Apr 062014
 
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Baby Boomer Entrepreneurs

What Boomer Businesses Have Going for Them

By Lynne Strang

John Olson was 40 years old when he founded Graystone Industries, a Georgia-based pond and fountain supplies business. Today, Olson’s company is among the leaders in its industry. But what if he had started it ten years earlier?

“It would not have been successful,” he says. “I could not have run a company as a younger man.”

Olson isn’t the only 40-and-older business owner who feels this way. Between 2011 and 2013, I interviewed dozens of late-blooming entrepreneurs to write a book about the success principles they used to start and operate their businesses. Most said they could not have started a business in their 20s or 30s — or if they had, it wouldn’t have turned out as well.

That revelation is noteworthy for those who dream of owning a business but wonder if they’re “too old.” If you count yourself in this group, you can stop wondering. For some people, a later start may increase the odds for entrepreneurial success because it allows time to develop certain characteristics and assets. Among them:

A bigger and better network. In entrepreneurship, the “It’s not what you know, it’s who you know” adage matters. The longer you’re around, the more people you know – and the more likely it is that you’ll have the connections needed to open doors, obtain technical advice, market products or services and find the right help.

A stronger financial position. A later start can provide an opportunity for entrepreneurs to accumulate personal savings — the most significant source of funding for startups, found a 2009 survey of entrepreneurial company founders funded by the Ewing Marion Kauffman Foundation. And while banks usually don’t lend to a first-time entrepreneur, an older one may have a chance. That’s because he or she has had time to build financial assets, establish a credit history and cultivate relationships with lenders.  

A commitment to customer service. Many 40-and-older entrepreneurs are passionate about great service for customers because they’ve been one for so long. They understand the frustrations of long waits, unanswered phones, unreliable quality and indifferent salespeople. As entrepreneurs, they tend to be patient when resolving service issues and practice the Golden Rule. This wins customers’ loyalty and keeps them returning for more.   

More resilience. Older entrepreneurs have lived through peaks and valleys – an inevitable part of starting and operating a company. For younger business owners who haven’t endured as many life events, lean times and dips in business may cause more angst. When you’ve weathered a lot of storms, you know the sun will emerge again eventually.

A grip on reality. People who start businesses after age 40 tend to be more practical about timelines, resources and expectations, which helps them set attainable goals. Among those who concur with this idea is Ken Yancey of SCORE, a nonprofit that provides free support for aspiring and new business owners. At a recent Senate hearing, Yancey pointed out that “encore entrepreneurs” have sensible financial expectations and are “realistic in their scope and projections.” 

Self-knowledge. Older entrepreneurs know who they are and what matters to them. With this self-awareness, they can build profitable businesses that also reflect their core values and provide personal gratification. Julie Savitt, owner of Chicago-based AMS Earth Movers, is a prime example. “It took the first 40 years of experiences to identify the strengths and weaknesses that define who I am today,” she said.

Not every boomer who wants to start a business is cut out for it, of course. If you haven’t followed through on your entrepreneurial idea, it’s critical to evaluate why. Inaction may indicate habitual procrastination, a lack of commitment or motivation, poor time management skills, inadequate resources or an inability to focus. Each of these could doom a company before it gets off the ground.

On the other hand, an unborn business could be the result of a timing issue. For a variety of reasons, such as young children who needed full-time care or a spouse’s demanding career, the earlier years may not have been conducive for a startup. In addition, student loans, car payments and/or other typical bills for younger families may have required a steady income and made it difficult to set aside seed money. The passage of time can remove or ease these obstacles, clearing the way for a successful business undertaking.

The bottom line? If you possess the drive – as well as a viable business idea and sound financial footing – an ideal time to act is when you have gray hair. The second half of life brings wisdom and other benefits that weren’t available earlier. By applying this life experience to your business, you just might take it to another level

Lynne Strang is a writer and communications consultant based in Northern Virginia. She is the author of “Late-Blooming Entrepreneurs: Eight Principles for Starting a Business After Age 40.” Her email address is lbstrang@gmail.com..

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Nov 142012
 
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Should I Start A Business?  Probably Not.

Some people ask themselves this question quite often:  Should I start a business?  For most people, in my opinion and experience, the answer is,  “Probably not, at least not yet”.

The fact is that many startups have little chance of success from the outset.  They are ill conceived and often based solely on the entrepreneur’s desire to have their own business.  That is, they are not created to address a market need that the entrepreneur has identified; they are created in more of a hopeful, “if you build it, they will come” kind of way.

I’m not saying that such businesses can’t succeed, just as I’m not saying that people don’t win the lottery; they do, but the odds definitely are not in favor of such an outcome.

Many of the most successful entrepreneurs I know will not consider starting a business until someone comes to them and tells them that they have a need that is not being adequately served by the marketplace.  Since most of these entrepreneurs are not really passive types, they don’t sit around waiting for people to come to them with this news.  Rather, they constantly have feelers out for where businesses and consumers are experiencing frustration.

Successful entrepreneurs then sift through those frustrations to identify which ones are true business opportunities – the ones where customers are willing to pay sufficient sums of money to solve their problems.  Sufficient, in this case, is defined as “enough to make selling the product or service profitable to a level that it is worth making the investment and taking the risk to start and run the business”.

How many businesses do you know of that were started in this manner?  How many businesses have you started this way?  Again, I’m not saying you can’t be successful by just starting up and “course-correcting” along the way.  I’m just saying that you can do yourself a favor and increase your odds of success by identifying potentially profitable products and services before you invest the (serious) time, effort and many times, capital, necessary to get a business off the ground.

Understand, too, that it is not as though you are going to have a monopoly on the solution to a particular problem or frustration that the market is facing.  If you do, congratulations, but that would be highly unusual.  In most cases, once a particular business comes up on the radar as a decent profit opportunity, a lot of new entrants will come onto the scene.  At that time, in most cases, you can expect competition to increase significantly, which usually means there will be pressure on prices and profit margins.  That’s one of the reasons that it’s so important that the margins you expect at the beginning of the venture be very healthy; that way, they can take a hit and you can still have an attractive business.  Ideally, you should be looking for initial gross margins in excess of 60%.  Such businesses are not easy to find, but they’re out there.

Do yourself a favor and don’t put yourself behind the eight ball from the get-go by selecting a business that has weak margins from the outset, or worse yet, by selecting a business that has weak margins and does not address an identified market frustration / opportunity.  Entrepreneurship can be challenging in its own right, so don’t make it more challenging, or even impossible to succeed, by selecting a “dog” from the start.

I look forward to your thoughts!  Please leave a comment (“response”) below or in the upper right corner of this post.

Paul Morin

paul@companyfounder.com

www.companyfounder.com

 

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Aug 122011
 
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Entrepreneur:  Follow Your Heart. Analysis Is Overrated.

As an entrepreneur, you must follow your heart.  Analysis is important, but it is overrated.

For those of you who are big into analysis and are going to get upset hearing it referred to as secondary to anything, let me explain.  This is kind of like me making an Irish joke – it’s OK, because I’m Irish.  Similarly with analysis, I can move it down the priority list a bit and recommend to others that they do so as well, given that analysis has been a major part of my career, particularly in the early stages.

This may further placate the “quant jocks” and analysis devotees who may otherwise be offended:  in no way am I saying that you should not do analysis when you are considering which business to pursue!  To the contrary, I still think it is very important to develop as strong and accurate as possible an analytical understanding of the business ideas and opportunities you are considering.  What I am saying though, is that the analytical part of the process should come second, not first.  Choose your potential ideas and opportunities first on what your heart says, then bring your mind into the picture to determine whether there may be “gold in them there hills”.

So, if you’re going to follow your heart, you have a few questions to answer.  First, what is it in life that really excites you and gets you “fired up”?  Make yourself a list.  Brainstorm.  There are no bad ideas when you’re brainstorming.  Make the list with your heart, and then you can come back and use your mind to analyze it later.

Next, if you’ve been wanting to start a business for a while, but just haven’t “gotten around to it,” ask yourself why.  What is it that’s holding you back?  Is it fear of the unknown?  Is it a lack of confidence in your ability to make the business successful?  Is it more generally a concern that you’ll “fail” and that will be embarrassing for you?  Is it simply that you have not come up with an idea that you think represents a true opportunity?  Business idea screening can be complicated if you don’t have a background in that area.  Seek help, or use a business idea screening tool to help you work through it.

If lack of time has been your excuse for not starting a business that you’ve been thinking about for a long time, ask yourself this question:  when do I expect to have more free time?  If you are like most people, the answer will be “never”.  The only way to have the time to start a business, or do anything outside the norm of your everyday schedule, is to make that time.  No one will make it happen for you.  You have to do it.  It will require a great deal of discipline and dedication, but if you are following your heart and pursuing a dream, you will find sources of extra energy that you never knew existed.  Do yourself a favor and answer this question:  What small step can I take right now that will get me moving on the way to my dreams?  It doesn’t have to be a big step, just take a step and get the ball rolling.

Ok, so now that you’ve gotten the ball rolling and you’ve decided to follow your heart and your dreams, back to that annoying analytical stuff.  Although you will be following your heart first, you’d do yourself a disservice if you didn’t make sure you took all the proper steps to ensure that your business idea is not doomed from the start.  When I say doomed, I’m talking about from a profitability perspective.  If it never looks like it can make you “real money,” it may be OK as a hobby or a charitable pursuit, but don’t kid yourself into thinking that it’s going to put food on the table for you and your family.  In order to get yourself and your business ideas grounded in reality, you’ll want to make sure that you understand how to do a simple break-even analysis, how to calculate and understand profitability and the Income Statement, and once again, how to differentiate between ideas and opportunities.  There’s a lot more analysis and “left brain” stuff you can and should do to plan your business and increase its likelihood of success, but the few exercises I just mentioned are the minimum – those you MUST understand and do.

You must first follow your heart, then use your mind and intelligence to determine which of your “heartfelt ideas” make sense as a business.  What sense does it make to have a potentially very profitable business that you’re going to hate?  Well, it makes about as much as sense as having a very unprofitable business that you love!  There must be a balance.

I look forward to your thoughts and comments!

Paul Morin

paul@CompanyFounder.com

www.CompanyFounder.com.

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Jul 242011
 
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How To Start A Business

Even though these days I often deal with entrepreneurs and senior-level managers who are much further along in their entrepreneurial careers, I still frequently get asked how to start a business.  Amazingly it’s often these further along and usually successful entrepreneurs or larger corporations who are asking me how to start a business correctly!  How can this be?!  Didn’t I just get done saying that they’re experienced and usually quite successful already?

As it turns out, many folks who have been in entrepreneurship their whole lives and have attained some significant success have never really thought through how to start a business.  Instead, they have subscribed to the “just do it” mentality.  In my experience, while this approach can frequently lead to success, it a can much more often lead to failure.  Granted, in any large group of people just “throwing it against the wall and seeing if it sticks,” there will be successes, some of them notable.  That said, just because there some successes with that approach doesn’t mean it is the way to go.

In my experience and observation, the best answer to “how to start a business” is carefully and deliberately, but with a great deal of confidence and belief.  Just because you take a meticulous, well-thought-out approach does not mean that you’re not an entrepreneur!  In fact, the best entrepreneurs do just that.  They take a measured, deliberate approach to assessing and starting up each business they get into.  They are willing to take risks, but they greatly prefer to take calculated risks and they are willing to constantly update their approach based on the ongoing feedback they receive from their target market(s).

These days, when I’m asked how to start a business, I provide the following steps.  While it is not intended to be an exhaustive list of what needs to be done, and the order of the steps may change slightly depending on the particular situation, I have used and seen this approach used successfully many times.  As one of my mentors told me early in my career, “you want have a powerful plan that can change”.  You must be willing to adapt to changing circumstances and feedback.  You must not be rigid in your behavior.  You must believe that you can succeed, but you must be flexible.

Here are the “how to start a business” steps.  Posts elsewhere on this blog go into greater detail on most, if not all of the steps.

1.)    Understand profitability and break-even analysis — too many people go into business not understanding these basic concepts.

2.)    Understand upside goals and potential — what kind of business are you trying to create? Does the business you are starting right now match your objectives?

3.)    Screen and sort your ideas/opportunities using criteria that make sense.

4.)    Understand the psychology of markets and niches.

5.)    Develop products and/or services that meet a true market need.

6.)    Understand and select appropriate marketing strategies.

7.)    Deploy appropriate marketing tactics.

8.)    Create a full, formal business plan.

9.)    Strive for operational excellence.

10.)  Replace yourself/sell your “baby”.

It should also be noted that you may choose to raise capital at any point along this process.  However, I would suggest that you should not seek to raise capital from angel investors or venture capitalists until you’ve at least reached Step 5, where you are developing products or services based on a true market need.  Depending on how well you know the angel investors and/or venture capitalists, and depending on how much capital you are seeking to raise, you will also likely need to have a formal business plan completed before it makes sense to approach them.  As discussed elsewhere, angel investment and venture capital don’t make sense for a large percentage of start-ups, so before investing a great deal of time in approaching them, be sure you have a business with characteristics that make sense for that type of equity investor.

I look forward to your questions and comments.

Paul Morin

paul@CompanyFounder.com

www.CompanyFounder.com.

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