Jerome Katz Coleman Foundation Professor in Entrepreneurship John Cook School of Business

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COLEMAN FELLOWS SUMMIT 2014: "It's Not As

Foreign As You Think! (a.k.a. The Seven Secrets

of Success for Independent Professionals)

Jerome KatzColeman Foundation Professor

in EntrepreneurshipJohn Cook School of Business

Saint Louis University

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Objectives for Today

1. Identify & leverage A/S skills for your own business.

2. Identify key resources and supports for the small business.

3. Clarify the critical success factors and pitfalls to avoid in your own business.

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Arts & Science Based Self-Employeds

Percentage Occupation70% Model makers

66% Non-MD Health practitioners

61% Misc. entertainers, sports & related workers

60% Photographers

58% Artists and related workers

56% Animal trainers

51% Musicians, singers, and related workers

46% Writers and authors

42% Massage therapists

29% Child care workers

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The Good News: You Have Skills

• All– Planning Skills

• Classes, programs, etc.

– Opportunity Recog. Skills• Funding, presentation venues…

– Prognosis Skills• Bulletproofing our work

– Veridical Thinking Skills• How things really work in our area

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What Do You Teach Grad Students In Your Field?

• How to find jobs, grants and opportunities

• How to match these to your skills & strengths

• How to assess which of these are “best”

• How to pursue these opportunities

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What Do You Teach Grad Students In Your Field?

What You Teach

• How to find jobs, grants and opportunities

• How to match these to your skills & strengths

• How to assess which of these are “best”

• How to pursue these opportunities

Entrepreneurship Version

• Opportunity Search

• Capability Assessment (or competitive analysis)

• Opportunity evaluation

• Marketing & Impression Management

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More Good News: More Skills• Humanities & Arts

– Expressive Skills– Communication Skills

• Sciences – Quantitative Skills– General Scientific/Tech

Knowledge/Skills

• Arts & Sciences– Making things

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Two Divers of Entrepreneurship

• Opportunities (“Pulls”)– Passion-driven– Technique-driven– Usually more innovative

• Necessities (“Pushes”)– Financially driven– Demand driven– Usually less innovative

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How the Drivers Play Out

• Opportunity = Wealth Creation– Full-time, growth-oriented,

employs others

• Necessity– Income Supplementing

• Part-time self-employment

– Income Substitution• Full-time self-employment for

yourself

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Today’s Secrets

1. Act to Open2. Pick a Market3. Craft an Entering Strategy4. Price & Haggle5. Think Strategically6. Plan to Move Up7. Help Helps. Get some.

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S1 - Getting In: To Act You Need To Open

• Types of businesses– Professional practices

• Delivers standard services

– Consulting • Delivers specialized services

– Workshops (Inventors) /Studios (Artists)

– Retail/Wholesale Stores– Today any could be bricks,

clicks or both

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Key : Deciding What You Can Sell

• What do you like to do?– Can you do it now or do you

need to learn something 1st?

• What will people pay for?– You may need to look for

your customer somewhere else

• The sweet spot is where the two come together.

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Keep Your Eyes Open!

• Baby boomers are going to be retiring by the millions

• Those that own businesses will either sell them or have to close them down.

• You might be able to get these at great prices.

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S1(c) - Getting Into Business: Opening

• Get a Team– Prof. Association

• Inventors, Artists, Professions, etc.

– Mentor• Look for alums & locals big on

giving back, also from Prof. Assocs.

– Attorney: General vs. Specialized– Bookkeeper or Accountant

• Get referrals from people already in the business

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S2 - Marketing Basics

• Market as key– Best: Client in hand at start– Use 6 degrees of separation

• Work, Schools, Church, Family

– Prospect via Internet, connect personally

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Marketing = Selling

• For most A&S driven firms, customers come from personal connections and contacts.

• The more people you know, the more likely you are to find customers.

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How Do You Find People?

• Alums (esp. successful ones)– Why alumni offices might like to

help you!

• In-class speakers & judges

• Family, friends & their friends

• Social network acquaintances

• Ask yourself – who can your product or service help?

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Prospecting Using LinkedIn

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Prospecting Using LinkedIn

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Search For Alums

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Fine Tuning Location

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S2(b) - Marketing Basics

• Your package– Business Cards – get online or at

Office Depot– Pamphlet – you, your product or

service– Bio/Resume– Website

• Informational (2-3 pages can do it)• Go cheap but buy your domain (~$8), e.g.

www.jeromekatz.com - this also gives you your name as your email.

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Next: You Need An Irresistible Product

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S3 - Entering Strategy

• What will you offer?– Fit to your clients’ needs

• What do they want?• Don’t know? Ask!

– Think features, not price• If it is “right”, people will pay more

– Look for products (vs. services)• E.g. instead of personally checking

grammar, sell an template add-on to word that checks what you would.

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Checking the Competition

• You can use Google to find websites of competitors– Look for services/products– Look for recurring themes– Look for testimonials for types

of customers to pursue

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What do you do next?• Check out competitors online.• Look for reviews on Yelp, Google,

elsewhere…• See what your friends say.• Go visit.• Question: what do you think they

do well? What’s missing?• Think about what you can do

better!

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S3 - Entering Strategy

• Why should they pick you?– Trust– Expertise– Providing a distinctive product or

service

– NOTE: You don’t want to be the cheapest!

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Why You Need Record Keeping

• To keep track of business– Customer lists, project lists…

• To keep track of money– Are you ahead of the game?

• To pay taxes– Government requires you to

keep track

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Record Keeping

• Level 1: Paper ledgers, day-timers– Office Depot

• Level 2: MS Excel – Templates @ office.microsoft.com

• Level 3: Quickbooks or NolaPro Online

• Level 4: Accounting Packages specific to your profession

• KEY: Keep it simple to keep being consistent

• Consider a bookkeeper – barter!

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Don’t Freak Out, You Know This…

• Cash Flow – like a checkbook/debit card

• Profit & Loss – like a budget

• Balance Sheet – like a tax return

• Start-Up Costs – like a remodeling estimate

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S4 - Pricing: Figuring Hours

• Think “You vs. Employee”• Solo can be slower (fewer

supports) or faster (expertise)• Iceberg rule: they only see a

fraction of what it takes– Usually 2 or 3 to 1– Also true for employees

• That’s why you bill hours + overhead.

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Pricing: Figuring Rates

• Comparison Figures (salary.com)

– Was looking for aConsulting Biologist

– Title not used in Salary.com– Looked for biologist– Then looked at the alternate titles– Found it in Biologist V

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Pricing: Figuring Rates

• Comparison Figures (salary.com)

– Consulting Biologist (Biologist V)– Average Salary: $103,463– Benefits (33%) $40,000– Overhead (20%) $20,000– Total Hourly Average is $81.73– Assume only 60% billable hours

81.73 * 1.6 = $131 / hr.

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Price too high? Haggle

• Clarify in-house cost• Provide extra value (e.g. web

access, faster results, guarantees)

• Stretch out payments• Bundle this service with others

(repeats, this + another service, etc.)

• Get them to find other clients and sell the syndicate a package (or offer a rebate for referrals)

• Offer a “bare bones” version (if you can live with it)

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5 - Strategic Thinking

• Master a deliverable, package it, promote it & price it lower or offer it faster– Expectant mothers, diabetics

• Leverage groups you participate in – They trust your hour estimates

• Website/newsletter for visibility• Reading business news like obituaries,

listening to gossip at church– Katrina opportunities

• Distribute products you respect

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S6a - Move Up: Income Substitution

• Ride Circuit – Go Outstate • Adjunct Instruct • Go deep in one industry – e.g.

Nursing Home Trade Assoc. for a dietician

• Expertise by web – About.com• Snowball sample – Referral

design

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S6b - Move Up: Wealth Creation

• Tech Transfer– Leading edge technologies– Popularization, e.g. California

Mashers, Gatorade

• Go for corp. or govt. money

• Spin-Off/Out

• Leverage Others – referral bonuses, commissions

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Can This Be Done?

• Pediatric Education Dietitian Services (pedsinc.com) – Barb Linneman

• Nutriformance – Ellie & Dale Huff

• 1-800-Butterball for ConAgra

`

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Why Help

Helps

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S7 - Help Helps: Sources

• On campus –Entrepreneurship Centers

• Everywhere – SBDCs, SBA, SCORE, ADA, Consultants, Lawyers, etc.

• Online – business.gov, sba.gov, score.org

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Finding that help

• Get Information– http://business.usa.gov/micro-

site/state_resource– SBA.gov– These sites and their help is

free!

– Let’s find some help!

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Other Sources of Help

• Legal – Nolo.com, Legalzoom.com,

Rocketlawyer.com, Shakelaw.com

• Online Business Planners (& online training courses)– SBA.gov– Myownbusiness.org

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Find Connections for Help

• Gales Directory of Associations– Look for prof/trade associations– Google & LinkedIn search for it

• Freelancer.com

• Entrepreneur.com

• Check the blogosphere

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Interesting Sites• Equitynet.com – risk &

valuation calculators• SBA.gov/tools/sizeup –

benchmark your business & map competitors

• City-data.com - Check out area demographics

• Prizm/VALS – customer segments (google for them)

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The Secrets

1. Act to Open2. Pick a Market3. Craft an Entering Strategy4. Price & Haggle5. Think Strategically6. Plan to Move Up7. Help Helps. Get some.

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Need a book?

• Entrepreneurial Small Business (McGraw-Hill)– Ask your MHHE rep for it– Buy used (and old)

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Questions?

Professor Katz, may I

be excused? My brain is

full.