Archive for the ‘Total Entrepreneurial Activity’ Category
Thursday, August 26, 2010 | Written by Erik Rostad
Posted under: General Thoughts, Total Entrepreneurial Activity |
Tags: age 55-64, older entrepreneurs, success, vivek wadhwa, young entrepreneurs |
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Duke University scholar Vivek Wadhwa recently completed a study of roughly 550 technology ventures and the people who founded the companies. What he found was that older entrepreneurs have better success than younger entrepreneurs when it comes to starting companies. Older entrepreneurs are defined as those in the 55 and over crowd.
Now, this may seem very logical, but the picture we most often see in the media is of the young entrepreneur and not necessarily the older entrepreneur. The older entrepreneur has likely spent many years in a company or in a trade learning the ins and outs of that industry. When they start a company, they are likely starting with more of their own seed money as well as years of experience that a younger entrepreneur does not have.
In fact, what Vivek discovered in this study was that entrepreneurs aged 55-64 have twice as much success as the 20-34 age group when starting a new business. The 55-64 age group also has the highest percentage of entrepreneurs among the age groups. Again, they are more likely to have money to spend on getting a business up and running. But also, with companies cutting back on management positions, there just aren’t many other job opportunities for someone in the 55-64 age range if they are let go. It would be curious to note how many of these 55-64 year old successful entrepreneurs started out of necessity as opposed to opportunity.
What are some other reasons you think entrepreneurship may be increasing and increasing successfully in this age group? Please use the comment box below to state your reasons.
Tags: age 55-64, older entrepreneurs, success, vivek wadhwa, young entrepreneurs | Posted under General Thoughts, Total Entrepreneurial Activity | No Comments
Tuesday, August 24, 2010 | Written by Erik Rostad
Posted under: International, Total Entrepreneurial Activity |
Tags: bollywood, engineering, IIT, india, india entrepreneurship, indian economy, innovation |
3 Comments
The new dean of the Harvard Business School, Indian-born Nitin Nohria, recently made this statement about Indian Engineers:
Indian companies have always had very strong engineering base, but no major global product yet identified as being developed in India.
This is actually quite astonishing when you consider that India has some of the best technical universities in the world. These IIT’s are so renown that most Indian students hope to get into an IIT over MIT.
In the past, many of these IIT graduates sought greener pastures in the United States and Western Europe. That’s where the jobs were. So the U.S.A. economy and workforce benefited greatly from these educated expats.
But recently, as the economic picture in India has been growing rapidly, many of these engineers have stayed in India to work for or start major companies. The fact that these companies, as Nitin Nohria notes, have not created a major global product may say more about the culture than the skills of the workforce.
In my own experience as a web developer, there have been times where I have relied on Indian contractors for aspects of my work. Now, I am relying on a very small base of workers here, and this could be true for particular workers in any country, but when I asked these Indian contractors to do very specific coding tasks, they excelled. When I asked them to be creative (ie. develop a logo based upon a few ideas), I could never use what they provided because it was that bad. I learned quickly that India is not the place to go for creativity.
Three years ago, I accompanied Jim Beach of The Entrepreneur School and a number of fellow students to India for a two-week trip to study entrepreneurship levels in India. The further goal was to determine if the Indian Government was helping or hurting entrepreneurship. Our conclusion was that the Government was taking some steps in the right direction, but that as a whole, the extensive bureaucratic process was taking its toll on entrepreneurial levels. We were continually told by businessmen and educators that the best thing the Indian Government could do would be to get out of the way.
In our meetings with students, educators, and businessmen, we saw a spark in the Indian people and a big desire to succeed. So, is the bureaucratic process stopping the next big thing coming from India, or is it something within the culture? Indian levels of entrepreneurial activity have been steadily decreasing over the past few years. So if it is a cultural barrier, how do you get beyond the wall?
Perhaps India is already breaking down barriers in another industry. The movie industry. Bollywood. Perhaps innovation in the entertainment industry will spark a cultural shift that will permeate other businesses and industries.
The skilled labor force is there. Venture Capital firms are present in India. The desire to succeed is strong. The missing component here is innovation and thinking outside the box.
What are your thoughts on why we have not seen a major global product developed in India? Use the comment box below to share your thoughts.
Tags: bollywood, engineering, IIT, india, india entrepreneurship, indian economy, innovation | Posted under International, Total Entrepreneurial Activity | 3 Comments
Thursday, August 19, 2010 | Written by Erik Rostad
Posted under: Government, International, Total Entrepreneurial Activity |
Tags: Africa, andrew mwenda, entrepreneurship, failure of aid money, Government, ted |
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Below is a video from the TED conference by a gentleman named Andrew Mwenda. In it, he describes the answer to Africa’s woes is not more aid, but is in releasing the entrepreneurial fervor of each nation. Job growth does not occur from more money to the government, but comes from entrepreneurs starting businesses. This is a very interesting video and one that holds relevance to the USA as well:
Tags: Africa, andrew mwenda, entrepreneurship, failure of aid money, Government, ted | Posted under Government, International, Total Entrepreneurial Activity | No Comments
Monday, August 9, 2010 | Written by Erik Rostad
Posted under: Government, International, Total Entrepreneurial Activity |
Tags: china, entrepreneurial success, entrepreneurship, guanxi, india, jugaad, start-up funding |
2 Comments
In 2007, a group of Georgia State students traveled to India to answer one central question – “Was the Indian government assisting or halting entrepreneurship?”
Our findings were that there were plenty of opportunities to start a business in India, that the bureaucratic process often hindered the speed of a start up, and that the Indian Government’s best policy would be to get out of the way.
A recent study on Entrepreneurial levels in India and China confirm these findings and added some very interesting information:
- Major motivation for Indian entrepreneurs is to be their own boss.
- Major motivation for Chinese entrepreneurs is to make more money.
- American entrepreneurs generally follow the Indian motivational factor of being their own boss.
- 23% of Chinese entrepreneurs say they are using training obtained in school to start their business.
- Only 9% of Indian entrepreneurs say the same about school.
- Family expectations were stronger in India compared to China (21% to 9%, respectively) as a motivation to start a business.
- Inspiration from entrepreneurial friends & family were cited as the reason 27% of Indians started their business and just 18% of Chinese.
- For Financing, 49% of Indians rely on start-up funding from Friends, Family, and Fools (the 3 F’s).
- Only 25% of Chinese entrepreneurs sought family funding.
- 49% of Chinese entrepreneurs obtained funds from banks.
- Only 27% of Indian entrepreneurs obtained funds from banks.
- As for the reasons for success for a new start-up, 93% of Chinese say “Guanxi” is the main reason. Guanxi is the personal relationships necessary to navigate China’s political, legal, and regulatory climate.
- 81% of Indians say “jugaad” is the reason for entrepreneurial success. Jugaad is the ability to be creative and innovative in getting around governmental regulations.
As we saw in our 2007 trip to India, entrepreneurs in India say getting around the government’s hefty bureaucracy is the is the main key to success. For the Chinese, it appears that the ability to navigate within this bureaucracy is the key to success.
What will happen as China’s middle class demands more protection and less government? How will this shift entrepreneurship in China? And what happens if India’s government truly begins to get out of the way? What successful traits will then be necessary to build a successful business in India? These are questions we will continue to monitor in the rise of India & China.
Tags: china, entrepreneurial success, entrepreneurship, guanxi, india, jugaad, start-up funding | Posted under Government, International, Total Entrepreneurial Activity | 2 Comments
Wednesday, June 2, 2010 | Written by Erik Rostad
Posted under: Bootstrapping, General Thoughts, Total Entrepreneurial Activity |
Tags: kaufmann foundation, opportunity vs necessity entrepreneurship, robert reich, self-employment |
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Robert Reich makes an interesting distinction in his op-ed in this morning’s NY Times. He asks if we are seeing a rise in entrepreneurship or a rise in self-employment. The question really comes down to whether or not we are seeing a rise in Opportunity or Necessity entrepreneurship. Typically, in wealthy countries, the majority of entrepreneurs start a business because of opportunity. The opposite is true in poor countries. Someone needs to start a business.
Mr. Reich references the Kaufmann Foundation’s recent numbers showing a sizable increase in USA entrepreneurial activity. The report states that 2009 had the highest number of business start-ups in 14 years.
The interesting data here is that the rise is contained within specific age groups. The 35-44 year-old’s have the highest percentage of new startups while the 55-64 year-old’s come in second.
If it is true that the majority of new entrepreneurs are on the Necessity side rather than the Opportunity side, this has enormous financial implications. Generally, Opportunity entrepreneurs have their own start-up capital in which to get their business up and running. Necessity entrepreneurs on the other hand don’t have the start-up capital and therefore must bootstrap their business. Bootstrapping is the art of keeping costs down to the bare minimum by selling right away and reinvesting funds into the business. Many entrepreneurs, opportunity or necessity, feel the need to have everything in place before making their first sale.
The professors of The Entrepreneur School believe that bootstrapping is the best solution for both Opportunity & Necessity entrepreneurs. By funding the business internally as much as possible, entrepreneurs maintain more ownership in their company and maintain more control.
Monday, April 5, 2010 | Written by Jim Beach
Posted under: Total Entrepreneurial Activity |
Tags: new job creation |
2 Comments
According to Robert Litan, director of research at the Kauffman Foundation, which studies and promotes entrepreneurship in America, “Between 1980 and 2005, virtually all net new jobs created in the U.S. were created by firms that were 5 years old or less. That is about 40 million jobs. That means the established firms created no new net jobs during that period.”
America needs to create a lot of new companies — NOW.
What has your government official done to help you start a business?
Tags: new job creation | Posted under Total Entrepreneurial Activity | 2 Comments
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 |
No Comments
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 |
1 Comment
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 |
1 Comment
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
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