How are entrepreneurs weathering the financial storm? Panelists in a recent Master Class on Innovation and the Economy discussed some of the ways entrepreneurs can stay competitive in a down market. (view video of the Master Class)
1. Look for money in the right places
While money is scarce (and being used to fund existing portfolios), it’s not impossible to find, the panelists agreed. “You can raise money if you have the right idea, but it has to be very real and very targeted,” said Professor Cliff Schorer. Alumni panelist Leonard Sylk ’65 said cutting costs was essential to raising funds and that firms should look to their suppliers for money. “Ninety days from your supplier is a gift because that can be interest-free money,” he said.
2. Secure your balance sheet
Preserve cash flow, ensure that there is capital on your balance sheet, take the long perspective and be wary of a high burn-rate, said Professor Morten Sorensen.
3. Find the opportunity
“Look at your resources and assets and find the opportunity,” said Schorer. “Ask, ‘Where can I take advantage of pockets of gold?’” Panelists discussed healthcare and energy as two areas with the potential for growth. “Provide services that can help companies run more efficiently and find places where there is revolutionary change,” continued Schorer.
4. Tap hidden resources
Schorer recommended that entrepreneurs wanting to build intellectual or leadership capital enlist the help of retirees. “Look to older people who are not returning to the work force and who are willing to help,” he said.
5. Be prudent to survive the game
“Resist the urge to expand beyond what you can handle, especially with fixed costs, and know how much debt you can take on,” said Sylk. “Have the discipline to say, ‘It’s not the right thing to do.’ Learn how to not be greedy and secure your position. If you can survive, that’s the most important thing, because you won’t have much competition left if you do.”
Photo credit: Jim Wallace