents. People are old and others are rich. Sometimes it's raining and other times it's cold. Some people have red hair and others wear jeans.

We're fat one day and thin after we lose weight. Or we're poor when we're young but become wealthy through hard work or luck or both. Or we're born men but have our sex changed and become women.

The concept is simple in definition but incredibly difficult and complicated in implementation. We'll talk more about variation as we go. Entrepreneurs will need to learn how to define what they mean by variation and how to measure it and how to interpret it.

Variation itself varies. The temperature varies on a Fahrenheit scale from around minus 200 degrees to plus 200 degrees. People's ages vary from 0 to 120 or so. People's gender can only be male or female. Their religion can be any number of classifications: Protestant, Catholic, Jewish, Islam, Buddhist, and so on. Protestant can be further broken down in to Presbyterian, Methodist, Lutheran, Quaker, Swedenborgian, and so on.

In the English alphabet there are only 26 characters. Only 26. Yet those 26 characters depending upon how they are combined and ordered and how they are used produces millions of words. There is only a finite number of genes. Yet combining those genes in different ways produces millions of different kinds of people.

Variation is one of the wonderful things that the world offers us. We just have to learn how to understand it, measure it, analyze it, and find meaning in it.

Entrepreneurship is the lifeblood of my professional activities. For my books, go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle.

The Extended Enterprise

2010-09-28T09:08:00.003-04:00

The concept of an extended enterprise represents a broadening of our view of the firm. Rather than contained within the bricks and mortar of a physical business, we think of our business of both the thing we represent on an organizations chart and which exists within the four walls of our business but to include our partners and connections that also make up what our business really is.

Wikipedia says it's a loosely coupled, self-organizing network of firms that combine their economic output to provide products and services to the market. I think it is more than that--it includes the connections that tie it to others.

Thus, Starbucks isn't just the coffee shop, it's the coffee shop plus all the coffee drinkers who buy the coffee, the employees involved in selling the coffee, the growers who supply the beans, and so on and so on.

That's a lot.

We need to think in broader terms because thinking that way gives us more ideas about how we can grow and thrive in whatever market we are obliged to compete in.

Entrepreneurship is the lifeblood of my professional activities. For my books, go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle.

Discounted Feasibility

2010-09-27T08:23:00.004-04:00

Here's a little more on feasibility. Feasible means stuff like practical, doable, realistic, appropriate. But feasible with regard to what? Here are some things to think about.

Personal feasibility. Are you the right person to do this? Do you have the necessary skills, money, connections, etc.?

Economic feasibility. Does the expected financial gain from whatever you want to do outweigh the total costs of doing it? Remember you won't be able to anticipate all the costs; there will be some unintended consequences for you to deal with; and you are going too put too rosy a view on the benefits because you are passionate (as you should be) about what you want to do. So be sure to discount your estimate of its economic benefit by half and inflate the anticipated costs by a factor of 3 to correct for your bias in favor of a positive outcome and to try to estimate unanticipated costs.

Schedule feasibility. Taking into account all the steps needed between planning, start up, getting to market, getting to generate positive cash flow, getting to profitability and exiting, can your project be done while the window of opportunity is still open? That is, if you have only 2 years to get the thing up and running, and you estimate the window of opportunity at only 6 months, maybe you better think again. Also, inflate the time you estimate because everything always takes longer and discount for the time the window will be open.

Remember, everything is always more difficult, is more expensive, takes longer than you think and often is not quite as cool as you think it will be. Include those factors in your calculations. You can't always estimate them exactly, but try to account for them as much as possible.

If the answer to any of these questions is "no," you should rethink things and figure out what reasonable attempts you can make to turn them into "yes," or maybe think about a different project where the answer is "yes" to all of these questions.

Entrepreneurship is the lifeblood of my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot.com.

Liquidation

2010-09-24T07:16:00.002-04:00

I reached into my grab bag and found liquidation from November, 2008. This is an interesting word. It means changing some thing's physical state from solid to liquid.

Wikipedia has the term referring to "the process by which a company (or part of a company) is brought to an end, and the assets and property of the company redistributed.

See the annoying use of parentheses? The sentence would read better without them. Their presence stops the eye's progress across the screen and slows comprehension. In fact you don't need the comma either.

The word "liquidation" has a fluid metaphor embedded in it. Maybe submerged below it. We see this fluid concept underlying business terminology. A house whose appraised value is less than the amount owed is referred to as "under water." A Liquidator gets cash for objects. Liquid assets are things that we can turn into cash. Cash flow is money coming in or going out., Stopping the bleeding means to keep a company from running out of cash. Red ink (as in blood) is debt." "Dissolution of a business is ending it. Retained earnings are what owners of a company get to keep. We talk of a business sinking into debt. People who can't get money when they need it have "liquidity issues." And so on.

Maybe this water metaphor is used so often because water is a very powerful concept. We evolved from water and we are almost all water. We have to drink water to stay alive, so maybe we make an implicit analogy between personal survival and the survival of humans. Whatever, we think of a good company as fluid and having a robustly positive cash flow which will allow everyone to prosper. That's what all of us want, to prosper and have good lives.

What do you think about this? I'd like to know. Post a comment.

Entrepreneurship is the lifeblood of my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot.com.

Tics, Ya Know?, in Oral and Written Communication

2010-09-23T07:59:00.003-04:00

Tics are repeated verbal or written behaviors that other people find annoying. La Law did a show back when in which the black attorney had a client with a severe case of Tourette's Syndrome such that the client would blurt out unpredictably various racial and ethnic epithets including the "N" word.

Tourette's is a very unfortunate condition such that those who suffer from it display uncontrollable physical twitching or verbal utterances. In the La Law episode just mentioned the attorney knew that his client was not doing saying those things on purpose and couldn't control any of it, but found the behaviors distressing anyway.

You find presenters who don't have Tourette's but who suffer from verbal tics. They pepper their presentation with words or phrases like "uh," "er," "um," or "you know." An entrepreneur who wants to persuade others to give him money needs to learn how to speck without showing these ticks. These can be gotten rid of with some work.

Physical tics can include straightening your hair, fidgeting with your hands, pacing back and forth, picking your nose, clipping your nails, wiping your glasses or other annoying mannerism. A graduate professor I had once had a tic. Once every five minutes or so during a seminar he would clean out his pipe and reload it and light it up. He'd spend the time between lighting's talking and the thing would go out so he'd have to do it all over again. I'm sure he was unaware of what he was doing.

An advertising guy I know has Tourette's. During a presentation he interrupts his sentences with kind of a weird physical twitching. But he always explains to people very matter-of-factly that he has Tourette's and asks that they bear with him. He does a very nice job and I don't even notice the tics except once in a while. In general, the problem with verbal tics is that they distract from your message. People end up being annoyed with the tics and forget to hear what you are saying.

Writers also have tics. I'm reading a book now in which the guy uses "however" about twice in a page. He also overuses semicolons and commas which are annoying and slow the reader down. When people are pressed for time and don't read as much, the last thing you want to do is shoot yourself metaphorically in the foot. Paragraphs with lots of adverbs also slow the reader down. These are not really tics but they have the same effect and should be gotten rid of. Same goes for empty phrases such as "it goes without saying that..." or "It's needless to say..." So---don't say it. Written tics are a problem in a business plan or proposal because they make the text harder to read and them require the reader to spend more time reading it. They also slow the reader down and distract him or her from getting your point. Not a good idea if you're trying to get somewhere.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Financial Capital

2010-09-21T07:49:00.002-04:00

Financial capital is the second of three forms of entrepreneurial capital. Capital is resources and financial capital is financial resources: money or access to money.

Money can be cash as in a suitcase full of fifty $100 bills. It can be the balance of your checking account. It can be stocks or bonds or investments that can be liquidated. It can be a house that you have just sold or which you can mortgage to get cash. It can be a car that you can sell.

It has to be something that you can either pay for something else with or which you can use as collateral for money that you can use to pay for something with. It could be a rich uncle who says you can have $100,000 for whatever you want just tell him and give him a few days to sell some non-performing stocks.

Financial capital is not the most important resource, but you need money. You need to have it so that you don't have to begin your business by borrowing. If you are thinking of a business that you can only start if you incure a huge amount of debt before you can start, I would recommend you think up another business you can start on no or very little money.

Plastic financing used to be big for entrepreneurs because banks weren't going to lend them money and most of them weren't eligible for angel investors or venture capital. But it's harder to bankrupt out of debt and credit card interest rates are through the roof so that's not as attractive as it used to be.

Shakespeare said "Neither a borrower nor a lender be." There's a lot of wisdom in this. But if you do have to borrow money, make sure you can pay it back. I wanted to join an expensive business club here in Philadelphia. I needed $4,000 up front and it would have been difficult for me to get it. But I was getting a pension from Wisconsin and I set the payments so that monthly payment would at least make the repayments. And I had some IRAs that I knew I could use to repay if the worst happened. My father-in-law gave the money and I repaid the loan about 2 months early. He was quite impressed.

If you borrow it from a family member, make sure you write out a schedule of repayments and if there's interest to be paid, make sure it's reasonable. And make sure you make your payments on time or maybe even pay off the loan early. That way they'll be happy to lend to you in the future.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Venture Capital

2010-09-20T07:54:00.002-04:00

Venture Capital is a very specialized resource for a very few, very risky businesses who show great potential of making a lot of money in a short period of time. Commonly known as a "VC", a Venture Capital investor is a person or a fund that provides very large amounts of money to companies who have a proven concept, are close to taking their product to market, and can demonstrate to the VC that they have a chance of paying back the VC's investment 10 times over in a year or two. VC's are looking for the next Microsoft Corporation. It's a rich pot of gold but one that very few can actually reach into.

Usually the VC will want part ownership of they company it funds and is willing to provide a lot of management and other assistance in order to make their investment pay off. And they're going to want a say in what you do. So, it's not for everybody. In fact it's for hardly anybody. It's especially not appropriate for service firms or for restaurants. But then, hardly anybody's going to lend money to a restaurant.

These days VCs are not giving money to new businesses. They're using their funds to help succeed those businesses in which they've already invested so they can get their money back.

So if you're thinking of relying on venture capital as a source of funds for your new business, don't.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Failure Analysis

2010-09-16T07:07:00.004-04:00

Failure is a fact of life. Things fail all the time. People get fired. Jobs don't get done. Things fail part. Teams lose. Objects break. Groups don't reach their intended targets. Failure analysis is simply analyzing data to understand why things have failed and what you can do about it. It's only a big deal if you let it be a big deal. You learn a lot more from failures than from successes.

Virtually every successful product was born of failure. Quicken was born of a prior product that didn't work. Wikipedia rose out of the ashes of Nupedia. Ted Turner failed to get into Harvard. Microsoft failed a couple of times and had to get resurrected.

There's a story allegedly about Edison, the American inventor who really started General Electric. He told someone at a party he'd run 500 experiments trying to get the light bulb to work but hadn't yet. The person listened and said, "Isn't that a waste of time?" Edison allegedly looked at him blankly and said, "Not at all. I have found 500 ways not to make a light bulb."

I don't know whether that story is true or not, but it's instructive. Failure can be good if the person who fail treat it as a learning experience. Why did something fail (i.e. not meet goals)? Then correct the mistakes and get in there again.

Many people try repeatedly to smoking and fail. We call those practice attempts.

The key to learning from failure is to write down what you want to accomplish ahead of time, how you want to accomplish it, and how you'll know whether it's working or not, what information you need to collect so that you'll know and how you're going to collect the information and how long you'll run the experiment. Then implement the project, collect the data, and at the end of it measure how you did against goal. If you exceeded goal, you were successful. If you failed, that is didn't at least meet goal, you need to analyze your data to understand why your effort failed.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Overconfidence Effect

2010-09-15T08:01:00.003-04:00

The overconfidence effect is that bias in people such that they are right far less often than they think they are. Human judgement is flawed and in many cases your first judgement is correct, it often turns out that it isn't and unless you back up your intuition with data you run the risk of going off in the wrong direction.

Malcolm Gladwell in his book Blink deals with this issue.

Many people who have an idea for a business or product overestimate the odds that it will be successful. It's related to the proximity effect which I've blogged about previously. Entrepreneurs have to guard against suffering from the its effects by consulting others who are disinterested in the outcome of your efforts.

If you're interested in this, read the Wikipedia article and follow the links. For fun make up a list of ten statements that you think are true about the world, such as "X% of Americans smoke," then do some research and find out if the facts are consistent with your view. Chances are you're not but then I could be wrong.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Feasibility

2010-09-14T08:07:00.005-04:00

Okay, it's been two years since I said anything about this. Feasibility simply refers to the question of whether it's possible to do something. Can you make a something for $X.XX a unit, bring it to market by November X, 20XX, have it generating a positive cash flow by January XX, 20XX, and make it show a profit by a date two years of that? The process by which you figure this out is called feasibility study. If it is found to be feasible a report is usually written. If it's not feasible, the studiers generally bury the whole thing so as not to waste anymore time on it unless the funders require something in writing to show what was done with their money.

Whether it's feasible is one thing. More important is should you do it? History is replete with examples, which I'm not going to mention, of things that were feasible but never should have been undertaken. Consider: even if you can build a thing and produce it at a huge profit and generate boatloads of cash, is it the right thing for you and for at least one segment of Society? This gets at a more fundamental issue and needs to be settled in at least in a preliminary fashion before you even examine the feasibility of it.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Redundant Networks

2010-09-13T08:05:00.002-04:00

Redundancy in Britain means unemployment. The redundancy rate is the unemployment rate. What I mean by redundancy is that your network has more than one link per node. After all being able to reach a connection through two or more other people is inefficient yet redundant and probably more effective.

Here's what I mean. If you, A, have only one connection, B, with the target, C, and you lose contact with B for some reason, you are no longer connected to C. But connection with B" But if you have two connections with "C", call them "B1" and "B2" and you lose your connection to B1, you're still connected through B2. Even better, you know C independent of either B1 or B2, the redundancy of your network is even greater.

Once a while ago I had a client in the Midwest and the Director of Marketing and Planning and I were very tight. I did several studies a year for them. I had tried, not not as hard as I should have, to cultivate another connection to the CEO but never did. One day my contact told me she was retiring but that she'd forwarded my material with a strong recommendation that they continue to use me on to her boss.

Guess what: about a month later I was told that they were changing to another firm. Not that my work was bad, just they wanted to try something new. I wonder how that person would have felt if their supervisor said they were letting her go, not that her work was bad but just because they wanted to try someone new.

Still, you have to decide how much redundancy you afford, either money, time, or attention. You can't be redundant with everybody.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Effective Network

2010-09-10T07:21:00.002-04:00

Effectiveness refers to the quality of the effort made to accomplish your goal, efficiency to how streamlined your efforts are.

Consider this: Two people, person "A" and person "B", accomplish the same objective, but "A" achieves his goal better than "B" does, even though B's efforts are more efficient, A's work has been more effective. In general effectiveness is better than efficiency alone.

In network terms let's say you want to both connect with person "D" yet develop a stronger position with him, you might want to connect with "D" directly, which would be more efficient, but you might also want to connect with "B" and "C" who also know "D." That way if you lose contact with either "B" or "C", you are still connected with "D".

Your work is more effective than if you had connected with "D" alone with no other connections. Efficiency is good but effectiveness, while more expensive, is better. The question is, is the "better" worth the time, attention, and money you have to invest in acquiring the connection?

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Efficient Networks

2010-09-09T10:16:00.002-04:00

Efficiency means an objective is an outcome is achieved with a minimum of input. If you spent X resources to achieve Y result you would have been twice as efficient than if you'd spent 2X resources to achieve the same Y result. And if you spent X resources to achieve Y result you'd have been half as efficient as someone who spent .5X to the same outcome.

In terms of network development assume you are "A" and the person you want to connect with is "D" and two intermediaries are "B" and "C." If to connect "D" you first must connect with "B" and then with "C" you're building your network less efficiently as if you could connect directly with "D" without having to connect first with through "B" and "C." Not having to connect with "B" and "C" means you spent less time and attention and probably money to achieve your objective of connecting with "D" and your efforts are more efficient.

Efficiency is good but as we shall see it's not everything.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Why Networks are Important

2010-09-08T08:06:00.007-04:00

Networks are important. You remember that Ron Burt says that personal capital is one of the three weapons entrepreneurs bring to the competitive arena. The other two being human capital and financial capital.

Networks contain the roadways over which information and opportunities get from person to person. Say there's a contract to be let at corporation A and your best buddy works there and gets you on the bidders' list for that company. You're going to get a request for proposal while your competitor who is not on the list isn't going to get one. They can't get here from there.

You know of a job at XYZ corporation and you have a connection that can get you the name of the hiring manager or, better yet, the president whereas the 10-11 people who might be qualified won't get in there.

Networks are important because markets are bumpy. There are roadblocks, crevasses, mountains, etc. that keeps information and opportunity from getting from point "A" to Point "B" easily. Networks are the bridges across the crevasses and around the mountains.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Network

2010-09-04T08:19:00.002-04:00

The network is the most elegant concept thought up ever. Something is elegant if it is simple yet pregnant with meaning. A network is just that. It's a set of nodes and links. Nodes are points and links are lines connecting the points.

People have been studying networks for over a century. Sociologists noticed that people tend to hang in groups and began to study that. Mathematicians find the network a very elegant model and like to do some pretty sophisticated math. Engineers study networks too. Power companies study "the grid." Traffic engineers study the road system which is a network with the intersections as nodes and the roads as the links.

Business consultants study the working arrangement where the workers are the nodes and the relationships are the links. Then there's the worldwide web which I won't get into. An uncle used to say that even a spider was smarter than him; the spider had a website and he didn't which shows you that networks exist in nature too. Bees have a well-defined social network. So do ants.

A big step forward was made in the middle of the 20th century when a researcher came up with a "sociogram" that allowed people to actually draw a network. You can't draw a very big one though because after you get past five or six nodes it gets harder fast to draw a network in two dimensional space.

The terminology is a mess. A node is also referred to as a vertex or a point. A link can be called a line or a connector etc. I just nodes and links. And you have directed networks and non-directed networks and ego networks and so on and so on. You have cliques and partial networks and so on. Every new researcher likes to create his or her own language.

And the amount of work already done is vast and getting vaster so fast that no one can get a hold of all of it. And you don't have to. A lot of it is so abstract and mathematical and irrelevant to daily life that unless you are a mathematician you'll never get it and not useful even if you did get it. And there are a lot of goofy terms, like betweenness centrality. As for me, my mind flips off when I see an ugly equation.

Thing is, you don't have to understand everything to help yourself. Just knowing some things about it will be helpful. For example, think of your market as a network. That's what it is. It's customers and their connections, nodes and links. And you can use that to understand how you can get your word out to customers and others and sell your products. You don't have to be able to compute the betweenness centrality of the nodes in your network find network analysis useful. Of course if you could, you'd probably learn more and come up with additional insights that would help you. Maybe not.

If you want to learn about social network theory without spending your life doing so, go to the Wikipedia article and follow its links. That should keep you busy.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

The Writer Entrepreneur

2010-09-03T07:25:00.003-04:00

Changes in the publishing system over the past few years have brought to my mind the concept of the writer entrepreneur. Writers have always been entrepreneurs until recently they've been able to hide under the rubric of artist.
That writers are entrepreneurs there can be no doubt. "Undertaking an enterprise within an atmosphere of uncertainty and risk" perfectly describes a writer. Previously he or she could focus on writing his or her story then delegating the selling of it off to an agent. Now we are our own agents. It's the way it should be.

Writers really are natural entrepreneurs. After all you have to craft a voice as both writers and entrepreneurs and you have to get people to buy into your vision as both a writer and an entrepreneur. Plus, entrepreneurs have to know how to write so they can craft clearly-conceived and written business plans and pitch decks.

Yes, my friends, writers are entrepreneurs, and entrepreneurs need to be writers.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Partnership

2010-09-02T09:36:00.003-04:00

Simply stated, a Partnership is a specific form of business organization in which each of the partners shares in the revenue and each is liable for 100% of the debts of the company.

There are lots of different kinds of partners like limited partners and general partners and managing partners but that's for larger organizations with investors. But look into it. Wikipedia is a good place to start but don't stop there.

If you don't do anything special but just go into business and start selling stuff on your own you have a sole proprietorship. Most of the time a sole proprietorship is all a person really needs. If you want investors (really?) or to employ people (watch out) or you want the business to outlast your death, you might want to go for something else. It yuse to be you had a standard C corporation, sub-chapter S, or partnership to choose from. Now there's a buch more. LLCs seem to be popular.

The word partnership is often used to mean a collaboration, as in "We're partnering together." To be more accurate a "partnership" is a form of business organization defined above. where two or more people act together in a business and each derives income You should contact an attorney to determine whether you want to be in a partnership. You should also ask an accountant. If you ask Tim Bosworth he's almost always recommend against it.

But, if you do, after talking with your attorney, decide that a partnership is the right way to go, you had better make sure you have a good partnership agreement. This specifies what you're doing, how you're making money, how the revenue is to be accounted for, who is liable for what, and what happens should the partnership agree to go out of business or if one of the partners is unavailable to the partnership because of illness, accident, death, or fraud.

Also, make sure you know the person with whom you're going to form the partnership. Make sure they are trustworthy and will be able to work together. You don't have to be close pals. If you don't know them or they have less than great credit don't go into business with them. If they're that important take them on as an employee or outside vendor with your relationship covered by a good employment agreement and a non-disclosure agreement.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Mental Accounting

2010-09-01T08:13:00.002-04:00

Accounting is a process that assigns value to things. Mental accounting describes the mental process people use to categorize their assets as belonging to current income, current wealth, or further income. I'm not sure everybody uses those categories, but the process of framing is such that we assign things to mental accounts.

As entrepreneurs it's an interesting way of thinking about how our minds' processes work.

By the way I have a new novel ready on Amazon.com. No Stop in Red and takes place mostly on Cape Cod and cooks up a delicious murder mystery of one part terrorism and one part homelessness and one part organ transplantation.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mysteries, The Case of the Kearney Music School Murders and No Stop on Red, both available at Amazon.com. You can read the first one for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Demographics

2010-08-30T08:37:00.003-04:00

Everybody talks about "demographics" but do they know what demographic variables really are? "Demographics? is a term in the marketing literature that has gotten so generalized as to be bland beyond belief. I blogged about the term "demographics" December 30, 2008, so it's time to do it again.

The term comes from the science of demography a branch of the social sciences with studies the nature of and changes in populations. Demographic analysis focuses on the following variables: the birth rate, the death rate, and net migration. They also incorporate other variables such as age at marriage, socio-economic status, social practices, attitudes and norms, etc., in trying to understand demographic phenomena. But these three variables are the key independent variables in a demographic analysis.

You can go on talking about demographics, which has been taken to mean "personal characteristics," but just be clear about what you mean. But also realize that demographic groups don't buy products. Interconnected individuals in networks buy products.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Deconstruction

2010-08-27T08:32:00.002-04:00

Deconstruction is a term borrowed from construction. It means the selective taking apart of all or part of a building for reuse.

Any business has a consumption chain. In publishing, for example, a writer writes a novel and sells it to an agent. The agent sells it to a publisher and the publisher gets it into the book store. Then the store sells it to the public. Ideally this is the way it's supposed to work.

There's a consumption chain there: writer (novel) - agent - publisher - bookstore - reader.

Today, the computer has deconstructed this chain. The e-publishing model has this consumption chain: writer (novel)- website and/or e-publisher - customer. The consumption chain has been dismantled and the agent and the publisher have been deleted.

You should draw your consumption chain. Just write down each step and draw an arrow between. Then evaluate each step to see how that should be done. Can any be eliminated so that you are linked more closely with the customer? Can you make a business out of any of the links in this chain?

Look at Encyclopedia Britannica. It used to be the product - salesman - consumer. Now it's just a disk that comes with your laptop.

Deconstruction is good defense. If you don't do it and realize the possibilities for you, someone will do it for you and you'll be either out in the cold or behind the 8-ball.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Meta-analysis

2010-08-26T08:37:00.002-04:00

A meta-analysis is a study based on studies. It's often used in medicine or professional services when you are trying to establish patterns in existing data and a large-scale study is not feasible or not appropriate for some other reason. A meta-analysis can be sounder because the researcher can cast a broader net.

The main problem is, you have to have enough studies to analyze. They have to be close enough in terms of objectives and methodology that you can standardize them for analysis. And you have to know enough about each study to be able to include them with confidence. That means you have to know clearly whether a given study fits the parameters of your study so that you can include it.

You also have to be satisfied that all the studies you want to use are independent of each other and not just different version of the same study published by different primary authors under different titles. And remember that academia is just as at risk from informational bubbles as the housing market is to housing bubbles.

Another problem is that many of the scientific studies you might need to analyze are proprietary and cost money or may not be available to you as a poor slobs stuck in the private sector. You can sometimes get access to JStore, the place that grants access to scientific studies, through your local or university library. For example, I am a member of the Free Library of Philadelphia (not totally free) which entitles me to order articles for free.

If conducting meta-analyses is appropriate for what you are doing and you can do one, go ahead. You can get a lot of value out of them for relatively cost and you don't reinvent the wheel. Just make sure you avoid the pitfalls.

Check Wikipedia. There's an entry on it which is generally useful and check the links.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Entrepreneurial Readiness

2010-08-24T08:19:00.003-04:00

I've been thinking about entrepreneurial readiness. What does being "ready" mean. Does it mean you're about to jump like when you're all packed and "ready" to go on a trip and you just have to wait for the cab to take you to the airport. Or does it mean you're "ready" like a car and all somebody has to do is come and start the motor?

A website I found lists five indicators of entrepreneurial "readiness." These indicators are allegedly based on 20 years of research studies and are said to predict "entrepreneurial effectiveness." I guess if a person scores high on these five indicators they're ready to start a business.

The five indicators are:

>Mind-set.
>Dealing with others.
>Business orientation.
>Self-management.
>Life and work orientation.

The website is www.qualifying.org and is run by something called Leadership Performance Systems Inc. They have a report you can buy and you can take a test for $14.95.

This warrants further checking out. For example what is meant by "entrepreneurial readiness" and what is meant by the term "entrepreneurial effectiveness?" Perhaps these are spelled out in the report you have to buy. I hate having to buy a report to find out something.

This approach deals with human capital only. It doesn't deal at all with financial capital or with social capital. In fairness there is an argument to be made that these five behavioral dimensions may be related to financial capital and social capital. And to me a better outcome measure has to do with finally starting and growing a successful business. I'd also have to see what these 20 years of research studies.

This scale has some face validity but it seems only to go part way to the end of the trip.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Vertical Integration

2010-08-23T07:57:00.002-04:00

A vertically integrated company is one where the company owns the raw materials, the means of production, and the entity that brings the product to market. For example a producer of fruit cocktail would be vertically integrated if it owned the orchards that grew the the fruit, the factory that processed the fruit into fruit cocktail, and the outlets that sold the fruit cocktail.

I used this example because I was part of a team that proposed research to a Milwaukee, WI, area producer of fruit cocktail. It was the country's largest producer of fruit cocktail at the time though its products were often sold under different labels. This happens a lot. Sargento Cheese used to sell cheese to Kraft and got marketed as a Kraft Cheese product where it really was made by Sargento Cheese. Sears uses different providers.

Anyway, this fruit cocktail producing company was at the time unique in the industry because it owned the fruit orchards that produced the fruit. All their competitors bought their fruit from privately owned orchards.

Whether you want your company to be vertically integrated or not is a decision you have to make. To help you make it sketch out the consumption chain and see if it would be better for you do handle each step or whether you should subcontract. The latter option is winning in a lot of companies because it's simpler, easier, and cheaper to use other companies. Look at Coase's Law.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Characteristics of Data

2010-08-21T07:36:00.004-04:00

Entrepreneurs need to know data. Knowing data is key to an entrepreneur. We need to be able to tell how much cash we have on hand, what our profit is, the average number of days it takes to get paid, what our average revenue is, and on and on. We need to be able to analyze data on our market, data on our company, and so on and so forth.

Two characteristics describe any set of data, whether it is a listing of batting averages in major league baseball, the amount of rainfall per day in the Amazon, or the height and weight of some group of people.

These two characteristics are dispersion and central tendency. Dispersion refers to data's tendency to spread out along some continuum. Height in humans runs from 3+ feet or so to 8+ feet. Yearly batting averages in baseball run from 000 to 1000. Temperatures measured in degrees F run from -100 or so to over 200. Measurements vary, but data tends to spread out within some range.

Central tendency refers to data's tendency to clump around some figure, often called an "average." A baseball player's batting average is really the average of all the averages he compiles in all the games he plays in. A hitter can hit from 000 to 1000 in a game. If he gets 5 hits in 5 at bats, he gets to "bat a thousand" or 1000. If he's hitless he bats 000. Average those and you get some figure usually between 200 and 300 though good hitters usually average in the 300 to 350 range. Terrible hitters can average under 100. Average temperatures are available on the weather in exhausting detail but are probably 75 degrees or so F on a pleasant day in the summer.

You can look in any statistics book or on line and you'll get lots of detail about measures of central tendency and dispersion. Sufficient for now to realize that an entrepreneur needs to know about this stuff and be comfortable talking about it and using it. If you don't know what I'm talking about, you should get education.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Mission Statement

2010-08-20T08:27:00.003-04:00

A mission statement is simply a statement of the purpose of your company or business or organization. What do you want to do for people? Do you want to make things more convenient in some way? Do you want to make some need met more cheaply or easily? Do you want to make something work better? Just what is it you're up to.

Some mission statements are deficient in the framing of them which undermines their impact. I was in a presentation when a team of several young MBA students at Drexel University here in Philadelphia presented their idea for making aging more "fun." They had studied the needs of older people and noticed that some of the things they had to do could be made easier by having larger print that would be easier to read. They said their product would make aging more fun.

Fun? Ask a person in his or her 80s how much fun aging is. Maybe aging could be made less daunting. But more fun--good luck with that. The students team's hearts were in the right places but their framing needs some reworking.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Concept Paper

2010-08-19T08:23:00.002-04:00

The third thing you should do before starting a business is write a business concept paper. This is a short, 3-4 "proposal" or statement of the idea behind the business. Some things you might include would be these: who, what, where, how, why, how, and how much.

That is:

>Who your customer will be. Who your competitors are.

>What your product is. What your customer will really be buying. What needs you are meeting. What market you are serving.

>When you envision getting your product to market.

>Where you will be in business. Where you envision finding the resources you will need.

>Why you are starting this particular business.

>How you are going to get your product to the customer. How the customer is going to find out about your product. How are you going to compete.

>How much capital you will need start and operate it. How much you will charge. How much it will cost to make your product. How you will monitize your business.

Once you have this on paper you can get down to work. Until you have something in writing you're pretty much blowing smoke.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Research

2010-08-18T08:37:00.002-04:00

From a recent conversation with a Temple University advertising professor here in Philadelphia I learned that many people are scared by the term "research." As a life-long researcher and market research professional I'm not scared by it at all.

Research is merely the systematic asking and answering of questions. The important concept here is "systematic." It's not random. For example, if it was cloudy out and looked like rain you wanted to know if you should carry an umbrella during the day's activity. You might wish to look out the window and see if (1) others are carrying umbrellas and (2) cars are driving around with their window wipers on. If one of these conditions are met, you might conclude that it is raining.

This is something I would do but it's not research. It's simply a practical way of reducing my risk of getting wet. If more people looked out the window the better off the world would be.

Research would be asking the following question--"To what extent does umbrella carrying predict that it is actually raining?"--then carrying out a carefully designed research study to measure the extent to which umbrella carrying behavior predicts "rainyness." The study would have a design, data collection, data analysis, and report with recommendation phases.

A somewhat simplistic and silly example but I think you get the point. When I lived in another city the late news used to pose a questions to their listeners and then ask them to call one number with a "yes" response and another number with a "no" answer. Then at the end of the newscast they would give the tallies. The killer was the disclaimer: "This is not scientific, just a way of find out what you think." Well, I hate to tell them, if it's not scientific, it's not a way to find out what people think. Oh well.

Anyway, we entrepreneurs need to know about research for at least two reasons. We will need to conduct some research ourselves some day and (2) we'll need to be able to read and evaluate research studies others do.

But don't be scared by the term. It's really an important field of endeavor. It won't do everything and often it is relied on to do too much. And the new economy has changed the way research has to be done. But that's the subject of a later post.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Viral Marketing

2010-08-17T07:37:00.002-04:00

I haven't posted anything on viral marketing for a couple of years now, so I'm going to do a rerun.

Dr. Ralph F. Wilson from "The Six Simple Principles of Viral Marketing defines viral marketing as "Any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence."

Dr. Wilson's six steps are:

1. Give away valuable products or services.
2. Provide for effortless transfer to others.
3. Scale easily from small to very large.
4. Exploit common motivations and behaviors.
5. Utilize existing communication networks.
6. Take advantage of others' resources.

Dr. Wilson regards the term "viral marketing" offensive. I don't see it. It just means the ideas spread the same way that viruses spread, person to person. Not all viruses spread easily and not all ideas spread easily.

Not everyone has a message that can spread virally. So before you go further look at your message and see what you can do to it to get it to spread.

Check out this website at www.wilsonweb.com5/viral-principles.htm.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Market

2010-08-16T07:11:00.002-04:00

A market is a set of buyers and sellers. That's it. Point, set, match. There may be other actors involved in a transaction. Attorneys, Agents, Loan Officers, Family members, Construction guys, Title officers, etc.

Bottom line is it's buyers and sellers.

If you have things for sale and a qualified, willing buyer who wants to buy it, market. If you have either nothing for sale or no qualified, willing buyer, no market. It's as simple as that.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Intellectual Property

2010-08-14T10:07:00.003-04:00

Intellectual property refers to things created by the brain: inventions, designs, novels, poetry, non-fiction, plays, music, plans, etc., used in commerce. In today's legal system any time you create something it is yours. If you write a book the minute you put the first word down on paper it's yours. You invent something, you own it. You design a logo for your business it's yours.

Certain legal devices have been created to offer increased protections to those who create things. Trademarks protect logos. Copyright protects written work. Patents protect rights to products under certain circumstances.

To see if you're particular creation needs a patent or copyright, you can go to the government office of patents and trademarks to read their policies. If you want a person you can consult an attorney. If you need a patent, I would advise going to a patent attorney rather than doing it yourself.

For most things IP protection sounds good on the surface but isn't practical. It's a long, expensive, and involved process, and unless you have something that is truly unique and non-obvious you may not be successful Go talk to a good attorney. He or she will advise you what you should do and generally don't charge for just a first meeting.

Face it, an attorney doesn't want to spend a big bunch of time on IP work when it's not appropriate, you don't have enough money, or it's not likely to be successful. Usually getting a patent takes 7-8 years and you'd better have at least $100K to cover the initial patent work and all the suits and other legal crap that get's thrown at you. Not counting the time you're going to dump into it.

So, my advice Sirs and Ma'ams (as Radar on M*A*S*H* used to say) invest your ego, time, limited funds, and attention on getting your product ready and to market as soon as you can. Don't worry about people stealing your ideas. Most other people don't want them. And those that do want them can find a way to steal them anyway. Make your product good so that if it does get copied, the copies will not be as good. Make it cheaper, better, more accessible, and easier to use than your competitors' market it correctly and the field of battle will be yours for as long as the window of opportunity is open.

Bill Gates is supposed to have said that he realized that his stuff would be stolen. But he wanted to make sure that if there were people out there stealing stuff his stuff got stolen not that of his competitors'.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Marketing

2010-08-11T07:52:00.002-04:00

Marketing is everything you do to bring your product to your public at a profit. It involves the traditional 4 P's which you can look up as well as the social media and virtual reality marketing.

A couple of generations ago used to call shopping marketing as in "I'm going to do the marketing" which was meaning "Go to the market and buy food."

That was when women stayed at home all day and kept house and did all the shopping and cooking and all the men took the train into the city and came home late at night after trading their time for a salary.

One still encounters that conception of it. I used to do cold calls for my marketing research firm and often I would be steered to the purchasing department. Marketing=purchasing i.e. shopping.

Many people equate marketing with selling. It is but it's more than that. Many people equate marketing with public relations. It's that too but it's more than that too.

Marketing is really everything you do. So you can't not market. You can only do it intelligently and well or unintelligently or not well.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Proximity Bias

2010-08-10T08:53:00.002-04:00

Proximity bias is a "birds of a feather" phenomenon. It's the tendency for people to overestimate the prevalence of social phenomena because they "flock" with those that are like us. My favorite illustration is smoking prevalence. Ask a smoker what proportion of Americans smoke and smokers will give a high estimate. Smokers have smokers as friends so they think the world is like them.

As a non-smoker the same question and you get a very low estimate because non-smokers tend to hang out with non-smokers.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Matrix--Not the Movie Franchise

2010-08-09T10:01:00.002-04:00

A matrix is an important concept for entrepreneurs to know about. A matrix is simply a table or n rows by n columns. Mathematicians like them because they can be used for lots of interesting stuff most of which is beyond our ken.

A 2 x 2 table is a matrix. A spreadsheet of daily expenses and categories is a matrix. A chart comparing your company with your competitors across eight different criteria is a matrix. You can read more about them in any math book or on line.

Matrices are very helpful analytical tools even if we don't want to, or can't, do algebra or higher level math with them.

So when somebody says let's make a matrix don't panic. It just means he wants to make a table with more than one row and more than one column. You can deal with that. And see what he has in mind. It could be pretty interesting.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Mass Customization

2010-08-06T08:10:00.002-04:00

Mass customization means you can produce a product for the mass market yet customize every order to the precise specifications of the customer. Sounds like an oxymoron--it's not.

Sometimes it's called market customization.

People want things made especially for them but don't want to pay what it would take to make one thing. A man may want a tailored suit for off the rack prices. Now he can have it.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

New Product Development

2010-08-04T07:49:00.002-04:00

The phrase "new product development" refers to the whole process of creating, developing, marketing, and servicing a new product, whether a product product like an automobile or a service like serving meals to home-bound seniors.

Product products and service products can be treated the same from an NPD perspective. They're both products.

New products include completely new products or variations on existing products, but a variation on an existing product needs to be treated like a brand new product when managing its development and marketing. More and more it's getting harder and harder to think up a brand new product. Things are changing so fast products are more often than not variations on a theme.

Developing products is not like it used to be. In the past, company A developed a product and sold it to customers B. Now a product is a cooperative venture of the company A and customers B. The dividing line between producer and consumer has been all blown to bits. If you're smart, you'll invite the users of your products to help you redesign them. They might actually have ideas for you you had thought of and they might act as your marketing agents. The walls of Jericho have come tumbling down.

A lot of companies don't understand this. They think it's the same old same old. Not true and it will be less true going forward. The people who see this will be far ahead.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Market Opportunity

2010-08-03T07:53:00.002-04:00

A market opportunity us something that causes us to bet that we can do something for somebody that is less expensive or easier to use or more accessible or better than what is currently being offered in the market. If what we want to offer is worse or more expensive or less accessible or less convenient that what is out there, there's no opportunity.

Just being able to do something to somebody is only a good start. What we want to offer has to promise to generate enough cash to cover the cost of investing in the business that takes advantage of this opportunity, adds value to society, and allows us to live at a level where we can be a productive member of society. If it doesn't promise to do this we have to look around for other opportunities.

But doing something for somebody is a good first step. It's certainly better than not being able to do anything for anybody.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Financing a start-up

2010-08-02T07:41:00.002-04:00

Financing a start-up is tough these days. It's tough any days but these are particularly challenging. That doesn't mean it can't be done but it's harder.

In many ways the market is doing you a favor by being daunting. It makes you work harder and be better than you would have to be if you could get money just getting out of bed in the morning. Things coming too easy is often a curse described as a gift.

There are two sources of money: you and somebody else. The best source of funds is you. Maybe you have savings or an inheritance or an asset you can liquidate. Frances Lear funded Lear's, a woman's magazine, with money from a divorce settlement.

Many people don't have a lot of money of their own so they must seek it from other sources. Best of these is friends or family. This is not without risk, I think I have blogged about this before.

Sometimes you can find a partner who's willing to underwrite your venture. Be wary of this, but this can be a good source.

The worst thing to do is borrow money from a credit card company. Do not do this unless you have to. And if you do, borrow as little as possible and on the best terms you can. And get your credit score up there so you can prove to potential partners you're a worthy person to do business with. The last thing you want to do is start out in business with a big bunch of debt. It's like trying to row a boat with an anchor dragging out behind.

If you have to borrow money to start a business, consider not starting the business.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Entrepreneurial Rah Rah

2010-07-31T12:38:00.002-04:00

There's a lot of stuff out there that I classify as entrepreneurial Rah! Rah! Do you have the spirit, the leadership, the intelligence, yatta yatta yatta. Not that that stuff isn't important. A lot of people have it. Maybe you can't be successful without it.

What you need is skills. You need the skills to pull it off.

You need to know the techniques. You need to know how to work. And you need to know how to decode a business idea, that is how to render the inner idea of an entrepreneurial concept.

That's what you need and you can learn it all.

So don't just go with the rah rah stuff. Develop an entrepreneurial skill set.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Capital

2010-07-30T09:33:00.002-04:00

I reached into my grab bag of ideas and thoughts for this blog and my hand came out with stuff on "capital." Look on Wikipedia and follow the links. Go to any book on finance and you'll find all you want to know about financial capital. Human capital and social capital not so much.

Capital is resources. Stuff you can use for your own good. Items of value. Cars, houses, money market accounts, pre-paid insurance policies, equipment. Capital for a construction company includes front-end loaders, rollers, and equipment. For a restaurant owner it means ovens, refrigerators, tables, chairs, etc. Stuff you can sell.

There are several kinds of capital an entrepreneur needs to think about. First, there's human capital, your health, your ability to think, your ability to listen and learn and convince, your ability push ahead when times are tough.

You could group that into physical capital and intellectual capital. If you can think you can come up with good ideas and if you are creative and can persevere, you can see them through to fruition. Part of intellectual capital is knowing stuff.

There's financial capital, money and access to money. I don't care what they say, you have to have money or the ability to get it.

Then there's social capital. Whom you know. Entrepreneurs should get into an accounting mindset.

Check back on other postings in this blog. I blog on capital quite often.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Accounting

2010-07-29T07:26:00.002-04:00

Entrepreneurs should get into an accounting mindset.

Most people think it is boring but it's only boring because they aren't interested in it.

Knowing the assets equal liabilities plus owners' equity is key to knowing how to run a business.

All that other stuff, like time value of money, is also important and it's important what kind of accounting you use is also important.

Not knowing what you're company is worth on a daily basis, how much cash you have, etc., can kill you dead.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Boundary Crossing

2010-07-28T08:01:00.002-04:00

I pulled out this sheet on boundary crossing. I found it on the web back on 5/20/2008. It's www.boundarycrosser.com. I've not been back there since, but it looks like it could be quite interesting.

Reading it I realized that I have always been a boundary crosser. Boundary crossers span many different worlds but don't really fit in any one of them. They challenge the status quo a lot. They get fired a lot. They get called rude a lot. They tend not to be rich. They don't like to kowtow or suck up.

Boundary crossers also are innovative thinkers. Innovations come from the edges of things. We need boundary crossers precisely because they don't fit in. But most people don't like that. They like to surround themselves with people like them. To do the same thing all the time.

This is a challenge for us. How to be a boundary crosser but actually have normal lives. It's not that it can't be done. It's just a challenge.

Boundary crossers of the world Unite! But once we all unite, we'll have to cross the boundary and look for other worlds.

I saw an advertisement for an entrepreneurial person to be an assistant manager at a well known department store chain. I mean, really, assistant manager for a department store chain. There has got to be some education in this country about what entrepreneurship is all about.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Bass Forecasting Model

2010-07-26T09:03:00.002-04:00

Entrepreneurs need to forecast sales of new products. This is kind of tricky because it requires you to make a bet when the the market with you in it will not be the same as the market as it is now. Forecasting is difficult, especially in the future.

Here's what Everett Rogers says about it:

It assumes that potential adopters of an innovation are influenced by two types of communication channels: Mass media and interpersonal channels. Individuals adopting a new product because of a mass media message occur continually through the diffusion process but are concentrated in the relatively early time periods. Individuals adopting as a result of interpersonal messages about the new produce expand in numbers during the ensuing time periods, creating a bell-shaped diffusion curve...The Bass model assumes taht the rate of adoption during the first half of the diffusion process is symmetrical with that in the second half, as would necessarily occur for an S-shaped curve." (Everett C. Rogers, Diffusion of Innovations Fifth Edition, 2003, pp. 208-9).

DecisionPro, Inc, has a product that allows you to use this model. I've not tried it, but I found it on the Internet 5/24/2008. Google them and find out what's up.

And read Rogers. You'll need to develop forecasts and this looks as good any.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Business Concept

2010-07-24T09:33:00.003-04:00

The business concept is the idea of the business. It's the thinking that underlays the creation, establishment, and development of the business. It gives rise to the organizational development, strategic planning, marketing strategies, financial planning, monetization strategy, and everything else.

Some people may equate it with a business plan, but not me. The business concept comes first. Everything else follows.

Before you start a business plan you should write a business concept paper. It's a 3-4 page document that lays out the thinking underlying the business.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Bankruptcy

2010-07-23T07:27:00.002-04:00

Wikipedia defines bankruptcy as "a legally declared inability or impairment of an individual or organization to pay their creditors." (5/20/2008). This is as good a definition as any. It occurs when you have no more cash.

Never mind profit. Plenty of businesses are profitable but have no cash. The joke goes, "What are the four last words of a dying business?" -- But we were profitable.

Profit is an accounting concept. It is one measure of how you are doing. How much cash you are generating is another. That one keeps you in business. Of course spurning profit for short-run cash is not good either. Profitability and "Cashflowability" are both important to know about. See Bill McGuinnis, Cash Rules (2000).

He compares a business that has run out of cash with a car that has run of out of gas. Neither one is of any use to very many people. A business out of cash is a bankrupt business.

Declaring bankruptcy is not always the worst option. Some businesses may wish to go into bankruptcy so they can reorganize, if the courts will let them, and there is some strategy devised to change the business so it can be profitable and generate cash. Some people are so far gone that their only hope is to declare bankruptcy and get on with their lives.

The consequences for the person are terrible and will dog a person for the rest of their lives. And it's harder to declare bankruptcy than it used to be. This makes it more costly for entrepreneurs to fail and start over.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Bandwidth

2010-07-22T09:16:00.002-04:00

We Americans like to think that everything will always get better. With technology that has been the case. Faster, cheaper, better.

All this comes down to bandwidth. The term bandwidth confusing because it means different things. In computer networking it means one thing and in communication theory something else and in signal processing and in linear algebra some other things altogether.

I think of bandwidth as carrying capacity. More bandwidth more carrying capacity whether number of frequencies or bits per second or whatever.

We think of bandwidth as getting ever bigger or else we don't think of it at all and assume that it will. We think we can continue to expand our number of Internet sites and the space required by computer games, etc. We've already seen an absolute eruption in the volume of our communications.

There may be a limit to it all. We don't know. And what will we do when this limit is reached? Are we having our own micro-big band, our own universe continuing to expand until some point in the future and then what? Does it stop? Or start to contract again.

And once we've become dependent on the ever-expanding world-wide web, what then? I'm not saying it's going to happen tomorrow or next year or in the next millennium, but like the world's oil supply it will run out some day.

As Grand papa says to Peter in Tschaikovsky's story set to music, Peter and the Wolf: "What if the wolf does come out of the forest? What then?"

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Virtual Reality

2010-07-21T09:10:00.001-04:00

A virtual reality is a computer-simulated environment, real or imagined. It exists along with "actual" reality. Virtual reality is the world you enter when you play massively multi-player role playing games (MMRPGs) such as Second life, the Sims, and World of War Craft in which players can take on new identities and interact in new ways with other players who have assumed new identities. Players can have other lives, experiment with new behaviors, do everything they would do in "actual" reality.

Virtual reality has been around for a while. Airplane pilots are trained using simulators which create virtual realities. They've been around on TV, in movies, and in books too. The Holodeck in the old Star Trek Next Generation series was a virtual reality. In the film Space Cowboys the astronaut characters played by Donald Sutherland, Clint Eastwood, Tommy Lee Jones, and James Garner train in a flight simulator. The Matrix films were all about virtual realities. William Gibson's novel Neuromancer, published in the 1980s, brings the reader into a virtual reality.

Virtual Realities are important to learn about for a couple of reasons. First, hundreds of millions of people in the world will be into virtual reality. It creates its own mindset and there is evidence that playing video games rewires the brain so that you think differently. If you're trying to relate to them you'll need to know how they think.

Secondly, you test market things in virtual worlds in ways you can't in the real world. You can run experiments you can't in the actual world and test stuff that you could not test in the physical world. And there are lots of characters in the virtual world who will take your tests if you know how to do it. There are companies whose business it is to run these tests.

So get with it. At least learn about it. Look in Sandy Carter, The New Language of Marketing 2.0 (2009). Or go to Richard Bartle's massively detailed Designing Virtual Worlds (2004), which will tell you everything about it.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Watercooler Effect

2010-07-20T08:39:00.002-04:00

Word Spy defines it as "the effect created by two or more employees having an informal, face-to-face conversation, as though at a water cooler." (5/22/2008)

People talking amongst themselves about your product, spreading the word, that's what you want for your product. You want to stimulate a water cooler effect. And you want the conversation to be positive for your product. Positive water cooler effect is good. Negative, not so much.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Kurtosis

2010-07-17T09:09:00.002-04:00

As I blogged previously, entrepreneurs need to understand kurtosis. It's
peakiness of a distribution.

If you have two data distributions: distribution A = {1, 2, 5, 15, 100, 15, 5, 2, 1} and distribution B = {1, 2, 4, 7, 10, 7, 4, 2, 1} they would both be even distributions but a would be more kurtotic.

If you're interested in knowing more go to Wikipedia or to any statistics textbook and they'll explain it. Entrepreneurs need to understand this concept so they have a vocabulary to discuss data and can think about the structure of data.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Values Clarification

2010-07-15T07:11:00.002-04:00

The Center for Rural Studies, when I looked at their website on May 17, 2008, had on there something they said was posted from the New England Regional Leadership Program.

The Center said it took no responsibility for the contents. Really? It's posted it on their website isn't it? Why would they post something on their website they don't support? The deal is, when you post something on your website, you take responsibility for it. Point, set, match. No matter how weenie you want to be and say you don't. I think some lawyer suggested they make this mindless disclaimer.

Anyway, it says that people make decisions based on their values. Leaders must be able to understand the difference between their values and the interests of their group. Leaders have to know what they value. Since we should all be leaders, everyone should do this.

I agree with this. Before you start a business look into yourself and understand what your values are. If you don't understand what they are you don't know your voice. And understanding your voice, how you are uniquely you, is crucial to your relating to the world.

They give some exercises you can use to help yourself understand your values and how you relate to the world.

You might want to contact the Center for Rural Studies. They give a phone number of 802 656 3021. I assume they're still around.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Outsourcing

2010-07-14T09:51:00.003-04:00

Outsourcing is one of the 10 flatteners that Tom Friedman in his great book The World is Flat says flattened the world. I recommend that book highly. Read it if you're the only other person in the country who hasn't.

Outsourcing is subcontracting a part of your business to a third party. Dell computers outsources it's customer support to a third party. When you get a computer delivered it's not by Dell it's by some other company. Don't get me started on that.

Advertising agencies usually outsource all their research to research companies. Many companies use UPS as their shipping department. Globalization makes this easier and makes it easier to outsource parts of their businesses to companies half-way around the world.

Some companies have outsourced so may of their divisions that they remain just a coordinating office connecting together all the businesses that they outsourced their divisions to.

If you're having profitability problems analyze your business model and construct a value chain. See what parts of the business can be spun off into another business so you can allocate costs to that new enterprise. And see what can be done more cheaply by outsourcing it to a company which will do that for you.

Outsourcing is not without risk. The companies you outsource to have to be reliable. You have to be able to count on them to do what they said they will do, when they said they'd do it, and provide value to your customer. If they foul up it will cause you trouble.

For example our cable company outsourced the hooking up of our new cable service to an independent companies. They guy they sent wasn't so good and we are convinced he ran off with our steak knife. At least we knew where it was. My wife let him use it to cut something and it was gone after he left. It may not be the company's fault, but they're the one that gets blamed because they're the one who sent him out.

Also, you may incur higher transaction costs because you have to manage the supplier. They might not be as easy to work with (or easier maybe) than people in your own company.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Opportunity Costs

2010-07-13T07:52:00.003-04:00

An opportunity cost is the loss you will suffer if you do one thing over another. That cost could be zero, or it could be negative (that is a net gain by doing A rather than B) or positive (that is, a net lost because you did B rather than A). Opportunity costs exist because you can only do one thing at a time.

The loss or gain doesn't have to be economic either. Making a decision could have non-pecuniary impacts that compensate for financial losses or gains, either pro or con. Taking a better job might mean a move to a different city where you won't see your friends every day. Or reducing your hours to part time may cut your salary but you might get to spend more time with your kids, or pursue a hobby, or start a business, none of which you could do before.

Here's the way opportunity costs work. Let's say you have two choices. Each of them is full time so you have to pick one or the other. Choice #1 is a volunteer position that lets you do exactly what you want to do but pays nothing. You have enough passive income that you won't go broke if you take it. Choice #2 is a high level position in a very good company that pays well and offers benefits but is not really what you're interested in.

What do you do? Do you do what you want to do but not earn anything, or do you take the job that pays well but isn't what you what you want to do.

Imagine two alternative futures. Future #1: you take the volunteer position. After a few weeks you get talking to a senior executive of a large company who says they're looking for someone like you and asks would you consider taking the job. You interview and are hired making almost as much as the job you didn't take but with better benefits and doing pretty much what you did as a volunteer but comes with a good salary and benefits. You still get to work with the organization you were volunteering with.

Future #2 is, you take the job and are earning very well. Three months later the company is bought out and you are outplaced. The volunteer job has been filled and you're out of luck. Six months down the road you still can't find a job.

Choosing the volunteer job had a severe short-term opportunity costs because you chose the unpaid position over the salary. You might have decided that the benefits outweighed the costs though. Long term, choosing the volunteer position had strong negative opportunity costs because you wound up with a really good job out of it which paid you well.

Choosing the salaried job had high negative short-term opportunity costs because of the salary, though the things you didn't want to do that you had to may have undercut that a little. But long term, taking the paid job had high opportunity costs because you didn't do the other thing.

The "true" costs are impossible to measure accurately in virtually every case because we only have one shot at things and we can't rerun our lives to see how things might have turned out differently. But they give us a language we can use to talk about what we have done and are going to do in our businesses.

Go to Wikipedia and look up "opportunity cost."

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Prediction

2010-07-12T09:47:00.002-04:00

Yogi Berra is supposed to have said, "It's hard to make predictions, especially about the future." Wikipedia says Niels Bohr said something similar, I don't know about that. But go read the article on prediction and the stuff earlier in my blog.

Telling the future is one meaning of prediction. What we mean by it is, one can predict to the extent to which knowing one thing helps us know another thing. That is, knowing a person's age helps us predict his wealth, since age and wealth move together.

Automobile ownership helps us predict social attitudes of the owners. That is a person who drives a Toyota Prius has different attitudes than a person who drives a Jaguar.

In starting or running our businesses we want to develop indicators that predict other data. That is, the number of customers who buy our product in one period of time is a good predictor of profit, given that expenses don't go up or down radically. Or the market share of competitors in a niche predicts the likelihood that we will be success entering that niche.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

The Average

2010-07-10T10:42:00.003-04:00

You hear the term "average" mentioned day in day out. The "average" guy. "Average rainfall on this date." A baseball players "average." A car gets an "average" of 35.3 miles per gallon.

The term "average" is a cultural rather than a statistical term. A tomato is technically a fruit but it's regarded culturally as a vegetable. David Stockman, head of something in the Reagan administration referred to ketchup as a vegetable.

Usually, the average is used as a measure of central tendency. Central tendency is the tendency of things to bunch together. Generally we mean by "average" the arithmetic mean, the total of all observations divided by the number of observations.

If Tiger Woods in a given golf round has 10 rounds of 4, 5 rounds of 3, and 3 rounds of 5, he has a total score of 70 and an average of 3.89 shots (rounding to the 100s place) per hole. How much does this tell you about how well Woods actually played that day? Not much, but it's one piece of data.

You have to be careful because what "average" you should use depends on the kind of information you have. An "average" man doesn't mean much because you can't really calculate an average. You can have average height or average weight but not an average man.

There's also different kinds of averages.

When you say, "He's just an average Joe," you usually mean "He's just a typical guy." That can get us into trouble.

For more on this go to Wikipedia or go to any statistics text book. Or you can look at some of my earlier blogs.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Trust

2010-07-09T08:29:00.002-04:00

I blogged extensively about trust as discussed by Steven M. L. Covey in his fine book, The Speed of Trust, (2006).

To see what I said, just read some of my earlier posts. Suffice it to say that trust underlies any business transaction. No trust, no transaction.

That a lot of people can't trust themselves accounts for their failure to be able to trust others. High trust speeds things up and makes things cheaper. Low trust slows things down and makes everything more expensive.

If you want to read more, read Covey or some of my postings.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.nc c

Cross-subsidization

2010-07-08T09:16:00.004-04:00

Why do people give things away for free these days? It's part of free economics. It's giving away something in expectation of getting paid later.

For example, say I am someone who want's to generate speaking fees. In order to build a reputation that will pay off down the road, I waive speakers fees at my first two speaking gigs.

Not for profit organizations get funded through cross-subsidization. A not-for-profit community center offers free tutoring for kids which is paid for by a grant from the city or from the school district.

There are lots of variations out there. Each involves moving money from one thing to another.

In this economy people expect most things to be free or nearly so. So how does the entrepreneur make money? Offer basic services for free. For extra value you can charge.

I counsel pro-bono at SCORE. I don't charge and am in the office every other week for 3 hours in the afternoon. A client wants to come see me, it's free. If the clients wants to see me in an off hour the client pays. That extra value of being able to seem me at the client's convenience gives me the right to charge them.

Look at how Linkedin works. 80% of everybody on Linkedin (including me) don't pay anything. If you want an enhancement, you pay. When I was a Realtor I wanted to send more inmails. I couldn't send any for free so it made sense for me to pay $50 a month to be able to send more. When I stopped being a Realtor the need for the enhanced service went away and I went back to free.

I'm writing novels. The first one sold very few. In fact I lost money big time. The second one I'm working on I hope will do better. I think if I get 3 or 4 out there my reputation as a writer will be enhanced and the later ones will sell and actually cause added interest in the earlier ones.

Chris Anderson unpacks the idea of "free" in his in his terrific book Free (Hyperion, 2009). Read it and then read his earlier one, The Long Tail. I'm going to reread them both pretty soon.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Security, Risk, Uncertainty, and the Like

2010-07-07T06:26:00.003-04:00

What I pulled from my concept grab bag was "security." Allied concepts are risk, uncertainty, threat, vulnerability, exploitation, countermeasure, assurance, and uncertainty.

One of the senses in which "security" is meant is as "a condition that results from the establishment and maintenance of protective measures that will ensure a state of inviolability from hostile acts or influences." See Wikipedia.

Today people are very risk averse. Your product has to be the most risk-free thing out there. If you're initiating a new product or service, you have to be able to assure people that you'll be around down the road. You have to assure them they won't be injured by it or that it won't break. And you have to address this issue without saying those things.

Read the Wikipedia article and follow the links.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Law of Preferential Attachment

2010-07-06T08:09:00.003-04:00

As explained in Wikipedia, "Preferential attachment" means that the more connected a node is, the more likely it is to receive new links." Look it up and read it and follow the links.

What this means in practical terms is that if we are entering a market in which there are 10 players already and one of them has 50% of the market the odds that a customer wil buy from the leading player are 5 in 10.

If the second leading player has 30% of the market the odds of that new buyer buying from second leading company are 3 in 10.

Finally, the odds that that new customer is going to buy from one of the remaining 7 players are 2 in 10. If the market is lucrative enough those last 7 players may do quite well sharing the remaining 20% of the market.

So here we come with our new company trying to compete with these 10 players when the odds of a new buyer buying from us are 0 in 10. How are we going to leverage our assets to be successful?

This doesn't mean the situation's inherently hopeless. We just have to come up with a disruptive product that will blow apart the old business model and over time seize a leadership position in the market.

Surely we can't come in there the same as all the others. We'll get killed. We have to be able to differentiate ourselves from competitors along some attribute that is important to consumers.

These days the dimensions along which one competes are cost, quality, convenience, access, and risk.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Disruptive Products

2010-07-05T09:28:00.005-04:00

Clayton M. Christensen, in his terrific book The Innovator's Dilemma; the Revolutionary Book that Will Change the Way You Do Business (Collins, 2005) talks about disruptive products and their impact. Destructive products are new ways of doing things that are done every day except the new products are simpler, easier, cheaper, or more convenient. They completely remake markets. The last shall be first sort of stuff.

Take the travel industry. Use to be when I wanted to take a flight I called my travel agent, told her when and where I wanted to leave. Sometimes I called two of them just to make sure one of them didn't miss something or wasn't working hard enough for me. They checked their computers and got back to me with times and dates and cost. I picked one and the winning agent made the reservations and I paid either off my charge card over the phone and she mailed them to me or if there wasn't time for them to reach me in the mail I went to her office and picked up the tickets and paid her then.

Enter the computer. This is definitely a candidate for the most disruptive technology since the printing press award or at least it's in the running.

Now when I want to fly somewhere I go to my computer and Google cheap fares. I put in the parameters and the computer spits out 250 or so of the cheapest fares that fit my specifications and I make a choice and reserve the flight and pay with my charge card and print out my boarding passes. Whew!

Where is my travel agent now? Doing something else probably like taking out the garbage.

I could go industry by industry and say how the computer has blown up the old business model.

Go get Christensen's book and read it. Then read it again and again. Wait six months and read it again. It will be new to you all over again.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Entrepreneurial Job Hunting

2010-06-30T08:17:00.002-04:00

I'm current looking for a job. Not the lot of an entrepreneur you say. Not so I say. Job hunting is an entrepreneurial activity. "Entrepreneur" used to mean one who organizes military expeditions. Looking for a job has a lot of parallels with undertaking military expeditions and with undertaking a company. I have organized an enterprise called "Tim's Search for Intelligent Life in the Universe."

So how am I being entrepreneurial?

I have to craft my voice. That defines how I differ from the kajillions of other searchers out there. It defines how I present myself and what kind of job I'm willing to accept. I know what my voice is (or what I want it to be) but it's taken me a few months to figure out how to make that manifest in an employment search context.

I have analyzed my assets and liabilities. My assets are my health, my education, my varied and interesting background, my curiosity, lots of connections and so forth. My looks not so much. I don't have a lot of money which means hiring a fee-based employment agency is out. I wouldn't do it anyway. I have a lot of other non-pecuniary assets but I won't go into them.

A big liability is my age. So I have to go for positions in which my age is an asset. Senior this or that. There are problems there I won't go into either. There are more but you get the picture.

I have figured out what resources you have at your disposal. This puts parameters on my job search.

I have figured out what I have to offer. This tells you what I'm "selling."

I know how long you have to look. If you have 5 years to look you can be pickier than if you have to have one within the month.

And so on and so on.

The problem with job searching is that the way it is usually done is that the searcher places himself or herself in a supplicant position. Prostitutes are placed in a supplicant position. He or she has in the back of his or her mind, "Please Mr. Employer, won't you take on poor little pitiful me?" This is depressing to the searcher and what employer wants to hire a down-in-the-mouth person.

You have to have to put yourself on a level with your potential employer. You have to have a plan and a way of showing the person you have something to offer. Maybe you have something to offer that that person didn't even know he needed.

You have to have a plan. You have to know what your objective is because these days you have to put it on your resume. A goal has been called a dream with a date attached. You have to know where you are now. You have to identify the things that have to happen before you can successfully find one. And you have to determine the actions steps you will take to make sure those things come to pass. You have to market your product (a.k.a. you) and have to have an evaluation period at which time you will evaluate your progress.

It helps to have a coach. I have one, but he doesn't really have a good idea of what a mentor or coach is. Fortunately I'm pretty much self-directed and a self-starter.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Attributes

2010-06-29T13:44:00.002-04:00

An attribute is something that defines a property of something. People have attributes. A person is tall, short, fat, thin, smart, dumb, good looking, ugly, atletic, so on.

Objects have attributes. A car is blue, a convertible or an SUV, gets good gas mileage, is expensive or not, and so forth.

If you're in business, what are the attributes of your products? How do you rank against competitors on attributes that are important to people. It doesn't matter if your product is the best there is if no one cares about it. On the other hand, it does matter if your product is worst at things that do matter to people. And the value people place on specific product attributes can change. People use to value brand names. Now they value price, accessibility, ease of use, and convenience.

So attributes are important. Attributes matter to people in selecting a mate and they matter when they decide which product or service they decide to use.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Word of Mouth Marketing (WOMM)

2010-06-28T06:43:00.003-04:00

Word-of-mouth is what is generated when someone talks about somebody else. Somebody gets excited about something they saw on TV or bought and tells a friend, and they "catch" the excitement and go out and buy it too.Word-of-mouth marketing is the art of generating positive word of mouth, harnessing excitement around the product or service, and riding it all the way to the bank.

Buzz, viral marketing, grassroots campaigns, blogs, influencers, social media, customer engagement, referral marketing, customer evangelism, reputation marketing-- all part of word-of-mouth marketing.

Positive word-of-mouth spreads like a disease, which is why viral marketing is such a great name for it.

There's negative word-of-mouth marketing too. The old chestnut that if someone has a good experience they tell two people but if they have a bad experience they tell ten is quite true even if the numbers aren't precise. It could be 3 and 7 or 1 and 10. Still, negative word of mouth can kill you. Think what the prospects are of a restaurant succeeding if a food critic shows up the first night and a cockroach walks across his table. Nada is what that place's prospects of success are.

Not everything spreads quickly. Some things spread faster than others. To read more about what spreads and what doesn't, there's a host of books. Or you can read the Wikipedia article on Word of Mouth and follow their links.

You want to generate lots of positive word of mouth. It will make you rich.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Little Red Hen Problem

2010-06-25T06:44:00.003-04:00

I'm having a "little red hen" problem.

Over breakfast with an old CPA friend recently I outlined a business idea I wanted him to work with me to develop. A comment he made once had caused the idea to happen to me in the first place.

Yes I believe that ideas happen to people. If an idea happens to a person that person needs to decide whether he's the right person for the idea or not. If he isn't he should hand it off to someone else or drop it altogether.

Several months before our breakfast I'd emailed my friend what I was thinking about and he consented to have breakfast with me to discuss it. His response to my email led me to believe he was interested.

He offered me his thoughts and concerns. They were all important issues. Potential areas of exposure. Business focus. Recruiting protocols. The like.

I asked him to work with me to develop the idea. He said I should develop the idea myself. He'd be happy to work with any clients I steered his way but he didn't really have the energy to build the business. I was disappointed in his response because I expected he would be interested. I'm glad he was frank up front. This saved each of us a lot of time.

Too many people go ahead with something they're not really very excited about because they think they "should" or they don't want to disappoint the other person but back out later because they just can't sustain the effort for the long haul.

I thought of the little red hen going all around asking people if they would help her bake a loaf of bread. "Not me," each said. So she baked it and everybody wanted a piece of it. She finally ate the whole thing herself.

Teams are better than individuals because we all have just 24 hours in the day which means we can only do so much. This number doesn't vary by race, gender, or wealth. Bill Gates has as many hours in the day as Tim Bosworth. We can do so much by ourselves. But two of us have 48 hours in a day. Four have 96 and so on. Plus we benefit from synergy and the increased creativity.

Most innovations are produced by teams rather than by one person paddling his own canoe. That's why I want a team. I don't want to go off and bake the bread myself.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Assets

2010-06-24T12:30:00.002-04:00

An asset is something from which one can derive a benefit. These include personal qualities such as charm or charisma. Assets also include social contacts, elevated social status from birth, or lots of money.

In a strictly accounting sense, an asset is defined as "a probable future economic benefit obtained or controlled by a particular entity as a result of a past transaction or event." This comes from Wikipedia the free on-line encyclopedia. You can to to Wikipedia or to any accounting textbook and you can get the scoop.

Assets are important because they allow you to do what you want to do. You can buy stuff, or cash in favors from others, or learn about things other people done. They create inefficiencies in the market which you can use to your benefit. They are one of the seven basic cash flow drivers.

When you contemplate going into business take inventory of your assets.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Triangulation

2010-06-19T11:04:00.002-04:00

Triangulations means something specific in math but in business means synthesizing information from different sources. Collecting information on the same topic from different sources allows you to get a more valid measure of whatever you're measuring.

For example, if you want to measure audience attendance at a give event. You can get published data from an organization that counts attendees at different concerts. And you have estimates from people who were there and made crowd estimates.

Let's say the published data puts attendance at 335,000. Crowd estimates that were there put attendance at 322,000. They're not very far off. As long as they came from different sources, placing your estimate at 330 is sounder than either one of the sources alone.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Overhead and Operating Expenses

2010-06-18T12:47:00.004-04:00

These days, Internet businesses can charge so much less than physical businesses because they have low overhead.

According to Wikipedia:

In business, overhead, overhead cost or overhead expense refers to an ongoing expense of operating a business (also known as Operating Expenses - rent, gas/electricity, wages etc). The term overhead is usually used to group expenses that are necessary to the continued functioning of the business, but cannot be immediately associated with the products/services being offered[1] (e.g. do not directly generate profits).

Overhead expenses are all costs on the income statement except for direct labor,direct materials & direct expenses. Overhead expenses include accounting fees, advertising, depreciation, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone bills, travel and utilities costs.

Overhead is what you have to keep as low as possible. After all, it's not what you make it's what you keep. It's a basic cash driver.

When you start a business, you want to start with spending as little money as possible. Many people come to me saying, "I'm starting a business and I need a loan." If you don't have sufficient resources to start a business without borrowing large sums of money, give serious consideration to not starting it. The last thing you want to do is go broke because you had to pay a bunch of interest before your business ever got going.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Your persona

2010-06-17T07:15:00.002-04:00

"Persona," as defined by Wikipedia the free on-line encyclopedia defines a trade secret, is "a social role or a character played by an actor." It's a "second self created by the author and through whom the narrative is related." Your persona has a character structure which I blogged about on 6/14/2010. Read the Wikipedia entries and follow the links.

What has this got to do with entrepreneurship? Everything, actually. You have a persona "out there." What is it? You have a voice. It's either a carefully developed voice that communicates your uniqueness or you proceed mindlessly through life.

I've said the writing and entrepreneurship are different manifestations of the same thing. Understand who you are. Who you need to be. How you're communicating your uniqueness. You're an entrepreneur starting to work on establishing and growing a new business. You're a writer starting to work on a new story. What's the difference?

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Trade Secrets

2010-06-15T09:48:00.004-04:00

Wikipedia the free on-line encyclopedia defines a trade secret as

"A formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers. In some jurisdictions, such secrets are referred to as "confidential information" or 'classified information'."

Go read the whole Wikipedia article and follow its links and google it and look at other sources.

Sometimes people who start businesses get so defensive about the "trade secrets" of their business they are unable to get people to help them. One guy came to our mentoring team asking if his idea was worth patenting. He wouldn't tell us what the idea was so we couldn't help him. I don't know how he expected us to help him. You have to share with people what you're doing before they can agree to help. If you find a reliable person to approach they're going to understand the need for keeping your idea under wraps.

Most ideas are not all that revolutionary anyway. The God is in the implementation. Not until you commercialize the idea will you show that there is value in them worth stealing. You're generating cash. If you've not created anything worth stealing yet you were to sue somebody for "stealing" your idea, you wouldn't win because you haven't created anything worth stealing.

Don't get me wrong. Once your business gets going and you've produced the value you need to protect your processes and products from poaching. But don't get too hung up on it at the start. Spend your time, money, and attention attracting a talented team to help you develop your idea and get it to market.

The thing that will help you is in the implementation, not just the idea behind it.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Character Structure

2010-06-14T09:32:00.003-04:00

I pulled out of my stack today this descripton from Wikipedia of "character structure." There's a short article on it with references to Freud and others. You should read it.

It basically refers to what Martin Luther King called the "content of our character." It's indicated by how a person relates to himself, to others, and his environment. Is he or she self-centered, defensive, jealous, brave, timid, honest, etc.

The old TV program from the 1950s and 1960s about Wyatt Earp called him "brave, courageous, and true." The Boy Scouts has a number of other traits it markets. The U.S. Marine Corps calls them "the few, the proud, the Marines."

Animals have certain traits acribed to them. Rabbits are often seen as timid. Bears are ferocious. Dogs are friendly. Coyotes sneaky. On and on and on.

Writers talk about character structure when they craft their stories. A person's character acts like a box. Certain skills and abilities can be found in the box, others are outside of it. Over the course of a story we like to see a character grow the size of the box.

What's the content of your character? What's your brand? Are you brave, courageous, and true? Are you sneaky and timid and cowardly? What do other people think it is? What do you want it to be? What do you want to be remembered by?

Think about this before you go into business. Your voice is your announcing the content of your character to the world. Are the things you are doing and saying consistent with this voice, or are you telling people you're generous, but acting niggardly?

I could go on and on, but I think you get the idea.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

Advertising

2010-06-12T08:55:00.002-04:00

Wikipedia, the free online encyclopedia, defines advertising as a "form of communication whose purpose is to inform potential customers about products and services and how to obtain and use them." Read the Wikipedia article and follow the links.

You can also go to any library or text book or the web and learn tons of stuff about it.

We all need to communicate and promote our businesses but we don't necessarily have to do advertising. Print advertising has diminished in importance as our society has changed and web-based adveritising expenditures has begun to outstrip them. Internet advertising is either way ahead of print advertising or soon will be. Advertising on social media sites has moved up as well. Facebook is or was the 5th largest country in the world or will be.

I think of advertising as different from other forms of communication in that the business pays for specific messages. For example it pays a media outlet $X for N number of spots. If that same business stages a rock concert and pastes its corporate name all over everything it's something else, public relations probably.

If the business hosts a dinner at which a prominent person has paid to give a pitch for his business, the dinner is probably part of a public relations campaign, but the speaker is advertising. A thin line, but you get the point.

Be very careful what kind of promotion you do. You should have a tight business plan and sound monetization strategy. Then watch your expenses, be pretty confident it's going to get results, then make sure you get good advertising that doesn't break you and measure, measure measure. Any good advertising plan will have an evaluation strategy. If it's not paying off after X number of months or years, you rethink your approach and make appropriate adjustments.

Entrepreneurship is the life's blood of all my professional activities. It makes them go. And go read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.