Q My youngest son, Brad, who is 16 years old, wants to follow in my footsteps by skipping college to start his own business. Is there a higher failure rate among entrepreneurs without college degrees? What advice should I give him?
Principal and chief designer
Matrixx Marketing & Design
Brad probably has posters of Bill Gates, Michael Dell, and Larry Ellison--all wildly successful college dropouts--plastered on his wall. You might want to paste over them pictures of Sergey Brin, Warren Buffett, and Scott Cook, products of higher education who better represent the backgrounds of accomplished entrepreneurs. The message: College matters.
Looking at the most successful entrepreneurs, 85 percent of CEOs and founders on the 2006 Inc. 500 list have bachelor's degrees, and 36 percent possess postgraduate degrees. But education pays off in the larger population as well. Companies run by college graduates are significantly more likely to stay in business and book annual profits of at least $10,000 than those with nondegreed leaders, according to Robert Fairlie, an economist at the University of California, Santa Cruz. In 2003, Fairlie studied more than 50,000 business owners and found that one key determinant of their success was human capital--the sum of their skills and experiences. College increases that capital in aspects hard (accounting classes) and soft (interactions with a wide variety of people).
In addition, investors are more likely to back a college grad, says Steve Brotman, managing director of Silicon Alley Venture Partners, an early-stage venture capital firm in New York City. Should your son go to college? "I don't think that's even a question," says Brotman, who has only backed one business owner without a degree. If entrepreneurs don't mention college in their bios, Brotman asks where they attended school and what year they graduated, even if they're older candidates with plenty of "real life" work experience. "If you don't go to school, the general thinking among investors is that's a little irresponsible," Brotman says. And that attitude isn't limited to investors. Eric Siegel, a professor of entrepreneurship at Wharton, warns that in a business world dominated by college grads, lack of a degree raises questions about ability in many minds.
Even if he doesn't care what others think, why would your son forgo all those networking opportunities? Some legendary partnerships were born in dorms or classrooms, and campuses are awash in bright students and seasoned faculty members who might become employees, advisers, or customers. Then there are the concrete benefits. For example, many schools are investing in entrepreneurship programs. Some--such as Babson College and the University of Iowa--have capital pools for student-run companies and offer free office space.
Finally, don't forget that your son is modeling you here. If you had it to do over again, would you have gone to college? Tell him so. Tell him why.
Q Is business-to-business telemarketing dead? I'm wondering if I should try telesales at my translation business.
The Do Not Call Registry, established in 2003, is a discriminate weapon--injuring hordes of business-to-consumer marketers but leaving business-to-business outfits largely unscathed. Only B-to-B companies hawking nondurable goods like printer ink and cleaning supplies must follow the law's guidelines. Still, telemarketing in general is like any other sales technique. If you're peddling something people don't want, you're an intrusion. If you've got something they need, you're the solution.
So the trick is to know who needs what you've got. "Relevance is the key to everything," says Meg Goodman, chief marketing officer of Townsend Agency, a firm in Chicago that specializes in direct marketing. That means taking the chill off of cold-calling with some upfront research. Goodman recommends reading annual reports of public companies and subscribing to database services like Hoover's and Pearlfinders--a London firm that scours public information for details on companies. Such services can be expensive--Hoover's Pro costs $2,995 for use by up to five employees, and Pearlfinders is $3,500 per year. But they can provide invaluable information, including the names and phone numbers of decision makers.
If you don't have time for research and your fingertips are developing calluses from punching too many phone numbers, you can outsource the whole shebang to a telemarketing firm. The Direct Marketing Association website lists hundreds of members, all of whom sign the organization's code of ethics. Look for firms that will work on a per-lead basis, advises Chad Gottesman, chief marketing officer at Extraprise, a business-to-business marketing firm in Boston. "If they're putting skin in the game, they're going to be sure they're performing," says Gottesman. It's also a good idea to set an upper limit on leads to stay on budget.
Of course, trusting an outsider with direct client contact is always risky, so you should arrange to listen in on a sampling of conversations to ensure targets aren't browbeaten. Gottesman also suggests testing your campaign with 30 or so conversations; you can then assess whether it's working or needs an overhaul. If executives sitting at their desks react like parents dragged away from family dinners when your company calls, something's wrong.
ResourcesFor information on colleges that offer experience-based entrepreneurship programs, check out Inc.com. To read more articles about telemarketing, visit the website of the Business Marketing Association.
Looking for answers? Stumped by a thorny business problem? Let Inc. help. Send your questions to email@example.com.