This is the first installment of a series called Entre-U (or Entrepreneurship University). Other installments and future videos of each installment will follow. Think of this as the most straight to the point Entrepreneurship degree you can get without the $20,000 price tag. Most entrepreneurs learn by the school of hard knocks anyway so save yourself the time, energy and money and get started!

Next: Entre-U Class #2 – Are You An Entrepreneur? >>

Between 2008 and 2010 The United States GDP hovered around $15 Trillion Dollars.  Small Business has been responsible for about 50% of that economic impact here in the U.S or about $7.5 Trillion Dollars.  The World’s second largest economy is tied between China and Japan at around 5 Trillion dollars.  In effect, this makes Small Businesses in the United States the world’s second largest economy.   

Further, Over the last 30 years from 1980 to 2010 big businesses have experienced a net loss in employment while small businesses have been the driver of our economic growth.  A Kauffman Foundation March 2010 study entitled High Growth Firms and the Future of the American Economy supports this view.  One of its key findings is: “…the top-performing 1 percent of firms generate roughly 40 percent of all new jobs.”  The study also found that high growth young firms – or firms that are less than 10 years old – create most of the new jobs.  

Clearly changes in technology have brought this revolution in entrepreneurship to the forefront.  What only five or six years ago cost millions of dollars to start can be done with $10, some open source software and a few hours of work.   

But also changes in social norms have affected the entrepreneurial landscape.  According to a Center For Women’s Business Research from 2008-2009:

A major shift in societal norms has made women owned businesses, minority owned businesses, and (the super growth combination of) minority owned women businesses the fastest growing segments amongst entrepreneurs in the United States.  

If we look at the stock market as a proxy for economic growth we can see more clearly the stages of the United States Economy in the past and future:   

Ignoring the 200 years before World War II when the economy was dominated by agriculture we can see clear parabolic economic growth cycles that are spanning time periods that are smaller by half or less.  The Ag economy was 200 years, followed by a 50 year Industrial Revolution, a 20 year Technology Bubble and a 10 Year Housing Bubble.   

It is my opinion that the Age of the Entrepreneur is upon us.  One could argue that the entrepreneur has been present since the dawn of the Industrial Revolution with Innovation leading the way.  However, it was the vast changes of the Technology Revolution that brought affordable, powerful technology to the forefront. 

The massive unemployment and economic hardship brought on by the Housing Crisis has also brought with it great opportunities for those with an entrepreneurial spirit.  The unemployed and underemployed can be a boon to Small Business America if they would apply their creativity with collaboration and new technologies to become the job creation of tomorrow.  I believe in this country’s economic future because I believe that our citizens are the brightest most innovative people on the planet.  I believe in the American Entrepreneur.

Wayne Rogers of M*A*S*H* fame discusses his entrepreneurial ventures.

Here are his five rules to “unconventional” entrepreneurial success:

Rule #1: Find people you can work with—and trust.

Rule #2: Dare to do what is not expected. Question the status quo. But keep a firm eye on reality. Creativity becomes useless when it crosses the border into fantasy.

Rule #3: To level the playing field, know what you’re up against. Make it your business to know the rules and regulations that affect your business.

Rule #4: Do your homework—and legwork. Improving standard business practices starts with understanding why they became standard in the first place.

Rule #5: Just ask the customer. It’s not rocket science. The customer has always been and will always be the best source for solutions to business problems.

Thinking of raising seed capital from an Angel Investor for your startup?  There are a lot of steps between making that decision and signing a term sheet.   You have to: 

Attract an audience with an Angel.

Pitch your plan.

Be prepared for a litany of “No’s”

Once you get a maybe…suffer through due diligence.

Hassle and haggle over a term sheet as if you are a used car salesman.

Give away half your company for half the money you were anticipating.

Bonus – get kicked out of your own company when things go really well or really poorly. 

So how do you assure you will receive an appropriate post money valuation based on the actual prospects of your company?  You can’t!  Well actually, you can but there is a secret.

All that B.S. about having the killer idea/app, the perfect team and the best market is a bunch of bologna.  Why?  Cause no one has a crystal ball.  So going through the process of identifying a market, sales channel and forecasting sales and cash flow so you can complete a discounted cash flow valuation for your company is a waste of time.

Here is ultimately what every angel asks themselves. 

If I invest $x dollars in this company can I expect a possible 10x return on that investment?

In otherwords, if you want $1 Million at 10% then they have to envision your company being a 100 million dollar company 5-7 years from now (100 million X .10 = 10 Million or 10x return).

So ultimately, they want to know the value at the exit which is typically in year 5 or year 7.  In a lot of ways it is not important what happens between then and now but only is it ultimately possible?  But, their crystal ball is as cloudy as yours.  It all comes down to if you can sell them on the dollar signs at the end of the rainbow.  Can a killer idea, ultimate team and global market contribute to that argument?  Of course but it is more about how well you present your idea than it is about the idea it self.

Still one of my favorite startup videos all these years later.

A summary one of my students put together:

Guy presents on the top 10 pieces of advice when starting a business – The Art of the Start.

#1 – If you want to be successful the best reason to start a business is to make meaning, not make money.  If you make meaning you will make money.  If you just want to make money you’ll attract the wrong type of employees.

-          Increase quality of life – be creative and productive

-          Right a wrong – find something wrong and fix it so it is right

-          Prevent the end of something good

2 – Make a mantra for your organization – mission statement.

-          Mission statements should be something employees can repeat and understand.

-          As an entrepreneur, create a mantra – three or four words describing what we stand for, why we work here, and why we exist.

3 – Get going – Most people first want to prove there is a market.  Just get going!

-          Think different – do things 10 times better than everyone else.

-          Don’t be afraid of polarizing people.  Great products polarize people.

-          Find a few soul mates.  The concept of a solo entrepreneur is overrated.  You need people to balance you off – need marketing, operations, accounting, etc.

4 – Define a business model

-          Be specific.  Questions to ask yourself:  who is my customer and how do I get my money out of her purse?

-          Keep it simple.  Do not innovate on business models.

-          Ask women about your business model.  Men want to kill things.  They always say yes it’s a great idea!

5 – Weave a MAT (milestones, assumptions, tasks)

-          A new company is a fresh start – pure, clear, a start from scratch.  This makes it hard to prioritize.

-          Come up with a handful of milestones such as finish the design, decide on the software, etc.

-          Write down the assumptions of your company – customer ROI, cost to install software or product, etc.   These change the business model.  Important: write down and test.

-          Do tasks.

6 – Niche thyself – need to know this about marketing

-          Great value to customer but not doing something unique allows you to compete on price.

-          No value, only person doing it (unique) makes you stupid

-          No value, many other companies are doing this (not unique) makes you even more stupid.

-          High value, unique product – want to be here!

7 – You must follow the 10/20/30 rule:

-          You should have 10 slides in your powerpoint pitch – title, problem, solution, business model, underlying magic, marketing and sales, competition, team, projections, and status and timeline.

-          These 10 slides should be able to be presented in 20 minutes.

-          Smallest font you should use is 30.  This forces you to actually know your presentation and just put the core of your presentation on the slide.  Do not read your material!  Find out who the oldest person is in the audience and divide his/her age by two and that is your optimal font size… unless you are pitching to young people!

8 – Hire infected people.  Hire people who not only have work experience and an education, but also love your product.  Most people only consider these two factors.  You should look at if they love your product.

-          Ignore the irrelevant.  You can be successful just because you love the product.

-          Hire better than yourself  – need A players.

-          Apply the shopping center test.  Go to Stanford shopping center.  You see the job candidate but he/she has not seen you.  If you don’t have the first reaction of seeing the person and wanting to go meet him/her then do not hire the person!

9 – Lower the barriers to adoption:

-          Flatten the learning curve

-          Don’t ask people to do something that you yourself would not do

-          Embrace your evangelists – people that carry the battle forward for you.  Evangelist is based on the Greek word “bringing the good news .”

10 – Seed the clouds.

-          Let a hundred flowers blossom.  Let people use your products in different ways.  Just take the money!  Don’t let this bother you.

-          Enable test drives to make sales.  Let people take your product home to test it.  You are telling them that they are smart for taking it home and testing it.

-          Find the true influencers.  The higher you go, the thinner the air.  Focus on the people that do the work!

11 – Don’t let the bozos grind you down.  You may be tempted to believe them but don’t!

Since the recent elections political pundits from the left and right have tried to label Obama’s health care legislation as a job killer or a job creator.  While there is little argument that conservatives have successfully made the bill less popular, with 52% of Americans saying they don’t support it that is clearly not all there is to the storey.

On the left, they point out that some of the 52% don’t like the legislation because it didn’t go far enough…which can be translated to; they wanted a single payer system like Medicare.  So too, when polled about individual parts of the bill such as no preexisting conditions clauses or kids on parents plans until 26 provided they are in college the approval goes way up. 

I am not sure whether any of this matters or not.  The House’s attempt at repeal is only to show their constituents that they did something about it…even if it was for naught.  But was it for naught?  In some ways since that exercise was announced the conversation has become deeper.  The republicans have even offered up some counter legislation. 

But to the question at hand.  The claim is that health care will slow growth in jobs for small businesses because, if a business has 50 employees or more they will have to provide a health care plan or pay a fine.  Therefore the assumption is that if a company is at say 49 employees and could really use another one or two or ten…they will not hire them because of the additional health care cost.  This might be true in the short term but long term if the company wants to grow they will hire the employees and pass those costs on as much as they can to customers and in fact the employees themselves.

Alternatively, I can only imagine the number of entrepreneurs who might have a spouse and kids that have not started a business because the cost of insurance is exorbitant.  Under the new legislation the entrepreneur would qualify for subsidized insurance due to their drop in income from starting a business.  And then, once successful, would pay the full premiums.  Sounds like a job creator to me.

That said, there is lots to not like about the plan such as the asinine 1099 requirement designed to capture more income and therefore more taxes.  But it goes too far when a small business owner who buys a laptop from say, Best Buy, would have to provide a 1099 to them because of that purchase.  Word is that they are considering eliminating this part of the bill but sources say it would leave an 18 billion dollar hole in the legislation which would violate Pay Go rules of the new majority.