Had the great opportunity to work with Linkedin, SVC2UK, and GEWUK in the last few weeks and just wanted to share what Reid Hoffman, Linkedin’s Executive Chairman and co-Founder had to say.
Thanks to Tech Europe for sharing.
Category: Blog
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Should I start a business while at university?
My advice for students thinking of starting their own business…
An interview at Aston Business School.
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Serial entrepreneur and RSA chairman Luke Johnson
Great speech from serial entrepreneur and RSA chairman Luke Johnson visits the RSA to share some key tips on the creation of successful, inspiring and ingenious enterprises.
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Learn from the best
Last week I heard that the electricity companies were making more profit per customer than in the previous year. This is a very important lesson for us entrepreneurs, one which we should take note of in these times of low economic growth.
The easiest way to make more profit is make more revenue to you existing customers.
Everyone knows this yet we seldom take our own advice and here we are looking at the big utility providers and see that this is just what they are doing. In the previous weeks we have seen that worldwide growth is almost nil, the banks are still not in a state to lend to businesses and international markets are looking more like a fun ride than places to invest your life savings.
The utility companies have a core problem, that they have a fixed number of subscribers (with limited house building the growth potential is negligible), they have had a very warm summer (average spending per customer has reduced) and unit costs of the raw material has increased and is set to continue. So with shareholders, waiting for our dividends, they can only do one thing, increase the profit margin per customer to show any form of growth. Without the shareholders, they can make electricity and we cannot buy it.
In many other markets you have many more options. The first is to up sell on the current produce. So if the customer has already purchased the Ford KA, then maybe they are ready to buy into the Fiesta or Focus. The great thing with this is you then may buy their used car and re-sell that, creating a double selling opportunity. Lets not forget the finance, insurance and servicing options which continues the revenue stream for years.
Another option is used by the fast food industry. Normally you are asked if you would like to go ‘large’ for 30p. This means they put more ice in your slightly larger drink container and add a few grams of fries in your slightly larger fries container. This going large, gets them 30p for spending around 3p in materials. However, over the period of one month with several hundred stores, this provides million of pounds for the chain of outlets.
Yet another well know tactic is used by the supermarkets, you may come in for the milk and bread but leave with a box of chocolates and a bottle of wine, therefore intending to spend £3 and acutely spending £20. Most supermarkets make sure you have to pass the higher margin products to get to the essentials. Online stores are also becoming very good at this, especially Amazon, who provide recommendation and product placement based on your previous purchase, current search and seasonal trends.
The loyalty card is yet another opportunity to make more from your current customers and coffee shops around the country, small and large have all now desperate to this. Providing you with a card, which them love to stamp and them offer you a free drink on completion.
The cost of find new customers is high and therefore making sure you have an approach to make sure you can rely of this income is important for your business. Just 10% extra from each customer at this time is the difference from your business being average and being at the top of your industry when the recession finally ends.
Take a look at what options you have today to make more from your current customers.
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Do we need a knowledge or a skill’s economy?
We hear the term ‘knowledge economy ‘ used by many people and this week I finally made a decision, its not good for us entrepreneurs. The essential facet of a knowledge economy is that focused on the production and management of knowledge. It means Universities can get paid to make new discoveries, without ever wanting anyone to use them.
So lets take a look at history, Greek scholar named Pythagoras, who lived around 500 BC was also fascinated by triangles with these special side ratios and came up with a theory which we still use today. So the Greek’s had a knowledge economy. I don’t have to say how they have factored since taking the cheap finance available since joining the Euro. However, the development of knowledge itself does not bring prosperity, it’s the exploitation of it.
The fact is, with a truly international economy and information sharing through the internet, knowledge is not an asset until you have the skills to use it. The frontiers of knowledge are only today’s and tomorrow we shall have new frontiers which make yesterdays knowledge redundant and obsolete. With more people on the planet the pace of this knowledge development increasing as the human race, races for more knowledge. How can you expect to win a race when you have over 6 billion people against you? Small countries do not have the man power or money.
The answer is to master the skill of managing, exploiting and capitalizing the knowledge. Society needs to develop people who have these skills to transfer knowledge into successful enterprises.
When I look at successful entrepreneurs, they develop industry knowledge, but never technical, they know the trends, but never the detail, they understand what works and what does not, but could not build any product themselves. The skill to adapt to whatever life throws at you is a skill we should all have and this skills needs to be learnt at every stage of education, even a university one.
In a knowledge-based economy, knowledge is a tool. So if we are going to anything we need an knowledge-based economy with a population who have access to the knowledge and the skills to master it for our enterprising future.
Pythagoras gave us a tool and we should never forget the skill of using it.
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Multiple Sources of Incomes
Don’t put your eggs in one basket is a saying I have heard time and time again, yet people don’t follow that up with don’t just work for one company. They sit there and say “get yourself a nice secure job” which in time becomes less secure and more of a daily grind.
However, when I read what other people promote as multiple sources of income, at best I describe them as ‘schemes’ and worst ‘pyramid selling programmes’ aimed at making only one person rich and that’s the programme’s owner and not you. However, the premise is fundamental sound and therefore what should we do to ensure we take this good advice and invest it in our selves.
As an entrepreneur, you won’t have only one customer, you want many, from diverse sectors or customer demographics which would allow you to maintain sales in any economic environment. This makes sense and I hope you are already doing this.
So why not take this to the next level and own two businesses, in diverse sectors or customer demographics. These businesses could then ensure you a higher and more secure revenue stream. This I’m sure you would agree is a good strategy, however, it hard enough to keep one business going, never mind more than one. This is an important stage in the growth of an entrepreneur and many do not take this step from single to multiple business owner, the true definition of an entrepreneur.
Investing time and money in businesses comes in many forms, as an entrepreneur you are doing this in a very hands on way. So if running the businesses yourself is an issue, then you could provide it in the form of an angel investor, pure stock investor or via the stock market. You could invest an amount each month which may be from your current cash flow.
Multiple sources of income is about ensuring you invest in many opportunities, using time, money, effort, knowledge, network and the skills you have at your disposal. Use them wisely and you will soon have multiple sources of income based allowing you to be a true entrepreneur.
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University Educators have to be Entrepreneurs!
Every year fresh new students enter university, these young enthusiastic people begin the next stage of their lives. They totally understand that the rules are different, they are no longer at school, no longer living with parents, have access to their own money and meeting new and amazing people in a very vibrant community.
The real trick for educators at this time of year is to facilitate this, develop this passion and ensure that it can be channelled in developing and progressing the student throughout the course.
However, with cuts in the system, staff who no longer want to teach but still want to get paid and courses which do not contain any modern related content except for that dated pre Apple/Microsoft operating systems, the chasm between the student and the educator can quickly, in a matter of hours, become only too large for either side to see why they should bother.
Equipping students for a life where they will change career four times, be in dept for most of their lives and develop relationships in virtual spaces first should be core to any persons education. Enterprising people by their nature adapt and create opportunities and we should only allow these types of people to focus our young.
Enterprising Educators are needed to ensure we develop enterprising graduates. As with the best sweet shops these come in all flavours and sizes with no one appealing to all. So how do we do this?
University educators should be part time and self employed, they should be entrepreneurs!
This would ensure that the young of today are learning from the very people that are adaptable and able to able to create opportunities. A lecturer could still do research, run a business or provide consultancy allowing the creation of more dynamic teams within the university. Its their mindset we need our youth to engage with.
University educators should also still work in the industry they teach. So if you are teaching math to engineering students, don’t get the professor of maths. His application of the subject will be purely theoretical and thus subject to doubt by the students. That doubt then generates mistrust which leads to our chasm.
University educators should know how to add enterprise into every part of the curriculum. Learning comes from lectures, discussions, assignments and lab work. Each of these should be designed to develop the enterprise capability of the student, moving them forward in understanding how they will be contributing to society during the fruitful enterprising career for the next 70 years!
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The entrepreneur mindset
What is the secret of being an entrepreneur and how can anyone be an amazing one?
There are some very important pointers that suggest than entrepreneurial leaders are made, not born. These are people who are open to new opportunities and develop themselves into entrepreneurs, no one else can do it for them. Entrepreneurship cannot be learnt, only practiced.
The development of the mindset may occur at various stages in life. Through research the main periods of a person’s life, normally while some form of transition is occurring when a person propensity to accepting risk is heightened. Statistically this occurs during adolescence, after completing education, after divorce, after redundancy and also after retirement.
However, growing up in a cultural environment where business owners and leaders are the norm and have the respect of their community is also very very important aspect which ensures the individual understands the importance of the role. In Britain today we still like to demonize entrepreneurs, Dragon’s and hard nose bosses in the Apprentice, to just name two popular culture. We only see businesses on the new when they are doing badly.
So once we understand that starting a business is normal and something which is good for society, the health of the economy and also creates more wealth for the country than any other occupation, we can move forward.
The second group of factors are funding, people and know-how. Mastering these leads to amazing success and there are some lessons to be learnt from others. For those starting their first business, bootstrapping is the key, use only what you have and what you do not have, either find cheaper, more entrepreneurial way of getting it, or just do without. This attitude is one we can see if many famous entrepreneurs, like Theo Paphitis who uses his children’s inheritance to show how he does not like wasting money.
Managing other people is one of the major problems for the entrepreneur, other people rarely have the passion, commitment or single-minded dedication to the business that they have. These people require management, appraisals and paying in set intervals, based purely on some dates in a calendar and not on effort, output or more importantly the profit they created. The benefits of having people who can multiple your talents is endless, once you have mastered managing them.
The skills required to be an entrepreneur is vast, accountant, sales director, marketing guru, logistics expert, health and safety specialist, taxation consultant, operations manager and HR administrator. However, each challenge provides opportunities to learn new skills, develop the business further and ensure than any new opportunities that lie behind these tasks are fully utilized.
Entrepreneur know how can be learnt, development and tuned whilst still in education or other employment. You can start a part time business, join a society or group, volunteering, or just researching on youtube/TED and the many other sites which have great content.
It is this attitude to risk or failure that allows the opportunistic mindset of the entrepreneur to find out and develop new businesses. Failure is the opportunity to truly learn what it is like to be an entrepreneur. Sergey Brin , Larry Page and Mark Zuckerberg are not entrepreneurs, they are business owners who largely have only one very small (yet highly valued) experience of business. This development of an active and dynamic knowledge of risk is what will ensure your success and the success of the country you live in.
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Not invented here!
Entrepreneurs are brilliant at looking at a problem and adding resources from various areas to create a solution. They don’t care where it was created and even who owns it, they just know they have a problem to solve. After reading the news papers this week, I see that Google has purchased Motorola for its patents and in another article, independent games developers are being sued by patent holders for providing in game links to buy more of their games. Entrepreneurs and software developers need the space to create new revenue models and opportunities, using everything that could possibly be available. Especially in a recession!
Many academics are the opposite, if there is a problem they must own this problem and solve it in pure independence, leading to potent disregard for other solutions. This has led to organisations that have not changed their business model, their internal structure or the products they provide, in cases for almost a thousand years. The opportunity to innovate this education industry is so much over due that new businesses are moving fast into the sector to take on these paralysed educators.
Again, this week in the papers the University of Buckingham achieves one of the best results in student satisfaction. This university is a private one, not government funded. It has a flexible four inductions per year, four ten week semesters, two and three year degrees and career focused courses which clearly its students love. This focus on customer satisfaction has made it look around the industry to find what works and how could we make it better. It’s a good job that Oxford and Cambridge didn’t patent the courses they started almost a thousand years ago.
I am very interested in how industry sectors re-invent themselves, especially when faced with challenges based around an evolving business model or new technology. Within education, the use of remote course access and e-learning is the clear advance which will occur in the coming decade. We have seen the first generation, which as always is, take what you do and just make it digital. Now this hasn’t worked, filming a one hour lecture was never a good idea and only shows the lack of interaction certain tutors allow. However, we can start to see some amazing developments, using mixed media, learning styles and combinations of self and organised learning timetables being offered.
The business model will also change with more internationally franchised course offerings and introduction of loyalty price reductions (Foundation, Degree, Master, Doctorate), discount pricing strategies through enterprise or other types of engagement and sponsored places which just taken off with the introduction of higher fees. Universities will also start to develop less capital-intensive infra-structures and lower salary overheads. This will ensure a business model that is centred on a variable cost per student and not a fixed campus cost.
Only one thing in business should be assumed and that is things are always changing, this ensures the fittest are able to move with the market, developing new ways of surviving problems that their industry is presented. This is why Motorola was purchased, Nokia have moved to Second division and teamed with Microsoft. We will see how our university brands are able to adapt to our new world order, business model and delivery mechanism.
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Entrepreneurial Summer Holidays
The Summer holidays for students are a great time to just sit in the sun and dream away the long hot summer days, enjoying their youth, a care free spirit and the lack of real responsibility in a modern digital debt laden society.
Or are they?
The first thing I will say is that they should be, those endless summers created some of the best literature, greatest relationships and most inspirational events this great country has to offer. There is no better place to be on a true summers day that in the English countryside. (Sitting on a packed train, in the rain)
So lets get back to the 21st century.
Most students have around three months off (around 25% of the year), so they should plan what to do as most parents don’t like such long periods of parental supervision thrusted upon them after having recently finding their freedom.
The answer to the long summer break has always been to gain experience: Life, Work, Places, Travel, Opportunities, Skills, Extra Learning and Revenue. So you need to think about how to do this entrepreneurially.
So going out and getting a job during the summer basically means three choices, paid casual work e.g. Bar, Internship e.g. major corporates or run your own business.
How do you ensure you get real benefit of working in some casual job? The answer is to think outside the box, how about working in a bar in Goa, help the owner to double their revenue during the summer,.. just make it different, make it fun and ensure you get some great contacts and references.
There are loads of Internships and one of the best websites to get you started is www.Enternships.com. Here they have jobs in many sectors in various locations, which you can apply for. What is interested is the length of time you can spend in some businesses, so over the summer you could work in 3 or 4 companies gaining a vast amount of experience in a particular industry sector. This is very valuable for your CV and also in deciding what you want to do for a permanent role.
I meet a lot of students who run businesses and the summer provides the opportunity to increase their income from a part to a full time amount. It also allows them to take the business to the next stage and ensure they are in good shape for the following years studies. The balancing act of studying for a degree and running a business can be difficult, however, some students have turnover of between 20,000 to 200,000 per year. Its about time management and focus.
The summer is a great opportunity to revisit your entrepreneurial side and think how can I make a real difference to my life.