uEntrepreneurs: The Learning Center for Entrepreneurs ™

Focus on your mission if you want to dominate

Personal GrowthEntrepreneurs often have trouble focusing their company and their resources. Why? There could be many reasons:

New entrepreneurs are usually desperate for sales and don’t want to turn anyone down. They often don’t see how the new business could add complexity to their operations and increases their overhead and their break-even levels. They don’t understand that doing too many things may cause them to be the best at nothing.

They may have an MBA and taken finance classes where they learned that diversification is good. However, they may not have realized that diversification is good for passive portfolios where the investor has no control over the venture. It is not that great for new entrepreneurs who have limited resources. Read more

Should you be humble to succeed as an entrepreneur?

Personal GrowthWhere does humility fit into the entrepreneurial profile?

There is a company called Segway. It was started by an inventor who is considered to be a genius because of the wide variety of successful products he has developed. The investors in Segway were considered to be the premier firms in the venture capital industry. They invested, and lost, about $160 million in the deal (MercuryNews.com, Jan 16, 2010). Why? From what I have read, the investors thought that the world would adopt the Segway as the way to travel in urban areas. Cities were even considering changing zoning laws to give greater access to all the Segway users who never materialized. The hype during the launch was tremendous. But the world did not change its habits. It did what it has always done. When the perceived benefits of a switch did not outweigh the huge costs of buying, they did not buy. There have been comments about how some of the insiders thought that the rest of us were not smart because we did not buy the Segway and change our cities. Maybe we are not. But they are the ones who lost $160 million. Read more

Where to find Growth Opportunities

Business StrategyMany would-be entrepreneurs never get started because they do not find their perfect business opportunity. And many others get into a business and reach a dead-end. So where should you find your opportunity for growth?

How do early-stage venture capitalists (VCs), who invest for a profession, find hot new opportunities? VCs try to develop home-runs (spectacular successes and potential Fortune 500 companies like Google and eBay) by financing ventures with a better technology or a better business model in a high-growth, emerging industry. This means they seek opportunities with a proven (if they can get it) advantage. They seek emerging, high-growth, high-potential industries. Emerging industries usually do not have large, well-established competitors who can destroy the new venture. With high-growth, they get the wind at their back – it is easier to grow rapidly in a fast-growing industry. And high-potential means that the new industry could become large and so could their investment. Even with all these advantages and strict criteria, they succeed in getting home-runs only about 2% of the time and have a reasonable return (for the high risk they are taking) about 20% of the time. Read more

To Bootstrap or Not? That is the Question

Financial EfficiencyYou are an entrepreneur faced with a troubling question: How do I get venture capital? Before you answer that question, consider another one that should be more important – should you bootstrap?

In my new book Bootstrap to Billions: Proven Rules from Entrepreneurs who Built Great Businesses from Scratch, I have profiled 28 entrepreneurs who built great companies from scratch, including the world’s largest medical device company (Earl Bakken of Medtronic), the world’s largest consumer electronics retailer (Dick Schulze of Best Buy), and the world’s largest private healthcare management company (Richard Burke of UnitedHealth Group). The 522 lessons in the book answer five key questions that each entrepreneur should consider. These include how to find the right opportunity with your unique competitive advantage, how to implement a capital-efficient sales and operations strategy in order to do more with less, how to finance to create wealth and keep it, how to build a dedicated and effective organization even without the resources, and how to be a better leader than your competitors. This column is a partial answer to the finance question. Read more

New book features iconic MN entrepreneurs

Business StrategyHe’s been in the venture capital business for decades, but University of Minnesotabusiness lecturer Dileep Rao now says people don’t need venture capital to grow a business, and he’s drawn on the stories of some of the Twin Cities’ most successful entrepreneurs to prove his point.

Rao has compiled those stories into a book called Bootstraps to Billions: Proven Rules from Entrepreneurs Who Built Great Companies from Scratch. The 28 profiles in the book are a who’s who of Minnesota success stories. They include Horst Rechelbacher, who started Blaine-based Aveda Corp.; Richard Schulze, chairman and founder of Richfield-based Best Buy Co. Inc.; and Minnesota Timberwolves owner Glen Taylor, who built North Mankato-based Taylor Corp. into what is now a roughly $2 billion business.

Rao, a senior lecturer at the university’s Carlson School of Management and a columnist for Forbes.com, spent two years interviewing the subjects of the book and writing the profiles.

This article originally appeared in the Minneapolis / St. Paul Business Journal.

You Don’t Need VC to Succeed

Business StrategySmall business finance expert Dileep Rao explains why some of the greatest companies never had a dime of investors’ money to get off the ground and grow — and how hard work, integrity, creativity, and an open mind can make up the difference.

Depending on your point of view, this might be the worst time to start a small business. On the other hand, with creative business and financing strategies, it’s possible to be successful without one dime from Wall Street or Silicon Valley. At least that’s the viewpoint of Dileep Rao, a consultant and small business finance expert who teaches financing courses at the Carlson School of Management (University of Minnesota). To prove the fact that you don’t need VC funds to be successful, in his forthcoming book, Bootstrap to Billions, Rao chronicled the stories of several Minnesota entrepreneurs who started with nothing to build successful companies such as Best Buy, Aveda, Digital River, United Health Group, and Medtronics. He calls the companies in his book a “third category” of business: not small business, and not built through VC financing.

This article originally appeared at OpenForum.com.

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