Wednesday, August 09, 2017

All hat, no cattle...

The more we talk about business startup, the fewer new startups.

According to the Kaufman Foundation, who's talk about startup is a big part of the problem, the rate of startup is about half of what it was in 1980.

Why? Here's what I wrote in my little book about startup, click Daring Mighty Things:

The world needs your new business!

   

         To understand my system for starting your new business, it is necessary to first appreciate the nature of business in a capitalistic, free market economy.

            The world will always have government, big-business, and big-labor:  government for those things individuals cannot do for themselves and big-business and big-labor because of certain efficiencies of scale. Unfortunately, the large scale of these three forms of bureaucratic operations leads to problems:

            1) Efficiency comes at the expense of intelligence and creativity. The large organization has a tendency to get better and better at doing what eventually is the wrong thing.

            2) Power corrupts. Governmental corruption is kept in check by our process of representative democracy. Big-business corruption is kept in check to the extent that the free market is allowed to operate. That is why big business hates competition.

            The worldview of the bureaucrat is necessarily different from that of the entrepreneur. The steps recommended here for starting a new business will not make sense to most bureaucrats.

            If you decide to work with a business mentor, it is important that you work with someone who subscribes to the following philosophy of business. This person almost always will be an independent business owner.

            Beware of seminars about how to start a new business; the most deadly advice for entrepreneurs comes from bureaucrats, public or private, active or retired...
            Businesses, like everything else in nature, go through three stages:  inception, growth, and decline. Anyone who has taken a business course is familiar with the sigmoid curve, the s-shaped line that is used to represent this process.

            The key to success in starting a new business is to get to the first sale as quickly as possible. Growth occurs as the methods used to create his first sale are perfected and used as a cookie cutter to create growth.

            Eventually, new technology and new competitors will bring companies to a natural end if they don’t recreate themselves during good times. The key to continued growth is the ability and willingness to reinvent the business. This process can be represented as a second sigmoid. Andy Grove, President of Intel in his book “Only the Paranoid Survive” calls this the inflection point. He says, “A strategic inflection point occurs when change is so powerful that it fundamentally alters the way business is done.” See http://www.intel.com/pressroom/kits/bios/grove/paranoid.htm

           I’ve identified four phases on the path toward starting your first or next business with as little risk as possible, and to then foster your business’s continued success by working with a new entrepreneur to stimulate your own creativity.