Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with Dr. Emad Rahim @CTUBusiness. Emad is an award winning author, educator and entrepreneur. He was named a 2012 Laureate Visiting Scholar and Beyster Institute Scholar, and was the recipient of the 2011 Certified Manager of the Year Award by ICPM of James Madison University and the Entrepreneurship Education Excellence Award by Oklahoma State University. He co-founded three successful businesses and served as a Professor-in-Residence for several business incubators with support from the Kauffman Foundation and Syracuse University. He is currently the University Dean for the College of Business & Management at Colorado Technical University.
SmallBizLady: How important is entrepreneurship education to a start-up business?
Emad Rahim: Education is critical to the success of a startup. The entrepreneur can save a lot of time and money by following best practices and using proven resources for developing and operating a new startup. Understanding some basic principles and concepts of business management will go a long way to securing and growing a successful venture.
SmallBizLady: How critical is mentorship to a successful small business?
Emad Rahim: There is a lot of research supporting the direct relationship between start-up success and the mentors that support the founders. It is important that a new entrepreneur identify a person that they respect to be their mentor. The mentor will not only help guide them through the process, but also be a resource linker for solutions to problems that they will encounter. I also highly recommend developing an advisory board made up of people with a strong background in business law, accounting, finance and strategy to also support the new venture. Surrounding yourself with supportive SMEs is a great way to keep you motivated during times of instability.
SmallBizLady: What are the biggest growth industries for start-ups other than technology businesses?
Emad Rahim: Surprisingly, it’s social ventures or “ecopreneurist” types of startups. I had the pleasure of meeting and talking with Daniel Epstein, founder of the Unreasonable Institute, where he shared with me the growing demand for social ventures from around the world. Ecopreneurists look to produce startups to help clean our environment, deal with social problems, solutions for issues relating to health and education, and creating green and sustainable products and methodologies. Where some are nonprofits, Mr. Epstein shared with me examples for for-profit ventures with social missions that have a strong possibility of revolutionizing certain industries.
SmallBizLady: What are the funding options these days to start a small business?
Emad Rahim: There are a lot more options today than there were a few years ago. Accelerators, crowd funding, community benefits agreements, employee stock ownership options (ESOP), social entrepreneurship grants and startup-labs are several new options. This goes beyond bootstrapping, bank loans and VC or angel investment support that entrepreneurs typically pursue.
SmallBizLady: What is a start-up accelerator?
Emad Rahim: The purpose of these accelerators is to help companies with the strongest potential of success get funding in exchange for equity. Accelerators are often privately-funded and focus more of their attention to tech start-ups. There is often an application process to get accepted into an accelerator program.
SmallBizLady: What is crowd funding?
Emad Rahim: Crowd funding, also known as social funding, is a pretty new phenomenon in the entrepreneurship space. Startups were typically funded by way of bootstrapping, investors (VC or angel) and bank loans. Now entrepreneurs are using their social networks to raise capital for their business, community projects, social events or to develop a new product. Investments could be little as five dollars or large as a thousand dollars. Think of it as campaigning for investors and donors to a start-up versus a political seat.
SmallBizLady: What is a business incubator?
Emad Rahim: Incubators provide small business owners opportunities to participate in training, workshops and programs to support their startup needs, while also giving them affordable access to technology, mentorship and coaching. If you are in need of an office space to meet with clients and get work done outside of your home, then a business incubator could be an affordable option. Incubators are often publicly funded and provide grants and seed money programs to support business owners.
SmallBizLady: Are business incubators the answer to small business success?
Emad Rahim: No they are not. A recent study conducted by Syracuse University and the Kauffman Foundation shows small business failures have increased after incubating. But, there were certain services and programs that were lacking in these incubators. The success increases with incubators that are associated with universities and local businesses, providing affordable workshops, trainings, mentorship, coaching and other services for its clients.
SmallBizLady: What is a co-working space?
Emad Rahim: Co-working spaces also known as co-working communities provide entrepreneurs and small business owners a collaborative open environment to work in. The concept is similar to a business incubator, except there are no actual office spaces or cubicles for individual business and tenets are encouraged to collaborate and support one another.
SmallBizLady: Does the business plan really matter?
Emad Rahim: Yes and no. It is rare that an investor will read a 20 page business plan. Your ability to present a compelling story and sell the value of the business idea is more important. Think of shark tank or kick-start, it’s the story and passion and confidence behind the story that matters the most. The business plan is really for the business owner to think through the business model and how they will run the business. It allows you to see potential risk and opportunities, while also noticing the gaps in the startup.
SmallBizLady: How can cities support business owners?
Emad Rahim: There is a lot of paperwork to start a business and operate one. The business owner often finds themselves visiting multiple places to complete the required paperwork. Cities that provide training programs to business owners and develop an efficient process system for completing paperwork will help to sustain current businesses and develop new businesses. There is a clear connection between cities that have seen an increase in entrepreneurship activities based on their ability to reduce roadblocks and red-tape for new startups.
SmallBizLady: If someone wants to start a small business, but can’t afford the training or education, where should they go?
Emad Rahim: There are a lot of free programs available. SCORE and the SBA provide free services and mentorship. You can also look at www.succeedasyourownboss.com, Melinda Emerson’s resource website for small businesses. Your city may have affordable programs and grants to support entrepreneurs through incubators, chambers and universities. There are also a lot of open-source programs online through the Kauffman Foundation, Saylor Foundation and Start-Up America.
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