Without question, entrepreneurship is the hottest thing going today. Rarely will you pick up a paper or magazine that does not either feature a fabulously successful entrepreneur or talk about some of the literally hundreds of programs or courses being offered to help you become that entrepreneur.
But, what is it really? In part the interest is a reaction to today’s younger generation – 75 percent of high school seniors do not want to work for a large organization. This is a reaction to the re-engineering of American business that has taken place during the past 20 years. These young people have seen the impact on their immediate families and they want to do something that will afford them more control of their lives.
Educational institutions, ever mindful of changing demographics, have jumped on the band wagon. The Internet revolution and the many successful IPOs of Web-based entrepreneurial firms have heightened the visibility of entrepreneurship. There is an increasing interest in entrepreneurship among the general population, but particularly among younger adults. As a result, colleges with formal Entrepreneurship centers have grown from a handful in 1990 to more than 200 today.
Smart Business spoke with Mark Hauserman, director of The Muldoon Center for Entrepreneurship, about common myths about entrepreneurship and what traits are common in successful entrepreneurs.
Are entrepreneurs necessarily young men and women?
You may be surprised to learn that a recent Kauffman Foundation research study revealed that the average age of the founders of technology companies in the U.S. is a surprisingly high 39 — with twice as many over age 50 as under age 25. With the average life span increasing and more ‘necessity entrepreneurs,’ those who start businesses because of the scarcity of job availability at existing companies, being created every day, this number will probably increase.
When you gain experience, you probably know a lot about a lot of things. If youth is the answer, why are so many venture capitalists over 50? And most of the better ones are over 60. Don’t short change your experience. Investors get a lot more comfortable if they know you have been around the block a couple of times.
How is entrepreneurship learned?
The best start for an entrepreneur is to gain experience. This often means working for a company that may not have the biggest buildings on the block, but has an entrepreneurial attitude and will challenge you to spread your wings and continually take on new tasks.
While all jobs consist of ‘things you must do,’ the better businesses are also continually looking for better ways to serve their customers and markets. Every business owner responds to ideas that will make the company more money. You may not think you are an important cog, but the owner will sit up and take notice when you offer better solutions to the existing business strategy.
Don’t be afraid to make mistakes. I have heard Edward Crawford, Chairman of Park Ohio and self-made entrepreneur, say that the common denominator in entrepreneurship is failure. Not every idea you have will be a winner, but people will respect you if you get up after being knocked down and get back in the game.
The younger entrepreneurs get it. A healthy 44 percent of young entrepreneurs feel that business failure is perceived as a learning opportunity.
How will you know when you have arrived?
In most cases, there was no ‘grand plan.’ The entrepreneur just started working and as they solved more and more problems, work became fun. The classic sign of an entrepreneur is they cannot let it go. Unlike the idea in the popular culture that they are looking for the big score, they love what they do.
I played golf with a guy a couple of years ago who had just been offered $8 million in cash for his company. I am afraid I jinxed the deal when I asked him what he was going to do in a month after a long vacation and a shopping spree; no answer and ultimately no deal. He was only 42 at the time, so he will eventually sell, but it was way early and he was having too much fun.
Mark Hauserman is director of The Muldoon Center for Entrepreneurship. Reach him at (216) 397-4572 or firstname.lastname@example.org.
To learn more about the Muldoon Center and our programs, visit: www.jcu.edu/Muldoon.
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For executives interested in branching out and starting their own business, the UCLA Anderson School of Management offers entrepreneurship courses designed to help them better understand what it takes to make that happen.
“Executives who enter the course have ideas they want to explore either related to their job or not. The course helps them think through the process of whether or not they should give up their job, incur the opportunity costs and strike out on their own,” says George Abe, lecturer and faculty director for the Strategic Management Research (SMR) Program at the UCLA Anderson School of Management.
As they work through the courses, students can begin to better answer questions such as: How do I raise investment capital? What’s the difference between an angel and a venture capitalist? Should I seek outside financing at all? I have an idea, how do I know it’s a good idea?
“They enter school with these questions and we try to be pretty direct on how to answer them. So the way entrepreneurship courses help them is to answer these questions. We do this by having them work through deals and providing examples of best and worst practices,” Abe says.
Smart Business spoke with Abe about how entrepreneurship courses can help prepare executives to start their own companies.
What do the school’s entrepreneurship courses cover?
The school has tried to establish a brand of entrepreneurial education. Faculty thinks entrepreneurship can be taught, at least aspects of it. So the courses are heavy on jargon — the newspapers are full of business jargon and students really want to know what’s going on — how deals are done; how to look at feasibility; and learn about early stage legal formation, financing, venture capital and angel financing. That takes about 10 weeks of study and is the first entrepreneurship class. In that class they’re asked to come up with some kind of business idea they think would be worth pursuing.
Then they take another class called Business Plan Development in which they take the idea they’ve thought about in the first course and write a business plan. The first course is primarily analytic — mainly to analyze markets, themselves, products and make a determination as to whether a company idea is feasible. Once having determined that it’s feasible they go about writing a business plan, which is an action-oriented document, in the latter 10 weeks.
The courses also delve into areas of entrepreneurship beyond starting up companies where acquisitions and spinoffs are discussed.
After that there’s a field study in which some students implement the business plan they’ve developed previously. There also are two elective courses, one on entrepreneurial finance and another on entrepreneurial operations.
What are some reasons executives take these courses?
Many students in the class have thought about their business ideas for a while and they’ve got a lot of the product ideas nailed down, but they don’t know how to think about the financing, marketing and operations pieces. That’s why they’ve come here. In fact, many of the students are ex-entrepreneurs who’ve failed previously and don’t want to fail again.
Another thing faculty tells students is even though you’ve got this nice cushy job at some big company it’s not necessarily secure. The greatest job security you can have is the ability to withstand a layoff and go off on your own.
What kind of time investment should be expected?
Classes are every other week, staring Thursday afternoon and going through the weekend. Faculty, then, assigns two weeks of homework. They have case studies, which are a set of facts about a particular business and they’re given open-ended questions about it. The cases address famous companies like Starbucks — for example, what made Starbucks work while thousands of other coffee shops didn’t scale up — and not-so-famous cases that did or did not succeed. Also, guest speakers come into class to talk about their experiences attempting to get a business up and running.
For each class, students can expect to spend three hours in the classroom and six to seven hours on homework and other preparations. Therefore, the workload is about 10 hours per session minimum. They’re going to take two to three classes at once, so they’re looking at 20 to 30 hours every two weeks.
The workload isn’t trivial, but it’s directly related to their entrepreneurial aspirations. In addition, there is a six-month field study project called Strategic Management Research (SMR) in which students are placed in a company in groups of five for six months. SMR frequently involves international travel.
What can executives expect to gain from this experience?
Students who come back tell me they learned a lot about themselves and whether or not they should be entrepreneurs. They learn how to execute deals. Both the entrepreneurship courses and others emphasize deal-making discussions and what deal terms look like. We walk them through the deal process; help them get familiar with term sheets; and advise them on how to work with legal counsel.
They also leave the program with a network of other students and faculty who can help them with their businesses. You’ve got this group of people you’ve been in this foxhole with for two years and they tend to stick together for a long time. This EMBA group is pretty close. There are only about 70 of them and they see each other every other week for two years. They get to know each other pretty well and they often get together and cooperate.
George Abe is a lecturer and faculty director for the SMR program at UCLA Anderson School of Management. Reach him at (310) 206-3082 or email@example.com.
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