Inc.'s editor explains why there's still plenty of room for brick-and-mortar start-up companies. Plus: why you should think about selling your business from the day you start it.
It's hard for a new company to get much respect these days if it doesn't have "dot com" in its name. I suppose that's one reason I love this month's cover package on hot start-ups. Here we are, after all, in the most advanced, complex, digital society on the face of the earth, and there isn't a "dot com" business in the bunch.
Well, OK, there is one Internet play. It's a company that publishes a Sunday newspaper insert for Web sites looking to advertise in the nondigital world. As for the nine other start-ups, they include a maker of board games, a chain of flower stores, an ice-cream business, and a manufacturer of light-reflective gear for pets. Together these companies provide a vivid reminder that, even here in the USA, there is still plenty of room for start-ups based on elegantly simple ideas.
Speaking of start-ups, this month's installment of Norm Brodsky's Street Smarts column should be required reading for all young entrepreneurs getting ready to launch a business. Why? Because they're soon going to be facing a challenge they've never imagined, one they may not even recognize when they see it--unless perhaps they've read Brodsky's warning and taken his advice to heart.
One young founder recently described that challenge to me. "You know the night-vision goggles that the military uses?" he asked. "They're really amazing. I mean, you're standing there in the darkness, looking out over what appears to be a barren, motionless desert landscape. Then you strap on these goggles, and you suddenly realize that the landscape is teeming with life you couldn't see before.
"Something very similar happened to me about 18 months after I started my business. I came in one day, and it was as if someone had strapped on a pair of goggles that lit up the world around me. Everywhere I looked, I saw business opportunities. I was absolutely overwhelmed. I told my wife I could spend the rest of my life pursuing them and I still wouldn't exhaust the possibilities."
That's a phenomenon experienced by most people in the start-up phase of a business, especially those who are bootstrapping. You immerse yourself in the world of your customers and suppliers, and--just by being in the market, struggling to survive--you become aware of opportunities that people on the outside can't see.
Those opportunities are, however, a mixed blessing. They may be telling you something important about your business. Then again, if you're not careful, they could lead you astray. In " The Right Stuff," Brodsky addresses the paradox and highlights a characteristic that I've noticed in all the successful entrepreneurs I've ever met: the ability to stay focused in environments filled with tantalizing distractions.
There's a scary statistic in Jill Andresky Fraser's wonderful feature " When It's a Seller's Market." In any given year, she writes, only a quarter to a third of all small, privately held businesses put up for sale are actually sold. Every time I see that statistic, I imagine how disappointed people must feel when they discover after years--maybe even a lifetime--of work that they've created something of no value to a prospective buyer.
That's a thought worth bearing in mind not when you're getting ready to sell a business but when you're thinking about starting one. By the time you want to retire, it's too late to decide that you really should have focused more on building something you could sell.
Don't get me wrong. There are many great businesses around in which you won't ever create any equity but you'll have a rewarding career and a terrific lifestyle. My point is simply that you should be aware of the possibilities from the start.
Finally, a word about Christopher Caggiano's interview with Morningstar founder Joe Mansueto, who talks about the extraordinary influence that Warren Buffett has had on every aspect of his business. It's very rare for a founder, any founder, to be able to explain so clearly where the idea for a business came from. But even more interesting is the fact that until last year Mansueto had never met Buffett face-to-face.
Of course, I admire Mansueto almost as much as he admires Buffett, and I've never met either one of them. Maybe there's a pattern here.