How do we prepare aspiring entrepreneurs?

ByF.C. Dawkins

There are many people who believe that you can’t teach entrepreneurship. They believe it is either inherent or a skill that has to evolve from experience. There is no doubt that as in any other skillset there are people who are naturals. Also experience is a tough taskmaster and the school of hard knocks leading to rejection and failure has produced some great success stories. Opportunity and determination are the cornerstones of entrepreneurship. Recognizing achievable opportunities and the commitment to find solutions and implement then are absolute prerequisites. There is a teachable philosophy involved that enhances both of these attributes. But there is something else we can do for our aspiring entrepreneurs. We can do a much better job of preparing them. We can help them understand the basic philosophy, the many personal challenges they will face and all of the fundamental business issues from team building to funding that are common to every business. The failure rate for entrepreneurs is too high. Some would have you think that this is merely the nature of the beast-part of the mystique. We must add a new word to opportunity and determination and that word is preparation. With preparation we can turn reckless risk into managed risk and greatly improve the success rate. Working with the Creative Destruction Lab at the Rotman School of Management at the University of Toronto I see many brilliant innovators anxious to start a business and get their project to market who lack this basic preparation. This lack extends much further to those entrepreneurs of necessity who will be trying to create and manage their own careers in our fast paced global economy.

Everyday Entrepreneur is written in a format that is relatable for anyone considering a career in entrepreneurship at any level. The focus is to use real anecdotes to put the reader in a business situation so he or she will recognize a similar issue when it develops. Preparation is an essential element of planning. The plan is not an outcome but rather a framework that allows us to anticipate and adjust as things evolve. Preparation and understanding are great assets for anticipation and adjustment. We need not build our businesses from the ground up. We can use the experience of others to prepare us. There are common bonds at every level of entrepreneurship. The goal of Everyday Entrepreneur’ which is coming out in December, is to convey as many ideas as possible that will make all our new entrepreneurs better prepared and help existing entrepreneurs put their challenges into prespective.

Praise for Everyday Entrepreneur
“Fred Dawkins has written a wonderful book about entrepreneurship unlike any other on the market. He brilliantly uses his storytelling skills to illuminate his subject in a way that makes the book a joy to read. You’re so wrapped up in the story that you may not realize how much you’re learning until you’ve turned that last page.”
— TERRY FALLIS, AWARD-WINNING AUTHOR OF THE BEST LAID PLANS AND UP AND DOWN.

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  • Globalization, Branding and The Entrepreneur

    ByF.C. Dawkins

    The appeal and benefits of pursuing a global economy lie in the theory of comparative advantage whereby global completion will ensure that goods and resources will be allocated in the most efficient way, ensuring the most cost effective production of goods and services to the benefit of all. Yet the more we open ourselves up to globalization the greater becomes the discrepancy in wealth distribution which contradicts the theory. Oh to be sure there is a growing middle class in the highly populated eastern countries like India and China but in effect we are just averaging out the wealth of the poor – improving in the eastern world and declining in the west while those at the top accumulate huge fortunes. Upward mobility  on any kind of scale may be in jeopardy.

    Life should be getting better for all of us. Instead large corporations are controlling the marketing of most products largely through effective branding  which allows them to keep the lion’s share of the benefits of low cost production in the form of huge profits rather than either paying a fair price or passing along the benefits to the end user. At the same time the demand for labour is shrinking in relative terms through technology and mechanization undermining wage structures around the world. These large corporations have abandoned their identity as national firms in favour of becoming global entities. They are routed in a culture of control and increasingly rely on acquisitions and outsourcing to give them the innovation and flexibility needed in a fast paced world economy immersed in rapid change. As long as they can control the market they retain control of the profits.

    So how do we break this system and allow the mass sharing of the efficiencies being gained? The hope lies in entrepreneurs digging in the corners, finding comparative advantages and getting low cost products to market. The problem is that there are barriers to get products to market and if you manage to break through your company soon joins the club bringing in huge profits.  Rather than breaking the system, those that succeed are embracing it. Greed is a powerful motivation in the face of dynamic achievement. So as it stands now entrepreneurial success lies in pursuing startups and selling out or by leapfrogging through this stage and becoming one of the Bigs. Neither of these trends will break the current trend on wealth distribution which is moving back towards the historical norm.

    On a macro level entrepreneurs are the main hope to break the culture of control but there are no guarantees that will happen. On an individual level, pursuing a career as an entrepreneur may be the only ticket to upward mobility. That is why the most important skill anyone can master today is the ability to create and manage their own career. We must all adopt the mindset of the entrepreneur.

  • Why Branding is a threat to the middle class

    ByF.C. Dawkins

    In theory as Globalization evolves resources will be allocated in the most efficient way possible ensuring that goods will be produced on the lowest cost basis to the benefit of all. In a perfect global system labour will shift around until the transition is complete and the rewards for labour will equalize around the global network. During the transition while wage rates in higher earning countries are frozen or rise slowly as wage rates in other areas catch up, those living in the higher wage countries will benefit from low cost goods during the transition. All of this takes place without impediments or barriers to free and open competition. Entrepreneurs will drive the progress by ferreting out opportunities across the global system.

    In practice as we continue to embrace such a global system, the rewards to labour in the low wage countries are lagging while much of the benefit of low cost goods are not reaching the consumer. Instead the rich are becoming the super rich while the middle class is facing the reality of returning to an historical norm with relative rewards well below those achieved in the west for the past sixty years during which consumerism has flourished. In an evolving era of Big Data where the status quo is becoming a moving target while character traits such as adaptability and resilience are becoming more critical, the business behemoths of the world are getting richer by controlling markets. Much of this control stems from branding and creating the allusion that branded goods are inherently superior. At the same time effective marketing has mislead us that these behemoths are so critical that they are ‘too Big to Fail’. Branding has effectively created near monopolies effectively providing barriers to entry for aspiring entrepreneurs in the process by limiting their upside and increasing their challenges

    Mammoth organizations operating on ten year plans are not appropriate for our fast paced Global economy. However control over markets allows them to achieve innovation and flexibility through outsourcing and acquisition. Oh these in themselves do create upside for entrepreneurs who can launch a startup and find an eager buyer for their initial success. However the odds against success are greater and fewer of us are likely to get there. It is certainly possible for a limited few to build new brands creating new members of the super rich club. However overall we have abandoned core economic principles such as the Law of Diminishing Returns and the Optimum Size of the firm in favour of uninformed consumerism and market control through brands owned and managed by what are effectively huge bureaucracies. Is there a tipping point ahead? Surely social media and instant communication are a threat to the dominance of brands – OR are they just additional instruments of control?

    Globalization has brought large numbers into the global work force, increasing the supply of labour. Technology through robotics and mechanization is reducing the demand for labour. Together these factors create downward pressure on wage rates. Upward mobility for the individual is in decline. Capital is securing the lion’s share of the rewards. Job stability is one of the status quos that is disappearing. For all of these reasons the individual must become his or her own brand. The most important skill you can learn today is the ability to create and manage your career.

  • Entrepreneurship: The Catalyst that puts all other resources to work

    ByF.C. Dawkins

    We have been in uncharted economic territory since well before we hit the wall in 2008. While we’re treading water reasonably well we are not finding the corrections that must follow every major downturn. Maybe it would help if we moved passed the Keynes vs. Friedman debate that still dominates economic theory.

    Keynes died in 1946. We are starving for new economic thought to act as the driving force for new and appropriate economic policy. What other discipline has produced such a lack of innovation in the past seventy years? The question begs asking: with the onset of econometrics in the 60s and 70s did we confine our economists to conduct statistical analysis and prepare projections? Even In those areas, economics is a behavioural science so negative projections are almost always softened so as not to become self fulfilling.

    Regardless in today’s fast paced global economy we need new theory and very different action plans. We need to revamp our organizational structures to incorporate greater resilience and adaptability. There is a pressing need to redefine capitalism or at least to reel it in so that the strong trend to increase the rewards for capital while reducing the rewards to labour don’t wreak social disaster . Frankly too Big to Fail is simply Too Big! Large corporations are truly multinational and chase profits above all else. Just look at the reward systems of the largest corporations. These same corporations are hoarding cash because they cannot move fast enough to build from the bottom up. The have to grow through acquisition buying up successful startups. In that sense entrepreneurs offer a lifeline for Big Business which also gains much needed flexibility by contracting out to independents. We have abandoned fundamental microeconomic theories like the Law of Diminishing Returns and the Optimum Size of the Firm, lost in a culture of control enhanced by market dominance founded upon effective branding.

    All of this points to a much greater emphasis on entrepreneurial thinking and entrepreneurs as our economic saviours. It will be entrepreneurs who invest locally who will solve many structural issues. Entrepreneurship has become the economic wonder drug of the 21st century. For individuals this is the key to their economic well being and any hope of upward mobility. In our modern world dominated by globalization, technology and inherent rapid change enhanced by Big Data, we do need to establish new sound economic principles rather than continuing to make it up as we go.

  • 3 Signs Your Startup May Be Slipping

    ByF.C. Dawkins

    Originally posted by Emily Barnes, The Creative Destruction Lab The Rotman School of Management, University of Toronto

    Businesses large and small can find it tough to spare a few moments to step back and look at the big picture. But immersed in the little details surrounding new product features and releases, you can easily miss a few telltale signs your startup is starting to spiral.

    Luckily, Fred Dawkins has done the legwork for you. Partner of the Creative Destruction Lab, serial entrepreneur and founder of The Old Hide House, Dawkins has turned his past experiences into a series of books about entrepreneurship, the first of which is Everyday Entrepreneur. He recently hosted a number of workshops in partnership with the Lab, touching on everything from the misconceptions of entrepreneurship, to the day-to-day trials and tribulations of an entrepreneur, to the increasingly important role of small business in the global economy and all that’s in between.

    If you can’t spare the few minutes to check in on that big picture, Dawkins asks that you at least watch for these three signs that your startup is on the out.

    YOUR STARTUP BECOMES YOUR LIFE.

    Undoubtedly, there’ll be an imbalance. There’s no denying that you’ll have to work long hours – especially in the startup phase and when you run into times of hardship.  Your social life will at times suffer, as will your relationships. But this anguish shouldn’t be a constant.

    This may seem erroneous if you’re in the early stage of running a business. Timing is everything, and if you launch too late – especially in tech – it can make or break your success. It’s a bit of a catch-22. But unless you’re an anomaly, if you’re working an innumerous amount of hours, you’re doing something wrong. It’s symptomatic, and signals a discord elsewhere in your business. How strong is your team? Are you delegating?

    Despite much popular literature that speaks to the contrary, you truly can maintain work-life balance as an entrepreneur.  Recharging your batteries is critical. Have your hobbies and have your venture. Sometimes the two will overlap. Even then, you must create that separation. When you lose sight of work-life balance, you also risk impairing your business’ vision. It’s important to step away from your company, if only for a few hours.

    CASH FLOW – IT NEVER LIES!

    If you’re going to be successful, you’ll first need to know and understand your numbers. Metrics aside, look to cash flow. It’s right on your doorstep. Omnipresent, it serves as the perfect warning mechanism. If you’re running low on cash, you’re doing something wrong.

    Too often, startups seem to bolt at the first sign of cash flow struggles, looking to investment for relief. Granted, it’s a quick and relatively easy fix (provided you can offer up a good pitch), but too many run into the open arms of deals that offer marginal amounts of cash for large chunks of equity.  It’s easy enough to relinquish control of your business because you have to – to bring in a partner or some easy money. But don’t make rash decisions without properly considering the long-term consequences. Do the math. Beware of commitments that’ll eat up your profits. Brick and mortar businesses tackle high overhead, hardware startups combat production costs, and SAAS businesses at first operate virtually cost-free. Remind yourself of this. In a startup press bubble that’s dominated by one funding announcement after another, it’s all too easy to start asking for money. Don’t forget about sales, the good ol’ fashioned revenue stream.

    There’s a lot to be said for natural growth and learning to manage within your means. Bootstrapping isn’t a requirement so much as an opt-in measure of control.

    YOU, THE FOUNDER, ARE THE BEST PERSON ON YOUR TEAM.

    Things are different when you transition from project to business. Parameters change, and your skillsets need to adapt along with them. But few people have the knowledge or experience necessary to carry an idea through to company, then onto global success. Don’t be afraid to hire people who know more than you do in specific areas.

    You’ll be tempted to keep a short leash on success, and find it difficult to relinquish control of even the most minor of tasks. Don’t impede success for the sake of ego. Sometimes you’ll need to let go of responsibility, and sometimes that also means you’ll need to cut off a slice of the equity pie. Your ego will take a hit, and your percentage of future earnings will too, but you’ll mend and the pie may just get bigger.

    Recognize your deficiencies. You can’t always keep pace with your company, or grow at the same rate it does – not everyone is that malleable. Hire those whose skillsets can compensate for the holes in your own. You are not your company and at some point your interests may diverge, so have an end game.

  • Here’s a quiz that everyone needs to take.

    ByF.C. Dawkins
    1. Are you concerned about funding your retirement?
    2. Does the trend to precarious employment disturb you?
    3. Do you consider globalization to be a threat to you, your children and/or grandchildren?
    4. Are you having trouble getting your career underway?
    5. Do you have to extend your career?
    6. Are you struggling to find a succession plan for your business?
    7. Are you worse off financially than you were ten years ago?
    8. Do you have fewer opportunities than you expected at this stage of your life?
    9. Would you like more control over your financial future?
    10. Are your best years behind you?

    If you answered yes to any of these questions than you should read my series of three books The Entrepreneurial Edge. These books are The Wealthy Barber for anyone dealing with these issues and looking to embrace self-determination in a world conspiring against individual success

    Book 1: Everyday Entrepreneur – making it happen

    Book 2: Family Entrepreneur – easier said than done

    Book 3: Ageless Entrepreneur – never too early – never too late

    Don’t let the word entrepreneur scare you off. You don’t have to run a business to think like an entrepreneur and take charge of your life. Think entrepreneurially. Be resilient. Be adaptable. Make things happen. Embrace self-determination. Trade stability for agility!

    The most important skill to learn in the 21st century is the ability to create and manage your career!

    Each of us must be his or her own brand making good strategic decisions about life and career.

    Fred Dawkins

    Author

    fred@fcdawkins.com

    fcdawkins.com

    Everyday Entrepreneur dundurn.com/authors/fred_dawkins

    Follow me on twitter @dawkinsfred

    Follow My Blog The Entrepreneurial Edge https://fcdawkins.com/blog/

     

  • Why Entrepreneurship is Critical on a Macroeconomic Level

    ByF.C. Dawkins

    For the past fifty years our business schools have been working on a flawed model. We have focused on producing executives for large corporations; only recently have we introduced enthusiasm for entrepreneurship to our MBA programs. However we live in a world economy focused on globalization, revved up by the technological revolution and immersed in a 24/7 mindset. We have created an extremely fast paced environment requiring flexible management led by adaptable and resilient leaders – the essence of entrepreneurship.

    The misguided emphasis on turning out high paid executives has led to politically motivated policies like ‘Too Big to Fail’ which can be more properly labelled “Too Big to Succeed” or simply “To Big”. Like their second cousin Big Government these monolithic corporations need the impact of entrepreneurs – people who are disruptors that challenge the status quo in the face of a new global reality. They are too slow and unwieldy and are led by overpaid executives far removed from reality, Increasingly they rely on growth by acquisition and flexibility achieved by contracting out. They are part of our reality but not the part that will have the greatest influence and guide the inherent change built into the global economy. Entrepreneurs will pursue opportunity around the world and find the many niches that will move us to more efficient allocation of resources and lower cost of production across the entire world. At the same time in the west where we have structural issues such as high unemployment levels among unskilled workers, entrepreneurs will invest locally finding opportunity and create jobs that will put these resources to work. Government cannot do this effectively and big business has no interest in doing so.

    ‘Everyday Entrepreneur’ encourages entrepreneurship at all levels, focused on preparing entrepreneurs for the challenges they will face through a wide range of anecdotes helping them experience the realities of life as an entrepreneur in this ‘New Era of Entrepreneurship’.

    Praise for Everyday Entrepreneur

    “Fred Dawkins employs a likeable cast of characters and the simple setting of Canadian cottage country in July to convey a complex set of ideas ranging from the nature-versus-nurture debate (are entrepreneurs born or made?) to a variety of essential how-to entrepreneurship skills to specialty topics such as gender, leadership, negotiation, and team formation, as well as the important role of entrepreneurship in the global economy. His casual, easy-to-read writing style belies the critical importance of his subject matter. Not just potential entrepreneurs but also governments, big companies, and business schools in the West must adapt to the new reality of an increasingly educated and ambitious middle class in so-called developing countries and take immediate steps to reinvigorate our large population of underutilized problem-solvers in order to remain competitive and continue to enjoy increasing prosperity. As Sam would say: It is not a question of if, but rather how.”
    — Ajay Agrawal, Peter Munk Professor of Entrepreneurship at the University of Toronto’s Rotman School of Management, founder of the Creative Destruction Lab for entrepreneurs, and co-founder of The Next 36 entrepreneurship program.

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