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How Entrepreneurs Really Think........

By Belinda Kolb, MBA - Manager, LCCC Entrepreneurship Program

Recently, I read some interesting new research that attempts to shed better light on how entrepreneurs really think and deal with the highly uncertain environments in which they make decisions.  The research by Dr. Saras Sarasvathy points to an alternative thinking mode that often describes how entrepreneurs think about opportunities. Sarasvathy describes this alternative style as effectual thinking or an effectuation process. Simply stated, the effectuation process describes the phenomena when an entrepreneur starts with what they have and selects among many possible outcomes. This is in contrast to the more familiar causal process or thinking style in which one starts with a desired outcome and then focuses energy and effort on generating that outcome. With effectuation, the definition of “what one has” is just who they are, what they know and whom they know. It is easy to identify with this type of self-assessment or taking stock of ones position and identifying what opportunities, solutions and innovations germinate from that analysis.  The entrepreneurial mindset and entrepreneurial thinking are not limited to the challenging application of starting a new business. There are applications of this effectual thinking or effectuation to the areas of problem solving and creativity. The next time you are considering an idea or opportunity it might be interesting to see which thinking style you really incorporate. What are your first thoughts? Do you run through a mental list of whom you know, what you know and how well your personality and interest align with the idea?(effectual process) Or, do you immediately have a desired outcome in mind and are creating a checklist in your mind of tasks to produce the outcome?(causal process).  I have taken the liberty to condense and otherwise paraphrase five basic principles that Dr. Sarasvathy believes describe the way that entrepreneurs effectuate or often really think.

1. Patchwork quilt principle: essentially creating something new with existing means, the patches of the quilt are the “who I am”, “what I know” and “whom I know”, the importance lies in what the entrepreneur does with their patches not necessarily the patch itself.
2. Affordable loss principle: identifying in advance what one is willing to lose rather than focusing on expected returns.
3. Bird-in-hand principle: involves negotiating with all stakeholders willing to make actual commitments to the project and therefore help to shape the new venture.
4. Lemonade principle: leveraging surprises rather than trying to avoid or overcome them thus  being able to run with emerging situation and create value.
5. Pilot-in- the plane principle: recognizes people as the prime driver of opportunity and the entrepreneur thinking effectually will be concerned with aspects of the future they can control with their own actions thereby removing the need to predict the future. 

I hope you find some value in this interesting research.

For more information you can visit the effectuation website.  www.effectuation.org

This topic and others are typical of some of the material we discuss in the Successful Entrepreneurship course ENTR 1500 taught at LCCC. 

Bad Employee! What to do?

  By Jill Kline, WSBDC Regional Director

Are your employees taking advantage of you? Have you let them get away with things you shouldn’t have and now wonder what to do?  If your business is beginning to suffer because of your employees’ behavior, but you don’t want to fire them, you may want to consider the following.

This is an interesting scenario; I’ll make some assumptions and generalize a bit.

First, take responsibility for your situation and minimize any damage or effects to your business and employees. This is a great step because you, as business owner, are ultimately responsible for what happens in your business, positive or negative. 

Perhaps you did not have any employee policies in place at the time of hiring. This is not uncommon in new businesses; as a business grows you may suddenly find a need for employees and not be fully prepared when you begin to hire. A thoughtful job description will assist with hiring of the right employee. Clearly defined policies and procedures that outline expectations and consequences can help reduce misunderstandings between employer and employee. Job descriptions and policies and procedures are not meant to be an exhaustive list of duties and responsibilities but they lay the foundation for what the employee can expect.

If this happens to be the case, I would encourage you to plot a timeline (this corrective change will not happen overnight) and let your employees know that you would like to begin formalizing your business by developing job descriptions and policies and procedures. Let your employees know the purpose for this decision – that you want your business to be prepared for anything and be successful. Involve the employees so they realize you value their input or opinions. Plan specific times for the process and keep it upbeat and non-threatening. You might ask your employees to write their own job descriptions based on their perceptions while you write your expectations and then together compare and discuss the two descriptions. You will also want to develop a performance evaluation based on the duties assigned; develop accountability measures that include consequences for both fulfillment and non-fulfillment of duties; let your employee know that you want them to succeed and set up regular times to evaluate progress. This does not have to be a time-consuming, burdensome task. Continued communication will allow the employee to seek help or express concerns and will also allow you, the employer, to guide and mentor the employee. 

There are many management programs or strategies that you could adopt. If this approach seems overwhelming, seek the help of a coach, mentor, the Wyoming Small Business Development Center or other professionals.

Do you know a sole proprietorship cannot be formed with anyone else – not even a mouse, not even a spouse!

By Jill Kline, WSBDC Regional Director

A sole proprietorship, as the name implies, can have only one owner; if you involve your spouse or anyone else, the entity would then become a general partnership. 

When a sole proprietorship is formed, no business “entity” is actually created.  The assets and liabilities of the business are the same as those of the owner.  If you want to involve your husband or wife because you are worried about what would become of the business if something happens to you, then rest assured that the business would transfer to your heirs.  Your heirs could continue the business, restructure it, or dissolve it depending on what was appropriate for them.

Forming a sole proprietorship opens you up to unlimited personal liability since the business is the same as the owner both legally and financially (as does a general partnership).  A sole proprietorship has no separate taxation; the owner pays all taxes personally.  You might consider forming an S corporation or limited liability company in order to obtain the appropriate tax advantages you might be seeking, while limiting your liability.  I highly recommend you consult an attorney or accountant to help you determine which legal form of business would best suit your situation.

A general partnership in Wyoming does not require a written contract or agreement and has many of the same characteristics of a sole proprietorship.  Again, there is unlimited liability for each person involved; the partnership would dissolve upon the death or declared incompetence of a partner (unless there is a written contract or agreement stating otherwise); and each partner pays taxes on their share of income.  If you decide to form a general partnership with someone other than your spouse I would recommend involving an attorney.  This, at the very least, could help you avoid any deadlock decisions if the ownership of the partnership is split equally. 

The Wyoming Secretary of State has a document called “The Choice Is Yours” that can help educate you on which legal entity would be best for your business.  It is available at http://soswy.state.wy.us/corporat/pub.htm.

Building the Wyoming We Want

  This is a blog posting about the statewide conference, “Building the Wyoming We Want,” January 10 and 11, 2008 at Casper College.

We have arrived at a unique point in time in Wyoming.

Our economy continues to surge ahead, unemployment remains at a record low and we’re seeing an encouraging increase in the number of companies that are looking to move to Wyoming and set up shop.

But with the benefits of growth come serious challenges. There is growing attention being given to the pace and pattern of growth in the state, especially as it affects our wildlife, our characteristic open spaces, our breathtaking mountain vistas and our wild and pristine places.

There are also mounting pressures for housing and infrastructure in cities, towns and counties around the state, where an influx of people and an increase in industrial activity have strained existing resources.

When considering the most significant challenges facing Wyoming and its future, high on the list is how we can welcome growth and prosperity and still protect the things and the places that make Wyoming a special place to live. We need to foster conversations about how to build the Wyoming that we want for our kids and grandkids.

Some of the topics I expect to be discussed at the conference include:

• Roads
• Subdivisions 
• Development patterns
• Open spaces and wildlife
• Water, sewer and septic systems 
• Increasing costs to local governmentsI hope this event will encourage continuing discussion about ways to make sure that the Wyoming we all enjoy today will endure into the future.

Frankly, we don’t have a lot of time to look the other way and pretend that these growth pressures will work themselves out. I do not believe that they will. Only we, working together, can do that.  We have an obligation, to ourselves, to our children, and to future generations to define today what we want our tomorrow to look like.  For many of us, there is no place as special as this state, and I’m confident that we can meet this challenge in a way that will lead to creating the Wyoming we want.  I hope that you will join me in this conversation.

Dave Freudenthal
Governor

SO – HOW’S YOUR CREDIT? Learn How to Check It and Improve It

By Cindy Unger, Wyoming SBDC

A credit score is not something that most people think about on a daily basis.  But, if you are about to purchase a new car or start a new business, that score can have a serious effect on your future plans.  Join us on Wednesday, January 23 from 6:30-8:00 pm in the Crawford Room of the Natrona County Public Library to learn more. 
Stacey Tichy, of Consumer Credit Counseling Service, will provide valuable information about credit reports and credit scoring.  You will learn how to access your credit report at no charge, how to read your credit report; how credit scores are figured and what they mean; how to improve your credit score; how to dispute incorrect items; and how to clean-up your credit report.  She will also discuss wise use of credit and how to avoid predatory lending practices.
The seminar is sponsored by the U.S. Small Business Administration, the Natrona County Public Library, the Wyoming Small Business Development Center, and the Casper Area Chamber of Commerce.  To register, please sign-up at the Library Reference Desk or call 577-READ, ext. 2.
Reasonable accommodations for persons with disabilities will be made, if requested at least 2 weeks in advance.

OK OK, So we'll post something already!

By Brandon Marshall

Honestly people, we're not trying to set records for least blog postings in a given period of time.  Really, I planned it this way! If we only post every 6 months, you'll really appreciate the morsels we throw at you, right? 

Ok, so on the serious side,  there are some pretty exciting things going on with the WBC and our partners at the University.  In fact, this week, I'll be touring Hill Air Force Base in Utah (of course I'll be wearing all the Pokes gear I can find) with Manufacturing-Works and three of Wyoming's most impressive manufacturers.  We plan to observe Lean Manufacturing techniques on large equipment.  The tour should be fantastic, and will hopefully give great value to the Wyoming Entrepreneurs who will be joining us Bureaucrats.   

The plan I have is to write up a posting on the tour and have it up Friday when I get home.  Lean Manufacturing is a great concept that can help almost any business become more efficient.  For more information on the process and the services offered by Manufacturing-Works to Wyoming's businesses, visit www.manufacturing-works.com.