2014 Q3-4 The Entrepreneurial Spirit in America is Alive and Well

How many times have you thought or heard, “Why didn’t I come up with that idea?” From our vantage point it is evident that the entrepreneurial spirit in America is vibrant and healthy. A sampling of ideas that Strategic Performance Group LLC (SPG) has been engaged to assess from a feasibility perspective illustrates the creativity and resourcefulness of entrepreneurs and established companies.

Some ideas involve patents such as streaming first run movies into homes on a global basis or a gaming technology that translates the physical dimensions of the user’s physical movements into a game by having the character on the screen perform the same motions that the user is doing in reality. Other creative ideas include an innovative way of manufacturing products in a state-of-the-art 335,000 sq. ft. aluminum extrusion billet production plant in the Midwest or the development of a system for recapturing billions of gallons of potable water that currently go to waste. Other considerations involve the construction of a facility such as a music theater in Florida, a cycling resort for Americans in Gerona, Spain, an assisted living facility on Staten Island, an amateur sport and training center in San Francisco, a culinary arts program for a college in Illinois and a world renowned preschool in Panama City, Panama.

Entrepreneurs are motivated for a number of reasons – some are idealistic, perhaps some attitude is involved in creating something tangible, in some cases, never attempted before. Never the less, our nation has benefited by the entrepreneurial sprit in America for generations. Small business as typically defined by the Small Business Administration (SBA) is an enterprise with 500 or fewer employees. The majority of the workforce owes their livelihood to small business since the SBA estimates that over half of the American workforce is employed by them.

Whether you’re Bill Gates, Mark Cuban, or an aspiring entrepreneur pitching a product on Shark Tank, all successful business start-ups have some commonalities, including vision, discipline, market awareness and execution. Why are several hundred thousand businesses established in the U.S. each year? For some it is to seek fortune or independence, for others it may be to lose a boss in a job they so longer find fulfilling, while others may want to impact society.

Furthermore, why do so many businesses fail? I recall two primary reasons – management error and insufficient capital. Although that is true to some degree and we can all probably cite specific cases, let’s also recognize that many businesses fail because the marketplace never valued their products or services in the first place. Ideas, like people, come and go. Some ideas translate into economic viability while others are DOA. Listening to the marketplace will uncover where hidden barriers lie and opportunities exist. Typically, lenders and investors will not embrace a new business venture unless it has a well constructed business plan anchored by a feasibility study.

Recognizing when to pursue your business venture and when to fold before spending your life savings requires a critical GO / NO GO decision. I recall a conversation with a cardiologist from Alabama that was seeking to manufacture and import a very sophisticated pharmaceutical product from India. After conducting the feasibility study for him and his partners, he asked what the chances for success were. Instead of responding in esoteric terms, I simply used a scale of 1 to 10 with 10 representing a “slam dunk” and 1 representing “don’t touch this idea with a 10 foot pole.” No one has a perfect track record; I certainly do not, in terms of evaluating business propositions. Generally speaking, for a product or a service to be feasible you should strive for a rating assessment of six at a minimum and preferably higher.

It is noteworthy to observe that Baby Boomers and Generation X do not have a monopoly on the entrepreneurial spirit in America. The younger generation will become the lifeblood of future entrepreneurial ship and it’s reassuring that many students have shown an interest. For several years, our firm has coordinated an annual survey of over 1,000 high school students located throughout the U.S. The information is provided for our client located in Japan that conducts an identical survey of over 1,000 high school students each in Japan, China and South Korea. When compared to our Japanese counterparts, the U.S. students fare well in their entrepreneurial spirit. Of 1,000 high school students surveyed, 60.4% of American students strongly or somewhat agreed with the statement, “I want to start my own firm or business.” This compares to 33.4% of Japanese students and approximately 70% of students in China or South Korea. Furthermore, I have witnessed similar entrepreneurial interest when periodically teaching a course in strategic management at a local university.

If you have an interest in launching a business venture, here’s a few initial steps to undertake:
▫ Assess your motivations and interest in starting a business.
▫ Analyze the market to determine if your product or service has an application.
▫ Review the competitive landscape.
▫ Conduct a classical SWOT analyses (strengths, weaknesses, opportunities and threats)
▫ Establish realistic revenue and profit projections backed by a sound business plan

After you have exhausted these critical steps, seek out investors or lenders to acquire the capital to launch your business venture.