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SCHOOL FOR STARTUPS
The Breakthrough Course for Guaranteeing Small Business Success in 90 Days or Less
By Jim Beach, Chris Hanks, David Beasley
The McGraw-Hill Companies, Inc.Copyright © 2011The McGraw-Hill Companies, Inc.
All rights reserved.
Anyone Can Do It
A belief common among would-be entrepreneurs is that only a chosen few are cut out for this kind of work, and everyone else is destined for a life in the corporate grind. Some people think entrepreneurs have some genetic trait that makes them capable of taking big risks, skirting colossal failure, and achieving great success while all others are addicted to the security of a monthly paycheck and health insurance. But in helping thousands of people start their own businesses, we have discovered over and over again that this myth is simply not true.
We believe that anyone, yes anyone, can be a successful entrepreneur. People love to argue this with us, and they always lose. Exactly what skill is required for starting a business? Do you have to be smart? No. Most business owners are far from geniuses. Do you have to have earned some prestigious graduate degree? No. Education in the form of a degree is irrelevant if you have the proper tools for success in place. We challenge you to find any criteria that a person must have in order to become a successful entrepreneur. The only characteristic that comes close to being necessary is raw desire and drive, and anyone who has picked up this book has demonstrated the requisite desire. Successful businesses can be launched quickly and profitably out of your basement, in your garage, or even, as shown in the following example, in a college classroom.
How Timeless Chair Was Born
The world was in turmoil in the months after the September 11, 2001, terrorist attacks. It was a tense period, marked by a swooning stock market. Today uncertainty and fear are with us again, this time due to the recession that started with the bursting of the subprime-lending bubble in 2008. In the fall of 2001, Jim Beach was teaching entrepreneurship to graduate students at Georgia State University in Atlanta. The enthusiasm of the students was palpable, but the university, as large institutions so often do, had him teaching the course with a textbook of fifteen-year-old case studies. The students, already upset about paying $129 for an old textbook, could not relate to stories about Larry Ellison, Bill Gates, or Oprah Winfrey. They realized that replicating these careers was about as likely as winning the lottery, maybe even less likely. Instead, they were anxious to start their own small businesses after college, so they could avoid entering the draconian corporate world.
Jim had a different idea. Why not use the classroom as an entrepreneurial laboratory? Why not start a company in the classroom? He was so confident of success that he let students choose the product and the country. Jim would provide the startup capital. If the company did not make a profit by the end of the four-month semester, he would give every student an automatic A. Earlier in the class, Jim had told the students how hard the furniture business was, how low the profit margins were. So the students joked about potentially starting a furniture company. In what country? Pakistan, of course, which was right in the center of the post-9/11 conflict and therefore not exactly the optimum location for starting a new business venture. Jim accepted the challenge, and the clock started ticking.
As students researched the furniture industry in Pakistan, they discovered that the country also had a very large rug industry, mostly producing handmade rugs. Jim and the class came up with the idea of combining the rug industry and the furniture trade. They would buy antique Persian rugs (sometimes called kilim) direct from the markets of Pakistan, cut them up, and use the pieces as upholstery for chairs. By the fourth week of class, they had only just gotten the idea off the ground, so time was running short to turn a profit.
Jim contacted the U.S. Department of Commerce (DoC) office in Pakistan. The DoC runs a program called the Gold Key Service, which introduces American companies to possible partners overseas. One of the federal government's best-kept secrets, this service helps American businesses flourish globally. The department asked several questions about the price range and quality expectations, so it could get a better focus on what types of furniture makers the class was looking for. Jim responded with the requested information, and two hours before class the next day, he received a two-page faxed response listing about twenty companies that might be able to satisfy the requirements. One of the students in the class was from Pakistan, and he was able to provide additional names based on information from his family.
During the fifth week of the class, the students gave their new enterprise a name, based in large part on the availability of the Web domain name (the name of a website). They called their business Timeless Chair—and registered the domain name timelesschair.com—because these were new chairs covered with old carpets, giving them a timeless look. (A quick point about naming your low-risk, high-speed entrepreneurship venture: You can spend months of your time and thousands of dollars hiring a marketing firm to come up with a name for your company, but if the Web domain name is already taken, you'll need a different Web address. It's better to check first for domain name availability and shape the name of the company around those that are available. A domain name can be purchased for a very small amount of money, often for as little as $10 a year, from domain name registration sites such as GoDaddy.com or Register.com.)
After they decided on a name, Jim's students set out to obtain books on chair design so they could refine their product. Soon they chose two high-back chairs, a classic dining room chair, two overstuffed chairs, and a library reading chair to emulate. These designs were then faxed to the list of possible suppliers in Pakistan. Three companies quickly responded. Within twenty-four hours, one company had a sample chair constructed and agreed to ship it UPS air express. Meanwhile, the students started working on creating a company website—nothing fancy, using just a $59 standard template design.
The first sample chair that arrived was a disappointment. The kilim fabric was boring and rough, hard to sit on. The polyurethane coating looked dusty. After the class complained, the manufacturer agreed to find better-quality fabric. A representative visited the local market, took digital photos of forty to fifty carpet samples, and e-mailed them back to the class for review.
Jim, seeking to improve the look of the chairs, also shipped the manufacturer a can of higher-quality polyurethane from the United States. There was simply not enough time left in the semester to locate another polyurethane supplier, so Jim decided to ship it himself directly. The owner e-mailed back, saying he could be finished with the original order of eighteen chairs and about ten ottomans within two weeks. This was about the right number to fill one shipping container, a practical consideration that entrepreneurs need to constantly keep on their radar screen. Too much inventory would force the class to pay for an extra container. Too little would have forced them to pay for empty space on the ship. Jim also started contacting various shipping companies that said they could have the container to the class in Charleston, South Carolina, thirty-one days after that. In terms of winning the bet with the class, it would be very close. The class would need to sell chairs within a week of them arriving in America. Jim might have helped them with some of the ideas, but the students would have to do the heavy lifting on their own.
The cost of the finished chairs was only $375 each. The ottomans cost about $175 each. So the total original bill was j
Excerpted from SCHOOL FOR STARTUPS by Jim Beach. Copyright © 2011 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
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