Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9 pm ET. This is excerpted from my recent interview with Jim Beach, @EntrepreneurJim. Jim is known for this belief that entrepreneurship is not about creativity, risk, or passion. Jim’s first book, School for Startups, was published by McGraw-Hill in June 2011 and reached as high as number 9 on Amazon’s business section. Promoting the book, he has done over 100 radio interviews, was featured in a UPS commercial, was referred to as the Simon Cowell of venture capital by CNN, and was excerpted by Entrepreneur magazine and the Wall Street Journal India. For more information, visit schoolforstartupsradio.com
SmallBizLady: What does the average person think entrepreneurship is?
Jim Beach: If you were to play Family Feud, and the questioned asked was about entrepreneurship, I am pretty sure the top three words on the big board would be creativity, risk, and passion. Most people think entrepreneurship is about creative people taking risk to start businesses that they are passionate about. Unfortunately, I believe this is a horrible definition and prevents people from fulfilling their dreams of business ownership. People say “I am not creative, so I guess I don’t qualify”. In fact, I believe anyone can be a successful entrepreneur when they forget about creativity, risk, and passion!
SmallBizLady: So what role does creativity play?
Jim Beach: Creativity is great, and if you are lucky enough to be creative, lucky you! But do not let your lack of creativity, or perceived lack, stop you from being an entrepreneur. Instead of waiting for a lightning bolt of creativity, why not get on Google and type in “business ideas to start for under $500” and see what comes up. I bet you will be surprised. Instead of waiting to be inspired, start a business now! And it’s ok to copy, borrow, or steal (maybe not steal!) an idea too. See an article about a great business in Seattle and do it in your city.
SmallBizLady: And what role does risk play?
Jim Beach: Risk is highly overrated! I hate risk and reserve it for bungee jumping and parachuting, two things I gave up when I turned 22. Serial entrepreneurs hate risk too and avoid it like the plague, instead reducing risk to the point that starting a business is a no-brainer. For us, it means limiting your startup capital to $5,000, keeping your day job, and growing your business at night. Start a business in an industry you know and have lots of connections in – that reduces risk. My wife started a boring little Amazon (not Ebay) sales business on December 26th of last year. She makes about $2000 a month now, and started with under $500. No risk there.
SmallBizLady: Well, then surely passion is important in your opinion?
Jim Beach: No, passion is reserved for Church, Synagogue, or Mosque, the bedroom, and Disney. I am passionate about my wife, my kids, and taking my kids to Disney. I do love woodworking, but I am really bad at it. I built a chair, sat on it, it collapsed, and my butt crashed to the floor. I cannot make a living doing what I am passionate about. No one will buy my chairs and no one will pay me to go to Disney! I am passionate, however, about wearing jeans, working when I want, going to wrestling practice at 3pm with my 16 year old son, basketball at 4pm with my 14 year old daughter, and playing with my 2 year old son at lunch. Be passionate about the lifestyle entrepreneurship provides. I don’t understand people that are passionate about things.
SmallBizLady: Okay, in your opinion then, what is entrepreneurship?
Jim Beach: Well, we have eliminated all the stereotypical things haven’t we! Successful entrepreneurs, and the ones that can repeat their successes, always have one thing in common. And it is not a degree, a personality trait, a license or a skill. No, entrepreneurs solve problems. People will gladly pay to make problems go away, so businesses that are designed to solve a problem do great.
SmallBizLady: There is an important conclusion from this. What is it?
Jim Beach: Do you have problems? Do you know anyone with a problem? You do! Then YOU qualify to be an entrepreneur. That is all there is to it. If you can identify a problem, you are more than half way there. The next step is figuring out how to solve the problem. Again, I suggest you turn to our friend Google and see if there has already been a solution developed for that problem. Focusing on problem solving is the key to being an entrepreneur!
SmallBizLady: Tell me about your class experiment in your MBA class.
Jim Beach: I taught MBA classes at a very good downtown school. One class bet me that I couldn’t start a business in one semester, as I had bragged it’s not really that hard. I bet I could start a business in one semester – 4 months, get it cash flow positive, repay all startup capital, and the class would choose the country and industry. They choose Pakistan and furniture, leaving me 4 months to build a profitable Pakistani furniture company. See the product at www.TimelessChair.com. We took old Persian carpets, cut them up, and used the fabric on a chair. I won the bet.
SmallBizLady: Tell me how did you win the bet?
Jim Beach: By following the rules! I had seen a smaller similar product before, so I was not being original. I was changing, borrowing, an idea I had seen in my travels, in Santa Barbara actually. I spent less than $5000 to start, so I only had to sell 3 chairs to be profitable. The other 18 in the first order were profit! And these are NOT the chairs that I talked about earlier that break. These were built by craftsmen in Pakistan and will last a century. I had no passion for this business but I must admit I was very passionate about the profit!
SmallBizLady: What is the role of multiple income streams?
Jim Beach: Again, I want to reduce risk, in every way possible. My wife has a job, with benefits, so we want her to keep that job. Her new business that I mentioned before is a new income stream for her. So, now if she loses her job, she will not be broke! And to let you know, that side business of buying wholesale items and selling them through the Amazon system, that boring little business takes her about 4 hours a week. She works full time, takes care of a baby, cooks dinner every night, and runs a little business on the side to reduce risk. That is so sexy!! 😉 And, I have income streams too, 2 or 3. So as a family, we have 4 or 5 ways to support the kids spending habits. That is risk reduction!
SmallBizLady: When should you quit your job?
Jim Beach: Never! Not until they fire you, after they figure out why you take such long lunch breaks. I even say (in jest!) that you should take up smoking so you can take a “smoke break,” which is in fact an opportunity for you to go outside and make a call or two for your business. Only quit if your business can totally replace the cost of benefits, health insurance and salary.
SmallBizLady: What is the Corridor Principle?
Jim Beach: This is the cool thing. Once you safely start down the path of entrepreneurship, you will see countless opportunities to start other businesses. Imagine standing at the entrance to a long hallway. You cannot see into those rooms because your angle is wrong. But once you start walking down the corridor and build some experience, you will be able to see great opportunities, problems to solve, in those rooms. New things will become possible because you started down the path.
SmallBizLady: What about starting in a bad economy?
Jim Beach: That is the best time! If you can start a business now, solve a problem now, then you are building a business that has solid fundamentals. Imagine how great sales will be when the economy is going crazy! Start in a great economy, and the strength of your sales may reflect the economy, not solid marketing, pricing, and other basic factors. And you cannot wait, you must act now. Go on Google, find an idea to improve upon, figure out now how to start for under 5k, and you can be off and running!
SmallBizLady: One final question, can it really be done for only 5k?
Jim Beach: YES, 430 of the Fortune 500 were started with under $5,000, adjusted for inflation. If you look, you will see that every type of business has been started with little money, a process called bootstrapping. My fake half brother Joey started a bar with only $4,000. It was, and is, a dump. But now, he owns some really nice places too. It can be done!
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While I don’t believe that passion alone equals success in entrepreneurship, I do believe it has its place. Passion and purpose will keep you up for two days straight working on a new solution for the problem your customer has. It’s what will keep you from throwing in the towel when everything in you wants to quit. It keeps you from handing over your business to the first investor that comes along without caring if it lives or dies. Sure, people are successful without it. But I think it would suck if I chose to be successful at something I’m not passionate about at this stage in my life.
Love what he had to say about passion! You don’t have to be passionate about the biz itself, but what it can provide.
Mulling it over…
Thanks for sharing this.