Wyospace.com

What makes an entrepreneur?

 By Brandon Marshall

Occasionally, because the ridiculously long word is in my title, I get asked what the definition of "entrepreneur" is.  Most people probably think its anyone who has started a business, but I'm basically uncomfortable with that because it just doesn't seem right.  Alas, today I was looking through an old book in my office and I found a pretty interesting perspective on what exactly makes up an entrepreneur.  Basically they share the Seven Perspectives on the Nature of Entrepreneurship.  The title of the book is "Corporate Entrepreneurship" and is written by Michael H. Morris and Donald F. Kuratko.  Here are the seven perspectives.  Good food for thought......

1. Creation of Wealth - Entrepreneurship involves assuming the risks associated with the facilitation of production in exchange for profit.

2. Creation of Enterprise - Entrepreneurship entails the founding of a new business venture where none existed before.

3. Creation of Innovation - Entrepreneurship is concerned with the unique combinations of resources that make existing methods or products obsolete.

4. Creation of Change - Entrepreneurship involves creating change by adjusting, adapting, and modifying one's personal repertoire, approaches and skills to meet different opportunities available in the environment.

5. Creation of Employment - Entrepreneurship is concerned with employing, managing, and developing the factors of production, including the labor force.

6. Creation of Value - Entrepreneurship is a process of creating value for customers by exploiting untapped opportunities.

7. Creation of Growth - Entrepreneurship is defined as a strong and positive orientation towards growth in sales, income, assets, and employment.

The end is near - of the tax year, that is..

By Brandon Marshall, Entrepreneurship Program

As the end of the year approaches, we all start to think about paying the good old tax man come April 15th.  This is a great time actually to start getting ready and making sure your business is prepared to file accurately and timely.  There's one month left in the year, then you've got to close out your books. 

While it seems counterintuitive, the IRS has some pretty great stuff on their website that will help you get on top of your taxes for 2008.  They offer both a Small Business Tax Workshop and a Tax Center for Self Employed Individuals.  The sites offer help on everything you may wonder about with your taxes, including avoiding phishing scams, figuring your depreciation correctly with the changes brought by the economic stimulus plans and a host of other general tax subjects.  You can also take several lessons online which include topics dealing with partnerships, hiring employees, etc.

Because this information is "straight from the horse's mouth" it's assumed to be completely accurate, so we recommend you give it a look.  No one ever wants the IRS breathing down their back, so using all the tools available just make good business sense. 

Here are the links:

Small Business Tax Workshop

Tax Center for Self Employed Individuals

Sole Proprietorship: The easiest way to start your own business.

BY Leonard Holler, Wyoming SBDC

America was built on the entrepreneurial spirit of our forefathers and it has done very well. One of the easiest forms of business to start is the “sole-proprietorship”. This is the traditional business form started with the assets of the owner. The business is synonymous with the owner. The assets of the business are the owner’s and the owner is responsible for the business’s liabilities. There is no separate entity formed, as with a corporation, therefore no board of directors or stockholders to be accountable to. The “Buck” stops with the owner. Unlike other forms of business, the sole-proprietor does not have to register the business with the Wyoming Secretary of State to operate; existence is based in common law and its life span is limited to the life the owner gives it. When the owner decides to dissolve the business he or she just sells the assets or stops generating income with the assets and returns them to personal use.
The business ceases to exist with the death of the owner. The assets of the business can be transferred to heirs, but the business of the sole-proprietor ends with his or her death. The heirs can use the assets of the business to continue operations, but it is a “new” business. One of the major disadvantages of this form of business is that the sole-proprietor has unlimited personal liability from the operations of the business. Because the business and the owner are one in the same, the owner is legally and financially liable for the business and the actions of employees. The owner has to rely on financing, raised by borrowing, or from their own personal assets. These are some advantages and disadvantages to the operation of sole-proprietorship, others are listed below:

Advantages
• Quick and inexpensive to get into business. No legal paperwork needed.
• Owner gets to make all the decisions.
• No additional tax forms to file. Owner pays taxes personally based on the profitability of the operations and files schedules with their IRS Form 1040.
• Owner can take advantage of allowable business deductions.

Disadvantages
• Potential for loss of everything in a catastrophic event or business failure.
• Owner has to make all the decisions.
• The future of the business depends on the health and abilities of the owner.
• The business might require more money to operate than the owner has available or can borrow.
• Owner is responsible for Self-Employment Tax. FICA and Medicare tax payments are paid with their other personal taxes on a quarterly basis.

Passing the business on to others, be it heirs or employees, will require the dissolution of the sole-proprietorship and possible formation of another form of business. So getting out of business may be harder than getting into it; a topic for another article.

Does your appearance say "I'm a professional?"

  By Anya Petersen-Frey, SBDC Director

Take a look in the mirror…

Books are judged by their covers, houses are assessed by their curb appeal, and people are initially appraised on how they choose to dress and act. First impressions count. In a perfect world this is not fair or right. What’s inside should count a great deal more, and usually it does, but not always immediately. In the meantime, many opportunities may be lost.

Many decisions about our appearance have been made for us.  Gender, skin color, height, etc. are beyond our control. We can, however, control how we portray ourselves to the outer world. The idea is to start at a place most visible, allowing for immediate, recognizable results. Wardrobe, grooming, and nonverbal communication are aspects apparent on the outside - to the outside world. Combined, these factors allow us to present ourselves as competent, knowledgeable, elegant, kind, powerful, or anything else we choose to convey.

We have approximately thirty seconds to communicate a strong message - good or bad. This has been determined as the average length of time it takes for someone meeting us to form a list of impressions about our character and abilities; including competence, personality, levels of success and sophistication, trustworthiness, humor, social heritage, and education.

In thirty seconds people form different impressions, based almost entirely on what they see—clothes, hairstyle, posture, smile, and other nonverbal communications. Thirty seconds doesn’t give you a lot of time to present a complete resume. It doesn’t give you time to explain all your training and abilities.

In the business world, appearance can make or break a deal. For example, a college career planning and placement center surveyed 150 employers; they discovered the number-one reason for rejecting an applicant, after the first interview, was poor personal appearance. Interestingly, those employers ranked poor appearance as more significant than being a “hostile, overbearing know-it-all” (reason no. 9) or “late for the interview without good reason” (reason no. 28).

What’s the bottom line? Like it or not, appearances count. As the speed of the business world accelerates the importance of a positive first impression matters as well.

Your mission, should you decide to accept it…

  By Anya Petersen-Frey, SBDC Director, Wyoming Entrepreneur.biz

Every business should have a mission statement and should also consider a vision and a values statement. The exercise of “visioning” and its complementary topics have often been overdone, but these are business elements often discussed then forgotten. A strong, clear mission can guide your company and help keep you focused, while a vision provides an overall framework presenting long term goals.

A company’s mission should be clear and meaningful. It should derive from values important to your company. Don’t worry about the wording; use terms appropriate to you. Ask yourself, “What is the purpose of my business”? How do I want to reflect my business values? What business am I in? Write notes as you brainstorm and later form into sentences. A mission statement should be a short statement constructed to (1) suggest an action, (2) identify this action only vaguely, and (3) include a social categorization. The second criteria allows for changes in specific goals as the company grows, without the need to rewrite the mission statement and to include all company interests. Mission or purpose is a precise description of what an organization does. It should describe the business the organization operates within. It is a definition of “why” the organization exists. Each member of an organization should be able to verbally express this mission.
Once you have defined what your business does, elevate the mission to a long term vision statement. Think about your business in five, ten or even fifteen years from now. Identify something real addressing your goals. Avoid vague statements. An artist might have a vision to “have my jewelry worn at the Oscars, or a similar entertainment event”; the mission might state something about the high quality unique styles to bring class to any outfit. The mission should be the day-to-day supports to help the business reach its larger vision.

A vision is a statement about what your organization wants to become. It should resonate with all members of the organization and help them feel proud, excited, and part of something much bigger than themselves. A vision should stretch the organization’s capabilities and image of itself. It gives shape and direction to the organization’s future. Vision statements can range in length from a couple of words to several pages; using just a few precise sentences is best.

A mission statement, and an accompanying vision statement, can be part of a great foundation for future success.  For additional insight into developing your mission and vision contact your Wyoming Small Business Development Center.

Improving your chances for getting money!!

By Brett Housholder, Researcher, Wyoming Market Research Center

So you want to start a small business?  How about some insight to improve your chances for getting the money to actually open your doors?

Starting a business can be a daunting task, even for the most knowledgeable and energetic entrepreneur. The first concern of a startup business is usually funding. Before lenders part with money entrusted to them, they’re going to want to see a business plan. There isn’t a bank on the planet that gives out loans for good ideas – they want to see evidence of preparation and research into the business and industry. The good news, however, is that you can arm your business plan with market research.

“Market research” isn’t just some fancy buzzword used by multimillion dollar corporations to convince shareholders their latest product rollout is going to be successful. It comes in many forms, all of which are relevant and useful to large and small businesses alike. Market research can answer simple questions like, “Who are my competitors?” It can also answer more complex industry-specific questions such as, “Who are the top fencing supply wholesalers in the Rocky Mountain region?
The extent to which market research can help small businesses isn’t limited to identifying competitors, customers, or suppliers; for example:
• If you’re opening a bookstore, wouldn’t it be helpful to know which genres are currently hot?
• If you’re going to sell high-end apparel, wouldn’t it be helpful to know how many customers in your market have the annual income to afford your products?
• If you’re going to provide care services for the elderly, wouldn’t it be helpful to know how many senior citizens live in your market area?

Knowing the trends within your industry and the demographics in your area are two more tools at your disposal to further reinforce your business plan.

Another decision facing today’s small businesses, in this age of e-commerce, is whether to sell online. If you’re planning on operating a website for your business the single largest key to success is visibility. If the major search engines can’t “see” your website you are limiting yourself to only customers who know your specific web address. Avoiding this pitfall is known as web optimization and since the majority of your online customers will use a web search to find your products or services, it is not something to overlook. For detailed information on web optimization check out this month’s Wyoming Business Tips article specifically addressing the topic.

If you want to start a small business, take advantage of the benefits of doing some homework. From simple tasks, like determining your competition, to specific details about your industry, market research can help you cover all the bases in your business plan to greatly increase your chances of getting the money to cut the ribbon of your new business.

If you would like more information on market research for your small business, on the services of WYOMING ENTREPRENUER.BIZ or the Market Research Center, contact Brett Housholder at lazarus@uwyo.edu or 307-766-5389.

How do I structure this mess?

  By Jeremy Wilch, J.D., SBDC Business Counselor - Region IV

The proper business structure for your business is a unique choice you are best suited to make.

Many aspiring entrepreneurs are concerned about the proper legal structure for their business. First, let’s review some of the business structure options available in Wyoming. Generally there are five options; sole-proprietorship, limited liability company, limited liability partnership, partnership, and corporation. Each structure provides its own unique benefits and drawbacks, which we will review briefly.

Sole-proprietorship is by far the most common business structure. The benefit of a sole-proprietorship is it requires no formal paperwork to be filed with the Secretary of State’s Office [the official business regulation office for the state of Wyoming]. This option is quick-and-easy, requiring no paperwork or fees. Unfortunately, sole-proprietors enjoy no protection from business liability. In the eyes of the law the sole-proprietor’s business and personal assets are indistinguishable. We’ll review why this is important below.

Limited liability companies [for individual or multiple owners] and limited liability partnerships [for two or more people operating as partners] are becoming very popular as a business structure.  The primary benefit of an LLC/LLP is the assets of the business are kept legally separate from the assets of the owner(s). This is a tremendous benefit to the business owner as it provides a “corporation-like” protection of the owner’s assets in the event of lawsuit or legal judgment. The drawback to this type of structure is it requires application/filing with the Secretary of State, annual reporting, and the associated fees.

The final two common business structures – partnerships and corporations – have very unique duties and benefits which are defined by law. The filing requirements of each structure are complicated and mistakes can negate the protections they are designed to provide. For this reason, it is highly recommended businesses considering these structures consult a Small Business Development Center counselor, an attorney, and/or an accountant for guidance.  Generally, these structures provide little additional benefit to the average small business.

The nature of your business, number of employees, value of assets, and other business traits will ultimately determine which business structure is best for you and your business. I encourage you to visit http://soswy.state.wy.us/corporat/corporat.htm or contact an SBDC counselor for additional information on each of these structures; go to http://www.wyomingentrepreneur.biz and click on free consultation.

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.