As a sophomore at New York University, Michael Simmons co-authored The Student Manifesto with classmate Sheena Lindahl. In the 2003 book, the authors encourage young people to consider entrepreneurship as a cool alternative to working for someone else. They also champion business ownership as a great and empowering lifestyle. Three years later, Simmons and Lindahl decided to practice what they preached, co-founding the Extreme Entrepreneurship Tour, a for-profit business that sends speakers by bus from college to college to teach business concepts to students. The company should reach $500,000 in revenue this year. Since he has written about entrepreneurship and practiced it himself, we asked Simmons to field questions from students who aspire to follow in his footsteps. Here's part two of our series.
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QI have been brainstorming and starting in the early research of starting a local/ regional magazine in the Cleveland area. I was wondering what possible tips you may have or possible contacts that could help along in building a viable business plan for starting my magazine and get me headed in the right direction.
--Erik Green, Lake Erie College
If I were thinking about starting a local magazine, I would do two things:
1. Test my concept with my target market to gather feedback, testimonials, and ensure that there is demand. If I had a budget, I would create a test issue to show readers and potential sponsors what the content and design would be like.
2. I would talk to other people who had already accomplished what I wanted to in other regions or in the same region. Being a student is an incredible advantage. People are more willing to help and less threatened by students then they are with adult professionals. More specifically, I would ask for 30 minutes of someone's time to ask them a few questions. I would come to the meeting 15 minutes early prepared with 10 questions. At the end of the meeting, I would ask if I could touch base in a few months, and I would ask for three introductions to others who could help. A day later, I would send a hand-written thank you note. After you've had a number of interviews, you'll have a lot of cheerleaders and you'll have new, deep insights into your business idea.
QHow do you let go of a co-founder when it's the best thing for the company?
--Bert Gervais, Co-Founder, The Place Finder/Binghamton University
Letting go of a co-founder is extremely difficult. I know, because I've had to do it two times. With each company, our paths started going in different directions. In the end, we shut down the first company. My current partner and I bought the second company from the third co-founder. Fortunately, both departures went well, and I still have strong friendships with the co-founders who departed.
My biggest advice here is to keep the lines of communication and trust open. Although, I did have nerve-wracking disagreements with my co-founder, we never let the disagreements turn into arguments that got out of hand. I would show good faith to your partner, not make any threats, try to understand their perspective, and keep your cool. Once communication is lost and things go to a lawyer, you both will probably come out losers instead of winners.
QAs everyone knows, the real-estate market is in low demand but many people are still renting. There is a small house in my neighborhood that is very inexpensive. My husband and I are thinking about buying it and renting it out. If we don't rent it out right away, the payments would be so low that it wouldn't hurt us at all but I really don't think we will have a problem renting the house out.
I am going to go about everything the smart way, but every time I mention it to anybody they ramble on about renting and people tearing up your house and go on and on. Of course, I know this, but my husband is a Mr. Fix it and we are not ignorant people. I am getting so tired of having people rain on my parade but I get excited and just start talking. Should I just stop telling people about wanting to get into real-estate and just do it or should I listen to them and not pursue it?
--Shannon Kelley, Southeast Missouri State University
One of the reasons that people never pursue their entrepreneurial dreams is listening to the negative feedback of others. Almost every entrepreneur goes through this in the beginning of their journey. This negative feedback is difficult to hear, especially because it often comes from the people close to us.
With your business, it seems like people are commenting more on lifestyle issues rather than the quality of the business idea.
For our company, the Extreme Entrepreneurship Tour (www.extremetour.org), I travel the country in an RV doing half-day events on college campuses. When I first shared the idea with other people, including mentors who I really respected, I kept on hearing warnings on how difficult travel would be. After 100 events under my belt, I can say that I love traveling to different parts of the country with a great team of people. In the end, traveling isn't always easy or fun, but I would never think about trading my experience in.
Your business sounds similar. It can challenging, but it can also be extremely rewarding. Rather than listening to people who may have never been landlords, I would find people who have been able to successfully balance being a landlord with a great lifestyle and listen to their advice.
QMy friends and I started an online software tool, http://www.bright-school.com, that provides data for parents to see the progress of their child's school performance and allows teacher-parent communication. So far we took on one school to see how this would play out, and we ran into financial problems already. The 3 of us already put in $75,000 into this idea...So my question is: Do you know of anyone who would want to invest into this?
--Melissa LaBell, Wayne State University
I once heard the founder of Whole Foods, John Mackey, be asked a similar question at the Ernst & Young Entrepreneur of the Year awards. He said that the best way to raise money is from your customers.
I completely agree with this. Instead of worrying about pounding on the doors of investors or putting a lot more money into product development, I would spend the time calling up customers asking for feedback and asking for the sale.
If you can sign up a lot of customers, and you're still finding that you need money, when you go to investors you'll at least be able to show that your product is getting traction.
By the way, as a college student, I would be careful about spending tens of thousands of dollars on a product that is not yet proven. I would suggest having customers pre-order your product at a discount to lessen your time and money risk.
QWhat is the best way to turn an idea into a business?
--Clayton Cooper, Missouri State University
I have a simple answer. It is to acquire a paying customer!! Many people get stuck in analysis paralysis writing 100-page business plans and creating cool web sites, but never getting a sale. Once somebody pays you money for your product or service, you know you're on to something. The next trick after that is to get more customers and to ensure that you're making a profit on each one.
QWhat are the most important factors that cause small business failure?
--Jeremy Brandt, Missouri State University
I think the biggest factor that causes small business failure is lack of experience. While experience certainly doesn't guarantee success, it increases the odds dramatically. You might be thinking, "Great!! Experience. I don't have any. How can I get it?"
There are two ways to get experience:
The earlier you get started, the earlier you can get your mistakes out of the way. Secondly, the more you can surround yourself with mentors and partners with more experience than you, the better.
Unfortunately, a lot of people never get started. Therefore, they never give themselves the chance to gain experience.
College is a great time to start a business, because there is less to lose from your mistakes. For the most part, you don't have to worry about health insurance, student loan payments, child care expenses, or life insurance yet. Furthermore, you still might have financial support from your parents.