Categories
Business Talk

Why America must cultivate successful entrepreneurs

Why America must cultivate successful entrepreneurs

America was built by visionary entrepreneurs, yet today most people believe that the path toward safety and security is through landing a job. The statistics show that jobs are declining in the US in particular. In fact, according to a report released by the McKinsey Global Institute in 2012, “by 2020 90 million low-skilled jobs will be eliminated and the replacement jobs, 45 million medium skilled and 38-40 million high skilled jobs will be filled mostly by college educated workers from China and India.”

According to the American Economic Review in 2012, small firms, especially during periods of high unemployment, are the major job creators.

Bill Gates shared in 2014 while speaking at an economic think tank, The American Enterprise Institute in Washington, DC, “Software substitution, whether it’s for drivers or waiters or nurses … it’s progressing. … Technology over time will reduce demand for jobs, particularly at the lower end of the skill set. … 20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.”

According to Staffing.com, several trends are emerging. “Increasingly globalization will move jobs and businesses to look for the best combination of low cost and highly qualified talent, wherever in the world they are located.

After the recession starting in 2009, large American corporations slashed payrolls by a net 500,000 jobs. At the same time these corporations hired 729,000 workers overseas.

In fact this trend started from around the turn of the century. From 1989 to 1999 multinational corporations with headquarters in the US created 4.4 million jobs. After 1999 to 2009 these companies eliminated 3 million jobs in the US whilst adding 2.4 million jobs abroad.”

America needs new entrepreneurs!

Kauffman Foundation Vice President of Research & Policy Dane Stangler asserts in an article featured on RealClearMarkets.com, why the United States needs an entrepreneurial renewal. He shares, “With venture capital funding at its highest levels in ten years, strong growth in angel investment, astronomically high startup valuations, and the proliferation of business accelerators and incubators, entrepreneurship in America is buzzing. However, research has found that new firm entry rates are actually falling and young firms are closing at higher rates than before.”

Why are we failing to cultivate successful entrepreneurs?

Stangler offers, “Many markets have become either entrepreneurially stagnant, or are experiencing massive efforts by incumbent businesses to use their political and economic power to protect themselves from new competition.”

According to the article, The Other side of innovation, “Organizations are not built to execute innovation”.

Entrepreneurs foster innovation.

Organizations are too often risk adverse and continue to invest in sameness rather than diverse perspectives. American companies need to foster diverse thoughts by encouraging different perspectives. In too many organizations mediocrities prevail as the same people, with the same background work on the same problems and avoid differences in perspective. This is why group think is so rampant while organizations struggle with innovative thinking in response to an ever increasingly complex market environment.

We need to make it okay to take risks again and find innovative solutions. In many cases we need to break our own business model and core products to make them better. In so many organizations intrapreneurs could be cultivated using existing resources, thereby generating the possibility for significant discoveries. Firms like 3M have a bootlegging policy which encourages using the products and creating new products; this is how Post-it notes were created following a failed attempt at creating a stronger adhesive.

American can cultivate more entrepreneurs and you can help by contributing your talents today!

I posit that part of the solution begins closer to home. Perhaps it begins at the dinner table.

It has been said that the families who cultivate entrepreneurs, share the details of the family business over dinner and the children gain advanced insight. Too many parents are still telling young people to go to school to get a job. Some of these kids should be encouraged to consider how they might create a job. I recall hearing stories that wealthy families in particular, reared their children with the words of wisdom to go to school and look for business partners. This may explain why a Mark Zuckerberg could build a multibillion dollar company from his dorm room.

I took the latter position with raising my own son who when he was in kindergarten each morning as he dressed, I reminded him that all he had done was spend money on other people’s products – washed his face, brushed his teeth, and putting on clothes. As I walked him to school I encouraged him to think about what he might invent by considering what problems he could solve. His exposure to business at an early age has helped to nurture his own entrepreneurial goals. He’s earned over $500,000.00 as a part-time SAG-AFTRA actor, and has pitched several business plans to venture capitalist. At 16 years old, he won a pitch competition held by K5 Ventures.

We must and can socialize the importance of being innovators and job creators to strengthen the entrepreneurial ecosystem.

This was Speech #7 for Toastmasters Liftoff group in Irvine, CA.

Dr. Stephanie Ardrey

Dr. Stephanie Ardrey

Business Growth Expert | Capital | Capacity | Customers | Dr. Money Live | Global Media Personality | Corporate Training and Development | Venture Capital for Independent Filmmakers

 the official website for the “Dr. Money Live” show. Here you will connect with Dr. Stephanie “Dr. Money” Ardrey, an industry leading Real Estate and Venture Capital specialist, as she shares clear strategies and tactics which will contribute to building and scaling a business venture. 

© 2020 Dr. Money Live. All Rights Reserved.

Categories
Business Funding

Capital 101: Why your strategy is all wrong!

Capital 101: Why your strategy is all wrong!

My last call was with an entrepreneur who was told that to launch his business he needed an investment. I asked him if he had developed a business plan, pitch deck, was familiar with prospective investors in his existing network, and if he had discussed his raise with a securities attorney to determine the appropriate exemptions which might best suit his campaign. The answer to all of the questions was “no, I was not aware that I needed to do these things”. 

Raising capital is not for the faint of heart. It is a process that requires an upfront investment to ensure that you are following the correct steps. Also, you must realize that the likelihood of a stranger writing you a significant check without getting to know more about your team, business, and plans are probably next to none. I don’t know any investor that is writing checks without wanting to understand the team, business plans and when they will receive their investment returns.

Too many entrepreneurs fail to gain basic information and understanding on the process of raising capital and what that means. I recall another conversation with an entrepreneur seeking an investment. I asked him how much capital he required and how much equity he associated with that capital raise. His response, “I need an investor, but I’m not giving up any equity,” I explained that if he was not offering equity for the investment, he should focus on debt options. He refused to consider debt and was adamant that he could get an investment without offering equity. I wished him well.

Here are some basic keys to developing an effective strategy when raising equity capital: (1) equity is ownership shares or stake in the business; (2) the valuation is determined by the revenue actuals, assets, or in some case the forecast of earnings; (3) the terms of the investment must be discussed and explored; (4) selling equity is selling securities – this is regulated by the Securities Exchange Commission (SEC); (5) you should discuss your capital goals with a Securities Attorney; (6) building a network of prospective investors takes time, so start early by making note of investors in your sector; (7) review Term Sheets to understand the types of clauses which are included.

Finally, be sure to speak with someone who can offer you guidance as you will need a solid team of professionals to launch and succeed with an equity capital campaign. 

Dr. Stephanie Ardrey

Dr. Stephanie Ardrey

Business Growth Expert | Capital | Capacity | Customers | Dr. Money Live | Global Media Personality | Corporate Training and Development | Venture Capital for Independent Filmmakers

 the official website for the “Dr. Money Live” show. Here you will connect with Dr. Stephanie “Dr. Money” Ardrey, an industry leading Real Estate and Venture Capital specialist, as she shares clear strategies and tactics which will contribute to building and scaling a business venture. 

© 2020 Dr. Money Live. All Rights Reserved.

Categories
Business Funding

Business Capital | Why your business is not fundable!

Business Capital | Why your business is not fundable!

Greetings! It’s already the start of a new decade and according to reports the economy is booming! How are you faring in business? Have you gained from the last decade boom? If not, I can bet there are three major reasons why: (1) Capital, (2) Capacity, and (3) Customers. In this article, I will focus on capital.

          Are you aware that there are several options to capitalize your business and that as a President and/or Chief Executive Officer you are responsible for setting the vision for the company, identifying the resources necessary, and securing those resources to execute your business plans?

          Well, let me tell you the major reasons why your capital strategy is failing:

  1. You don’t have a capital strategy
  2. You have not created the proper legal structure for your business
  3. You have not created the proper credibility elements
  4. You are banking with the wrong type of bank and have not created the correct banking relationships
  5. You are filing losses each year on your Tax returns to reduce taxes, but killing your chances for personal or business finances
  6. You are not managing cash-flow appropriately
  7. You don’t know who to consult to get the correct strategic guidance to fix the above problems and forecast for future growth
  8. You are operating your business like a job, and not a business so making “employee” focused decisions rather than “employer” decisions

A capital strategy requires some foresight based upon not only past performance, but knowledge of the dynamic macro and micro market influences, in plain language you are not taking into consideration the impacts of a turbulent political environment and how the global market decisions always impact domestic business operations (e.g., Trade War with China).

The proper business structure is important based upon the industry and sector in which you operate. For some firms the use of a Limited Liability Company (LLC) structure will suffice, for others who operate firms requiring licensing, another structure might be required (e.g., general contractors must form corporations).

Once you have properly identified the appropriate legal structure for your firm and industry, establishing credibility begins with addressing initially some very basic items: (a) Dun & Bradstreet account; (b) business address in commercial location; (c) business email account (e.g., no Gmail, yahoo, Hotmail accounts); and (d) business telephone numbers (e.g., cell phone is not appropriate). These are just a few of the credibility items limiting your funding options.

When establishing banking relationships, it is important to interview and research the lending practices of the bank you are considering, and further to ensure that the bank is focused on business and not just retail customers. Many of the big-name banks are too large for your initial firm and will not take an interest in your business until you are in the 100s of millions of dollars in gross revenues. Some of those banks go further and basically rob you of your hard-earned dollars without recourse, while refusing to provide any lending options to assist you with growing your business. If the bank is so large that your accounts are just numbers in the system, you are banking without a relationship.

Too many owners are going to bookkeepers or Certified Public Accountants (CPAs) with the only focus on reducing tax liabilities. Depending on the experience, a bookkeeper is not a qualified Tax Code expert, actually most CPAs lack in this area they might know a few codes, but the Tax Code is over 70,000 plus pages and has more relevant deductions which allow you to claim top line earnings and still reduce your tax liability. Ever wonder how billionaires make billions and often pay less in taxes than you? It’s not by claiming losses on the top line, but through having a talented fiscal management team comprised of Chief Financial Officers, Certified Public Accountants, and others on the team determined to manage the capital with precision. I know, you are a small operator and cannot afford these layers internally, however, it is in your best interest to consult with some external professionals to make sure you have the appropriate fiscal management strategies to successfully manage and grow your business.

Finally, you are not operating like an entrepreneur, but following the mentality of an employee and making poor business decisions as a result. An entrepreneur who is debt adverse is going to fail to grow, it is difficult if not impossible to grow relying only on cash from operations. There are situations which require an upfront investment to ensure that you can gain market traction, or expand, or managing the supply-chain requirements. Any of these matters can be presented and are opportunistic for growth, yet if you have limited capital resources, you might miss the opportunity to advance.

Dr. Stephanie Ardrey

Dr. Stephanie Ardrey

Business Growth Expert | Capital | Capacity | Customers | Dr. Money Live | Global Media Personality | Corporate Training and Development | Venture Capital for Independent Filmmakers

 the official website for the “Dr. Money Live” show. Here you will connect with Dr. Stephanie “Dr. Money” Ardrey, an industry leading Real Estate and Venture Capital specialist, as she shares clear strategies and tactics which will contribute to building and scaling a business venture. 

© 2020 Dr. Money Live. All Rights Reserved.