2015’s Best Cities to Start a Business

by John S Kiernan

Best-Worst-Cities-to-Start-a-Business-BadgeAmericans are born with an entrepreneurial streak. It’s in our DNA. From Manifest Destiny and the Gold Rush to the Industrial Revolution and the Internet Age, intense periods of innovation have molded our economy and sparked important societal advancements.

Innovation is never easy, though. Hardship and necessity underpin much of our entrepreneurial progress, largely because the motivation to enter the unknown in the face of bleak odds simply is not in abundance when more comfortable avenues remain to be explored. Driven by a dearth of traditional job opportunities and a reenergized hesitancy to put one’s fate in the hands of others, somewhere between 15 million and 53 million Americans are now working for themselves. There is always room in the market for new ideas, products, services and multi-million-dollar success stories — if one knows where to look.

In order to help aspiring entrepreneurs — from restaurant owners to high-tech movers and shakers — maximize their chances for long-term prosperity, WalletHub analyzed the relative start-up opportunities that exist in the 150 most populated U.S. cities. We did so using 13 unique metrics, ranging from 5-year survival rate and the affordability of office space to the educational attainment of the local labor force. Our findings, as well as expert commentary and a detailed methodology, can be found below.

Main Findings

 

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Overall Rank City “Access to Resources” Rank “Business Environment” Rank
1 Shreveport, LA 6 13
2 Tulsa, OK 18 1
3 Springfield, MO 1 70
4 Chattanooga, TN 2 65
5 Jackson, MS 4 72
6 Sioux Falls, SD 39 2
7 Memphis, TN 14 39
8 Augusta, GA 15 21
9 Greensboro, NC 31 11
10 Columbus, GA 26 19
11 Fort Wayne, IN 10 74
12 Amarillo, TX 22 38
13 Columbus, OH 27 30
14 New Orleans, LA 23 41
15 Birmingham, AL 11 79
16 Wichita, KS 8 88
17 Grand Rapids, MI 17 64
18 Laredo, TX 21 56
19 Winston-Salem, NC 33 23
20 Nashville, TN 56 3
21 Oklahoma City, OK 43 14
22 Brownsville, TX 13 87
23 Lubbock, TX 19 68
24 El Paso, TX 29 46
25 Toledo, OH 4 119
26 Louisville, KY 32 48
27 Fayetteville, NC 41 26
28 Montgomery, AL 20 77
29 Rochester, NY 3 127
30 Omaha, NE 48 16
31 Baton Rouge, LA 33 57
32 Knoxville, TN 35 54
33 Corpus Christi, TX 40 43
34 Lincoln, NE 30 60
35 Reno, NV 42 42
36 Kansas City, MO 51 22
37 Stockton, CA 9 112
38 Indianapolis, IN 45 47
39 Tallahassee, FL 24 91
40 Spokane, WA 12 115
41 Houston, TX 70 5
42 Lexington, KY 53 33
43 Salt Lake City, UT 69 8
44 Cincinnati, OH 36 76
45 Mobile, AL 47 59
46 Fresno, CA 16 120
47 Milwaukee, WI 7 144
48 St. Louis, MO 57 45
49 Dallas, TX 70 15
50 Richmond, VA 50 75
51 Colorado Springs, CO 68 29
52 Des Moines, IA 28 111
53 Norfolk, VA 72 37
54 Port St. Lucie, FL 46 100
55 Little Rock, AR 36 117
56 Detroit, MI 25 132
57 Virginia Beach, VA 82 12
58 Jacksonville, FL 66 58
59 San Antonio, TX 75 27
60 Arlington, TX 85 10
61 Newport News, VA 63 66
62 Charlotte, NC 94 6
63 Fort Worth, TX 77 31
64 Huntsville, AL 62 81
65 Buffalo, NY 38 130
66 Honolulu, HI 79 51
67 Tucson, AZ 44 131
68 Boise, ID 80 55
69 Tampa, FL 84 35
70 Atlanta, GA 107 6
71 Albuquerque, NM 64 97
72 Madison, WI 58 109
73 San Bernardino, CA 52 128
74 Akron, OH 54 126
75 Irving, TX 110 9
76 Garland, TX 101 34
77 Chesapeake, VA 91 44
78 Las Vegas, NV 74 88
79 Orlando, FL 90 52
80 Modesto, CA 55 136
81 Bakersfield, CA 87 62
82 Cleveland, OH 49 144
83 St. Petersburg, FL 85 71
84 Chicago, IL 60 137
85 Grand Prairie, TX 106 25
86 Cape Coral, FL 73 105
87 St. Paul, MN 59 143
88 Los Angeles, CA 81 96
89 Minneapolis, MN 64 134
90 Durham, NC 113 17
91 Austin, TX 114 20
92 Phoenix, AZ 97 69
93 Plano, TX 125 4
94 Henderson, NV 108 40
95 Aurora, CO 94 83
96 Worcester, MA 67 140
97 Overland Park, KS 109 53
98 Baltimore, MD 78 121
99 Aurora, IL 83 113
100 Anchorage, AK 105 80
101 Moreno Valley, CA 87 108
102 North Las Vegas, NV 100 95
103 Denver, CO 122 24
104 Sacramento, CA 99 97
105 New York, NY 102 93
106 Raleigh, NC 125 18
107 Mesa, AZ 103 99
108 Miami, FL 93 115
109 Philadelphia, PA 60 148
110 Fort Lauderdale, FL 115 73
111 Pittsburgh, PA 89 141
112 Santa Rosa, CA 97 129
113 Glendale, AZ 117 85
114 Tempe, AZ 119 84
115 Boston, MA 96 142
116 Tacoma, WA 103 134
117 Hialeah, FL 91 147
118 Riverside, CA 112 109
119 San Diego, CA 127 78
120 Rancho Cucamonga, CA 132 67
121 Fontana, CA 116 104
122 Chandler, AZ 141 31
123 Gilbert, AZ 141 36
124 Long Beach, CA 123 102
125 Seattle, WA 129 93
126 Huntington Beach, CA 145 49
127 Irvine, CA 146 49
128 Santa Clarita, CA 136 82
129 Glendale, CA 134 88
130 San Francisco, CA 143 61
131 Scottsdale, AZ 150 27
132 Vancouver, WA 121 124
133 Pembroke Pines, FL 138 86
134 Washington, DC 133 101
135 Providence, RI 75 149
136 Peoria, AZ 148 63
137 Oxnard, CA 123 125
138 Oceanside, CA 130 107
139 Portland, OR 119 139
140 Chula Vista, CA 128 122
141 Anaheim, CA 131 118
142 San Jose, CA 140 103
143 Santa Ana, CA 118 146
144 Oakland, CA 134 114
145 Ontario, CA 136 123
146 Fremont, CA 149 92
147 Yonkers, NY 144 106
148 Garden Grove, CA 139 133
149 Jersey City, NJ 147 138
150 Newark, NJ 111 150

 
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Ask the Experts

As current self-employment figures have shown, an increasing number of Americans aim to become more economically self-reliant by working for themselves. To assist them in that goal, WalletHub asked some of the foremost entrepreneurship experts what advice they would offer an aspiring entrepreneur. Click on the experts’ profiles to read their bios and responses to the following key questions:

  1. What tips would you offer an aspiring entrepreneur?
  2. How important is the city an entrepreneur picks to start a new company?
  3. Which are some of the biggest mistakes entrepreneurs make?
  4. Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?
  5. What is the best source of funding for new companies?
  6. What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

 

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  • Jerome Katz Coleman Professor in Entrepreneurship at Saint Louis University, John Cook School of Business
  • Anne S. York Associate Professor of Strategy and Entrepreneurship, and Director of the Bioscience Entrepreneurship Program at Creighton University, Heider College of Business
  • Brent C.J. Britton Adjunct Professor of Creativity and Innovation at University of South Florida
  • Michael V. Laric Professor of Marketing at University of Baltimore, Merrick School of Business
  • Grant Black Director of the Center for Entrepreneurship and Economic Education at University of Missouri-St. Louis
  • Peter R. Russo Executive-in-Residence and Senior Lecturer at the Boston University Questrom School of Business
  • Wade T. Brooks Executive Director of the Angel Investment Fund and Contributing Assistant Professor of Entrepreneurship at Willamette University, Atkinson Graduate School of Management
  • Christopher L. Shook Management Department Chair and Russell Professor at Auburn University, Raymond J Harbert College of Business
  • Jeffrey York Assistant Professor of Management and Entrepreneurship, and the Shane Faculty Scholar at the University of Colorado Boulder
  • Lou Marino Frank Mason C&BA Faculty Fellow in Family Business, and Professor of Entrepreneurship and Strategy at University of Alabama
  • David L. Deeds Schulze Chair in Entrepreneurship at University of St. Thomas, Schulze School of Entrepreneurship
  • Linda F. Edelman Professor of Strategic Management at Bentley University
  • Felipe G. Massa Assistant Professor of Management, and Kloor Professor of Entrepreneurship and Small Business at Loyola University New Orleans
  • Shaker A. Zahra Robert E. Buuck Chair of Entrepreneurship, and Academic Director of the Entrepreneurship Center at University of Minnesota, Carlson School of Management
  • Jeremy Short Professor and Rath Chair in Strategic Management at University of Oklahoma, Price College of Business
  • Gregory L. Stoller Adjunct Lecturer of Operations Management at Boston College, Carroll School of Management
  • Larry W. Cox Associate Professor of Entrepreneurship at Pepperdine University, Graziadio School of Business and Management
  • David Thomas Assistant Professor of Management at University of Northern Colorado, Monfort College of Business
  • Kathleen Allen Professor of Entrepreneurship at Lloyd Greif Center for Entrepreneurial Studies, and Director of the Center for Technology Commercialization at University of Southern California, Marshall School of Business
  • Starr Marcello Director and Chief Operating Officer of the Polsky Center for Entrepreneurship and Innovation at University of Chicago Booth School of Business
  • Joel H. Dobbs Executive in Residence in Entrepreneurship, and Director of the Office of Innovation and Entrepreneurship at University of Alabama at Birmingham, Collat School of Business
  • Franz T. Lohrke Brock Family Endowed Chair in Entrepreneurship at Samford University, Brock School of Business
  • Daniel J. Freeman Director of the Horn Program in Entrepreneurship and Associate Professor of Marketing at University of Delaware, Alfred Lerner College of Business and Economics
  • Nik Rokop Industry Assistant Professor of Entrepreneurship at Illinois Institute of Technology, Stuart School of Business
  • T. Paul Thomas Executive in Residence and Assistant Professor of Practice at Northern Arizona University, W.A. Franke College of Business
  • David Y Choi Associate Professor & Director of the Fred Kiesner Center for Entrepreneurship at Loyola Marymount University
  • Jerry White Director of the Caruth Institute for Entrepreneurship at Southern Methodist University, Cox School of Business
  • John Bradley Jackson Director of the Center for Entrepreneurship at California State University, Fullerton
  • Jason Harkins Associate Professor of Management at University of Maine, Business School
  • Marc H. Meyer Robert Shillman Professor of Entrepreneurship, Matthews Distinguished University Professor, and Co-Director of the Center of Entrepreneurship Education at Northeastern University
  • Jeff Amerine Principal at Startup Junkie Consulting & Adjunct Instructor at Sam M. Walton College of Business, University of Arkansas
  • Christine Beckman Associate Professor of Management and Organization at University of Maryland, Robert H. Smith School of Business
  • Clifford Holekamp Senior Lecturer in Entrepreneurship and Director of the Entrepreneurship Platform at Washington University in St. Louis, Olin Business School
  • Bryce C. Pilz Clinical Assistant Professor in the Entrepreneurship Clinic at the University of Michigan Law School
  • Annaleena Parhankangas Assistant Professor of Entrepreneurship at University of Illinois at Chicago, College of Business Administration University
  • David T. Croasdell Charles and Ruth Hopping Professor of Entrepreneurship at University of Nevada, Reno
  • Norman Smothers Professor of Marketing and Entrepreneurship at California State University, East Bay
  • Samuel A. Nelson Associate Director of the Center for Entrepreneurship, and Assistant Professor of Practice at University of Nebraska-Lincoln
  • David K. Hensley Clinical Professor and Executive Director of John Pappajohn Entrepreneurial Center at University of Iowa, Tippie College of Business

Jerome Katz

Coleman Professor in Entrepreneurship at Saint Louis University, John Cook School of Business
Jerome Katz
What tips would you offer an aspiring entrepreneur?
  • Be persistent - rarely does an entrepreneur's first try hit the jackpot.
  • The customer is key - the most-often successful firms are rooted in what customers want to buy.
  • Get out and network - the more people you talk to, the more likely you are to find opportunities, partners and success.
How important is the city an entrepreneur picks to start a new company?

For everyday "main street" businesses, it is not super important, because large and small towns need those restaurants, stores, and business to business operations. But if you're looking at an Internet or other tech business, the town can be crucial because those towns have resources for tech firms (so you can borrow or rent instead of buying), networks of other tech entrepreneurs, and angels (sometimes even VC firms) for funding.

Which are some of the biggest mistakes entrepreneurs make?

Hate to sound like a broken record, but creating a product without finding customers and their needs for it. Falling in love with an idea without getting customers involved is what dooms most startups.

Second is not paying attention to the numbers. Call it what you will, financials, business models, whatever. If you don't have a clear idea about how you will make money (and hopefully, profits), you're dooming yourself to failure.

Third is not asking for help when you need it.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Mobile is still a tremendously creative area, with low entry costs and a wealth of competition to keep you on your toes.

There are still a lot of industries where the net can speed getting rid of the middleman, connecting consumers to the goods and services they want.

What is the best source of funding for new companies?

(1) Self - if you won't do it, why should others, (2) Family, Friends and Fools - for most firms these two are enough to get a firm going and on the path to profitability. (3) Angels - if you have the prospects of very good returns (like 25% a year) and a chance for them to cash out of your firm and get their investment cash back.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Support grass-roots efforts to develop entrepreneurial support organizations, accelerators and co-working spaces. Making sure there are SCORE and SBDC locations in the area. Support all new businesses. Good restaurants and bars (and the rest of the creative class place) are where all other entrepreneurs go when they leave work!

Anne S. York

Associate Professor of Strategy and Entrepreneurship, and Director of the Bioscience Entrepreneurship Program at Creighton University, Heider College of Business
Anne S. York
What tips would you offer an aspiring entrepreneur?

Stay positive, be persistent, follow your passion.

How important is the city an entrepreneur picks to start a new company?

Having other mentors who have succeeded and gone before you makes a huge difference. Also, finding a place where there is support for your concepts and industry, whether those are people, finance resources, technology or infrastructure. To me, those things are more important that the city. There are just too many ways to be entrepreneurial to generalize.

Which are some of the biggest mistakes entrepreneurs make?

Failing to understand and manage cash flow, poor choice of partners, giving away too much ownership while getting back too little.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

My sense is the music industry and education. While the disruption has already started in these industries, I don't think we are at the tipping point yet where innovation has reached its highest payback. Green energy is another area, along with biotech. I expect huge breakthroughs in these areas in the next ten years.

What is the best source of funding for new companies?

If startups (even biotech's) can figure out ways to generate early internal cash flow, that is ideal. While it may take a little longer to ramp up, it can be safer. People think that external investors such as VC's or private equity are ideal. They are, as long as things are going well. But once things go south, entrepreneurs will spend a huge chunk of time dealing with their questions rather than working on the business. Another interesting financing mechanism, with interest rates so low, is to ask for private loans, repayable over a period of time at a risk-appropriate interest rate.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

I've seen so many state, local, and national programs be gamed by pseudo-entrepreneurs who use the system with little positive to show from it. I would say all governments should support basic and translational research and make it available at minimum cost to entrepreneurs who are interested in developing it.

Brent C.J. Britton

Adjunct Professor of Creativity and Innovation at University of South Florida
Brent C.J. Britton
What tips would you offer an aspiring entrepreneur?

Entrepreneurship is a full time job, not something to be pursued on the side during off hours, nights, or weekends. Pick something you love, and love the heck out of it.

How important is the city an entrepreneur picks to start a new company?

The city is extremely important. It all comes down to which end of the progressive-conservative spectrum the city's monied class falls on. If rich folks in your city are likely to value new ideas over old, reliable ideas, you stand a much better chance of getting funded than if your local rich folks are perfectly happy with the old reliable idea and don't care much for your attempt at disrupting it.

Which are some of the biggest mistakes entrepreneurs make?

The single biggest mistake is failure to obtain market validation as an early step in the process. One does not start a successful company on a hunch or a gut feeling that customers will pay for the product or service being developed. The entrepreneur must go out and actually talk to people to ensure that s/he is creating something that people will pay for. Successful startups produce solutions to big fat problems endured by customers. They interview potential customers and rely on the resulting data to tune the solution to satisfy the market need. They do not assume everyone will love their product. They test it.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

The practice of law. Despite Legalzoom and others, no one has found a viable way to replace the living, breathing lawyer. IBM's Watson may be of some help here, but the jury is still out. No pun intended.

Next big thing? Anti-aging treatments that use platelet-rich plasma and the patient's own stem cells to rejuvenate tissues and organs. Soon, the very wealthy among us will be able to live for along time and look great doing it!

What is the best source of funding for new companies?

Depends who you ask. Founders often want to spend investors' money. Investors' want founders to have spent a little of their own money. But the best source of funding is revenues from sales, because that means the company has proven that it can part customers from their hard-earned cash. Once you've got revenues, it's all over but the market expansion.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Tough call. My first response is to stay the heck out of the way, but that's the mostly dormant libertarian in me waking up for a brief moment. The best uses of public monies I have seen involve the formation and execution of accelerator programs that take in only a few qualified startups at a time and usher them very carefully and closely through the startup process, including nearly constant education, the injection of some cash, and, perhaps more importantly, introductions to local captains of industry who can help the startup succeed by doing actual deals.

Michael V. Laric

Professor of Marketing at University of Baltimore, Merrick School of Business
Michael V. Laric
What tips would you offer an aspiring entrepreneur?
  • You cannot succeed if you don't try - if you have a dream or a vision get going.
  • There are resources available to help you do just about anything - look for them.
  • If the doors to your opportunity seem closed - try again and find an open window.
  • It is ok to fail - you will learn from it - remember winners don't quit.
How important is the city an entrepreneur picks to start a new company?

The city is just a physical space. It is only important if it has the resources you need to start the business. The entrepreneur defines what is important - be it financing, skilled labor, specialized know how, family, friends, etc. There is a reason Silicon Valley, Route 128 around Boston, the Research Triangle etc., attract start-ups.

Which are some of the biggest mistakes entrepreneurs make?
  • Poor management of resources (e.g., finance, personnel, protecting intellectual capital).
  • Misreading the market needs and/or the competition.
Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Almost everything disruptive these days includes some technology. Computer Chips will be combined with products and, by using the Internet, these smart products will be controlled and operated remotely. That goes for medical science, genetic manipulation, targeted pharmaceutical drugs and a host of other bio-tech innovations.

Micro and highly customized products will be obtained by 3-D manufacturing. Regarding nano-technology and robotics, smart decision-making systems combined with robots will displace many professions (medicine, law, engineers, etc.).

We are looking at any system that disrupts and displaces another as a technological change. Online retailing displaced much of retailing.

What is the best source of funding?

In order of entrepreneurial process:
  1. Small grants and/or loans, credit cards, second mortgage, etc. Generally 1-200,000.
  2. 3-F's - family, friends and fools Generally 2-300,000.
  3. Angels, serial entrepreneurs and local investors. Generally 1-2 million.
  4. Venture capital, depending on the rounds of financing.
What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Provide seed money and grants (MD TEDCO, DBED).

SBIR, CRADA, STTR:
  • Provide loans or loan guarantees
  • Open and support incubators
  • Cut taxes and red tape

Grant Black

Director of the Center for Entrepreneurship and Economic Education at University of Missouri-St. Louis
Grant Black
What tips would you offer an aspiring entrepreneur?
  • Do your homework – thoroughly investigate your ideas, your potential markets, the costs and risks of your business, etc., before your take the plunge.
  • Guard your heart and mind – do everything you can to anticipate and manage the high stress, self-doubt, and negative input from others that accompany entrepreneurial activity.
  • Keep your focus on your product or service – fundamentally, how do you help people?
  • Get plugged in with other entrepreneurs and business leaders – find a mentor, join a network of local entrepreneurs, become a member of a trade organization.
  • Manage your time well – learn to delegate as soon as you can and find the best people to do the jobs you need done, which often isn’t you alone.
  • Get control of your finances – control spending, manage debt, set appropriate profit margins, anticipate disruptive cash flows, plan ahead for future capital needs.
  • Plan – take time to plan your business: identify your purpose, set goals, determine needs and risks, anticipate your strengths and weaknesses, clarify your finances, create a marketing strategy, map out your future growth.
How important is the city an entrepreneur picks to start a new company?

The city – and even areas within a city – can be critical for many businesses. A lot of research indicates that location matters. Even in the digital era, we often see entrepreneurial activity cluster. There is something about being in a city where there is an entrepreneurial vibe and active entrepreneurship.

Being around others engaged in entrepreneurship and innovation is stimulating and breeds new innovation and entrepreneurial endeavors. Proximity plays a big role: how close is a business to needed services, needed talent, networks of others doing similar things, needed information and research, etc.?

Other factors also come into play. It can be important having an environment conducive to creating and growing a business, such as favorable tax structures or limited regulation. More holistic factors can influence location decisions as well, like rich cultural amenities and quality schools.

Which are some of the biggest mistakes entrepreneurs make?

Entrepreneurs face many challenges. It is not for the faint of heart. While many people can come up with ideas, it is not easy to make something of them, and many entrepreneurs struggle to do it well. Common challenges include:
  • Choosing the right business, product, or niche;
  • Going too big too soon;
  • Being unprepared to handle a disruptive cash flow;
  • Finding and retaining good talent;
  • Not having clear business plans that influence your ability to acquire capital and grow your business in the future;
  • Learning to let go of responsibilities and doing too much on your own;
  • Failing to plan, especially for future growth, and consider common challenges;
  • Underestimating the time it takes to see success;
  • Struggling with the high stress of running a business and self-doubt about your abilities;
  • Ignoring the impact of complying with government regulations.
What is the best source of funding for new companies?

If at all possible, bootstrapping your business by putting up your own funding. Acquiring capital from outside sources can be challenging and costly. There is heavy competition for funds and a climate for lower risk among many investors. There is a tradeoff for getting outside funds. You may give up some control of your business to outsiders or you become strapped with increased indebtedness, which have implications for your future growth.

Peter R. Russo

Executive-in-Residence and Senior Lecturer at the Boston University Questrom School of Business
Peter R. Russo
What tips would you offer an aspiring entrepreneur?
  1. Build your network. To succeed, you will need the help of others.
  2. Get out and talk with people. Be sure that you understand how your product or service solves a problem someone cares about and that the customer agrees.
  3. Be willing to commit. It is OK to do some initial research and product validation as a part time pursuit, but you need to be prepared to go “all in” at some point.
How important is the city an entrepreneur picks to start a new company?

Depending upon the type of business, it certainly can be easier to start a business in some cities than others. Access to funding, proximity to customers and potential partners and availability of helpful resources are all important factors. That said, I believe an entrepreneur can find a way to succeed wherever they are. Technology has made location less critical and there are resources available almost everywhere these days.

Which are some of the biggest mistakes entrepreneurs make?

This is a difficult question to answer, because the list is a very long one! Some that I see more frequently than others:
  • Over emphasis on secrecy, to the point where the entrepreneur fails to get market validation and sound advice.
  • Being overly focused on maintaining control or retaining equity. Remember, the size of the pie is more important than your share.
  • Believing that they can build a venture on their own schedule, without regard to the “window of opportunity” that may be closing.
  • Failure to attract the very best team.
Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Rather than try to guess, I’d rather point out that opportunities are everywhere, and that it is not necessary to “catch the next wave” in order to find success. Where can we find customers who are not well served by the products or services currently available to them? What unsolved problems might we help them with? How might emerging technologies allow us to do things in a new and better way?

What is the best source of funding for new companies?

Raising money can be a huge challenge for an entrepreneur. The best sources of funding are ones that add value to the venture and hopefully increase the probability of future funding. Customer funding has the added benefit of demonstrating market validation, so that is one that I like to see. Depending on the stage of development, angels and VC’s can both validate a venture idea and provide helpful advice. The key is to understand your needs and those of potential investors and to spend your time targeting those sources that represent the best match.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

There are a number of things that they can do. Supporting an education climate that will stimulate entrepreneurship is a big one. Promoting and supporting events and resources that help create a community of entrepreneurs is another. I do think that one underdeveloped opportunity is in supporting the existing small and emerging ventures in their efforts to scale. These entrepreneurs have already demonstrated the validity of their ideas, but may lack the education, skills and access to resources to grow their business and create more jobs. Helping them is less exciting than stimulating new venture creation, but the upside can be greater.

Wade T. Brooks

Executive Director of the Angel Investment Fund and Contributing Assistant Professor of Entrepreneurship at Willamette University, Atkinson Graduate School of Management
Wade T. Brooks
What tips would you offer an aspiring entrepreneur?

Entrepreneurship is hard and there will be numerous challenges, long days, and difficult decisions. Passion for your industry, solution, and team will be critical to maintaining focus and pushing through those tough times.

Write down an inventory of your skills, resources and contacts. You'll find that list to be longer than you thought - use them as your foundation.

How important is the city an entrepreneur picks to start a new company?

The city isn't as important as the local contacts and resources you have. If you move to a new city to start a company, and have few if any contacts, that will be a real challenge. As your business grows and you get a foothold you might consider a new location that is closer to your largest customers, financiers, or an industry hub. One caveat, if you get accepted into Y-Combinator, you should relocate for that opportunity.

There are a few places with exceptional startup infrastructures including startup communities with incubators, accelerators, labs, etc., in addition to access to capital through local angles, angel groups, and venture funds. My most highly recommend city is Portland, Oregon which is currently booming and not as competitive as Silicon Valley, but of course I'm biased. Others that come to mind include Austin, Seattle, Cambridge, Denver, etc. It's a much longer list than it used to be.

Also, depending on what your product/service is, I wouldn't rule out an international location where labor may be less expensive. Access to capital will be more constrained and exit opportunities limited but it's becoming a more connected global marketplace and countries such as Chile and New Zealand have started to cater to entrepreneurs and angel investors.

Which are some of the biggest mistakes entrepreneurs make?

The biggest mistake I consistently see is not talking to customers early and not taking their feedback. This doesn't mean you should chase every opportunity, but you should reassess your solution, business model, and financial model when confronted with large resistance from customers or slow adoption.

Selling is hard and selling starts with talking to customers and being told no. No one likes rejection, it stings no matter who you are, but if you're doing it correctly you should be getting good data from those interactions. That data should help you create a better product/service. As you hone your solution, and better identify your market, it will get easier. If rejection is hard for you turn it into your success - set a goal to get 10 noes every day and accomplish your goal. Again, make sure you're learning why potential customers are saying no, this is invaluable data.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

This isn't something I chase. I look for folks that are hard workers, that know their industry inside and out, that have experience and contacts in their field, and can create their own future. You have to have a passion to make the dream the reality. It doesn't matter if that's in genetics, nanotechnology, 3D printing, geolocation, cryptocurrency, alternative energy, cyber security, or disrupting the way houses are built.

What is the best source of funding for new companies?

If you are looking to get outside investment, and I hope you don't need to, but if you do, your company will have to meet three key criteria:
  1. Scalable - you can make money while you sleep.
  2. Durable - your company can withstand market competition as it grows.
  3. Sellable - there needs to be active acquirers for companies like yours.
Without all three of those it's hard to get anything beyond friend and family money.

The best money you can get is money you've generated through sales. I've founded companies that grew organically on their own earnings and ones that have had multiple financing round. There is nothing quite like the freedom of running a shop that you own 100% of. Still, that isn't always an option.

There is a natural progression when raising money and it's true in almost all cases:
  1. Savings, Credit Cards, Refinance (5k-200k)
  2. Friends, Family, Fools (10k-500k)
  3. Local Angel Investors/groups (25k-3M)
  4. Angle Funds (100k-1M)
  5. Seed Stage VC funds (250k-3M)
  6. VC Funds (1M-50M+)
What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

The big three are money, infrastructure and tax incentives.

Money

The city/state is typically a poor investor as their main goal (employment) is not aligned with the goals of early stage companies (doing the most with the least), however, in Oregon the state has invested in a number of existing privately run angel funds and that has provided much needed capital to early stage companies. This is a model that should be emulated.

Infrastructure

Discounted physical space, access to university resources and labs, high speed internet, community support for entrepreneurship, top-tier education at all grade levels, a good tax structure that keeps both companies and successful cashed-out entrepreneurs in the community and reinvesting.

Tax Relief

Angel investing and early stage investing can be increased by providing tax breaks, credits and incentives. A number of states have passed, or are working on passing, this type of legislation.

Christopher L. Shook

Management Department Chair and Russell Professor at Auburn University, Raymond J Harbert College of Business
Christopher L. Shook
What tips would you offer an aspiring entrepreneur?

First, follow your passion. Second, do adequate information gathering. Don’t’ let your enthusiasm cloud your judgment. Try to get objective assessments of your product, service and potential location. Tap into the local resources available. There may be many local governmental resources that may offer various forms of assistance. Ask friends and acquaintances for honest and objective feedback. Look for someone to be the “devil’s advocate.”

How important is the city an entrepreneur picks to start a new company?

Sometimes, the city matters on the margin, and other times, the city is crucial to success. In some startups, access to a specific resource is key. Sometimes, those resources are concentrated in certain cities. For example, take biotechnology startups, where access to the human resources is limited to certain cities. All things equal, entrepreneurs benefit from being around other entrepreneurs. Service providers (e.g. accounting and legal services) become familiar with the special needs of startup companies and can form a web of support. A culture of entrepreneurship can develop in cities and that can be a very powerful thing.

Which are some of the biggest mistakes entrepreneurs make?

The biggest mistakes are overoptimistic forecasting and underestimating the capital needed to survive until the business can generate the necessary cash flow. Startups in the early stages, may experience incredible sales growth, but the cash flow has to be reinvested, so entrepreneurs should not plan on taking cash out of the company anytime soon.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

I don’t think it will be one sector, it will be the melding of two sectors. The place to look for opportunities is at the intersection of the sector boundaries that are blurring. I would look for where technology and service sectors are melding.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

State and local authorizes should look at a portfolio of approaches. A combination of tax credits for new businesses, along with low cost office/meeting spaces can be quite effective in jump starting business development. Most startups can’t afford the expense of their own space and can’t utilize support staff effectively, so shared space and services that is subsidized can be quite helpful to new startups.

Jeffrey York

Assistant Professor of Management and Entrepreneurship, and the Shane Faculty Scholar at the University of Colorado Boulder
Jeffrey York
What tips would you offer an aspiring entrepreneur?

Start with yourself as a creator of opportunity, rather than seeking the “next big thing.” An easy way to do that is by reflecting on your identity, your network, your knowledge, and your beliefs. A simple table with what comes to mind under each of these is a nice starting point. Then, ask, based on what you wrote, what can you do today to start a business? Then actually do that and see where it leads next!

How important is the city an entrepreneur picks to start a new company?

I think it depends. For businesses aligned with some broader cultural norm, I think it can matter a great deal. For example, in two research projects I’ve been involved in, we found that entrepreneurs were more likely to enter the solar energy and green building industries in areas with strong environmental socio-cultural norms. More recently, we’ve been finding that such entrepreneurs are also more likely to survive. While I don’t know of research in other areas showing similar effects, in all startups I think it is helpful to have a community of available mentors, partners, and investors.

Which are some of the biggest mistakes entrepreneurs make?

In my classes, the biggest mistake I see budding entrepreneurs make is to ignore what potential stakeholders are telling them, and “stick to their guns.” A far better approach is to co-create the business with customers, partners, and even competitors, so that you find a truly compelling value proposition.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Well, if I knew that I wouldn’t be a Professor; I’d be investing there! But, I think that we will continue to see environmentally relevant innovations across all industries as the impacts of human-induced climate change become more apparent and impactful. While this represents one of our biggest challenges, it’s clearly also one of the biggest entrepreneurial opportunities of our time.

What is the best source of funding for new companies?

Sales. There is no better source of funding than actual paying customers. I always encourage companies to begin selling their product before they are even sure what it is. A product that a customer helps to create has a built in market.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

I’m not sure that there is that much they can actually do in many cases. I think there have to be entrepreneurs on the ground first. However, we are finding that entrepreneurs tend to be attracted to places with a high quality of life, great education, and recreation possibilities. So, my best advice would be to focus on doing a great job at creating those things to attract entrepreneurs.

However, for specialized industries, I do think policy can help. For example, we found that renewable portfolio standards, as well as incentive based policies, were key to growing entrepreneurship and entry in the the wind energy sector both nationally, and here in Colorado. So, for a specialized industry, policy can be critical.

Lou Marino

Frank Mason C&BA Faculty Fellow in Family Business, and Professor of Entrepreneurship and Strategy at University of Alabama
Lou Marino
What tips would you offer an aspiring entrepreneur?

Choosing the right location is critical both for a new store location, and a new business.

How important is the city an entrepreneur picks to start a new company?

The city in which an entrepreneur chooses to operate can be critical to their success. Despite the plethora of online resources and the use of virtual teams, nothing can take the place of the ecosystem that exists in the city in which your base of operations is located. Perhaps even more important than the formal institutional support that exists in a city for entrepreneurship, the culture an livability of the city can significantly impact your ability to get the best people to work for you and how happy they are to be there.

Which are some of the biggest mistakes entrepreneurs make?

Three major mistakes I see entrepreneurs make are 1.Not understanding the value proposition of their product or service from the customer's perspective, 2. Not budgeting and managing properly for cash flow, and, 3. failing to plan for growth.

What is the best source of funding for new companies?

I am a major proponent of growing from personal funds and trying to avoid debt early on. If this is not possible, then look first to crowd sourced funding opportunities that leverage premiums, next look to friends and family, then to crowd sourced equity funding, finally to angel investors. If the idea is big enough you can go for VC's but for many startups that is simply not a viable option.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Tax credits and other incentives are all nice to have, but if your city is not vibrant and does not value diversity, in all of its forms, you will have a serious uphill battle in building a successful entrepreneurial ecosystem.

Entrepreneurs also do not like bureaucracy, so it is critical to foster a "can do" attitude and to avoid onerous legislation.

David L. Deeds

Schulze Chair in Entrepreneurship at University of St. Thomas, Schulze School of Entrepreneurship
David L. Deeds
What tips would you offer an aspiring entrepreneur?

Do your homework. Specifically, research the market, customer needs and how you will reach those customers. A strategy based on “If you build it they will come almost never works”. Talk to as many potential customers as possible, get a simple prototype together – it doesn’t have to be perfect it just has to be able to communicate the idea. The original prototype for the mouse was a chunk of 2x4 with handball set into it.

How important is the city an entrepreneur picks to start a new company?

Critical, but not in the way most people think about. An absolutely critical asset for every entrepreneur is her/his network. Networks are geographically centered, so shifting cities to start a business because of taxes, the supposed availability of investment capital, etc., is rarely a good idea, unless you happen to have a strong network in that city. If you’re in Minneapolis and have a decent network, your odds of success are far higher in Minneapolis then they are in the Silicon Valley where you have little or no network.

Which are some of the biggest mistakes entrepreneurs make?

Not doing their homework and refusing to listen to the market.

What is the best source of funding for new companies?

Depends on the stage of development but it always starts with your money and friends and family money. This is the most readily available, generally comes with the best terms and is usually the most patient.

I am about to commit heresy, but credit cards are a wonderful source of seed stage capital and cheap, relative to almost every other source out there. If you need expansion/development capital beyond your personal sources then you are also committing to an exit, assuming you bring in professional money (Angels & VC’s). The best source of capital is the one that is available and fits with the plans of the entrepreneur and the type of venture. If you’re not revolutionizing a market don’t chase VC money because you’re not a VC type of venture. Build your business the old fashioned way with your money, retained earnings and bank lending.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Great Education systems – starting with K-12 and moving on to higher education. Build great education and get out of the way and let the products of the system create the future. Great K-12 education provides a talented and creative workforce and attracts and retains talent in a region. Education is the most important input and gets the least amount of press and attention because it’s hard, takes a long time and is difficult to directly correlate with outcomes.

There’s a reason Massachusetts and California were the epicenter of entrepreneurship and innovation in the 70’ & 80’s – they had great education systems in 1960’s that provided the most important raw material for entrepreneurship – smart, creative, motivated people.

Linda F. Edelman

Professor of Strategic Management at Bentley University
Linda F. Edelman
What tips would you offer an aspiring entrepreneur?

I always tell my students to learn everything they can about the competitive landscape, because they will be looking to figure out ways to do things faster and better than the competition. I also remind them that others have overcome what seem like insurmountable obstacles right now, and that there is no shame in asking other entrepreneurs how they overcame a particular hurdle. My experience is that people are very helpful when asked.

How important is the city an entrepreneur picks to start a new company?

That is a great question. Of course the buzz in tech is to go to the west coast, but I think that people undervalue the importance of their personal network. I tell aspiring entrepreneurs, there is a great amount of wisdom in staying wherever they currently are, because that is likely where they know the most people who can help out, and they will need help.

Which are some of the biggest mistakes entrepreneurs make?

Trying to grow too fast, before they really understand their business. Having big ideas is fantastic, but at the very beginning, when cash is tight, count every penny and grow slowly to get a sense of the challenges inherent in the business model. There is a time for fast growth, but learning the business first always makes sense.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

I wish I had a crystal ball, however, I do think there will be a lot of movement in the energy sector. Right now cheap new oil is slowing down the economic incentive in this space, but that will not last forever and I just don’t see us solely dependent on fossil fuels in the foreseeable future.

What is the best source of funding for new companies?

Friends and family at first. If an entrepreneur has a great idea, then they should be able to use their network to get enough seed money to give it a try. Once that has run out, the entrepreneur should have a pretty good idea if their idea can scale, and then they can go for outside money in the form of debt or early stage equity investors.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

I think that governments can provide the environment that is conducive to small business, and then once that is done to leave business alone to figure things out. I am not a big fan of governments making investments in new ventures, I prefer to see that left to the professionals.

Felipe G. Massa

Assistant Professor of Management, and Kloor Professor of Entrepreneurship and Small Business at Loyola University New Orleans
Felipe G. Massa
What tips would you offer an aspiring entrepreneur?

Embed yourself in your focal community. Starting a business is as much about passion and personal drive as it is about the network of mentors and customers that help you formulate a business model, find funding and execute. An important initial step, therefore, is to identify a community of people starting businesses in your community or industry and get to know what issues are important to them. Who are their customers? What are their needs?

How important is the city an entrepreneur picks to start a new company?

Although the influence of founding location will vary depending on what kind of business you are starting, it is crucial for any entrepreneur to understand how their city will impact their potential for sustainable success. While Silicon Valley provides entrepreneurs with access to some of the best tech talent in the world, cost of living and operating a business there can be extremely high.

The key is to find a city that can give you what you need to establish your business and scale without breaking the bank. I advise entrepreneurs in New Orleans. We have a burgeoning ecosystem with entrepreneurs willing to give advice, with buildings in great locations with cheap rent, and several universities that can provide businesses with a steady flow of human capital as they grow. We are, however, lacking in the kind of tech talent and investor networks that one might find in Silicon Valley or San Francisco. Each place has pros and cons, so think carefully about what matters in your particular situation.

Which are some of the biggest mistakes entrepreneurs make?

The biggest mistake I see entrepreneurs making is that they adopt a "field of dreams" strategy. They expect that if they build a shiny new app, start a restaurant in a great location, or begin manufacturing their clever invention, customers will eventually burst through their doors clamoring for whatever it is they are selling. Instead, they often find themselves struggling to attract a handful of customers and eventually have to declare bankruptcy. Instead, entrepreneurs should talk to their customers while they are iterating on their business model and optimize their product or service to fit the needs of a specific target market that is big enough to sustain their startup. In short, successful startups are rarely formed from the musings of the lone genius. They are, more likely, born out of the conversations between founders and potential customers.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Investors typically like technology companies because they can scale quickly and provide them with a profitable exit (e.g., acquisition by some Fortune 500). If you are looking for the next big thing, start by looking for startups that have high margins and that take months, not years to grow their customer base ten times over.

What is the best source of funding for new companies?

Each company will typically follow their own unique path to financial sustainability. Some entrepreneurs might find that their product is amenable to a Kickstarter campaign, some will "bootstrap" their businesses by using their own money or borrowing from friends and family, some might try to get a bank loan, while others may design a business for a clean and profitable exit that will appeal to Angel investors. I typically advise entrepreneurs to ask entrepreneurs in their ecosystem that have similar businesses garnered funding or to reach out to universities and accelerator programs that offer free advice.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Authorities can do a lot to help their entrepreneurial ecosystems succeed. By making it less time-consuming and expensive to obtain licenses, to find information and by creating programs that support early-stage startups financially, state and local government can address needs that private enterprise might not be willing to tackle.

Perhaps one of the most important roles government can play is to legitimize - through awards, mentions, and events - the efforts of leaders that are trying to strengthen the mentor networks, pitch events and workshops that create a self-sustaining community of innovators.

Shaker A. Zahra

Robert E. Buuck Chair of Entrepreneurship, and Academic Director of the Entrepreneurship Center at University of Minnesota, Carlson School of Management
Shaker A. Zahra
What tips would you offer an aspiring entrepreneur?

Do your homework.

Test your ideas; talk to others.

Balance intuition and excitement with analysis.

How important is the city an entrepreneur picks to start a new company?

Location makes all the difference; some cities are rich with opportunities and resources that are relatively easier to exploit. Other cities offer more limited opportunities and resources. Cities also differ in the qualities of their infrastructure, human capital, and supporting industries that make the creation and growing of new companies feasible.

Which are some of the biggest mistakes entrepreneurs make?

Over optimism; ignoring common sense rule of managing companies and people, narrow span of attention; and focusing on the "techniques" in doing things -- creativity and flexibility are crucially important.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Things that are essential to our daily life are most likely to be the next arenas for disruption. radical ways to produce, distribute and store basic things such as water, food, nutrition, and the like are among the best.

Educational Institutions are well over-due for disruptions as current institutions increasingly fail to offer the training and skills needed for an ever changing global existence. Who teaches, as well as what, and how is taught are likely to change.

What is the best source of funding for new companies?

Family and friends remain a great source of funding of new business, especially in a company's early years. The best source of business varies by the stage of business development, amount of money needed, and a company's business model. Newer ways of funding, such as crowd funding, complement traditional means of raising capital.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Creating and upgrading infrastructure, reducing red tape, reducing taxes, and connecting companies to promote business, learning and growth.

Jeremy Short

Professor and Rath Chair in Strategic Management at University of Oklahoma, Price College of Business
Jeremy Short
What tips would you offer an aspiring entrepreneur?

I believe aspiring entrepreneurs can take a page out of one of the key ideas often promoted on popular crime dramas. In such shows, a cunning detective or forensic expert will let data ‘speak’ to them as valuable information helps to tell a particular story that leads to solving a case. In contrast, entrepreneurs might often be tempted to rely too much on following their gut instincts or passions in their quest to build new ventures. But, some data about a particular market, or demographic, or trend in goods or services can often be of equal value to put all of the pieces of the puzzle of starting a new business together effectively. Along the same lines, I would encourage entrepreneurs to make sure they are launching a career instead of feeding a hobby. In some cases, the outcome can be the same. But in many cases, the passion is best saved for leisure time rather than business time.

How important is the city an entrepreneur picks to start a new company?

Selecting the ‘right’ city at the right time is crucial in many entrepreneurial ventures because many towns may or may not be ready for a given enterprise. At the same time, a number of viable businesses might be old hat in some towns.

Right now, where I live, Oklahoma City is seeing a renaissance in ‘foodie’ culture including thriving growth in unique restaurants and an abundance of clever food carts. In contrast, this culture is very well established in other cities. So a concept that might be warmly embraced today in OKC as novel might be met with a lukewarm reception in another city.

Which are some of the biggest mistakes entrepreneurs make?

I mentioned the importance of seeking data before starting a new business and I believe failure to follow the old cliché of ‘look before you leap’ is likely one of the biggest mistakes.

For example, a large body of research in strategic management and entrepreneurship finds that industry membership is one of the biggest determinants of the success of a particular firm. Yet, many entrepreneurs overlook the perils associated with certain industries (the restaurants industry in particular comes to my mind) and these entrepreneurs feel they will no doubt succeed where others fail.

I believe a number of decision biases many individuals can struggle with can be particularly troublesome for entrepreneurs. There is a general bias of overconfidence that many of us must overcome. Most individuals believe they are above average drivers. In the same vein, most entrepreneurs believe they are more likely to be successful than their peers. But everyone can’t be above average in driving and business acumen. One way to combat this tendency is to find a friend or colleague who can act as a ‘devil’s advocate’ by providing candid feedback about a particular business idea. Of course, this only works if the entrepreneur is willing to listen to and internalize such feedback.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

I often tell my students that a good idea is worth nothing. The notion is that what is of value in the market is getting the idea for a particular good or service to market. With this premise, I believe that many goods and services may see previously unmet potential as crowdfunding take a more prominent role in our economy. The impact can range from platforms that target social ventures (Kiva), goods and services (Kickstarter/ Indiegogo), and now we are even starting to see crowdfunding of franchise concepts (crowdfranchise.com)

What is the best source of funding for new companies?

The old entrepreneurial cliché is that most new ventures are funded by family, friends, and fools. I believe this adage still remains true. But I do believe crowdfunding is becoming a valuable additional funding source to complement these traditional methods.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

I believe the best way for state and city leaders to stimulate entrepreneurship is to create a place where people want to live.

For example, years ago, Oklahoma City passed a temporary one-cent sales tax. This money funded renovations to performing art centers that now host Symphonies and Broadway shows, state fairgrounds, a downtown entertainment warehouse district, and improvements to other parks and public works. The beauty and quality of these improvements encourages more individuals to live in the city and more businesses to cater to such individuals.

I believe if authorities adapt the idea of throwing a party they want to attend to building a city where they would like to visit, things will fall into place and create a halo effect that results in a thriving business community.

Gregory L. Stoller

Adjunct Lecturer of Operations Management at Boston College, Carroll School of Management
Gregory L. Stoller
What tips would you offer an aspiring entrepreneur?

Begin planning your business as early as possible, even before you begin developing your products (or services), or actually selling them to customers. Areas to consider are: 1) Type of incorporation entity and any necessary, and associated, Partnership Agreements, and 2) What types of people you’ll be raising money from, as this might require separate registrations in individual states across the US.

You’ll also want to give some thought to what I consider the “Big 3” questions, through a carefully honed 3-minute Elevator Pitch: 1) How does the business make money, 2) What is its competitive advantage and 3) Why will your management team positively contribute toward its success?

How important is the city an entrepreneur picks to start a new company?

This will depend on the type of business you’ll be starting. If it’s retail focused, not only the city but also the street address / location will matter significantly, in terms of visibility or walk-in traffic. If you’re in the manufacturing or tech space, the city choice will be important in terms of partners, vendors and suppliers, whom you might need to be in close proximity. But, with the internet and mobile telephony being what it is today, the choice of city isn’t necessarily as crucial as it once was.

Which are some of the biggest mistakes entrepreneurs make?

The biggest mistake is engaging in what I call a “ready, fire, aim” strategy, either externally or internally.

Externally, I see lots of executives, 99% of whom have the best of intentions, going full throttle launching a company or product too soon without having first more carefully researched the market’s potential acceptance, pricing, competitive landscape or barriers to entry.

Internally, entrepreneurs need to ensure they’ve vetted the chemistry and capabilities of people on their management team, the amount of assistance investors can provide well beyond the monies they have access to, and ensuring an entrepreneur has a solid network of service providers (i.e., lawyers, accountants, insurance, landlords, etc.).

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

There are 2 ways entrepreneurs can make their mark:

1) Changing existing behaviors such that customers will have disincentives to *stop* using their products once they’re adopted. Consider how reliant we’ve become on ATMs or auto bill pay. These are comparatively low-tech solutions but now that we’re used to them, people will likely avoid going back to the “old system” of in-person bank tellers or paper checks.

2) The second way an entrepreneur can be positively disruptive is by improving an existing process, but doing so without needing to re-invent the proverbial wheel. Satellite radio was one of the pioneers here in that it charges a modest subscription fee for something which used to be free (i.e., listening to the radio) but now gives consumers a huge of amount of additional choices through access to more channels. Leveraging the same resources across multiple channels, often with pre-recorded content, greatly reduces overall cost.

What is the best source of funding for new companies?

If a company has collateral it can lend against, then debt financing is preferable. While less expensive than equity, the cost is, in general, more predictable (especially with a long-term loan or fixed rate line-of-credit) and the lender is the ‘partner which goes away,’ once the indebtedness is repaid. Equity is, of course, more effective for new companies just starting out and although it will be more expensive financing, it will also likely include strategic counsel from the investors providing the funds.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

They can assist in two ways — 1) Provide tax breaks to new businesses as an incentive for entrepreneurs to set up shop in their particular city or state. 2) Help craft long-term legislation so it benefits local or US business sectors, in terms of allowing them to be competitive in the wake of potential off-shore, lower-cost entrants.

Larry W. Cox

Associate Professor of Entrepreneurship at Pepperdine University, Graziadio School of Business and Management
Larry W. Cox
What tips would you offer an aspiring entrepreneur?

Always be on the lookout for interesting problems to solve – especially in areas of personal passion. This is where it all starts. Then move forward based on who you are, what you know and whom you know.

How important is the city an entrepreneur picks to start a new company?

Entrepreneurs almost never pick a city to start their company. They start the company in the city where they currently live. This is because most aspiring entrepreneurs (at least in the US) are employed, and have homes and families. They have come to their home city for some reason other than entrepreneurship (e.g., a job, to go to school, because they like the surroundings, etc.) and they do not uproot everything for a business idea that is somewhere between conception and wildly successful.

They only relocate at a much later stage of the business to be closer to key resources. I recently invested in a start-up called "Champion Technology Company, Inc.” The technology came from Pacific Northwest National Laboratory in the state of Washington. The CEO/Founder continues to live in LA. The CTO/Founder and Inventor continues to live in Washington. Neither of them will move until the business requires it and is large enough to make it possible.

Which are some of the biggest mistakes entrepreneurs make?

Surprisingly, one of the biggest mistakes for (especially novice) entrepreneurs occurs when they have a product or service with multiple potential vertical markets – when they indeed have something revolutionary. They rightly understand that their technology or process could solve problems in multiple domains. So, they “lock up” for fear of choosing the “wrong" opportunity. They waste time trying to “figure it out” rather than simply taking action in one direction and then pivoting when necessary.

In entrepreneurship, there are no “right answers” and no way to move forward other than to take action, risking only what you can afford to lose.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

There is absolutely no way to know this. By the time any of us know what “the next big thing” is, someone is already there. Seasoned entrepreneurs don’t worry about this. They just find interesting problems to solve and apply creativity to develop an innovative solution to that problem. Then they start with who they are, what they know and whom they know to move the project forward.

What is the best source of funding for new companies?

This is another question that is impossible to answer. It all depends on how much money is needed, the goals and preferences of the entrepreneur, and the nature of the business.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Entrepreneurship is, at its core, a creative activity. However, very few of us have been trained in the principles, skills, tools and processes of creativity. This is where entrepreneurship begins. So, start with training people to use more of their creative capacity.

We have also started a non-profit research foundation called the Early X Foundation to connect entrepreneurs with technologies coming out of national labs and universities. These two things are producing an amazing number of new ventures. The traditional “levers” that governments use with regard to entrepreneurship (e.g., incubators, accelerators, small business assistance, tax breaks for VC funding, etc.) are further downstream. They’re good, but you need a lot of people heading down the pipeline to produce the few businesses that will move the economic needle. My advice – begin at the beginning!

David Thomas

Assistant Professor of Management at University of Northern Colorado, Monfort College of Business
David Thomas
What tips would you offer an aspiring entrepreneur?

Complete a feasibility analysis to ensure your idea is viable. Do this before you spend any money or invest valuable resources in your business idea. Research dollars spent now, reduce waste later.

How important is the city an entrepreneur picks to start a new company?

A local network of like minded individuals makes for a favorable ecology for start ups...pick a city with a business incubator and university.

Which are some of the biggest mistakes entrepreneurs make?

Under-estimating the competition and over-estimating the value of your business offerings...and not completing a feasibility study before spending dollar one.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Answer lies in what your research reveals.

What is the best source of funding for new companies?

Depends...business plan competitions are excellent avenues to test your idea, plan and attract investors.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

They can get out of the way. Most governments and their managers have no clue on how to start and operate a small business. Keep taxes low, eliminate unnecessary regulations, and look for ways to build partnerships with local universities and business incubators.

Kathleen Allen

Professor of Entrepreneurship at Lloyd Greif Center for Entrepreneurial Studies, and Director of the Center for Technology Commercialization at University of Southern California, Marshall School of Business
Kathleen Allen
What tips would you offer an aspiring entrepreneur?

Make sure you’re ready to start a business. It’s not as easy as it looks; you need the support of people you care about and you need to put some personal resources (money) in place so you can maintain control of what you’re doing.

Think twice before starting a business with close friends. You may be risking that friendship in favor of a business partner. The most successful teams are built from people who bring specific expertise and experience to the table, rather than simply a social relationship.

Do your homework before you launch. Customer discovery and finding the right business model are critical steps to a successful launch. Too many entrepreneurs start with a solution looking for a problem. That’s backwards. Get out and talk to people to find out where there’s a real need or pain that you can solve.

How important is the city an entrepreneur picks to start a new company?

It depends on the type of business. There is value in being near other businesses in your industry; that’s why you find clusters of businesses — for example, biomedical businesses in San Diego and financial services in New York City. Clusters attract investment dollars and facilitate collaboration for greater productivity. However, most pure Internet businesses can operate from anywhere and they do.

Which are some of the biggest mistakes entrepreneurs make?
  • Not solving a compelling problem for customers. If you solve a real problem, customers will pay for the solution. If you’re solving a “nice to have” type of need, you will spend far more in marketing dollars to bring customers on board.
  • Not validating a business model. Getting feedback from the market on the value proposition, customers, strategic partners and all the other elements of the business model before you launch in a big way is critical. Most business models don’t completely survive first contact with the marketplace. You increase your chances that first contact won’t be a complete disaster if you test the model with small experiments first, revise, then go back out and test again until you’re confident enough to launch.
  • Splitting equity in the business too soon. Unless your team has a long history of working together, you don’t want to hand out equity immediately to any co-founder with whom you’ve never worked. Too many co-founders break up before the business becomes successful. If you have given equity before you know that the team is solid, you will pay for that perhaps for the life of the business. Some teams choose to have dynamic equity sharing agreements where they specify how much equity each member gets, should they still be part of the venture at some designated point in the future and contribute what they were supposed to contribute.
What is the best source of funding for new companies?

Personal resources. The longer you can go before taking formal capital, the more leverage you have in negotiations with angels and venture capitalists because you have reduced some of the risk associated with your new venture. Every time you take a round of capital from an outside investor, you lose some of the ownership you had in your company; and if you’re not careful, you will lose control of your company’s destiny.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Stay out of their way. Make it easy for businesses to get started without going through a lot of hurdles that cost time and resources.

Starr Marcello

Director and Chief Operating Officer of the Polsky Center for Entrepreneurship and Innovation at University of Chicago Booth School of Business
Starr Marcello
What tips would you offer an aspiring entrepreneur?
  • Be fanatical about knowing what your customers need;
  • Know what you know and what you don’t know;
  • Surround yourself with good leaders and mentors;
  • Practice your elevator pitch on your toughest critic;
  • Always know what your competition is up to and who your competition could be.
  • How important is the city an entrepreneur picks to start a new company?

    Choosing a city to start a new company is important when your business requires close interactions with customers, partners, mentors, suppliers or manufacturers; when you need access to a specific talent pool or industry hub; or when the local government provides incentives that are beneficial for launching your business in that city.

    Which are some of the biggest mistakes entrepreneurs make?

    One of the biggest mistakes we see entrepreneurs often make is jumping right in without knowing who their customers are; or failing to realize that their purchasing customer is different than their end-user customer.

    Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

    One of the benefits of someone in my position is the opportunity to work with all kinds of ideas across a wide range of industries. There are opportunities for disruption in many sectors. Real estate and education, including higher education, are sectors I am watching.

    What is the best source of funding for new companies?

    Early-stage companies can tap friends and family, launch a Kickstarter or Indiegogo campaign, apply to join an accelerator program or incubator, or try to win any number of city or university-sponsored competitions that provide funding. An entrepreneur has a greater chance of getting funding from angel investors or venture capital firms once the company’s idea has been vetted with customers, once it has an MVP (minimum viable product), and once it has a sound business plan. An entrepreneur must always consider how much equity he/she is willing to share with outside investors and should ensure that his/her goals are aligned with the investor’s goals, expectations, and exit strategies.

    What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

    Since entrepreneurship and new business development stimulates job creation and the local economy, it’s essential for state and local governments to invest in education and partner with institutions to educate, train and help equip its citizens to have the skills required to act on their entrepreneurial ambitions. Access to resources, such as low-cost office space and a mentor network, can also foster local ecosystems in addition to solving frequent challenges for early-stage founders.

Joel H. Dobbs

Executive in Residence in Entrepreneurship, and Director of the Office of Innovation and Entrepreneurship at University of Alabama at Birmingham, Collat School of Business
Joel H. Dobbs
What tips would you offer an aspiring entrepreneur?

Fall in love with the problem you are solving, not your solution. Chances are you will need to make multiple changes or pivots to your initial product. If you are focused passionately on solving a problem you are likely to decide wisely when making these choices. If you are focused on your solution, you may find yourself pursuing a dead end. Be prepared to experiment, learn and evolve.

How important is the city an entrepreneur picks to start a new company?

Having an entrepreneurial support system is really important, especially in technology and scientifically-based startups. For instance, here in Birmingham we have one of the country’s leading business incubators, Innovation Depot. Incubators, business accelerators, and the proximity to investors, all facilitate a startup environment. In addition, the support of fellow entrepreneurs is important.

Which are some of the biggest mistakes entrepreneurs make?

Probably number one is underestimating the level of commitment required to successfully start and grow a business.

The second is failing to validate the market for their product or service. Just because you think it is a good idea doesn’t mean that people will buy it.

Third is underestimating their competition. I frequently hear investor pitches in which the entrepreneur boldly states, “We really don’t have any competition.” Wrong! The status quo is competition.

Finally, getting the pricing right. Part of validating the market is understanding the best price. Usually, new entrepreneurs either underprice (“We’re better and cheaper”), or they overprice, believing that what they offer is far better than it actually is.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

I wish I knew the answer to that one!

I believe that most, if not all truly disruptive innovations will involve technology. I would look at the medical and health care sectors, which are ripe for innovation given the current cost and complexity of health care along with the current demographic trends. I’m not just talking about new therapies but new and novel ways of delivering care, empowering patients to manage their health, process improvements in hospitals and clinics and advances in diagnostics and medical devices.

I also believe than any sector that utilizes “gatekeepers” is ripe for disruption. Historically, travel agents are an example of intermediaries who have been “disintermediated” by technology. Others ripe for this same fate are realtors (we are already beginning to see this now with apps such as Zillow and Trulia). Publishing is another example as is the music industry, which has been turned on its head by iTunes, among others.

What is the best source of funding for new companies?

For early stage startups, I recommend looking to business plan competitions as well as the “3Fs”, friends, family and fools. For really novel ideas crowdfunding can be a lucrative source of early funds. Use small amounts of money to validate your business model and products by learning to fail fast, fail cheap and learn quickly. Wait as long as you can before engaging with third parties who will take a piece of your business in exchange for their investment. These types of deals will have very unfavorable terms for a very young business. As you begin to grow, generate significant revenues, and claim market share, you will likely get much better terms plus you will now be using these funds for growth.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Invest in building an environment that is favorable for innovation and entrepreneurship. Look to partner with universities. Start business plan competitions to help fund early stage companies. A favorable tax climate can also be a big plus.

Franz T. Lohrke

Brock Family Endowed Chair in Entrepreneurship at Samford University, Brock School of Business
Franz T. Lohrke
What tips would you offer an aspiring entrepreneur?
  1. Gain a wide range of experiences before starting a business. Work experience can help aspiring entrepreneurs spot new opportunities in the industry in which they plan to start a business. In addition, experience in or knowledge about other fields can enhance an entrepreneur’s creativity. For example, Steve Jobs adapted his interest in the arts (he took calligraphy in college) to designing computers.
  2. Network constantly. Having a diverse network also can help generate new ideas, and it is often impossible to know who knows whom. So, even though talking with several people about ideas can potentially increase the threat that someone will “take your idea and run with it,” it can also lead to unforeseen opportunities. For example, Leah Busque, who founded TaskRabbit, credits a dinner conversation with friends to gaining access to important mentors and residency in Facebook’s business incubator.
  3. Build credibility. One critical step to convincing potential investors, employees, and customers about a business idea is to demonstrate how trends are converging to make a particular business viable. The second step, though, is to demonstrate that you and your team (as opposed to someone else) are the ones who can build the business and compete successfully with current or future competition. Gaining industry experience will help, but potential entrepreneurs should consider writing a blog, working as an intern (maybe even an unpaid one) or sponsoring an event to gain experience or generate publicity.
  4. Stay flexible. Many successful companies were built on Plans B, C or D, rather than Plan A. Paypal, for example, resulted from a company that had originally designed secure interactive software for PalmPilots pivoting to employ this knowledge online.
  5. Recruit a solid management team. Building a successful new business requires a diverse set of skills. For example, Steve Jobs provided the product design and marketing skills at Apple, but Steve Wozniak brought critical technical skills to the team.


  6. How important is the city an entrepreneur picks to start a new company?

    Location can be critical for some new companies. For example, some provide access to well developed “entrepreneurial ecosystems” with customers, mentors, technically skilled employees and financial resources. A particular location (like Silicon Valley) can also provide credibility to a new business.

    At the same time, location may be less important for some businesses. For example, an ecommerce-based business can be run from just about any location having good Internet connections and a reliable transportation network.

    In addition, some strong ecosystems are beginning to emerge outside the traditional entrepreneurship centers of Silicon Valley, Boston, and New York City. For example, access to high speed Internet, business incubators, educated employees, and/or government entrepreneurship incentives have made cities like Austin, Denver, Oklahoma City, and Chattanooga attractive places to start businesses in the U.S.

    Which are some of the biggest mistakes entrepreneurs make?

    Aspiring entrepreneurs will make mistakes. The uncertainty surrounding the startup process ensures that nothing will go exactly according to plan. Some mistakes can be great learning experiences, but others can be fatal to a business.

    Externally, entrepreneurs often underestimate the speed and intensity with which established competitors will respond to their new business. Although these competitors may ignore a new entrant or see its new product/service as nonthreatening, they often have the capabilities to respond. Thus, objectively analyzing competitors’ strengths and weaknesses is critical to a startup’s success.

    Entrepreneurs may also not seek enough customer feedback before and after they launch a new business. Entrepreneurship expert Steven Blank stated that “no business plan survives first contact with customers,” so entrepreneurs need to seek out frequent customer feedback. In addition, entrepreneurs need to understand the production process for how their product/service goes from raw materials to final customer. Different parts of this production process provide different opportunities and threats to the business, because they can have important partners or gatekeepers that can help or threaten a new business’ success.

    Internally, entrepreneurs have to understand how cash flows into and out of a business, particularly during the startup or growth stage. New and growing businesses often burn through cash, and running out of cash will kill a business. Thus, forecasting, conserving, and managing cash flow is a vital survival skill.

    Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

    Instant connections available from social media, mobile technology, and location tracking have helped launch several new successful businesses. These and other technologies have allowed entrepreneurs to develop new business models that reduce customer pain points or enhance convenience and customizable experiences.

    Industries that are ripe for disruption are those having high fixed costs, which can be reduced via technology and/or that have enjoyed protected status, provided regulations or other industry characteristics providing this protection can be overcome or circumvented. For example, Bellhops, a successful startup focusing on customers moving into or out of dorms or apartments, has employed mobile technology to find customers and manage its employees. In addition, because the company does not have the high fixed costs of established moving companies (it doesn’t own any moving vans), it doesn’t have to support the traditionally high overhead costs of the moving industry, allowing it to quickly scale up its business.

    What is the best source of funding for new companies?

    Startups currently have several funding opportunities that were unavailable a decade ago. The traditional sources of borrowing from banks and selling equity to “accredited investors” still exist, but some of the long-standing problems like difficulties obtaining loans from banks also persist.

    The growth in social media and on-line funding sources, however, has improved startup funding opportunities. Reward-based crowdfunding through sites like Kickstarter and Indiegogo has allowed startups to raise money and, in some cases, avoid some cash flow problems by preselling their inventory to supporters instead of first having to produce inventory and then hope it sells. In addition, 17 states and the District of Columbia have passed intrastate equity crowdfunding laws that allow entrepreneurs to raise money from non-accredited investors (those with a net worth of less than $1 million or less than $200,000 in annual income).

    Each of these new sources has its risks, but as a group, they have helped democratize startup funding.

    What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

    Two things: (1) identify and support private organizations focused on building stronger entrepreneurs, and (2) support educational programs that demonstrate effectiveness in developing the entrepreneurial mindset of students to ensure a better future.

Daniel J. Freeman

Director of the Horn Program in Entrepreneurship and Associate Professor of Marketing at University of Delaware, Alfred Lerner College of Business and Economics
Daniel J. Freeman
What tips would you offer an aspiring entrepreneur?

Make sure you’re working on something you’re going to want to stick with for several years because building great businesses takes time. Focus on raising customers first and capital will follow. Time is your most precious resource so invest it wisely.

How important is the city an entrepreneur picks to start a new company?

It depends on the business. You want to be reasonably close to customers, advisors, relevant talent pools and capital.

Which are some of the biggest mistakes entrepreneurs make?

They focus on perfecting their technology rather than their value proposition to customers. They attempt to scale before developing a sales process that is repeatable and financially viable. They fail to address vesting schedules for founder equity, leaving the company in disarray if a disagreement, loss of enthusiasm for the business or life event causes a founder to stop actively working to build the business.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Certainly lots of money is pouring into the internet of things, but there will probably be a lot of big next things as entrepreneurs find ways to apply new technologies to address major pains or realize big potential costs savings. For example, self-driving technology seems like it has the potential to disrupt the transportation and shipping industry. Imagine how much a self-driving big rig that could work 24/7/365 would reduce operating costs.

What is the best source of funding for new companies?

Revenue from customers is always the best because it validates demand for the product and it’s non-dilutive of the entrepreneur’s ownership.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Two things: (1) identify and support private organizations focused on building stronger entrepreneurs, and (2) support educational programs that demonstrate effectiveness in developing the entrepreneurial mindset of students to ensure a better future.

Nik Rokop

Industry Assistant Professor of Entrepreneurship at Illinois Institute of Technology, Stuart School of Business
Nik Rokop
What tips would you offer an aspiring entrepreneur?

Learn how to look for problems. Listen to what prospective customers (people or companies) have to say and understand their pain points. Work very hard to articulate clear value proposition(s) to solve those pain points.

How important is the city an entrepreneur picks to start a new company?

For most, not very important. If your startup requires raising a significant amount of money, particularly from VCs, then certain cities are better suited for particular types of businesses - for example, building a massive user base without initial revenue (Silicon Valley), growing a business with revenues and strategic partnerships (Chicago).

Which are some of the biggest mistakes entrepreneurs make?

Solo entrepreneurs don't build a team early enough. Technical entrepreneurs build what they want instead of what customers are looking for. Pricing on a cost basis instead of value leaves a lot of profit uncaptured. Not thinking about the big picture and the context in which they are building their business.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Small scale manufacturing technologies are getting more capable - 3D printing, table top CNC, customized prototyping capabilities.

Sensors are getting smaller and more integrated into devices like smartphones, smart watches, etc. Data from sensors will first be analyzed to provide better knowledge of systems, and thereafter that knowledge will be applied to controlling those systems. Great early examples are health apps and self-driving cars.

What is the best source of funding for new companies?

Customers (i.e., sell stuff). Friends, family, & fools. Competitions, particularly for university based startups.

Science/research-based companies often get early funding from SBIR and similar non-dilutive government grants.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Support the creation of entrepreneurial communities in their regions. Provide space, seed funding, tax relief and grants to create organizations such as 1871, Catalyze and Blue1647 (all examples in Chicago).

T. Paul Thomas

Executive in Residence and Assistant Professor of Practice at Northern Arizona University, W.A. Franke College of Business
T. Paul Thomas
What tips would you offer an aspiring entrepreneur?

Remember that it isn’t easy. Trust your gut and keep fighting. Get help and be open to advice. Be persistent and know that others will tell you all the reasons it won’t work. Entrepreneurship involves risk, long hours, hard work and failure. But every win will make it all worth it.

How important is the city an entrepreneur picks to start a new company?

It all depends on what phase the company is in. Great ideas can come up in any city/country. As you move through, the stages of the company where you are located is critical for raising funding (some venture capital firms won’t invest in a company they can’t drive to in an hour). The talent may be regional and depending on how specialized the product is, you may have a tough time finding employees. But great ideas come up from any place. And every city has folks that have been there and done that to help.

Which are some of the biggest mistakes entrepreneurs make?

Fail to ask for help or follow great advice. Entrepreneurs by their nature are big risk takers and will sometimes make foolish decisions because they also believe they don’t need help. There needs to be some basic planning (you don’t need a 50 page business plan, but you need to think through some important things like the market, competition, funding, etc.)

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Not sure I agree that technology is what I would go after. I had a mentor that once told me, “solve a basic problem with technology and you’ll be successful”. I don’t think entrepreneurs need to create the next greatest app, or a faster or smaller widget. Instead find something that is a basic issue or problem and use technology to solve it… a better potato peeler, a more effective mouse trap, a solution for parallel parking, a better post-it note, etc.

What is the best source of funding for new companies?

Almost all of my experience is working with venture capital firms. But these firms look to invest a minimum of $5m. They see literally thousands of deals a year and if they are lucky they will invest in 25 a year. So vc’s invest in very few companies.

If at all possible, self fund your start-up or look to friends and family. Crowdfunding is a great alternative, especially if your start-up addresses a cause or issue.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Not sure that getting the government involved really helps. Entrepreneurs by their nature tend to live and work “outside the box” and I haven’t seen many government agencies that think that way.

While i hate to say it, i think the best thing they can do is just stay out of the way and leave it to the private sector. I know of no great start-up that started in a local or state agency.

David Y Choi

Associate Professor & Director of the Fred Kiesner Center for Entrepreneurship at Loyola Marymount University
David Y Choi
What tips would you offer an aspiring entrepreneur?

Do it! Take action!

How important is the city an entrepreneur picks to start a new company?

Very important. I have known great inventions coming out of certain cities and states that just could not get funded themselves. In addition to funding, the overall ecosystem of other entrepreneurs, advisors, and potential partners is very important.

Which are some of the biggest mistakes entrepreneurs make?

Entrepreneurs overestimate the value of their ideas (and therefore) underestimate the amount of work involved to get a business headed to success.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

When most people say technology, for some people they mean information technology. Other technologies like bio, environmental, material science… are also ripe for rapid innovation. Look at the new hopes in cancer drugs for examples. I think there are many innovations that are possible that apply certain technology for consumer products, skin care, etc. I think material science especially pertaining to energy storage and battery could be huge.

What is the best source of funding for new companies?
  1. Any source you can get.
  2. The ones most helpful without being time-consuming to raise and work with. For example, angel groups are great, but it takes too long to raise and too many people involved - they all want to add a clause into the contract and that is very time consuming.
What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Most states have stupid programs like tax deductions, etc. The best and most direct way is to create more pools of money to invest in early startups.

Jerry White

Director of the Caruth Institute for Entrepreneurship at Southern Methodist University, Cox School of Business
Jerry White
What tips would you offer an aspiring entrepreneur?

You need to have knowledge and experience in the business you want to go into. If you don’t have that, go to work for an established competitor for a few years and learn the business. Also, learn the difference between profit and cash flow. Cash flow is probably the most important financial management concept an entrepreneur has to deal with.

How important is the city an entrepreneur picks to start a new company?

It is always important; sometimes, critically so. The availability of your target market, sources of financing, availability of skilled workers in your industry, business friendly local government, etc. can make a big difference in an entrepreneur’s ability to survive and grow.

Which are some of the biggest mistakes entrepreneurs make?

The biggest mistakes are:
  • Failure to understand how to calculate the amount of financing needed and to arrange for it.
  • Hiring friends instead of the most qualified person they can afford.
  • A belief that “if you build it they will come,” when the truth is if you build it and market the heck out of it, they might come. Then again, they might not.
Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

One possibility: more efficient organization and utilization of existing assets with examples being Uber and Airbnb.

What is the best source of funding for new companies?

There is a progression of sources depending on the evolution and experience of the entrepreneur and the evolution and development of that entrepreneur’s business concept. The sequential sources (and in this order) are: personal savings, friends and relatives, business associates, angel investors, venture capitalists.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Genuinely seek ways to reduce regulatory and administrative burdens, lower taxes to the degree feasible, and develop specialty financing programs.

John Bradley Jackson

Director of the Center for Entrepreneurship at California State University, Fullerton
John Bradley Jackson
What tips would you offer an aspiring entrepreneur?

Seek feedback and criticism from others, especially those outside your comfort zone -- this can help improve the business concept.

How important is the city an entrepreneur picks to start a new company?

While the web gives us access to everything, there is no substitute for face to face contact. Your location choice can make this easy or difficult.

Which are some of the biggest mistakes entrepreneurs make?

Not talking to prospective customers before coming up with a solution.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Privacy, which is quickly becoming a luxury good.

What is the best source of funding for new companies?

Bootstrapping.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Incubators can help fledgling startups move faster.

Jason Harkins

Associate Professor of Management at University of Maine, Business School
Jason Harkins
What tips would you offer an aspiring entrepreneur?

Develop hypotheses about just about everything and then test them in the best way you can. There is a lot written about the value of the customer discovery process and validating hypotheses related to a company’s value proposition and customer segments, but this philosophy extends well beyond that. You can develop hypotheses about which method is best for connecting with customers, what you need to do and what you should buy, who your key partners are, what costs you must bear and which ones you can shift. There are many ways to get to the same end point, but some are decidedly more efficient.

How important is the city an entrepreneur picks to start a new company?

I believe the city is key, but no one specific city is key. You don’t have to startup in Silicon Valley or Silicon Alley to be successful, but you do need to startup your business in a place where there are the right people to support growing that business. The human capital available to you plays a large role in what you can consider when you look to scale the business, especially if you need to scale quickly.

Which are some of the biggest mistakes entrepreneurs make?

The biggest mistake I see time and again is not asking for help. No one expects entrepreneurs to be able to know and do everything, but some entrepreneurs try anyways. You need to make sure that you reach out early and often to get information, connections and skills that will enable you to develop your business and scale it.

Additionally, finding a good set of advisors early is key. Get 5 people who come from different backgrounds and who will speak their mind and pull them together as often as it feasible and have them chew on the biggest challenges you are facing. Make sure these are people you can trust to help you grow your business and then use them as a periodic resource.

What is the best source of funding for new companies?

This really depends on the stage your company is in. You can do a lot of hypothesis testing, and raise $10k or more in the process, through engagement with crowdfunding. Also at the earliest stages, you will likely need to tap friends, family and “fools” for money to be able to develop your idea. Once you have refined the idea and can put together a cogent story, equity investment goes from angel investors to VC firms. If you aren’t looking to part with equity, you can bootstrap your company if it can generate revenue without having to be at scale. Bootstrapping involves taking the profit generated in operating the business and building the business from the reinvestment of these funds.

Marc H. Meyer

Robert Shillman Professor of Entrepreneurship, Matthews Distinguished University Professor, and Co-Director of the Center of Entrepreneurship Education at Northeastern University
Marc H. Meyer
What tips would you offer an aspiring entrepreneur?

Be smarter than your competition, work harder than them, and pay extra attention to identifying your target customer and understanding their needs and frustration. Your product or service needs to be differentiated in some clear way that is obvious to the end user.

How important is the city an entrepreneur picks to start a new company?

Very important — the entrepreneur needs access to a) customers, and b) talent to bring into the company. For a software company, any city with a strong university makes sense, although people have a preference of the coasts; for life sciences, you need major research institutions, typically universities, nearby. But for a sports or outdoor lifestyle company, places like Portland, OR, Boulder CO, or Burlington VT, are better. It all depends on the type of company you wish to start. We like to think that Boston is a great place to start a company; lots of universities, lots of young people, major medical research institutions; lots of sports and sports active people; a real passion for new food; and many startup investors. San Francisco is just the same, perhaps with even a greater intensity of startup activity.

Which are some of the biggest mistakes entrepreneurs make?

A lack of deep customer understanding, insufficient research and mastery of distribution channels, and the lack of discipline to really think through a business model that can be scaled into an interesting, sizable business. Good methods and advisors can help avoid these mistakes.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Everything — every sector, every product category, every service — is ripe for disruption.

What is the best source of funding for new companies?

This all depends on the specific business. We have books on this topic. Most startups either get money from friends and family or a kickstarted type program for seed funding to build prototypes and then once they learn how to write a business plan, from angel investors. A few serial entrepreneurs or well connected, truly brilliant first timers score with institutional VCs — but this is such a rarity, it is best not to focus on VCs for early stage financing.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Work with universities to develop low cost startup rental facilities adjacent to the universities themselves, encourage the development of a spinout program, and create strong tax incentives for entrepreneurs to start and keep their companies local. New York has done this; so has Amsterdam in the Netherlands. All major cities should consider the same.

Jeff Amerine

Principal at Startup Junkie Consulting & Adjunct Instructor at Sam M. Walton College of Business, University of Arkansas
Jeff Amerine
What tips would you offer an aspiring entrepreneur?

Solve a real problem that customers will actually pay to have solved. Follow the lean startup methods outlined by Ash Maurya in Running Lean and on his site.

How important is the city an entrepreneur picks to start a new company?

Startup ecosystems thrive on a variety of factors such as an existing entrepreneurial culture and legacy, access to talent from universities and other sources of innovation, and available capital at all stages. Finding communities with those attributes and a reasonable cost of living is a real advantage. While the Valley has density and an incredible environment, runways can be much, much shorter due to the high cost of everything. A variety of locations in the center of the U.S. may be better choices, as the startup world has been democratized and is not only a coastal phenomenon. Check out NW Arkansas for example, if you want to start anything associated with retail innovation, supply chain, food, or data analytics.

Which are some of the biggest mistakes entrepreneurs make?

Often, inadequate customer development is done and money is spent building something that doesn't address a real need. The field of dreams approach doesn't work. Many times valuations are set way, way too high at the outset which eliminates the possibility of gaining investments from sophisticated investors in later rounds. Spending money on the wrong things and not managing cash wisely are other key mistakes. Also not being coachable and not looking for complimentary skills and advice are common errors as well.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

We're seeing some really interesting trends in high-end fashion, organic, natural, non-GMO foods, and the artisan or craft movement in general (beer, spirits, etc.). These areas are all pretty fragmented and regional at the moment. Healthcare IT and over the counter lab-on-chip diagnostics are also going to be huge.

What is the best source of funding for new companies?

Customer money is always the best source of funding. Get to revenue as soon as possible. In the process, work from your own wallet, friends, family, and fools, non-bank debt and then angel and venture funding. Any form of non-dilutive funding is typically best if you can get it, i.e., grants, etc. Be scrappy and get to customer money as quickly as possible. Only take angel and VC funding if it will help you grow and dominate more quickly than not.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Institutions and governments work best when they remove friction points and provide incentives like simplified regulations, tax credits, and matching funds. Also, supporting programs like the Innovate Arkansas program in Arkansas and i2E in Oklahoma, and the Regional Innovation Cluster programs that the SBA run also make sense. These programs expand mentoring and coaching to emerging startup founders at a time when they can't afford to pay for expert advice and have been hugely successful. Aside from these sorts of things, government involvement needs to be frugal and subtle.

Christine Beckman

Associate Professor of Management and Organization at University of Maryland, Robert H. Smith School of Business
Christine Beckman
What tips would you offer an aspiring entrepreneur?

Choose your co-founders and early team members carefully. Look for people with complementary expertise and be clear about who does what early on. It's better to wait and hire a sales person with the right experience than to fill a spot with the wrong person. It feels impossible because you need people - but it's worth it to wait for the right people.

How important is the city an entrepreneur picks to start a new company?

The city is important because it is the ecosystem in which you operate and is the network in which you are embedded. Here you will find organizations and other entrepreneurs who can be customers, collaborators and competitors. In an emerging industry in particular, you want to look at who are the anchor organizations (universities, government agencies, investors, or a cluster of collaborating companies) that will set the tone for how organizations will work together and provide an infrastructure on which entrepreneurial success can be built.

What is the best source of funding for new companies?

Friends, family, angels. It's easier to raise money when you can demonstrate early success, so those early dollars often come from those with close connections to the entrepreneur.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Public research organizations can serve as the anchors on which an entrepreneurial community can be built. An entrepreneurial community needs to be nurtured and these types of organizations can serve that role.

Clifford Holekamp

Senior Lecturer in Entrepreneurship and Director of the Entrepreneurship Platform at Washington University in St. Louis, Olin Business School
Clifford Holekamp
What tips would you offer an aspiring entrepreneur?

Never lose focus on customer value. Build what your customer wants, not what you thing is cool. Stay focused on seeing the world though your customer’s mindset, buying behavior, and psychology, not through your own.

How important is the city an entrepreneur picks to start a new company?

Even in our increasingly virtual world, location still matters. Certain cities have industry clusters that you can tap into and some have done a better job than others in creating a startup scene. The openness of the business community and the vibrancy and connectivity of the local startup scene matters because entrepreneurs need to be able to easily tap into these networks in order to connect to the investors, employees and create the partnerships they need to grow their businesses.

Since funding is usually their first and largest challenge, entrepreneurs should pay closer attention to the comparable costs of living and costs of doing business in different locales. Your funding needs could easily be cut in half by choosing one city over another. The legal environment is also a factor which entrepreneurs should take into greater consideration. Enforceability of employment contracts, tax environment, and regulatory issues, all differ from state to state and could make one location significantly advantageous over another.

Which are some of the biggest mistakes entrepreneurs make?

The most frustrating is to see when great entrepreneurs with great products make critical errors with early financing decisions that haunt them later. Examples include raising small seed rounds at too high a valuation (which in turn over-prices future rounds), taking on too much debt too early, and striking deals with early angel investors whose terms or involvements later prove to be too restrictive or inflexible.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

The prior generation of entrepreneurs disrupted the factory floor and the current generation is automating the processes of the business office. I think the next generation of entrepreneurs will go after the farmer’s field. Look for increasing innovation in agriculture, both with genomic and technology solutions.

What is the best source of funding for new companies?

This depends on the type of business and the factors at hand. Financing a new business is a strategic consideration and should be treated as such. Regardless of the methods you employ (angels, competitions, crowdfunding, accelerators, VC, etc.), it is important to look at funding as a series of financing rounds that build upon each other. Funding rounds should be timed to coincide with reaching business milestones. For early rounds, check out the growing number of startup competitions and accelerators that are popping up all over the country (there are several just in St. Louis for example). And of course, the ultimate funding strategy is bootstrapping – keep your expenses in check and look for early sources of revenue to reduce your funding needs in the first place.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

An entrepreneurial ecosystem needs three things to thrive: talent, money, and density. Policy makers should focus on efforts that develop these three things in concert, and should not spend resources on programs that don’t. In an effort to be fair, most politicians and bureaucrats miss on density and end up spreading their resources too thinly across the districts they serve. Efforts should be geographically concentrated in order to generate the critical mass needed for a self-sustaining ecosystem.

Bryce C. Pilz

Clinical Assistant Professor in the Entrepreneurship Clinic at the University of Michigan Law School
Bryce C. Pilz
What tips would you offer an aspiring entrepreneur?

Find good mentors, such as people with subject matter expertise in your industry, or those who have been where you want to go. Also, think about your customer from the very beginning. Lots of entrepreneurs have a successful science experiment, but they proceed only with assumptions about what their customers will want. They need to talk to customers from day zero and learn about their pains and needs. A successful science experiment, or a cool idea, doesn't always equate to a product that customers are willing to use, let alone buy.

How important is the city an entrepreneur picks to start a new company?

On one hand, entrepreneurship is becoming democratized, and it's more possible than ever before to be a successful entrepreneur wherever you live. That said, due to the importance of mentors, it really helps if you live in a city with other people having expertise in your domain. As many people have said, it takes a village to raise a startup. Being in a city with experienced and entrepreneur-friendly investors helps. Having startup and venture-savvy lawyers in your city helps. It's also important to have a city or community that has a culture of entrepreneurs "paying it forward" and generously mentoring and sharing their experiences with other entrepreneurs. It's much easier to benefit from this expertise if you are running into these people at the coffee shop and at your kids' weekend soccer games.

Which are some of the biggest mistakes entrepreneurs make?

Not talking to customers form day one. Also, not having the right technical and engineering expertise on their team.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

It's hard to name just one, and some of these are already happening. In no particular order, first, it seems clear that the way we get groceries will be vastly different in a few years. Second, depending on how quickly we get to fully autonomous vehicles, and especially if we get to a shared vehicle model, it will be impossible to overstate the implications of that technology. Third, education is changing before our eyes, with it now being possible to not only access information, but closely interact with subject matter experts and engage in experiential training online. Fourth, it also seems that the blockchain technology underlying the Bitcoin currency is going to have a broad impact in any situation where assets are being transferred or managed. Lastly, while people have been talking about the disruption of healthcare for decades, it will be interesting to see how wearables, and the quantified self-movement, will impact healthcare.

What is the best source of funding for new companies?

There's no right answer for all companies. For some companies, customers might be the best source of funding. Generally speaking though, a startup wants investors who can also provide subject matter expertise and provide value to the company beyond the cash they provide.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

Enabling startup communities to form. Right now, a big issue is encouraging downtown landlords to provide startup-friendly short-term leases. Also, any spaces that can be provided that draw entrepreneurs together is going to facilitate the magic that happens from entrepreneurs getting together and sharing their experiences and expertise.

Annaleena Parhankangas

Assistant Professor of Entrepreneurship at University of Illinois at Chicago, College of Business Administration University
Annaleena Parhankangas
What tips would you offer an aspiring entrepreneur?

Be persistent and never give up, but remember that your first business idea/ model is rarely the one that succeeds. Be ready to adapt based on the feedback you get from the market.

Luck and serendipity play a huge role in entrepreneurial success. However, remember that luck favors the prepared mind.

Entrepreneurship is an emotional roller coaster. Therefore, learning to manage stress is extremely important for entrepreneurs.

How important is the city an entrepreneur picks to start a new company?

Extremely important. Cities can support aspiring entrepreneurs in a number of ways, please see below.

Which are some of the biggest mistakes entrepreneurs make?

Most of them relate to people: whom they choose as co-founders or first employees, how they manage relationships with co-founders, employees, suppliers, customers and investors.

What is the best source of funding for new companies?

It all depends on what type of a new firm we are talking about. Crowd-funding on reward-based platforms gives an entrepreneur an opportunity to test the markets without giving up equity. Science-based companies benefit from grants. Companies with potential for exponential growth should seek business angel and venture capital funding.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

This topic has been covered intensively by Richard Florida in his book "The Rise of the Creative Class--Revisited: Revised and Expanded". I listed some of his points below:
  • Set favorable rules of the game for entrepreneurs through small business friendly regulations;
  • Enhance knowledge intensity by supporting higher education and R&D;
  • Support initiatives that create a high quality and mobile work force;
  • Help create a climate that rewards risk-taking and tolerates failure;
  • Foster collaborations among business, government, and nonprofit organizations;

David T. Croasdell

Charles and Ruth Hopping Professor of Entrepreneurship at University of Nevada, Reno
David T. Croasdell
What tips would you offer an aspiring entrepreneur?

I find the formula somewhat dynamic, based on factors such as funding, willing market, timing, luck, etc. Some things are relatively consistent:
  • Leverage your passion. The thing that seems to stay consistent for successful entrepreneurs is the ability to leverage passion for a project in a way that makes believers out of others. It’s never a one person show. Those that can find others to buy in early to their idea and contribute in a variety of ways tend to have more success over the long haul. Many of the traits associated with good entrepreneurs are the same as those associated with good leaders: clear vision, the ability to build consensus and strong communication abilities.
  • Stay committed – it’s a marathon not a sprint. Many of the teams I work with are too easily discouraged if they get feedback that is not consistent with their goals. That said, most people recognize the vast majority of entrepreneurial enterprises fail within the first three years. Many of the startup gurus talk about failing fast. Entrepreneurs need to balance commitment and passion against market realities. Many great ideas don’t go forward as revenue generating businesses.
  • Know your business. Whenever you seek funding, support or advice people will expect you to be an expert with regard to market potential, competition, financial operations and the like. Too many startups fail to do their homework. They simply jump headlong into an idea without fully understanding whether or not the product or service has a chance to succeed.
  • I like to frame this issue in the form of a question: “Where is your ice cream maker?” Metaphorically, the majority of people I work with know people like ice cream and will probably buy ice cream at one point or another. However, they fail to focus on business details such as how the ice cream is made. This narrow perspective most commonly manifests itself in the inability to generate even basic financials like cash flow statements and balance sheets. We teach people how to create business model canvases to get them to think about all aspects of the business.
  • Know your market. Many early stage companies think the world is their oyster – everyone wants their product if only “they knew about it” and if only they had “enough money to get it out there.” Unfortunately many don’t take the time to firmly identify a potential market for their product or service.
  • Take advantage of opportunities to learn. Exercises like Startup Weekend and Lean Startup weekend do a great job of focusing startups and early stage companies on market analysis and opportunity evaluation.
  • Ask questions. Listen carefully. Don’t be defensive. Use those ideas that fit. Seek out relevant expertise and ask questions. Almost nobody is creating the wheel for the first time any more. Listen carefully and use those things that make sense for your company.
How important is the city an entrepreneur picks to start a new company?
  • The community is more important than the city. Perhaps this is a semantic issue but important nonetheless. Victor Hwang talks about creating an entrepreneurial ecosystem in his book The Rainforest. That ecosystem can be created through communities of practice that exist in on-line virtual communities. They are also reflected in global partnerships such as NASF a group building entrepreneurial partnerships Navarre, Spain, Haifa, Israel and the Silicon Valley in California.
  • Infrastructure can be studied and copied. A culture and mindset that seeks out and embraces serendipitous collisions is not as easy to replicate.
  • Reno is a good example of a city that has been able to transform itself. The geography of the city is less important than the community that has sprung up organically to support start-ups and entrepreneurship. Reno, Nevada is my hometown. We have recently been receiving a lot of attention for our vibrant start-up community. Several major innovation companies have announced plans to locate business operations here. To the point of the question, Reno as a city has not been recognized as a start-up city until very recently. It’s difficult to pinpoint exactly what changed, except to say the community has embraced the notion of being entrepreneurial. The economic downturn hit our city and our state quite hard. Traditional business sectors like gaming, tourism and construction were hit especially hard. The community rallied around job creation through entrepreneurial mechanisms. Having a major University in town helps. A study by IBM provided impetus to build stronger ties between the University and broader business community.
  • Access to high value mentorship is important in building a thriving entrepreneurial ecosystem. Several efforts to create local incubators and accelerator programs have gained traction. High value mentorship programs such as EO, Venture Mentoring Services and Entrepreneurs Assembly work with local startups.
  • A campaign to rebrand the City has helped reframe mindsets. Ultimately, the tireless efforts by a lot of people throughout the entire community led to some early wins and created a foundation and mentality for success. We have seen this manifested in likeminded thinking, support for new ideas, and energy and passion for being part of something exciting. Reno has hosted several StartUp weekends and JumpStart programs. There are numerous collaborative workspaces in town that encourage cooperative work and leverage skill sets and expertise across multiple efforts. The Kaufman foundation hosts One Million Cups to bring local entrepreneurs together once a week to network and constructively assess ideas presented by local entrepreneurs. The University received a large endowment to establish the Ozmen Center for Entrepreneurship to support both student-based initiatives to create businesses and offers assistance to community based initiatives. The business school has raised nearly $8M in support of entrepreneurship activities. Much of the funding supports business creation such as the Sontag Entrepreneurship Competition. The Nevada Small Business Development Center works with numerous individuals to support their business ideas. The city of Reno has created an accelerator fund. The Economic Development Authority of Western Nevada hired a VP for Entrepreneurship and has launched several efforts to support local business ventures. The Nevada Governor’s Office on Economic Development has also engaged with financial and political support to keep things rolling.
  • Going back to the original question: the city of Reno has been around since 1868. It is fair to say that Reno residents have long practiced a sense of strong independence that serves entrepreneurs well. Still, Reno has only recently been recognized as a strong start-up community. The model can certainly be replicated. The infrastructure and support tools are not unique. What makes a difference is the community and the people who press on with a common goal and a belief that they can be successful.
Which are some of the biggest mistakes entrepreneurs make?
  • The inability or unwillingness to listen to and apply constructive criticism. Generally speaking, the people who are not able to move forward are those that get defensive when people offer suggestions. They are so committed to their ideas that anyone that disagrees is viewed as an adversary – one more person to convert. This perspective is almost always counterproductive.
  • Believing the notation that his or her market is everyone.
  • Trying to do it all – not recognizing limitations or the need to ask for help. Many people simply cannot get out of their own way. Their business is their baby and they are the only person who can properly care for the enterprise. It is important to find people who share similar values and work ethic with complementary skills who are willing to help push the company forward.
Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

Almost all of the ideas I have seen since becoming involved in business startups and entrepreneurship have some technological component. Generally speaking, the next big thing will focus on challenges that we all face. These ideas are not new but are still significant:
  1. Sustainability – creating efficiencies in work flow and work practices; alternative energy; more efficient and productive food production; energy and water conservation.

    I saw a presentation a few months ago in which smart homes monitored energy consumption and issued reports to homeowners. The application was similar to Leeds certification in large buildings. The net result was the ability to dynamically allocate energy thus reducing overall consumption by over 50%.


  2. It seems that many would-be-entrepreneurs focus on life-style businesses. Such businesses are difficult to sustain over the long haul. Those that do survive don’t generally add a lot to job creation and economic growth. However, to the extent that people can create their own jobs and achieve some level of autonomy in their lives, they can be successful.
What is the best source of funding for new companies?
  1. Everyone knows about friends, family and fools but this financial model is generally unsustainable.
  2. Angel investors are out there but are notoriously slow to fund and at levels that are lower than many companies request.
  3. Most start-ups have difficulty raising venture capital because they don’t offer large enough returns and lack the process knowledge to be successful.
  4. Some local, state and federal funding is available via grants and low interest loans. This is generally easier to get for many companies depending on the nature of the business. However these funding sources are also very slow in making funds available.
  5. The most consistent source for funds is bootstrapping using personal funds and revenue generation from the business.
What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?
  1. Provide funding opportunities.
  2. Provide incentives for start-ups like rent subsidies, tax incentives, reasonable business fees.
  3. Develop workshops that inform entrepreneurs of the necessary licensing and registration processes.
  4. Make it easy to find necessary resources.
  5. Promote and support entrepreneurial activities and celebrate successful businesses generated through those efforts.

Norman Smothers

Professor of Marketing and Entrepreneurship at California State University, East Bay
Norman Smothers
What tips would you offer an aspiring entrepreneur?

The first key to becoming a first time entrepreneur is that you want to choose a business that doesn’t require much capital to start. The more capital it takes, the less likely anybody will actually do it and the more problems and risk you take on. Capital equals risk. So, for example, a lot of people want to start a restaurant. This is the example on how to reduce capital. That costs a lot of money. You need a kitchen, a staff, an inventory, menus, etc.

The cheaper way to do it would be to start a catering business - no kitchen required. An even cheaper way to do this would be marketing catering services. The capital outlay for marketing somebody else’s business is next to zero, maybe a few hundred bucks. You can start a catering business; you need a van and some bunch of pans and rent a kitchen, several thousand dollars. And to start a restaurant, you’re probably looking at anywhere from ten thousand to a million, typical restaurants from a hundred to two hundred thousand. The big mistake that most people make on their first business is they don’t think about how to reduce the capital requirements.

Also, I see a lot of hesitation. The typical time for successful businesses to get started is just a matter of a few months between when the idea occurred to them and when they’ve had their first customer. So, the second tip is take action.

Samuel A. Nelson

Associate Director of the Center for Entrepreneurship, and Assistant Professor of Practice at University of Nebraska-Lincoln
Samuel A. Nelson
What tips would you offer an aspiring entrepreneur?

The top 3 tips I would offer to aspiring entrepreneurs are: 1.) Ensure you know ‘why’ you want to be an entrepreneur - if it is simply to be rich and work your own hours you should reconsider 2.) Never lose sight of your value proposition and accept that it will change as society’s want/needs change 3.) Be ready to cope with uncertainty and failure and ensure you learn from both.

How important is the city an entrepreneur picks to start a new company?

Very important (for most companies). When starting a company you need capital, service providers, mentors, customers and suppliers. There are companies that can be run from anywhere, so the city would not be important. However, history has demonstrated that innovation often comes from specific geographic locations due to the collaboration occurring there – i.e., Silicon Valley.

Which are some of the biggest mistakes entrepreneurs make?

1.) Not understanding the importance of cash flows - or specifically how it flows through their business and the challenges that presents. 2.) Assuming that success will happen quickly - in most cases it takes decades to build a strong company. Too often, people want the exception (such as Facebook) to be the rule - it just doesn’t work out that way for the most of the businesses engaging in economic transactions.

Besides technology, what other sector is ripe for disruption by entrepreneurs? What is the next big thing?

I think all industries are ripe for disruption. Travel, agriculture, construction, retail, etc., are all going through some form of disruption and this will continue.

What is the best source of funding for new companies?

Friends and family are still the best place to start for most. Accelerators are another great option, because they will often put in cash before any sales are made. Angel investment is an option, but they generally want to see the following: 1.) a successful business model and 2.) sales. Subsequently, a company is still going to need capital to demonstrate those two things.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?
  1. Cover the success stories in the news.
  2. Evaluate the amount of resources dedicated to large companies in terms of tax incentives, etc., and ensure that a similar level of focus is being given to new businesses.
  3. Ensure the community has adequate ‘space’ for collaboration within the community to occur.

David K. Hensley

Clinical Professor and Executive Director of John Pappajohn Entrepreneurial Center at University of Iowa, Tippie College of Business
David K. Hensley
What tips would you offer an aspiring entrepreneur?

Entrepreneurs should fully vet their business concept with potential customers before building the ultimate solution. The "Field of Dreams" approach -- build it and customers will buy it, can lead to failure, since the proposed solution might not address the customer's true pain point(s). Founders need to assess their strengths and weaknesses and surround themselves with top talent -- building a great team is critical for entrepreneurial success. The entrepreneur also needs to manage cash effectively -- entrepreneurs often overestimate the level and timing of revenues and underestimate expenses. Proper cash management will allow the company to extend their runway and help the founders sleep better at night.

How important is the city an entrepreneur picks to start a new company?

Launching a new business in a community with a strong entrepreneurial ecosystem will increase the probability of success of the venture. Key components include access to talent/mentors, technical resources and capital. Entrepreneurship is a team sport; entrepreneurs need innovative and talented people with diverse skill sets to successfully launch and grow their venture. In addition, having access to a mentor network will augment the leadership skills of the founding team and connect the company to other resources and potential strategic partners.

For technology-based ventures, having access to software developers, product designers and prototyping assistance will shorten time to development of the MVP and ultimately the final product. Locating in a community with a large pool of investors is critical to providing the early-stage capital needed by high-tech companies, as well as tapping into their professional network. Finally, community-based economic development programs -- i.e., funding and incubation/acceleration programs, also have proven very valuable for entrepreneurs.

Which are some of the biggest mistakes entrepreneurs make?

Three mistakes entrepreneurs often make are:
  1. Not solving the customer's problem. Entrepreneurs need to get out of the office and talk to customers so that they know their solution is something a customer really wants and will pay a premium for.
  2. Trying to go at it alone. Entrepreneurs can't be experts in everything. They should focus on what they do best and surround themselves with the best talent available -- employees, advisors, mentors, and strategic partners.
  3. Not having enough capital to get to breakeven. Failure to accurately project revenues and expenses coupled with not having an effective fundraising strategy may result in early failure. Proper cash management is key to giving the company a chance to succeed.
What is the best source of funding for new companies?

Funding the company is dependent on issues such as the type of venture, stage of development, and overall financial potential. Entrepreneurs should be prepared to invest some of their own capital into their startup. They should be aggressive in seeking grants and non-dilutable sources of capital when available. Entrepreneurs should seek outside investors that align with the values of the founders, have a network of professionals and investors to connect the company to, and will provide valuable input to the leadership team. Fundraising takes time -- the startup needs to have a strategy in place to ensure they are able to raise the necessary capital in order to succeed while the window of opportunity is open.

What is the most effective way state and local authorities can stimulate entrepreneurship and new business development?

To support entrepreneurship and new venture formation, governmental organizations should consider the following:
  1. Create incentives to stimulate early-stage investing in startups; this will encourage individuals to either become angel investors or invest in community-based seed funds to increase the availability of early stage capital.
  2. Support entrepreneurial training, technical assistance, and incubation/acceleration programs; strengthening the entrepreneurial ecosystem will increase the number of aspiring entrepreneurs and improve success rates of startups.

 

Methodology

To help aspiring entrepreneurs find the most fertile ground in which to plant their start-ups, WalletHub gauged the relative entrepreneurial opportunities that exist in the 150 largest U.S. cities. We analyzed each city across two key dimensions, namely “Access to Resources” and “Business Environment.” We then identified 13 metrics that are relevant to both dimensions. Our data set is listed below with the corresponding weight for each metric.

For this report, we chose each city according to the size of its population. Please note that city refers to city proper and excludes surrounding metro areas. In addition, the metrics marked with an asterisk were available only at the state level.

Access to Resources – Total Weight: 5

  • Financing Accessibility (Total Annual Value of Small Business Loans Divided by Total Number of Businesses): Full Weight
  • Office Space Affordability (Cost per Square Foot): Full Weight
  • Employee Availability (Number of Job Openings Minus Number of Unemployed Residents): Full Weight
  • Median Annual Income (Labor Costs): Full Weight

Business Environment – Total Weight: 5

  • Corporate Taxes: Full Weight
  • Cost of Living: Full Weight
  • Length of Average Workday: Full Weight
  • Workforce Education Level (Percentage of Population with at Least a Bachelor’s Degree): Full Weight
  • Entrepreneurial Activity: Half* Weight
  • Five-Year Establishment Survival Rate: Half* Weight
  • Number of Small Businesses Per Capita: Half Weight
  • Industry Variety: Half Weight
  • Small Business Friendliness Index: Half* Weight

 
Sources: Data used to create these rankings were obtained from the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, Indeed.com, the Kauffman Foundation, the Tax Foundation, the Council for Community and Economic Research, Thumbtack, LoopNet and the Federal Deposit Insurance Corporation.

Author

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John Kiernan is Senior Writer & Editor at Evolution Finance. He graduated from the University of Maryland with a BA in Journalism, a minor in Sport Commerce & Culture,…
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Discussion

 
Apr 14, 2014
There are many reasons Port St Lucie, FL has few businesses. Definitely do your infrastructure homework, for one.
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