Posted by: John S Kiernan

1. Main Findings
2. Ask the Experts
3. Methodology

Main Findings

 

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Overall Rank	City	Total Score	‘Business Environment’ Rank	‘Access to Resources’ Rank	‘Costs’ Rank
148	Washington, DC	35.11	56	18	149
149	Providence, RI	35.03	149	29	100
150	Ontario, CA	34.60	101	150	118

 

 

Ask the Experts

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• Vinit Nijhawan Lecturer in Strategy and Innovation in the Questrom School of Business at Boston University
• Scott DeRue Associate Dean for Executive Education and Professor of Management in the Ross School of Business at University of Michigan
• Dawn Mackiewicz Adjunct Professor of Business and Management at Pine Manor College
• Luke Pittaway Director of the Center for Entrepreneurship and Professor of Management Systems in the College of Business at Ohio University
• Troy D’Ambrosio Executive Director of Lassonde Entrepreneur Institute and Assistant Dean of the David Eccles School of Business at University of Utah
• Bonita Kolb Associate Professor of Business Administration at Lycoming College
• Anil K. Gupta Michael Dingman Chair in Strategy, Globalization & Entrepreneurship in the Smith School of Business at University of Maryland
• Aaron Hagar Vice President of Entrepreneurship and Innovation for the Wisconsin Economic Development Corporation
• Patricia H. Lee Associate Professor at Saint Louis University School of Law and Director of the Legal Clinics
• David M. Townsend Union Junior Faculty Fellow in Entrepreneurship and Assistant Professor of Management in the Pamplin College of Business at Virginia Polytechnic Institute & State University
• Kate Zhou Professor in the Department of Political Science at University of Hawai‘i at Mānoa
• Evelyn Chan Professor of Business Administration at Oakland Community College
• Michael Schirmer Chair and Associate Professor of Business at Peirce College

Vinit Nijhawan Lecturer in Strategy and Innovation in the Questrom School of Business at Boston University What tips would you offer an aspiring entrepreneur?

• Make sure you do sufficient market research to confirm customer pain point;
• Attract co-founders that have complementary skills.

How important is the city an entrepreneur picks to start a new company? Quite important. Cities are known for certain areas of focus and as a result, both talent and funding resources are concentrated around that focus. For example, if one is starting a consumer focused software platform, San Francisco is ideal, or if a life sciences company, Boston is ideal. What are some of the biggest mistakes entrepreneurs make? Scaling too early. The metaphor I use: You must be dialed into the exact frequency of a radio station before you turn up the volume so you get music not noise. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? Every segment can be disrupted by technology: Uber disrupted taxi, AirBnB hotels. The next areas of disruption are many but I like the intersection of computing and biology. What is the best source of funding for new companies? Customer revenue, i.e., bootstrapping. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? Get the basics right: affordable housing and public transportation, since Millennials who are very interested in starting companies do not want to own cars and want to live in urban cores. Next, make the regulatory environment easier for startups. Finally, attract investors by using matching funds. Scott DeRue Associate Dean for Executive Education and Professor of Management in the Ross School of Business at University of Michigan What tips would you offer an aspiring entrepreneur?

1. People not only buy “what" you do, but they also buy “why” you do it. Start with why.
2. Build your founding team in ways that complement your skills set (not duplicate it), and keep the team small.
3. Have a bias for action and experimentation, but a commitment to learning. It’s okay to make a mistake, just don’t make the same one twice.

How important is the city an entrepreneur picks to start a new company? The city is important. Your team is more important. Make sure you have access to talent, in other words thriving cities and college towns. You also want to choose a place that is not going to burn through your cash before your business does. There is a reason entrepreneurs are moving to Detroit, for instance. The Detroit metro area has more STEM grads than anywhere other than the Bay Area, but there is one really big difference — it’s affordable. What are some of the biggest mistakes entrepreneurs make?

1. Thinking something is a blockbuster business because it is cool or unique. Have a business model that explains who the customers are and why they will pay you for your product or service.
2. Letting pride and ego get the best of them. Always surround yourself with people better than you, and empower them to bring your vision to life.
3. Not determining if they want to be rich or the king. Some entrepreneurs want to be rich, in which case the data is very clear — build the idea and then give up control to people who know what they are doing. But if you want to be king or queen, that’s fine too — but understand that it’s much less common to be king and rich. The data are very clear on this issue.
4. Seek feedback early and often, prototype, and experiment. Again, it’s okay to make mistakes, just don’t make the same one twice.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? Education. Education. Education. Just not the way most people think. Technology won’t displace the residential, in-person experience. Technology will put a premium on residential, in-person experiences that are transformational. The days of sitting in a 400-person lecture hall and listening to a sage on stage is over. But the idea of students learning the fundamentals via technology and then engaging in action-based learning and “live cases” alongside world-class thought leaders and teachers is the next evolution of education. What is the best source of funding for new companies? Profit. Short of profit, angels and VCs who actually care about seeing your business succeed. Be wary of investors who are playing a diversification strategy with your business. For those folks, you are just another stock in the portfolio. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

1. Thriving cities with affordable property.
2. Partnerships with and investments in higher education, especially universities that have a thriving entrepreneurship ecosystem and pipeline.
3. Seed capital and small-business investment and loan programs.

Dawn Mackiewicz Adjunct Professor of Business and Management at Pine Manor College What tips would you offer an aspiring entrepreneur? The entrepreneur should market his/her product in a manner that will outweigh the competition. One method is designing a unique web site that is user-friendly and allows the potential consumer to navigate the site easily. How important is the city an entrepreneur picks to start a new company? I think this aspect is extremely important because the geographical location can determine your market audience. Consequently, the entrepreneur should survey the area and population age, median income and other factors to determine the best location that will draw in a large pool of customers. What are some of the biggest mistakes entrepreneurs make? The biggest mistake is that the potential entrepreneur does not research the market or develop a long term strategic plan for the business. Effective planning and solid revenue forecasting is essential for business survival in a competitive business world. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? The entrepreneur should find innovative methods outside of technology to market the product. Some methods might include billboards or other visual means of marketing the product so that you cover all audiences that may not have access to technology or actively involved in social media. What is the best source of funding for new companies? The Small Business Association is the best source for finding small business loans, specifically for woman and minority business owners. The Small Business Association has a strong network of financial resources designed for new business ventures. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? State and local authorities can support the business by accepting the business plan, understand how the business can contribute to the growth of the community and promote more business ventures. Luke Pittaway Director of the Center for Entrepreneurship and Professor of Management Systems in the College of Business at Ohio University What tips would you offer an aspiring entrepreneur? There are a few components that you need. Find something novel or unique to start with. Don’t try and find something revolutionary or disruptive; it will change and develop as you launch the business. Surround yourself with good people both advisors/mentors and other team member; entrepreneurship is a team effort. Try things out, create an initial MVP (minimal viable product) and test it on people. Speak to as many people as possible and, above all else, talk to prospective customers. Finally, it takes tenacity to be a successful entrepreneur; don’t give up and above all else, learn as you go along. How important is the city an entrepreneur picks to start a new company? Being in the right city can really matter. Look for a vibrant start-up scene where others are doing cool things – you can learn from them. Look for a city that is creative, energetic and livable – the talent you will need to recruit wants to live in those types of places. Go where there is already some success; you need access to mentors, accelerators, cash and innovative customers that are interested in your business. Ultimately, however, choice of location really needs to be driven by the venture itself. Sometimes, the obvious locations are not the right ones (e.g., locating a manufacturing business in Silicon Valley may not be the best choice). What are some of the biggest mistakes entrepreneurs make?

• Not talking to the customer before developing a product or service can cause mistakes.
• Underestimating the challenges involved and being undercapitalized is often a cause of failure.
• Picking the wrong people to work with and finding they have different levels or commitment or different visions for the venture.
• Spending too much time chasing cash (either grants or investment cash) when you should be chasing customers and generating revenue.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? Nothing escapes disruption. Health care and education are two areas everybody considers have major opportunities for disruptive change right now. I also consider trends in 3D printing will create major disruptions in manufacturing. Most people are looking at AI, Robotics and the Internet of Things to be other key areas for disruptive change. But nothing escapes disruption in the end. What is the best source of funding for new companies? This really does depend on what the company is doing. Crowdfunding remains a great source for early stage seed capital for creative and technology based ventures. Traditional small businesses have to look to love money and bank loans. The SBA small business loan guarantee is useful for some of those businesses. High growth, high potential ventures should consider business angel syndicates and accelerators as their first step. Usually, institutional investors, such as VCs, will only enter the frame at a later point. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? Create public backed venture capital companies in areas where there is poor access to finance and also consider the role of micro-finance in a location. Aim to reduce the barriers to starting and running a business. Consider tax incentives for informal investors, such as those providing love money and angel finance. Look more broadly at how livable and creative the community is. Can you enhance the arts, make the location more bike and pedestrian friendly, can you encourage the music scene? Finally, look to improve support mechanisms such as accelerator programs, entrepreneurship education in schools and colleges, incubators, business advice and support and access to entrepreneurial mentoring. Troy D’Ambrosio Executive Director of Lassonde Entrepreneur Institute and Assistant Dean of the David Eccles School of Business at University of Utah What tips would you offer an aspiring entrepreneur? Start now, don’t wait, and learn to live with ambiguity. If you are inventing the future you’re not going to find it in a book. How important is the city an entrepreneur picks to start a new company? The right city is important for three reasons:

1. Startup infrastructure - abundance of funders, lawyers, talent.
2. Creative density – are there other smart, creative people in your area that can help you and that you can help succeed?
3. Attracting and keeping talent – the competition for great people is always high; the right location can make it easier.

What are some of the biggest mistakes entrepreneurs make?

1. Being undercapitalized.
2. Letting creed and ego get in the way of the business.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? I think low cost, smart medical devices will disrupt high cost devices. Just like the desk top computers disrupted the mainframe, med device technology will be developed using sensors and cameras developed for smart phone industry and change how healthcare is delivered. We are working on a disposable laparoscope that cost less than $100 and provides the same quality images as $500K system. What is the best source of funding for new companies? Bootstrapping is a viable option to delay taking institutional funds and build early value. We have also had a number of high quality seed funds formed recently in the Salt Lake area that will come in pre-revenue. They will help with build model development and team building and have ties to quality VC firms. Their investments have significantly accelerated time to first revenue and opened the door to second round funding. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

• Invest in education;
• Provide a safe environment;
• Invest in roads, airports, parks, etc.;
• Be cheerleader for the startup economy and use the power to convene to assemble people that need to meet each other.

Bonita Kolb Associate Professor of Business Administration at Lycoming College What tips would you offer an aspiring entrepreneur? I advise both creative entrepreneurs and developers of consumer products. For the second group I suggest that unless they are truly in love with their product, they should not proceed. It is this belief that their product will solve someone’s problem that will carry them through the inevitable disappointments and hard times. Creative entrepreneurs who are artists and musicians do not have this problem as the work they have created comes from their soul. These entrepreneurs need to learn how to view their product through the eyes of the consumer and be willing to make product adjustments. How important is the city an entrepreneur picks to start a new company? Entrepreneurs need support in two ways. They need practical advice and they need emotional support. Both of these can only come from someone who has been an entrepreneur. This is why cities that have and attract entrepreneurs tend to create more. Cities that do not have this base of support, who try to become known as entrepreneurial centers find it very difficult to do so. What are some of the biggest mistakes entrepreneurs make? I have found that too many entrepreneurs do not sufficiently plan for when things go wrong. They have a Plan A, which shows their route to success, but they do not have a Plan B or C for how to be successful when success does not happen as planned. They are then stuck and waste time trying to figure out what to do next. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? Someone has to figure out how we deliver two essential services in this country, which are health care and education. As someone who has both worked in the private sector and as a professor, I know that the model we have for higher education is broken. In fact, if someone sat down to create the most inefficient and expensive model for college education possible, they would develop the current model. It simply can’t continue. What is the best source of funding for new companies? Funding is always the issue. There is funding possible for tech products that if successful, can be scaled up quickly and bring in the big bucks. The problem is there is less funding for small startups that serve niche markets. While they may not make millions of dollars for the investors, they will improve the life of the person who needs the product. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? I believe this is where city and state governments can have a role. They should focus on a product sector that is an issue for their city or region and provide small startups with seed funding. I recently read that the City of Las Vegas is taking this approach for any product idea that can conserve water. Anil K. Gupta Michael Dingman Chair in Strategy, Globalization & Entrepreneurship in the Smith School of Business at University of Maryland What tips would you offer an aspiring entrepreneur? Smart entrepreneurs are different from your run-of-the-mill entrepreneur. Smart entrepreneurs do not per se believe in risk-taking. Rather, they’re exceptionally focused on reducing the risk so that what others see as a risky move is not particularly risky from their own point of view. How important is the city an entrepreneur picks to start a new company? Very important because it is the eco-system that provides the new company with ideas, team members, and early investors. What are some of the biggest mistakes entrepreneurs make? Lack of clarity about who your target customer is and what value you intend to create for that customer. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? As software continues eating up the world, every industry is ripe for disruption. Just look at retail, cars, and banking. This process is underway in every industry. What is the best source of funding for new companies? Ideally, incubators and/or accelerators. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? Create incubators where budding entrepreneurs can get going with initial support and low fixed costs. Aaron Hagar Vice President of Entrepreneurship and Innovation for the Wisconsin Economic Development Corporation What tips would you offer an aspiring entrepreneur? Be prepared to change course. Your idea on day one is almost certainly not the idea that will generate your first dollar of revenue. How that change occurs is extremely important, so surround yourself with people who can provide good advice and good connections. Most importantly, listen to your customers and be very clear on what your value proposition is. How important is the city an entrepreneur picks to start a new company? Access to support and the networks necessary to grow are critically important to entrepreneurs faced with an uncertain path forward. No community is “too small” when it comes to providing the infrastructure necessary to support startups. It’s more a question of quality than quantity. Once a company starts to grow and needs to hire and retain talent, the community takes on a new layer of importance as prospective employees look for somewhere they want to live outside of work hours. What are some of the biggest mistakes entrepreneurs make? One of the biggest mistakes entrepreneurs make is not opening themselves up to constructive feedback. Too many entrepreneurs decide what they want to do and are overly discouraged when customers or investors do not respond with the enthusiasm they expect. On the flip side, entrepreneurs can get distracted by ideas and suggestions that do not contribute meaningfully to their goals. Balancing these two extremes requires focus — inviting questions and knowing how to define progress. Another big mistake is focusing too much on investment and valuation. Certainly, those are important considerations, but they are more likely to follow from customer acquisition and strong growth. What is the best source of funding for new companies? The best source of funding for new companies is the one that provides the appropriate amount of capital to support growth without terms that threaten the company’s future. For some it’s bootstrapping; for others it’s VC; for others it’s a second mortgage and an SBA loan. There is no “best,” just what works. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? The best role for state and local authorities to play in encouraging business startups is creating and supporting an environment where entrepreneurs can find the connections and resources they need to launch their ideas. Wisconsin’s business development efforts include a comprehensive approach that addresses the multiple potential failure points of startup businesses. We offer a strong network of support — from business planning and mentoring and accounting and legal services to financial resources and incubator space — that is essential to foster startup activity. Most importantly, the structures and programs we’ve developed are flexible so that they can meet the needs of companies in any number of industries with any number of growth strategies. Patricia H. Lee Associate Professor at Saint Louis University School of Law and Director of the Legal Clinics What tips would you offer an aspiring entrepreneur? Entrepreneurship is not for the faint of heart, so if you are going to be an aspiring entrepreneur, be persistent. Create your concept and determine your value proposition to your community or customers. Test the concept and make sure it is financially feasible. Before stepping out with the concept, pitch it to family, friends and others who might be interested and get their honest feedback. At this point, you will have a better idea of whether to start this concept scrap it or start something new. How important is the city an entrepreneur picks to start a new company? If you are truly an entrepreneur, the city is probably the least of your concerns. However, I would recommend picking a city that you know something about or you have researched its market for your products and services. Determine if there is an entrepreneurial support community and research the relevant laws, regulations and entrepreneurial climate as it pertains to your business. What are some of the biggest mistakes entrepreneurs make? Having the wrong team surrounding you is a big mistake that many entrepreneurs make. Operating while being under-capitalized (even if it is no fault of their own) is a big mistake. Failing to pay taxes and addressing legal requirements is another big mistake. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? There are several sectors that appear ripe for disruption by entrepreneurs. Big box department stores are sitting on inventory, at the same time digital venues exist to sell apparel and other consumables. Also, higher education may well be a next place for disruption in light of innovation in communication between teacher and student beyond the traditional classroom and innovation in the means by which educators disseminate instruction to the student learner. What is the best source of funding for new companies? There are a variety of funding vehicles available for new companies. Which source of funding is the best is a relative question. Typically the best funding is cheap, reliable, timely, convenient, and private. Commercial lending or peer to peer networks are the best for new companies with excellent credit ratings and reliable income streams. For others, they may be relying on family, friends and other interested investors. This month, in May, new companies will be able to avail themselves of equity crowdfunding through internet portals. There are SEC requirements and limits of accessing capital to $ 1,000,000 but it is one of the newest alternatives for new companies seeking capital. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? State and local authorities need to broaden the way they think about entrepreneurship and become more pro-growth. I would like to see state and local authorities become more innovative, reduce red tape, create inclusive networks that foster leadership and stimulate entrepreneurship. A few good ideas are supporting incubator and taking the lead on identifying successful ecosystems that are actually getting results. David M. Townsend Union Junior Faculty Fellow in Entrepreneurship and Assistant Professor of Management in the Pamplin College of Business at Virginia Polytechnic Institute & State University What tips would you offer an aspiring entrepreneur?

1. Build your company with a team of equally committed people with complementary skill sets. Contrary to popular belief, entrepreneurship is more of a team sport than an individual effort. Find partners who are skilled in areas where you are weak and learn how to argue well together.
2. Although generating great personal wealth is an attractive, long-term byproduct of starting your own company, remember Peter Drucker’s advice that the main purpose of a business it is to serve its customers. Prioritize your customers’ needs first and you will often find that profits and wealth will follow.
3. Great entrepreneurial opportunities often exist at the intersection of your customers’ most pressing needs and your own personal skills and expertise. Although some entrepreneurs achieve success by chasing trends, many more entrepreneurs are successful when they are deeply committed to solving important problems for customers. A good test to figure out whether a particular opportunity is right for you to pursue is whether you would be willing to work for free for a couple of years on solving the customer problem.
4. Cashflows matter a lot more to your early success than profits, market share, growth rates, etc. and liquid cash is a lot more valuable early on than paper profits or wealth. Inexperienced entrepreneurs are sometimes surprised to find out that their business can fail if they tie up too much cash in inventory or receivables even if their overall company sales are growing very quickly. So when you hear celebrity entrepreneurs criticize the “cash is king” perspective, please remember that what they are not telling you is that the only reason they have the luxury of ignoring their cashflows is because they have very generous investors.
5. You do not always need outside financing to be successful. Less than 3% of businesses raise equity-based financing from investors. Most other companies utilize a combination of personal funds, cashflows, family assistance, or other types of resources to fund their companies. Bootstrapping is a crucial skill to develop as an entrepreneur and so even if you raise outside financing from investors, learn to manage your cash effectively and efficiently.

How important is the city an entrepreneur picks to start a new company? The city you select to start your venture in can be crucial to your long-term success. For some entrepreneurs, there are still many good reasons for locating their startups in major entrepreneurship clusters like Silicon Valley or NYC. For many other entrepreneurs, though, there are so many great areas where young, vibrant entrepreneurial communities are emerging. If you have flexibility in where you locate your business, there are a couple of key factors to consider when making your decision. First, access to customers is often really critical early on for your startup. Depending upon your sales model, face-to-face visits with current or prospective customers can be crucial for helping your refine your products/services or even in gaining referrals for other customers. Time spent on a plane traveling around can be a significant waste of time and money. Second, access to skilled employees is going to be huge issue for you if you plan on growing your business. Unless you plan on managing distributed, virtual teams, having access to local talent who can help grow your business will be crucial. Third, if you are planning on raising outside financing, the closer you are to your prospective investors (most equity investing is pretty localized), the better off you will be. If you cannot park next door to your investors, at least be located close to a major airport. Your investors hate flying as much as you do. For these reasons, I think many entrepreneurs with a particular set of objectives in mind are well served to locate their startup in major entrepreneurship clusters. I also think these reasons are pretty obvious but I think there are some additional factors that many entrepreneurs do not consider. First, the local cost of living can be a lot more important to your long-term success than you sometime realize. When you work for someone else, they pay your salary out of their profits. When you work for yourself, you will realize that it is much more difficult to make this decision than you realize. If you have to pay yourself a large salary to be able to afford living in the city without 20 roommates, you will not have these funds to invest in product development, customer relationships, marketing, hiring, team building, and other important areas. Clearly, becoming “ramen profitable” is usually said tongue-in-cheek until you realize that you might have to eat ramen noodles every single day until your business reaches a point where it becomes more self-sustaining. Second, the relationships you build with other entrepreneurs will often be a key to your success. Very few people will be able to relate to the highs and lows you will experience as an entrepreneur except other founders. Find other community to plan yourself in and learn to share both your victories and your struggles. Great communities create great entrepreneurs! What are some of the biggest mistakes entrepreneurs make?

• Emphasizing growth, market shares, and profitability versus cashflows early on.
• Trying to shoulder too many of the company’s burdens on their own shoulders instead of delegating key problems and tasks to the people who can actually solve them.
• Not hiring a good accountant and lawyer. You will always get what you pay (or don’t pay for). Innocent mistakes can sometimes be very costly and it is hard to argue that the tax authorities should ignore your failure to pay payroll taxes or sales taxes.
• Failing to prioritize execution over perfection in products, services, or business models. Most entrepreneurs want to produce world-class products and services. Great products, service, business models are essential for competing effectively in many markets but sometimes you just have to ship your products. Learning to temper your inner perfectionist with the knowledge that good execution almost always trumps great ideas is crucial for your long-term success. Products almost always improve over time and so do not try to force every single feature into one “perfect” product.
• Lastly, many entrepreneurs make the mistake of forgetting that the key ingredient for success in entrepreneurship is learning from others. You will never know everything you need to know to be successful. You will also make many mistakes that will sometimes make you cringe when you reflect on them at a later time. Who cares? Chin up and focus on making key improvements every day to make both you and your company better.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? Our economy is structured in an ingenious way to facilitate the development of so many creative new ideas that it is almost impossible to predict new trends. That said, a great way to approach entrepreneurship is to focus on key societal problems that need to be solved. Here are some exciting areas:

1. Healthcare: Given the prominence of healthcare spending in the US economy, it is not surprising that many entrepreneurs are attempting to create disruptive new products, service, and business models in the healthcare space. One company that is introducing a novel business model in this space is Sano Surgery in Scottsdale, AZ. The founder, Dutch Rojas, started the company a few months ago to offer a range of brokerage-type services for surgery centers. After only a few months of operations, Dutch’s team has recently sold its 1000th surgery. The goal of this startup is to lower the out-of-pocket expenses for self-insured businesses to cover the healthcare costs of their employees. There is an enormous amount of room for entrepreneurs to enter the healthcare arena with novel business models.
2. Food/Beverage/Agriculture: American dietary habits are changing very rapidly in many places. The rise of craft brewing companies and more recent rise of craft distilleries and other locally-grown, organic food sources are only just the beginning of this trend as people start to remember that food can be healthy and tasty at the same time. At the same time, the ways in which this food is produced and served is changing dramatically. Companies like Eatsa in San Francisco are pioneering new ways to “mass customize” healthy dishes rapidly for consumers. While I am much less enthusiastic about many of the on-demand delivery services that have emerged in this space (it is really difficult to manage a complex distribution system cost effectively), I think we will continue to see significant changes in this space and consumer demand continues to shift away from fast food and even fast casual (e.g., Chipotle, Noodles & Company, etc.) towards novel, new distribution and food production systems.
3. Got to mention tech – especially machine learning and wearable computing. We have barely scratched the surface in regards to how these converging technological trends are going to shape our lives. Smart, adaptive learning software platforms have the potential of revolutionizing just about every industry (even as a College Professor, perhaps my future students will be using a tutor-bot to help them learn how to project future cashflows?). Wearable computing and perhaps virtual/augmented reality are going to transform our lives as the virtual and physical world become ever more intertwined. This trend encompasses much more than the Apple Watch or the Oculus Rift VR Goggles. Mobile smartphones have completely changed many industries over the past decade but interfacing with a tiny screen on a mobile device is still a bit awkward in many settings (or even dangerous while driving). The more we can track and embed virtual data and information into our daily lives as we go about our business, perhaps we can improve decision making and our overall experiences in the world. New products, services, and business models that learn to erase this barrier between the physical and virtual worlds will completely re-shape humanity. This is not hyperbole.

What is the best source of funding for new companies? Bootstrapping is crucial! There are great resources out there to help entrepreneurs learn to bootstrap but it all starts with an emphasis on learning how to manage cashflows. Crowdfunding is an exciting new area in the financing arena. Although there are many great success stories regarding entrepreneurs who have successfully crowdfunded their products and ventures, I think a word of caution is essential here as many entrepreneurs are running into unexpected problems with crowdfunding campaigns. In our own research, we are exploring why some of these problems are occurring and many of the problems stem from the failure of entrepreneurs to manage the development risks of creating their products effectively. Creating new products and ideas from scratch is a time-consuming process, filled with many uncertainties. When you promise your backers that a product or service will be delivered at a certain time, you better have a backup plan if your development process is delayed. At the same time, we are also learning that successful crowdfunding campaigns also do not always translate into successful companies. The Coolest Cooler folks are learning this lesson the hard way as they are trying to transition from a Kickstarter success story into an operational company. However, after promising the cooler to many of their backers, they have realized that they cannot deliver the product profitably at the reward price they charged and so now they are facing the awkward process of selling their product openly on Amazon at a much higher price before they have delivered the same products to their original backers. In our research, we have identified three different stages of success in reward-based campaigns like Kickstarter: 1) Initial Campaign Success; 2) Product Development Success; 3) Company/Product Commercialization Success. Clearly, these stages do not apply to all projects on sites like Kickstarter, but we know very little about why some companies are more successful than others at progressing effectively through these stages and success at one stage does not always translate to success at later stages. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? This is a crucial question and one that is quite controversial in some arenas. In my own research, I have worked extensively with a government-funded startup assistance agency in Oklahoma named i2E. i2E is commissioned by the State Government in Oklahoma to help grow technology-based, high growth companies in the state. Since the mid-1990s, they have worked with about 90% of the companies in the state and have been recognized with many international awards for their success in these efforts. Based on these experiences and other research regarding this question, I think effective government support from local and state agency falls into three categories. First, governmental agencies can provide expertise and advice to entrepreneurs as they try to navigate the startup process. i2E staff members were especially effective in providing feedback on business plans, making connections with local and state-level resources, and with creating networks of supportive founders and other interested parties. Second, state and local governments can help first-time entrepreneurs and others effectively navigate the often complex regulatory systems in local communities. I know that many people argue that governments should significantly de-regulate or simplify regulatory processes for entrepreneurs. While I won’t dispute the fact can stifle innovation and growth and should be carefully managed in many areas, smart regulations can also be a good thing for customers and for startups as well. If you as a consumer know that a startup is being held accountable to maintain clear safety standards surrounding things like your food or even personal financial information, this might increase your willingness to try new products and services. Eliminating all government oversight and regulation is a political fantasy that I do not actually think would offer the benefits some folks tend to imagine that it would. Third, governmental agencies like i2E and others around the country can help ease the funding gap that many high-growth startups face when trying to raise outside financing. Raising money from investors is not all that different than going to a middle-school dance. While the beautiful (or handsome) kids will have many suitors, the rest of the normal folks will stand around waiting until someone else goes first out on the dance floor. Hence, all of the kids standing around the edge of the gym, starting awkwardly at their phones. Investors don’t like to be first either. Some government agencies have set up early-stage funding processes to help eliminate some of these problems. Oklahoma created a seed financing loan program where the agency would agree to match funds up to $100,000 dollars if the company was able to raise the equivalent amount from outside investors. The entrepreneurs would then pay these loans back over time as the firm hit key milestones. Our research indicated that for every dollar the agency invested in these loans, the companies would go on to raise $22. The signaling value of these funds was extremely important in instilling confidence in investors in taking chance at funding a new company. In contrast, I think investment into accelerators and incubators are much less effective. I know many agencies want to dedicate co-working spaces for entrepreneurs to work around other founders. While this can sometimes be effective, physical space is not as important as strategic advice, network building, and potentially offering funding to new companies. Kate Zhou Professor in the Department of Political Science at University of Hawai‘i at Mānoa How important is the city an entrepreneur picks to start a new company? Very important. Houston is the best, Honolulu the worst. What are some of the biggest mistakes entrepreneurs make? Setting a high goal that cannot be reached. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? The government regulation is often disrupting. The next big thing will be internet banking so that people can use the net to avoid the state control. What is the best source of funding for new companies? The three Fs: friends, family and fools. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

• Reduce taxes and regulations.
• Give people more freedom.

Evelyn Chan Professor of Business Administration at Oakland Community College What tips would you offer an aspiring entrepreneur? Passion is a key ingredient but must be accompanied by three other vital ingredients: customer focus, effective execution, and tenacity despite setbacks. Relentless trial and error and bouncing back while learning from mistakes is a definite component to success! How important is the city an entrepreneur picks to start a new company? There are so many factors that must be considered when selecting location. I would make sure to evaluate whether there was adequate infrastructure and customer demand. What are some of the biggest mistakes entrepreneurs make? Poor cash flow management, ignoring metrics, lack of product focus, needless inventory, failure to connect with customers, and committing to sales orders without adequate staff or resources to fulfill demand. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? Anything based on the sharing economy and infrastructure created by Uber and AirBNB. What is the best source of funding for new companies? Crowdfunding has democratized the allocation of funding for new start-ups and small players. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? Provide support in terms of tax breaks, free consulting/educational opportunities, targeted funding, minimal regulations, etc. Michael Schirmer Chair and Associate Professor of Business at Peirce College What tips would you offer an aspiring entrepreneur?

1. Be passionate about your pursuit but do not let that love blind you. Continually look for ways to improve your value proposition and how what you are selling offers a solution to your customers’ problems and helps meets their needs.
2. Know your market. Too many entrepreneurs fall short when conducting market research, especially when it comes to knowing the competition. Go back to the drawing board if you believe you have little or no competition. Your customers make choices every day when selecting what products and services to purchase. Choosing not to buy and choosing something from a completely different set of competitors – e.g., a movie ticket instead of a restaurant meal – are two considerations that entrepreneurs too often overlook when attempting to understand the depth and breadth of their direct and indirect competition.
3. Focus on the cash flow. Too many small businesses fail due to an insufficient inflow of cash to sustain the business. Cash flow is generated from operations (via revenue from sales of products and services), from investing (via purchases and sales of assets), and from financing (via internal and external resources). For long term viability of a venture, an entrepreneur needs to generate a positive cash flow primarily from operations. It is critical for an entrepreneur to have an understanding of how and from where cash is flowing in, as well as how and to where cash is flowing out.

How important is the city an entrepreneur picks to start a new company? That depends on the type of products and services an entrepreneur intends to market. For those pursuing a venture with a more traditional brick-and-mortar (physical site) model in mind, considerations need to be made for accessibility to customers and resources; lifestyle and likings of the entrepreneur; and operational sustainability, which involves aspects such as physical site costs, taxes, licensing, fees, and the overall business climate of the city. Some entrepreneurs find that an online business can be launched with just a smart phone, making the choice of city more a question of the cost of living and their own lifestyle wants and needs. Accessibility to customers may be brought to them via apps and the World Wide Web. Other considerations include whether or not a city is on the rise or in decline. Some entrepreneurs may be attracted to the latter as they see opportunities amidst the issues and want to be involved in something bigger than just their business. Again, it depends. What are some of the biggest mistakes entrepreneurs make? Those who are blinded by their passion, who are insufficiently knowledgeable of their market, or who think cash flow is the name of a Goodson-Todman game show from the 1970s risk failure. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing? It seems that the only constant in the tech sector is change. Entrepreneurs have taken some sector ventures from zero to hero in relatively no time (at least on paper – see my previous comment about cash flow from operations). However, I believe that technology can be viewed both as a sector and as a disruptive entrepreneurial force in itself. Take a look at the transportation industry for example. App-based businesses such as Uber and Lyft have rocked the previously staid world of the vehicle-for-hire (aka, taxi) industry by offering riders a convenient alternative heretofore known as being a hack. We can be looking for the next “big thing” within consumer-focused opportunities of overlaying that convenience app and creating competition where there was none or very little. It would be something if we all woke up tomorrow and downloaded an app that enabled us to choose a convenient and efficient alternative to how we, for example, power and heat our homes. Then again, there may already be an app for that! What is the best source of funding for new companies? That depends on the type of business opportunity an entrepreneur pursues. Alternatives for securing sufficient startup financial resources include contributions from the entrepreneur and the launch team; from leveraging assets, both physical and intellectual; by tapping the debt and equity finance markets; and, most recently, via crowdfunding contributions. Success can depend on how well the resource mix is developed and managed, but the goal should be to utilize the venture’s financial resources in creating a sustainable, positive cash flow from operations as soon as possible. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development? First and foremost, creating that stimulating entrepreneurial environment involves providing high quality, economical basic services to our communities. If he were alive today, 18th century economist Adam Smith might recommend to state and local authorities that they focus on the “Big Three”: keeping [fair and balanced] law and order, building [and maintaining] infrastructure, and providing [high quality] education. Neighborhood unrest, a disenchanted and disenfranchised electorate, crumbling roads and bridges, dirty streets, failing schools, and an undereducated workforce all present significant challenges to entrepreneurs and business owners. I believe that too many elected and appointed officials gravitate toward the headline-grabbing “Band-Aid” business development programs that may be masking festering community problems and that lend support to those who may not otherwise be so challenged were it not for the failures to offer fair and balanced basic services. The most effective way for state and local authorities to stimulate entrepreneurship and new business development is to get back to basics: make our communities safe, keep them clean, and educate our children. If done well, the authorities can then stand back and watch the business community flourish and be comforted knowing that what they did in providing basic, high quality, economical services helped make that happen.

 

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