The Entrepreneurs: Helping first-timers steer their ships
January 4, 2014 11:51 PM
Mark Proud, CEO of Bridgeville-based automated solutions provider The Proud Co., with one of his company’s industrial robots. “In Pittsburgh, the climate has never been better, I’ve never seen so much activity from the new startup perspective.”
Mark Proud, the CEO of The Proud Company in its Bridgeville office. As president of the Pittsburgh chapter of The Entrepreneurs Organization, he hopes to help first-time entrepreneurs and point them in the right direction.
By Deborah M. Todd / Pittsburgh Post-Gazette
In much the same way everybody's a critic, everybody is also a potential entrepreneur.
Dreaming of a game-changing, disruptive business concept by night only to have the idea dissipate to a foggy memory by the lunch hour is more common than one might believe, especially considering the small number of people who turn those dreams into reality. But those who decide to take the plunge today enter the realm of self-employment during a time when hurdles surrounding education, networking and even financing have never been lower, according to experts.
"In Pittsburgh, the climate has never been better. I've never seen so much activity from the new startup perspective," said Mark Proud, CEO of Bridgeville-based automated solutions provider The Proud Co., and president of the Pittsburgh chapter of The Entrepreneurs' Organization.
The boost is partially due to a push to expand the number of job-creating small businesses during a time when their efforts have been critical to economic recovery, said Mary McKinney, director of Duquesne University's Small Business Development Center.
Small businesses accounted for 64 percent of net new private sector jobs and 49.2 percent of private sector employment in 2010, according to the Small Business Administration's Office of Advocacy.
"We've become so obsessed with the concept of supporting small businesses that will create jobs that all sorts of resources have been devoted for small businesses to start and grow," said Ms. McKinney.
Despite the wealth of resources, the idea of jumping from a stable 9-to-5 job to the helm of a company that will sink or surge depending on your actions is daunting for most.
Hoping to help first-time entrepreneurs steer their ships in the right direction, Mr. Proud, Ms. McKinney and serial entrepreneur and author Tom Panaggio outlined some of the most important factors that have determined the success or failures of small businesses they have encountered over the years.
Inspiration, like lightning, often strikes indiscriminately. For the auto mechanic or day care worker with an idea for a smartphone app, a source of inspiration outside of their realm of knowledge can feel a lot like a waste of energy. However, a lack of specialized knowledge surrounding an idea shouldn't necessarily render a solid concept dead in the water.
For Tom Petzinger, a former Wall Street Journal small business columnist who transitioned to entrepreneurialism in 2000, recognizing a void in Pittsburgh's life sciences innovation sector was only the first step. With no science background to speak of, Mr. Petzinger made it his mission to find the most prominent names in the city to school him on the ins and outs of the field.
Rather than simply attending professional mixers dedicated to scientists, he created BioBlast, a "beer blast" for scientists, inventors and anyone with an interest in life sciences. When he wasn't picking the brains of the city's top scientists, he was doing independent research with a medical dictionary by his side.
Today, Mr. Petzinger is founder of South Side-based life sciences incubator LaunchCyte and co-founder and officer of South Side-based investigational drug company Knopp Biosciences. And while his background in journalism helped when it came to research, he said anyone with an open mind and the willingness to reach out to others can make themselves leaders in a previously unknown field.
"If you're not afraid of a new area and are willing to learn -- but at the same time maintain some humility about a need for help -- you can do anything," Mr. Petzinger said.
Mrs. McKinney agreed that real-world experience is often the best possible classroom for an entrepreneur looking into an unknown field.
"I think you have to learn what you absolutely need to know, but I don't think you have to go to college to do it," she said.
She noted that the SBDC hosts monthly Startup Workshops free of charge that cover business basics such as finding funding, registration and trademark requirements, partnerships, targeted marketing and several other topics important for startups. She also noted that programs through other local universities and initiatives such as Hill District-based Urban Innovation 21 offer general aid to potential small business owners who are unsure how to get started.
For specialized knowledge, tapping into professional networks related to the business is probably a better move than a yearslong return to academia, said Mr. Panaggio. The author of "The Risk Advantage: Embracing the Entrepreneur's Unexpected Edge," said entrepreneurs looking into highly specific ideas such as taxes or medical services should definitely seek further education, but the vast majority would be better served finding a partner with the knowledge needed to build from the ground up.
Additionally, with software accounting programs such as Intuit QuickBooks available to handle straightforward bookkeeping matters, Mr. Panaggio said the most important thing a small business owner can bring to the table is enthusiasm.
"You don't need an MBA to start a business. What you do have to have is passion and commitment for whatever venture it is you're about to launch," he said.
However, Mr. Petzinger noted that even with the aid of technology, serious entrepreneurs need to at least learn the basics of accounting and marketing.
"QuickBooks can manage your finances, but it won't bring you any revenues. Easy websites can create an image, but they won't create the substance behind the image," he said.
While finding cash to start a business is probably one of the greatest deterrents to entrepreneurialism, the recent atmosphere of support has made funding much easier to track down, said Ms. McKinney.
Accelerator programs such as Innovation Works' AlphaLab -- which provides $25,000, office space, mentorship and more to small businesses chosen for its 20-week program -- are increasingly viable options in the area, said Ms. McKinney. Outside of AlphaLabs, East Liberty-based Hustle Den, Uptown's StartUptown, Oakland-based Idea Foundry and Bloomfield-based C-leveled all offer accelerator programs that provide some level of funding for startups.
The Pittsburgh Central Keystone Innovation Zone, a public/private partnership, provides grant funding, tax credits, business capital and professional support to small businesses located in commercial areas in the Hill District, Uptown, Downtown, Oakland and several other Pittsburgh neighborhoods. Kiva Zip, a microlending program provided through Urban Innovation 21 and Garfield-based Catapult PGH, uses crowdsourced funds to provide interest-free loans up to $5,000 to area small businesses.
Ms. McKinney said crowdsourcing platforms such as Indiegogo and Kickstarter are now solid resources for small businesses thanks to recent changes to the federal JOBS Act.
Despite the influx of outside funding, Mr. Panaggio still says there's no place like home for startup capital.
"The first thing you should do is ask family and friends because they're the ones that will be most open to helping you out," he said.
Finally -- if loved ones aren't in a position to help out -- nothing beats helping yourself, according to Mr. Petzinger.
Pointing out that AlphaLab and other incubator programs require businesses to show some sign of progress before they see any sort of funding, he said the best way to show a business is legitimate is for an owner to put their own skin in the game.
Taking the plunge
Once an idea is formed, research is complete and word is out that a business is up and running, oftentimes the most difficult step is deciding to make what was a part-time idea into a full-time venture.
It's common to see new entrepreneurs keep one foot inside the door of a full-time or part-time job to pay the bills, said Mr. Panaggio. However, he advised that once a business owner is in a position to pay general living expenses through their venture, it's time to let go of any outside work.
"Once they're at a point where they can pay their bills, they may not be completely living in the conditions and the way of life they became used to, but at that point they can move on to work full time for their venture," he said.
For others, such as Mr. Petzinger, the time to dive in takes place as soon as the idea is formed.
Leaving the security of a full-time job and the comfort of expendable income is a frightening proposition, but one that doesn't become any less worrying even when a businesses starts taking off, he said.
"An often overlooked attribute of first-time entrepreneurs is having the stomach to do it. It's not only financially risky, it's emotionally and psychologically consuming and you need to be prepared for that," he said.
Calling his experience as an entrepreneur a "roller coaster ride" he said the best preparation anyone can make is knowing to expect twists, turns, occasional nausea all precede the thrill that comes with accomplishment.
"You prepare for it by being aware that [the roller coaster ride] is inevitable. And with hope and idealism that if you're successful in some way you're going to change the world," he said.
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