Learning From Other Business Owners

There are two important ways we learn.

The first is the formal process of learning. This includes formal education but also the workshops, reading, and the self-improvement courses we take and do.

The second means is the informal process and it is key in our lifelong learning. Let me give you an example.

I have a 9-month old grandson. He learns every day but not through the formal methods. He learns by observation, watching and listening to the world around him. He knows that eating must involve a spoon so, when eating, he wants a spoon in his hand even though he doesn’t use it. Also what he eats is depend on what he sees others eating.

Much of our learning comes from listening, sharing and observing others. We often refer to this as “real-world” experience.

The examples of my grandson is learning through real-world experience. And that learning happens when we connect with our peers and reference groups.

But does informal learning work? Can it be trusted?

According to research, yes it can. Effectiveness depends on two factors among several others. First, finding a person you follow over time who is often typically correct. The second way, one we more commonly employ, is to listen to lots of people on a single issue. If we then average the answers, the result is often quite accurate. This latter method, when tested in the intelligence community has been found to be better than the expert opinion more than 30% of the time.

So why bring this up?

Friday starts a new opportunity for learning. The Power of Business Friday 15, a 15 minute conversation, helps you network with other business owners on a variety of questions.

Chats will be held the first Friday of every month at 12:15 ET, 11:15 CT, 10:15 MT, and 9:15 PT. THE COST IS FREE!!!

To register, go to: http://go.unl.edu/Friday15registration. You will receive an email acknowledgement with information on how to get to the session and about existing and future Power of Business opportunities.

Take 15 minutes to improve your business. Join us online at Friday 15!

Power of Business - First Friday Live Chat

First Friday – Live Chat

Valentine’s Day – Thinking of . . . . Business??

Valentine heart

Photo (CC) by moonlightbulb, on Flickr

Just before Valentine’s Day for the past 10 years or so, my phone will ring a few times with a reporter on the other end wanting to discuss couples and being in business together (probably not how you expected that sentence to end).

Copreneurs, or couples in business together, seem to be a fascinating topic this time of the year. Most writers are interested in knowing if there are more or fewer couples operating a business together? Another popular question is why do they do it? And the third most common question is does it make for a stronger business?

Considering the copreneurial couple is not a new topic. Two authors, Barnett and Barnett, in 1988, coined the term copreneurs. The first chapter of their book, Working Together, sets the basic assumption for why they do it. The title of the chapter is “An End to Separate Lives and Separate Agendas.” The idea of working together is considered utopian with both spouses spending time together at work and at home.

My colleague, Dr. Margaret Fitzgerald, and I have been exploring this unique business structure for over a dozen years. In our work, copreneurs made up about 1/3 of all family businesses. That may mean 1.5 to 3 million family businesses or more are owned by such couples. Yet anytime such claims are made, you need to consider the definitions being used. One common means of defining copreneurs is by ownership. Such data is more common than what we used and is often considered an appropriate proxy. Yet ownership does not define involvement in the business which we considered important. Our definition asked if the spouse was a major decision maker. Both individuals also had to be working in the business.

But is it utopia? That question is much harder to answer. In our study, copreneurs made less income but were nearly as satisfied with the success of their business as were other family business owners. This may have come from the fact that copreners feel more strongly that the business is a way of life and not just a way to earn income. Income is less of a driving force as being able to achieve a blended relationship both at work and at home. This question really depends on how the couple choses to define success.

Being a copreneurial business has it difficulties though. Some couples express reservations about whether or not they could make this type of ownership work. Those that try it discuss issues such as role clarification and the need to capitalize on the skills of each person as being important. Most people approach me with a traditional structure in mind with the husband as the business owner and the wife working in the business. Yet we find that situation is often reversed, again based on skills and who holds the strongest passion for the business.

Is running a copreneurial business a good option? It may or it may not be. The couple, not those of us on the outside, must measure the positives and negatives in doing so. And just like not all relationships remain together, not all copreneurial couples remain in business together. The personal relationship continues but the business one does not. And the reasons why such businesses start and stop remain hazy. We know business income has some influence as does the personal relationship remaining intact. Additional understanding of such business relationships requires more evaluation.

So for you copreneurs, enjoy this Valentine’s Day as you greet the customers, tend the till and stock the shelves. To everyone else, you only have candy, flowers, dinner and cards to get you through.

I Want My Own Business But…..

Walt Disney quote

Photo (CC) by Celestine Chua, on Flickr

Having your own business is a dream held by many. And although many people do indeed start a business, there are lots who still wish it could happen.

The reasons for not starting a business are many. One of the more common reasons is the belief that you don’t have the right skills or traits. That is simply a myth. Most of what you need to run a successful business are things you can learn or find a way to overcome. Some of the skills you may not like to do but, again, you learn what you can and then do the best job. It does get easier. It may mean finding a partner who brings those skills to the table.

The idea of learning brings up another reason for not trying – the fear of failure. Everyone fails and some of us, such as myself, make it a regular habit. Failure means you are trying. Failure brings with it opportunity for growth. Failure is a learning experience. Yes it can cost time and money but those should not stop you from trying something you really, really want to do.

Not moving when you really, really wanting something is might be hesitation or feeling the time isn’t right. If you are thinking along those lines, you may want to step back for a time before you take the plunge. However when stepping back remember you are not giving up. Starting a successful business is a timing issue. Is it the right time in the market and is it the right time for you?

Sometimes the hesitation comes from not knowing where the money will come from. Many companies start for less than $1000 and entrepreneurs are often great at bootstrapping or finding the resources they need through creative techniques.

So, there is no special set of skills or traits that you need. Go into the endeavor knowing that failure is a distinct option but know that it also is learning. You will be much smarter the next time (and the odds are there will be a next time). Money – well there is typically no free money and you need to be prepared to put some of your own funds in the business. But you also just need to think of ways to stretch your dollar. Barter, trade, find no cost marketing opportunities, etc. All are possible.

Bottom line – If you want to start a business you can.

It’s the Questions You Don’t Even Think About

Oil well site (CC) Glenn Muske

Oil well site (CC) Glenn Muske

Everyone who has considered starting or has started a business has probably received this piece of advice, you need to do your research and planning. This means finding the data that may influence the potential success of the business and then planning on how you will overcome that challenge.

Often times aspiring owners also find a somewhat standardized list of the information they need to gather such as market size, income levels, potential competitors and availability of suppliers.

What you won’t find on the lists, though, and you really can’t because each situation is different, are questions about the unusual factors that must also be considered (I suspect that every area has one and probably more unique items).

Currently in my role with the North Dakota Extension Service, I regularly get questions about starting a business in western North Dakota. Now if you have watched or listened to the news during the last couple of years, you probably know we are experiencing an oil boom. Many of the people contacting me are interested in how they can get involved in the boom. They have a business idea and are now trying to make the idea a reality. In general, their questions focus on the standard questions.

When I get the standard list of questions, however, I suspect that the aspiring owner has not taken the time to do a little more research or homework into some of the most important questions – those not asked.

When talking with a potential business owner looking to come into the western ND oil patch, other questions they need to consider include:
– where am I going to live and what will it cost?
– can I find a space to locate my business and what will it cost?
– if I need help, can I find it and what will it cost?
– if I am bringing a family, can we find daycare or what is the school situation like?

Those are questions I add to their list. Yet every area will have a set of unique issues that owners need to be aware of and take into account when planning. Many of these issues can be found with research – the Internet is a great tool for this. It may be development plans or zoning issues that may impact a community or a major employer who is growing or downsizing or new competitors who have announced their intentions. In a rural ag-dependent community, it may be commodity prices or what the weather has been.

The bottom line for the aspiring business owner is to do your research and then dig a little deeper. Consider what questions “you should have asked.” One place to get that information is with talking to other business owners.

What Drives Entrepreneurship?

Bowden GroceryThis is a question often asked regarding how entrepreneurs get started. Does something push them to that end or are they pulled into it?

Over the years the general agreement has been that both represent entrepreneurial paths and there is nothing to suggest that either way is more or less likely to result in a successful entrepreneurial business, if success is measured by remaining in business and making a profit.

Last week I had the opportunity to spend some time in Detroit, MI. During my time there I met several entrepreneurs. You know the struggles of Detroit during the last several years. In most cases, the struggle for the entrepreneur represented the push needed to start their own business – they lost their jobs. While I am sure that was devastating, today they are running successful businesses that remain in existence. The entrepreneurs talk about how after a hard beginning they are slowly growing. Several have added employees. The businesses have allowed them to provide support for their families.

One entrepreneur started out driving a taxi. He now has a fleet of five vehicles meaning his business has developed new jobs. A few of the other business owners also indicated that they have hired one or more employees. This supports the recent Kauffman report that again found, after several years, new small businesses are beginning to be the leading source of new jobs. The taxi driver indicated that his road to success had not been easy and he sees challenges ahead. It was, he said, a difficult transition after working over 20 years for the automotive industry. But he was upbeat and saw opportunity in the future.

I found the conversations offered new perspectives and understanding.

When you are in conversation with new entrepreneurs ask why they decided to “take the plunge.” Share their response along with their outlook for the future. The readers of this blog would be interested in hearing their stories.

Business Modeling Before Business Planning

Guest Blogger: Marilyn Schlake, Extension Educator, University of Nebraska-Lincoln

Every business has a model that they use to generate revenue. According to Alex Osterwalder, founder of the Business Model Canvas, a model is simply how a company creates value for itself while delivering products or services for customers.

Traditionally, when a founder had a business idea, they were first told, write a business plan, get it all down on paper, make sure you do your research, and dot the I’s and cross the T’s! After much time and effort, the founder had one model that maybe, just maybe fits the market. It’s a build it and they will come (or at least you hope they will come) type of process.

But what if the model is not the most profitable or not even viable? Some researchers support the idea that business failures are often a result of the wrong model driving the business.

Business modeling is rapidly gaining popularity as a pre-curser to the rigorous work associated with writing a business plan. Business modeling uses the key components of a business plan in a visually-oriented canvas that focuses founders on the needs of the customer and the value the business will bring to the market. Ideas are quickly generated about customer archetypes, value propositions, revenue streams, channels, resources and other essential segments of the business model. At best, the early canvas iterations are hunches that beg for more information and facts.

The business modeling mantra, “Get of the building and ask!” forces the founders to discover the true needs of the market by talking to targeted customers, understanding their needs, problems and learning how best to solve them. Through the process, multiple models are generated and evaluated. With each canvas iteration founders get closer to the optimal model that will create the most profitable business.

No, business modeling is not glamorous, it is another tool that can make a difference to the long-term viability of the business.

Sources: Alexander Osterwalder & Yves Pigneur (2009), Business Model Generation. Steve Blank & Bob Dorf (2012), The Start-up Owner’s Manual: The Step-by-Step Guide for Building a Great Company.