Archive for the ‘Total Entrepreneurial Activity’ Category
Friday, March 12, 2010 | Written by Erik Rostad
Posted under: Financial Concerns, Total Entrepreneurial Activity |
Tags: corporate america, entrepreneur income, working for yourself |
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Why is it that you have more potential to make money as an entrepreneur or small business owner than you do working for the man? Here are my top 5 reasons.
1. You Obtain All Money from a Project
Chris Hanks, faculty member of The Entrepreneur School, often cites the stat that says you must generate 3 times as much money as you make at a company. If your salary is $100k a year, you must be bringing in $300k of business. This pays for your health insurance, supplies, and profit for the company. But in working for yourself, if you generate $300k of business, you keep $300k. Granted you will have marketing costs, supplies, and other overhead, but you keep more of the money earned as an entrepreneur.
2. You Control Your Workload
When I worked for a company, I had a set list of tasks to perform in any given week. If I did those tasks in 2 days, I would make the same amount of money I did if I stretched those tasks out over 5 days. But if I am working for myself, if I complete my tasks in 2 days, I get paid for those tasks and can focus on new business for the other 3 days. Additionally, I can work extra hours and make more money bringing in new business.
3. You Have Ownership
If you work for yourself, you likely own your company. If you run a company that gets purchased by a bigger company along the way, you get the money. It’s unlikely you would own a part of a company that employed you unless you were in the upper executive levels of the firm. In that case, if that company got purchased, not only would you not see any proceeds, but you’d likely be fired as well.
4. You Have Motivation
In working for a company, you are spending your time promoting that brand. In working for yourself, you are building your own brand or your own name. I regularly see people work harder and smarter when their reputation is in question as opposed to working for the reputation of their boss or a brand.
5. You don’t have Meetings
How much time is wasted in Corporate America in pointless meetings? Excessive meetings don’t generate income. As an entrepreneur, you will still have meetings in order to garner new business, network, or pitch your idea to potential investors. But those meetings are related to your bottom line. Many corporate meetings have the bottom line as a goal, but waste precious work time in bickering.
Submit a comment to this blog if you agree and have other reasons or if you disagree with the top 5 list above.
Tags: corporate america, entrepreneur income, working for yourself | Posted under Financial Concerns, Total Entrepreneurial Activity | No Comments
Wednesday, February 17, 2010 | Written by Erik Rostad
Posted under: Total Entrepreneurial Activity |
Tags: old people, retirees, starting a business after retirement |
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Can you guess what age group reports the highest rates of entrepreneurship in the United States? Could it be the young 20 – 25 year olds looking to make a mark on the world? What about the 35 – 40 year olds who have some experience in the work force and now seek to start their own company? Or could it be the 55-64 year olds who have recently retired and can’t seem to sit still?
According to the Marion Kaufmann Foundation, it is the 55 – 64 year olds who have the highest rate of entrepreneurial activity. And not only for 2009, but for the past 10 years!
55-64 year olds bring a unique skill set as entrepreneurs.
First, they have capital. They have a lifetime of savings and chances are their 401k’s have just opened up or are about to.
Secondly, they have a perspective on problems unique to their age group. They start businesses to address problems that 20 & 30 year olds might not even know exist.
And third, they have a set of skills learned through a lifetime of work.
And last of all, even though older entrepreneurs likely have some savings to pull from, they also know that they don’t have a backup source of income should the venture fail. This likely leads to retirees bootstrapping to get their business up and running instead of putting huge financial burdens on the beginning of the venture.
Tags: old people, retirees, starting a business after retirement | Posted under Total Entrepreneurial Activity | No Comments
Wednesday, February 10, 2010 | Written by Erik Rostad
Posted under: Creativity and Ideation, General Thoughts, International, Technology, Total Entrepreneurial Activity |
Tags: china overtaking usa patent applications, china patents, global patent applications, wipo |
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The UN recently released their report on the number of Patents applied for per country for 2009. The USA tops the list with 45,790 patent applications. This is about 54% more applications than number 2 on the list, Japan. What is surprising about the list of the top 15 countries is that 14 of them had a decrease in patent applications from 2008 to 2009 or remained relatively flat. China, on the other hand, had 29% more patent applications than the year before.
Right now, China is #5 on the list coming in with 7,946 patent applications for 2009. If China keeps up their application growth rate of 29.7% and the USA continues to decline at 11.4%, China will have more patent applications than the USA by the year 2013. This is not wholly unreasonable as China has averaged a 34% average patent application increase over the past 4 years.
Click here to see the full results, including a patent application list by country and by company. Also, the list of top 15 countries is contained at that link.
Tuesday, February 9, 2010 | Written by Erik Rostad
Posted under: International, Total Entrepreneurial Activity |
Tags: china, chinese entrepreneurship, entrepreneurship, shenzhen, Total Entrepreneurial Activity |
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Over the last 10 years, China’s average rate of Entrepreneurship has averaged 14.1%. This is according to the Global Entrepreneurship Monitor that researches the percentage of the nation’s GDP generated by Entrepreneurial Activity.
So what does Entrepreneurship look like at a city by city level in China? According to a recent article in The Economist and a recent study by schools in Shenzhen & Hong Kong, entrepreneurial levels are decreasing rapidly in some of the biggest cities. Cities like Shenzhen (which had the highest rate of population growth from 1990 – 2000 out of any Chinese city) has seen it’s percentage of the population involved in entrepreneurial activity drop rapidly from 12% in 2004 to 5% in 2009.
The Universities conducting this study also noticed similar rate drops in other major Chinese cities. But on the other hand, high levels of Entrepreneurship showed up in the poor, rural cities.
This leads us into the discussion of Opportunity vs. Necessity Entrepreneurship. As cities such as Shenzhen (just north of Hong Kong on the Chinese side) develop, land prices rise, and the cost of starting a new business also rises. Most new businesses these days in Shenzhen are started out of opportunity and are not completely necessary to keep the entrepreneur alive. However, in the poor rural areas that are starting to accumulate people into future major cities, the entrepreneurial levels are high and are based upon necessity. Someone has to sell a widget to feed their family.
What we are seeing in China is that as major cities mature, their levels of corporate citizens rise and their levels of entrepreneurial activity decrease. Shenzhen’s drop of 12% to 5% is substantial.
Tags: china, chinese entrepreneurship, entrepreneurship, shenzhen, Total Entrepreneurial Activity | Posted under International, Total Entrepreneurial Activity | 1 Comment
Tuesday, January 5, 2010 | Written by Erik Rostad
Posted under: Angels, Banking, Bootstrapping, General Thoughts, The Entrepreneur School, Total Entrepreneurial Activity, Venture Capital |
Tags: babson, Bootstrapping, entrepreneurship in 2010, entrepreneurship predictions |
1 Comment
2010 will be the Year of the Bootstrapper. It will be the year of the Entrepreneur who can figure out how to do the most with the least.
2009 was a bad year for entrepreneurs. Most predictions for 2010 show a slight improvement in conditions and funding, but still, a difficult time to start a business. But we at The Entrepreneur School believe that now is as good a time as any to start your business.
The Wall Street Journal had a great article this morning covering the different funding avenues available for Start-ups:
Angel Investors
Angel funds fell by 30% in the 1st half of 2009. Predictions are that Angel funds will stay flat in 2010. An interesting fact about angel funds is that even though the total dollar amount invested has decreased, the number of start-ups funded has increased. Fewer dollars for more entrepreneurs. The bootstrappers will win.
Venture Capital
Average deal size in the 1st half of 2009 was $5.7 million compared to $7.5 million + average from 2005 – 2008. Venture Capitalists are saving their money for companies in the late stages of development or are giving more funds to companies already in their current portfolios. Bootstrappers will be a step ahead by not having to wait on the dwindling number of venture funds to come through and will also retain more of their company.
SBA Loans
Less than 45,000 SBA loans were approved from Sept ‘08 – Sept ‘09, which is 36% lower than the year before. Right now, SBA loans only make up 1% of start-up lending. This is expected to increase to 5 – 10% in the near future due to the government’s stimulus packages.
The end of the article describes how Babson College, which is one of the elite entrepreneurship universities in the world, estimates that the average entrepreneur needs $65,000 to get their business up and running. In this economy, with savings accounts, nest eggs, and house values in disarray, it will be difficult for most entrepreneurs to come up with $65,000.
We at The Entrepreneur School teach ways to start businesses for much less than $65,000. There are a number of businesses that can be started where Bootstrapping is considered for each aspect of the business. One of Babson’s professors, Dr. Zacharakis states this in another way:
“Instead of capital infusions, there might be a lot more exchanges of services or trading favors.”
Take a look at the first set of entrepreneurship lessons at The Entrepreneur School.
All info and statistics for this blog post were gathered from The Wall Street Journal on Tuesday, January 5th, 2010.
Friday, December 11, 2009 | Written by Jim Beach
Posted under: General Thoughts, Total Entrepreneurial Activity |
Tags: state by state levels of entrepreneurship |
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The Small Business and Enterprise Council released today their annual ranking of the best states to be an entrepreneur. Several groups perform surveys or studies like this, and in fact, recently we reported one that listed Georgia as the best state in the country to start a new business. According to the SBE Council, the best states are: South Dakota, Nevada, Texas, Wyoming, Washington, Florida, South Carolina, Colorado, Alabama, and Virginia. A cursory glance reveals several states in the top ten with no personal income tax. Somehow, its not surprising that Connecticut, Hawaii, Minnesota, Massachusetts, Maine, Vermont, New York, California, and New Jersey are in the bottom 10. They all strike me as high tax, big government places.
The SBE Council used about 30 criteria to evaluate the states. I wanted to list and explain each of them, despite the tedious sounding nature of that, so that you entrepreneurs will know what to consider when starting a firm. I know you aren’t going to move to a better state to start your business, well you might, but at least you need to know what factors will impact your business.
- Personal Income Tax – 90% of small businesses (that’s us) file as individuals.
- Individual Capital Gains Taxes – They are taxes on risk taking, so the higher this rate, the harder to raise capital.
- Corporate Income Tax – Higher the rate, the less the profits. Imagine competing with a firm in another state with lower taxes.
- Corporate Capital Gains Tax – This is the one Obama says he will lower for one year to create jobs. SHAM, see post from 2 days ago.
- Additional Taxes on S-Corps – We teach to go LLC!
- Individual Alternative Minimum Tax – Everyone pays at least this amount. Yuk.
- Corporate Alternative Minimum Tax – Same. Yuk.
- Indexing Personal Income Tax Brackets – Prevents inflation from pushing you into a higher bracket.
- Property Taxes
- Sales, Receipts, and Excise Taxes
- Death Taxes – Oh, come on.
- Unemployment Tax rates
- Health Savings Accounts – Allow you to safe tax free to health expenses. Reduces costs and premiums.
- Guaranteed Issue of Health Insurance – Means you cannot be turned down for insurance, but drives costs up for all.
- Community Rating of Insurance – Everyone must pay the same higher amount. You cannot charge her less and me more.
- Health Care Mandates – Rules requiring certain types of insurance, even if not wanted. Costs go up for something you don’t want.
- Electricity Costs – Actually Vary greatly, but cheaper in the South usually.
- Worker’s Compensation Costs – Low wages attract business. Why the car companies moved south and left Detroit.
- Crime Rate
- Right to Work – Employees not forced to join a union, increasing flexibility and efficiency. Unions kill small business.
- Number of Government Employees – The more regulation, the worse….
- Tax Limitation States – Voters must approve each new increase.
- Internet Taxes – State by state sales tax on net sales.
- Gas Taxes -
- Diesel Tax -
- State Minimum Wage -
- State Legal Liability Costs – Texas for example greatly limits liability, especially for doctors.
- Regulatory Flexibility Status – States must assess impact of new regulations, which tends to slow them down.
- Trend in Local Spending -
- Per Capita Spending – The lower, the better for entrepreneurs.
- Private Property Protection – Ease of government to seize your land.
- Traffic and Highway Costs – Is your commute forever like here in Atlanta? Actually that’s a good reason to be an entrepreneur! Work at home.
- Paid Family Leave -
Tags: state by state levels of entrepreneurship | Posted under General Thoughts, Total Entrepreneurial Activity | 1 Comment
Monday, November 30, 2009 | Written by Jim Beach
Posted under: General Thoughts, Total Entrepreneurial Activity |
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Where would you rather start a new business, California or Texas? California certainly wins for the coolness factor. Hollywood, movie stars, Sonoma, wine, Route One. HP, Cisco, Apple, Genentech, Google, eBay, Amazon, venture capital. When you think places where entrepreneurship live, California wins. Hands down.
But California is $26 billion in the hole and is paying its bills with IOUs. Jobs are leaving the state, and unemployment is above 12%. The state income tax is the second highest in the country. One hundred thousand people are leaving California a year.
Texas has no income tax. There is no tax on capital gains. Unemployment is well below average. Housing repos occur at one of the lowest levels in the U.S.
The reasons for this disparity all point to Texas as a better place for entrepreneurs. They are:
- Lower taxes in Texas.
- Texans support laissez-faire economics and decry big government.
- Texas has solved the health care problem better than any other state. Tort reform has doctors pouring into the state while Massachusetts has doctors leaving by the hundreds, due to their Democratic health care solution.
- Texans believe in personal responsibility.
- Californians treat global warming as religion, and land use restrictions have driven prices through the roof. Texans protect the environment while trying to maximize quality of life.
- Texas encourages racial mainstreaming. California values ethnic diversity.
- Texas has worked to streamline business burdens, by decreasing regulatory and litigation threats.
The result? Jobs will move to Texas. Venture capital will migrate east. Entrepreneurs will stop thinking of California as the Golden State.
Posted under General Thoughts, Total Entrepreneurial Activity | No Comments
Saturday, November 21, 2009 | Written by Erik Rostad
Posted under: International, Total Entrepreneurial Activity |
Tags: foreign corrupt practices act, global corruption, International Business, transparency international 2009 |
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Transparency International has just released new data for Corruption Perception levels for 2009. From a scale of 1 – 10, 1 being most corrupt, and 10 being the cleanest, here are how some of the countries fared in the report:
- India – 3.4
- USA – 7.5
- China – 3.6
- Iraq – 1.5
- Sweden – 9.2
- Mexico – 3.3
- Japan – 7.7
Click here to see the full map. Click here to see the countries listed in order of least to most corrupt.
As an entrepreneur, these numbers offer a good indication of the level of trouble you will have in trying to do business in these specific countries. The level of corruption in a country is directly related to the cost of doing business as well as the expected time frame of doing business in a country. Transparency International also found a strong correlation this year between high levels of corruption and poverty. Corruption also deeply affects the levels of entrepreneurship in a country. If red tape exists in the form of bureaucracy and bribes, this prolongs the time to start a new business.
This is not to say that business cannot be done in countries with high corruption levels. But in countries with high levels of corruption, you may need to spend more time and money using local business partners who have expertise in dealing with the system. This is definitely the case in China where business relationships (guanxi) determine levels of influence to move business licenses along.
You must also be very aware of US laws while doing business in other countries. For example, the Foreign Corrupt Practices Act (FCPA) outlaws bribes by US citizens to public officials in another country. Bribery may be an easy shortcut to expedite business in a foreign country, but it is illegal and you could wind up in jail.
Monday, November 2, 2009 | Written by Erik Rostad
Posted under: International, Total Entrepreneurial Activity |
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I took a trip to India in 2007 with Jim Beach of The Entrepreneur School. We met with university professors, government officials, students, and entrepreneurs. This was our analysis of Entrepreneurship in India:
I. Introduction
The purpose of our trip was to study entrepreneurship in India. We were to take a broad view of the economic, political, social, and educational aspects of the country to provide a macro view. At the micro level, we were to take a detailed look into the government’s role in entrepreneurship. Did the government help entrepreneurs in the past? Do they have programs in place to assist entrepreneurs in the future? What is the role the government should take now with entrepreneurs as the economy booms?
We believe that the government is taking the right steps to provide an atmosphere conducive to innovation and entrepreneurial ventures. Even in India’s recent history, the government has offered incentives such as tax breaks, subsidies, and small venture capital funds to assist with entrepreneurship. In addition, the Indian government established the Technology Institutes that are now some of the most prestigious in the world. Although steps have been and are being made, India continues to be bogged down with bureaucracy.
The current situation with the new Bangalore airport clearly highlights some of the major issues in India. Next year, a new airport will open in Bangalore. This will be a state of the art facility costing $430 Million dollars. Contractors are busy at work on this facility that will be one of the first to accommodate the new double-decker Airbus jet. This airport will be a new international hub that will further increase Bangalore’s importance in the world. The only problem is that the road to the airport is not complete. The government in mired in bureaucracy and a road to this new beautiful airport is being held up.
This is a fitting picture of India today. As the economy reaches new heights and innovations in technology bring the world’s best companies to India, the country still faces many hurdles in government and infrastructure. The degree to which the government can provide an atmosphere allowing the talented people of India to thrive will greatly affect the future growth of the country.
II. Entrepreneurship
We found that the definition for entrepreneurship in India closely fit our concept of entrepreneurship. Through a small sample of surveys and from company and university visits, we believe that India as a whole thinks of entrepreneurship as the starting of a business to meet a market need. As different countries define entrepreneurship in specific ways, we wanted to be sure that we were starting from the same framework.
III. India’s Transition
India is in the middle of a technical revolution. They are in a state of deregulation and growth, which is leading to opportunities for all. Many are starting businesses out of need and others are able to take advantage of the opportunities that are cropping up because of the growth and investment in the their country. Women are gaining more important roles and changing the way the Indian society views them. They are running their own businesses, climbing the corporate ladder, and leading departments at educational institutions. Educational opportunities are becoming easier to attain. The need for educated employees is increasing, so institutionalized education will be ever more important.
IV. India’s Future
Venture Capital firms are beginning to invest heavily into India. The latest numbers show that $800 Million is being invested each quarter. The majority of these VC firms are investing in technology and BPO companies. Also, a small but growing angel investor community is beginning to arise. The wealth generated from the IT sector is providing many people with discretionary income to invest in potentially lucrative ventures.
Opportunities abound for entrepreneurs, especially in bringing essential services online. Other established countries are already saturated in this respect but India’s vast and largely untapped market is ripe for those willing to invest. The government has acknowledged its role in supporting entrepreneurs and foreign direct investment and is making the appropriate policy changes. The number of licenses required is decreasing and the time necessary to start a new business been cut in half in the last couple of years. There still exists a restrictive bureaucracy, which needs to be factored into investment decisions.
V. Microfinance
One word that we heard over and over was microfinance. Microfinance, or micro-credit, is the concept of providing loans to the world’s poor so that they can purchase the necessary items for which to produce and sell a product or service. The loans are then paid back with profit made from their endeavors. So far, more than $4 Billion has been dispersed as micro-credit throughout the world. Of this amount, more than 98% of the loans have been repaid in full.
The key point in continually hearing about microfinance was that entrepreneurs in India are not just looking to meet the needs of the wealthy elite in India. We saw a more holistic approach in the realization that India cannot leave the less fortunate behind. It is also an economic necessity that the entire population comes along for the ride instead of just the wealthy few. What this means in the long run is that if companies in India can come up with a business plan and cost structure in which the majority of Indians are included, they will be able to take that business anywhere.
VI. Summary
The Indian government is aware of the role that entrepreneurs play in the growth of an economy and are making the right steps to encourage entrepreneurship. The main problem is the legacy of the ‘license raj’ and the bureaucracy that this created. It was amazing to see the infrastructure when entering a company’s campus here in India. While power outages are common in India, these companies had their own power source of back-up generators. While the streets of the city were dirty and crowded, the streets inside these campuses were immaculate and clean.
Before we departed on our trip, we heard Ambassador Jassel state that the success of India’s IT sector was a result of the government not having a hand in the business. The government’s role should be to provide the basic infrastructure necessary for an entrepreneur. Anything more than that will only hurt the economy. Indian entrepreneurs have shown that they have the necessary skill and talent to start world-class operations.
According to the latest Global Entrepreneurship Monitor report, the % of GDP based upon entrepreneurial activity in India is at a relatively high 17.9%. Many of the entrepreneurial indicators would suggest that this number should not be so high. What we learned on this trip is that the reason this level is so high is due to the entrepreneurial activity based upon necessity. When pushed into a corner, one has no choice but to fight their way out. We see the future entrepreneurial activity in India based more upon opportunity than necessity.
Posted under International, Total Entrepreneurial Activity | No Comments
Friday, October 2, 2009 | Written by Erik Rostad
Posted under: International, Total Entrepreneurial Activity |
Tags: broadband quality score, global broadband rankings 2009, Total Entrepreneurial Activity |
1 Comment
The University of Oxford and Oviedo just released a report in conjunction with Cisco ranking broadband quality per country. The numbers are quite impressive. South Korea just surpassed Japan and Sweden to top the list. Below are some of the country rankings. The number next to the country is the Broadband Quality Score (BQS) – measured by taking download speed, upload speed, and latency into account:
1. South Korea – 65.99
2. Japan – 63
3. Sweden – 57
4. Lithuania – 54
5. Bulgaria – 49
14. France – 37.5
16. United States – 37
31. Britain – 30.5
43. China – 26
63. India – 20
South Korea’s government is pushing to be the world leader in IT. It’s obviously paying off.
As entrepreneurs, the next big question is – how does broadband connectivity affect the entrepreneurship levels of a particular country?
If we look at the latest Total Entrepreneurial Activity percentages for these countries, is there a correlation between the rankings? And would this show up in the rankings now or in a few years from now? Here are the entrepreneurial percentages for the countries listed above:
1. South Korea – 10%
2. Japan – 5.4%
3. Sweden – 4.2% (2007)
4. Lithuania – n/a
5. Bulgaria – n/a
14. France – 5.6%
16. United States – 10.8%
31. Britain – 5.9%
43. China – 16.4%
63. India – 6.9%
There doesn’t appear to be much of a correlation here. Perhaps this is something we will see further down the road.
Here is a chart highlighting the the Broadband Quality Score per country.
Click here for the entire report broadband quality report provided by the Said Business School at Oxford, and Cisco. This report also contains a breakdown by city.
And click here for a wikipedia report on broadband use per country.
