s
s
Sections
Sections
Subscribe

The North Bay has a variety of resources to help entrepreneurs get the right answers to these questions. The Sonoma State Alumni Association networking event on Tuesday, Aug. 30, from 7:30 a.m. to 10:00 a.m. at the Sonoma Mountain Business Event Center will bring together many of the key North Bay economic development agencies to help answer such questions and give practical advice about starting a business. For further information, contact the SSU Alumni Association at 707-664-2426 or email alumni@sonoma.edu.

__________________

An article in the Wall Street Journal entitled “Shrinking in a Bad Economy: America’s Entrepreneur Class” recently caught my attention. The author asked whether or not the damage done by our weak economy would have a long-lasting effect and thus discourage the next generation of entrepreneurs.

In my work as a consultant to North Bay start-ups and entrepreneurs, I’m often asked whether this is a good or bad time to start a business. The answer, as with so many things is, it depends.

Let’s first explore the question by examining the reality of the current situation regarding small business in America. The news at first glance tends to be rather discouraging. But as Winston Churchill once said, “A pessimist sees difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

One of the key metrics often used to gauge the strength of U.S. small business is SBA lending activity. For the last couple of years it’s not been good. According to a recent article in CNN/Money, bank lending to small businesses fell $15 billion in the first quarter of this year. The article also noted that small business lending had declined steadily during the previous three quarters and had fallen on a yearly basis since hitting its peak in 2008.

Another troubling indicator is that according to the U.S. Bureau of Labor Statistics, the number of jobs created by businesses less than one year old fell from 4.1 million in 1994 to 2.5 million in 2010. Combine this with current economic uncertainty and market volatility, and one could make a compelling case for holding off on any new business start-up.

However, one fact still remains: according to the U.S. Bureau of Labor Statistics, the size of the U.S. economy is estimated at $15 trillion.  And the Economist recently estimated the global GDP to be $65 trillion. In my book, that signals a huge opportunity for forward-thinking entrepreneurs.

Times of exponential economic shift lead to cracks and openings in the marketplace. We are seeing a sea change in how consumers approach purchases by being more value-oriented. The world is witnessing a move toward sustainability, and innovative new technologies are being introduced almost daily. Combine this with ever-more efficient ways to move products and services globally, and voila: entrepreneurial opportunity.

But success is never easy. To win today in small business requires a completely new way of thinking and a new set of entrepreneurial skills. The business models of today are laser-focused on solving key needs in the marketplace and responding quickly to a dynamic environment, as well as requiring less upfront capital to get started.

I’ve often said I’m most excited about working with entrepreneurs because they are the ones who will solve the world’s problems. If there is not a problem confronting consumers in the marketplace, there is no need for a new business. But if there is a problem, an innovative business will urgently be needed to solve it.

Two of the essential keys to entrepreneurial success are to identify the fastest-growing industries and to create business models solving those sectors’ needs. For example, in May, 2011 IBIS World noted rapid growth in alternative energy, Internet technology, e-commerce, “boomer-care,” environmental consulting, web-based publishing and biotechnology industries. The report further observed that these industries grew due to one or more of four drivers: Internet growth, environmental issues, cost-cutting and evolving technology.

Future entrepreneurs might ask themselves what types of business models they could create that would leverage technology, help cut costs to consumers or have a positive environmental impact. The answer to any one of those might be the genesis of the next successful business to be launched here in the North Bay.

The key here is to approach any new business concept with a plan. A carefully thought-out concept vetted by a basic feasibility study is a good place to start. Some good questions a potential entrepreneur might begin with are: Does this idea solve an unmet need in the marketplace? Have I created a product or service that is superior to the competition’s? How profitable is the financial model? Can I secure sufficient financing to get from concept to cash flow break-even? Are the market trends favorable to my business concept? Am I the right person to execute this idea? Who else do I need on my team?

The North Bay has a variety of resources to help entrepreneurs get the right answers to these questions. The Sonoma State Alumni Association networking event on Tuesday, Aug. 30, from 7:30 a.m. to 10:00 a.m. at the Sonoma Mountain Business Event Center will bring together many of the key North Bay economic development agencies to help answer such questions and give practical advice about starting a business. For further information, contact the SSU Alumni Association at (707) 664-2426 or email alumni@sonoma.edu.

Entrepreneurship by its very nature is a high-risk, high-reward proposition and certainly not for everyone. However, for those intrepid individuals with the right business concept, a sound financial model, a small amount of seed capital and the right advice, I think it’s a great time to start a business.

...

Paul Bozzo is the founding principal of The 10X Group in Santa Rosa (www.the10Xgroup.com). The 10X Group specializes in working with start-up and fast-growth companies to provide business planning, funding, web marketing and visual media solutions. His weekly blog highlights key information relevant to North Bay entrepreneurs starting or growing successful businesses. He can be contacted at paul@the10Xgroup.com or 707-536-1097.