MBAs: Time to Look in the Entrepreneurial Mirror

While its normal for people to run to MBA programs (WSJ) during downturns (take cover for two years, increase knowledge, network, then get to interview with lots of companies in diverse positions and industries), what about the folks who are graduating this winter and next spring? Recruiting is bound to be tough as the dynamics for Wall Street and Corporate America have changed dramatically.

CBS Marketwatch has a piece by Whitney Jackson. From the article:

Turmoil in the stock market and decreased opportunities at big banks directly affect a lot of classic M.B.A. career paths, according to Steven Goodwin, an independent Washington-based education and career-strategy specialist.
He said he’s received a surge of phone calls from nervous workers who obtained degrees over the past few years. Many of these former students are forced to broaden their job search and lower their standards, a move labor economists say trickles down and strikes people at the lowest rung of the ladder.
In general, students who settle for a lower position during an economic downturn rarely make up the financial differences in the long term, according to Lisa Kahn, a Yale University economist who studies the intersection of employer practices and external labor market factors. M.B.A.s are a unique subset of these students because most of them worked for several years before going back to school.
While it’s too soon to tell how many people’s career hopes have been dampened by the Wall Street crisis, it’s likely that many M.B.A.s who wanted to work in the financial sector took jobs elsewhere — or don’t have a job at all. These individuals will have a lower financial trajectory over the course of their lifetimes, Kahn said.
I find the above comments scary and makes it clear to me that entrepreneurial actions are a necessity. If the state of the economy around the time of graduation is the main determinant of career earnings for those who enter the labor market upon graduation — then DO NOT enter the labor market. BECOME AN ENTREPRENEUR. Take control of your own financial trajectory. You won’t show up on the payroll data that Kahn uses when she does her research.
The path may seem more difficult — creating something out of nothing vs. taking a second choice job that pays the bills in the short term, but it will pay off in the long term.
So stop worrying about making your resume ‘standout’ to land those interviews you never would have considered 2 years ago and go start something. Check out Tim Berry’s new Plan-As-You-Go Business Planning Book. Good luck!

More Cool (and free) Marketing Stuff

Found this via Tim Berry; Small Business Trends blogger Anita Campbell has compiled a list of 100 Marketing Secrets. I appears she called for submissions and this is the output. Its available in a 33 page pdf. Yes, its free. From her site,

A big THANK YOU, dear readers, for the outstanding marketing tips you contributed to the Best Kept Marketing Secrets roundup.

As promised, we took 100 submissions and turned them into a downloadable PDF document.

It’s 33 pages of tips for marketing, including relationship marketing, marketing strategy, selling, messaging, online marketing and social media. 

It’s all been packaged up tidily into a document for you to save, give to clients, print, post on your website — use it however you wish.  It is free of charge, of course.

Looking forward to seeing whats in there, but I am excited by the use of Campbell’s site to aggregate knowledge, edit/clean it a bit, and then distribute it back out. (not to mention picking up sponsorship by HP)

Tim Berry on Which Business to Start

Tim Berry has an interesting post on deciding what business to start. There is even a nice, short video (worth watching) on in which he is interviewed on this question of choosing a business. Below is a snippet from the post on how to decide on a business:

Look in the mirror. A good business to start is the one that matches who you are, what you know how to do, what you like to do and the resources you have.

It’s not like there are good businesses or bad business. There are businesses that….

1) You can do;

2) You want to do; and

3) Where somebody wants what you’re selling.

Those things come together in what’s the good business for you.

As far as the new business I am in the process of launching, I can answer Yes emphatically to the first two points (can do and want to do); the third is unclear because I am going into an industry open to innovation (consumer internet) and won’t really know until I get out there. I believe my products and services will fill needs and will likely have to tweak and change things as feed back comes in.

It is that challenge; that I have to go out and sell it and prove that this consumer business that I want to build (point two above) At the end of the day, is the core job of a majority of entrepreneurs. Going out and getting sales. And more sales. And then repeat sales.

More Business Plan Angst

Last week this blog discussed the changing nature of business plans (a la Tim Berry) and whether business plan competitions truly teach the students anything about really using the business plan as a tool.

Belmont Prof and blogger Jeff Cornwall investigates focus on business plans in a great post/reaction to BusinessWeek’s recent entrepreneurship special issue. I had not even seen the issue, but judging from Cornwall’s write up, I may not have missed much. From Cornwall’s post,

It is as if we are telling aspiring entrepreneurs that once they unlock the secrets of the business plan, the world of entrepreneurial wealth will come pouring out at them.

Sorry, but this is just not true.

On the other hand, there is now a debate raging as to whether we should even teach entrepreneurs about business plans. a growing number of experts now fundamentally question whether business plans even matter. It seems that some data suggests that business plans have no impact on the overall success of entrepreneurial ventures.

All of this — and I mean both sides of this debate — is missing the point.

Are business plans all you need to know to unlock the door to success? Of course not.

Is writing a business plan a complete waste of time? Also, not true.

So why do we teach about business plans? It is because they are a way to help organize what can be a complex and overwhelming array of issues. It is because it forces us to integrate our marketing plans, or operating plans and our financial plans into one, coherent story. It is because we need to put it all down on paper to make sure that we have thought of all of the important stuff that goes into a successful start-up. It is because business plans have become the standard for communicating about a business to those with money.

I have come to believe that unless you are really going out to raise serious funds from institutional/professional new venture investors, a formal business plan is unnecessary. Which underscores Cornwall’s questions on why so much focus is placed on writing business plans?

Interview with Tim Berry

Found a nice interview with Tim Berry at his blog. Last week I recommended his article/book on planning as you go. Well, here is the audio version in the form of a podcast by SmallBizPod. (btw, he did this interview/podcast in London at a ‘rather nice’ Bloomsbury Hotel — about a block from where I lived when I attended the University of London’s School of Oriental & African Studies. Very cool urban campus environment)

Again, Tim is focused on the ‘living document’ with built in check ins and metrics. Also – always pay attention to cash flow. Great little analogy of a map vs navigating.

Its interesting to hear about Tim’s background/career development as a journalist turned MBA turned software entrepreneur/writer/blogger.

Tim Berry and the Evolution of Business Planning

I spent much of the holidays frantically trying to launch a business (incorporating, calling web contractors, graphic designers, networking, dealing with the funding issue, etc.) and also putting together a business plan — for internal use and also for communicating what I am doing (via a 2 page exec summary) to potential partners, vendors, etc. The plan currently exists as 9 word docs (everything from exec summary and mission to industry analysis and competitive landscape ) in varying degrees of development.

Today I stopped by Tim Berry’s blog for a little encouragement. I found it in a big way. Tim has a new post on the Plan-As-You Go Business Plan. Which, as I read the entry and learned more about it, is exactly what I am doing.

Tim is working on a book about this ‘new conception’ of the business plan and I am looking forward to it. Here are just a few highlights from his post.

1. It’s a process, not just a plan. Every PAYG plan has a review schedule built in, from the beginning. It sets the dates and participants in the future review meetings, taking 60-90 minutes once a month and 2-3 hours once per quarter. and PAYG planning is about process: not just the plan, but the regular review and management of the plan.

2. Form follows function. The PAYG plan is not necessarily the same kind of formal business plan document you did in business school or read about all over. It doesn’t necessarily follow a recipe. Every PAYG plan is unique. It might generate a formal document at some point, or over and over again actually at different points in company history, but until you need the formal plan document to show somebody it lives on your computer. You pull from the plan to make a pitch presentation or elevator speech or summary memo or full detailed business plan document, as required for business purpose. It’s the source of all of these, the key thinking including strategy and metrics and dates and deadlines, without having a specifically defined form.

The post is really worth the read and I am sure the book is going to be great. It also makes one wonder a bit about the value of business plan competitions which demand static plans created for judges rather than a living, evolving tool of entrepreneurship that is the ‘plan as you go business plan’?

Basic Rules for Valuation from Tim Berry

Not sure how many of you are planning on raising money from investors, but Tim Berry offers 10 basic rules for valuation. It may seem simple, but definitely worth a look. Here is #7:

Analysts often apply formulas. The most common formula is called “times profits” because it multiplies profits times some number. Another common formula is “times sales.” Companies might be worth two times sales or 10 times profits. There’s also book value, which is assets less liabilities. And there’s the estimated sale value of assets.